-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IB6x6GAqHpa5E2c5TfK9xXgZSgFYPhtYrXCEfGqpUcLVZo4dYmkVf86os6Jmw8jj Q9iz8QGK34rjmYYnCuFR/Q== 0000885721-98-000045.txt : 19981118 0000885721-98-000045.hdr.sgml : 19981118 ACCESSION NUMBER: 0000885721-98-000045 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXPRESS SCRIPTS INC CENTRAL INDEX KEY: 0000885721 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 431420563 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20199 FILM NUMBER: 98749929 BUSINESS ADDRESS: STREET 1: 14000 RIVERPORT DR CITY: ST LOUIS STATE: MO ZIP: 63043 BUSINESS PHONE: 3147701666 MAIL ADDRESS: STREET 1: 14000 RIVERPORT DRIVE CITY: MARYLAND HEIGHTS STATE: MO ZIP: 63102-2750 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998. TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________. Commission File Number: 0-20199 EXPRESS SCRIPTS, INC. (Exact name of registrant as specified in its charter) DELAWARE 43-1420563 (State of Incorporation) (I.R.S. employer identification no.) 14000 RIVERPORT DR., MARYLAND HEIGHTS, MISSOURI 63043 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (314) 770-1666 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Common stock outstanding as of November 2, 1998: 18,600,310 Shares Class A 15,020,000 Shares Class B EXPRESS SCRIPTS, INC. INDEX Part I Financial Information Item 1. Financial Statements (unaudited) a) Consolidated Balance Sheet b) Consolidated Statement of Operations c) Consolidated Statement of Changes in Stockholders' Equity d) Consolidated Statement of Cash Flows e) Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risks - (Not Applicable) Part II Other Information Item 1. Legal Proceedings Item 2. Changes in Securities - (Not Applicable) Item 3. Defaults Upon Senior Securities - (Not Applicable) Item 4. Submission of Matters to a Vote of Security Holders - (Not Applicable) Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K Signatures Index to Exhibits PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EXPRESS SCRIPTS, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, DECEMBER 31, (IN THOUSANDS, EXCEPT SHARE DATA) 1998 1997 --------------------- -------------------- Assets Current assets: Cash and cash equivalents $ 101,100 $ 64,155 Short term investments 57,938 Receivables, less allowance for doubtful accounts of $26,514 and $4,802 respectively Unrelated parties 391,299 194,061 Related parties 16,230 Inventories 42,344 28,935 Deferred taxes and prepaid expenses 50,303 2,649 --------------------- -------------------- Total current assets 585,046 363,968 Property and equipment, net 75,392 26,821 Goodwill, net 307,781 251 Other assets 87,459 11,468 --------------------- -------------------- Total assets $ 1,055,678 $ 402,508 ===================== ==================== Liabilities and Stockholders' Equity Current liabilities: Current portion of long term debt $ 27,000 $ - Claims payable 238,767 153,051 Accounts payable 52,253 17,979 Accrued expenses 166,536 26,876 --------------------- -------------------- Total current liabilities 484,556 197,906 Long term debt 333,000 Other liabilities 1,199 901 --------------------- -------------------- Total liabilities 818,755 198,807 --------------------- -------------------- Stockholders' equity: Preferred stock, $.01 par value, 5,000,000 shares authorized, and no shares issued and outstanding Class A Common Stock, $.01 par value, 75,000,000 shares authorized, 9,291,000 and 9,238,000 shares issued and outstanding, respectively 93 93 Class B Common Stock, $.01 par value, 22,000,000 shares authorized, 7,510,000 shares issued and outstanding 75 75 Additional paid-in capital 109,427 106,901 Foreign currency translation adjustments (81) (27) Retained earnings 134,398 103,648 --------------------- -------------------- 243,912 210,690 Class A Common Stock in treasury at cost, 237,500 shares (6,989) (6,989) --------------------- -------------------- Total stockholders' equity 236,923 203,701 --------------------- -------------------- Total liabilities and stockholders' equity $ 1,055,678 $ 402,508 ===================== ====================
See accompanying notes to consolidated financial statements EXPRESS SCRIPTS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, (IN THOUSANDS, EXCEPT PER SHARE DATA) 1998 1997 1998 1997 - ------------------------------------- ------------------ ----------------- ---------------------- ------------------ Net revenues $ 807,319 $ 319,937 $ 1,986,087 $ 882,442 ------------------ ----------------- ---------------------- ------------------ Cost and expenses: Cost of revenues 738,544 291,590 1,820,593 803,794 Selling, general & administrative 43,153 15,758 101,245 42,789 Corporate restructuring expenses - - 1,651 - ------------------ ----------------- ---------------------- ------------------ 781,697 307,348 1,923,489 846,583 ------------------ ----------------- ---------------------- ------------------ Operating income 25,622 12,589 62,598 35,859 ------------------ ----------------- ---------------------- ------------------ Other income (expense): Interest income 1,794 1,609 5,683 4,171 Interest expense (6,912) (29) (13,793) (65) ------------------ ----------------- ---------------------- ------------------ (5,118) 1,580 (8,110) 4,106 ------------------ ----------------- ---------------------- ------------------ Income before income taxes 20,504 14,169 54,488 39,965 Provision for income taxes 9,201 5,556 23,738 15,580 ------------------ ----------------- ---------------------- ------------------ Net income $ 11,303 $ 8,613 $ 30,750 $ 24,385 ================== ================= ====================== ================== Basic earnings per share $ 0.34 $ 0.26 $ 0.93 $ 0.75 ================== ================= ====================== ================== Weighted average number of common shares outstanding during the period - Basic EPS 33,121 32,800 33,091 32,624 ================== ================= ====================== ================== Dluted earnings per share $ 0.34 $ 0.26 $ 0.91 $ 0.74 ================== ================= ====================== ================== Weighted average number of common shares outstanding during the period - Diluted EPS 33,682 33,187 33,635 33,007 ================== ================= ====================== ==================
See accompanying notes to consolidated financial statements EXPRESS SCRIPTS, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
Number of Shares Amount ------------------ ------------------------------------------------------------------------- Foreign Class A Class B Class A Class B Additional Currency Common Common Common Common Paid-in Translation Retained Treasury (IN THOUSANDS) Stock Stock Stock Stock Capital Adjustments Earnings Stock Total - -------------- -------- --------- --------- ---------- ---------- ------------ --------- --------- -------- Balance at December 31, 1997 9,238 7,510 $ 93 $ 75 $106,901 $ (27) $103,648 $(6,989) $203,701 Net income for nine months ended September 30, 1998 30,750 30,750 Foreign currency translation adjustments (54) (54) Exercise of stock options 53 1,478 1,478 Tax benefit relating to employee stock options - - - - 1,048 - - - 1,048 -------- --------- -------- ---------- ---------- ---------- ---------- --------- -------- Balance at September 30, 1998 9,291 7,510 $ 95 $ 75 $109,427 $ (81) $134,398 $(6,989) $236,923 ======== ========= ======== ========== ========== ========== ========== ========= ========
See accompanying notes to consolidated financial statements EXPRESS SCRIPTS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, (IN THOUSANDS) 1998 1997 ------------------- ------------------- Cash flows from operating activities: Net income $ 30,750 $ 24,385 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,254 6,924 Tax benefit relating to employee stock options 1,048 2,855 Net changes in operating assets and liabilities, net of changes resulting from acquisition 49,720 (1,638) ------------------- ------------------- Net cash provided by operating activities 99,772 32,526 ------------------- ------------------- Cash flows from investing activities: Purchases of property and equipment (17,990) (10,822) Acquisition of ValueRX (460,137) Short term investments 57,938 (2,784) ------------------- ------------------- Net cash (used in) investing activities (420,189) (13,606) ------------------- ------------------- Cash flows from financing activities: Net proceeds on long term debt 360,000 Deferred financing fees (4,062) Other, net 1,424 1,611 ------------------- ------------------- Net cash provided by financing activities 357,362 1,611 ------------------- ------------------- Net increase in cash and cash equivalents 36,945 20,531 Cash and cash equivalents at beginning of period 64,155 25,211 ------------------- ------------------- Cash and cash equivalents at end of period $ 101,100 $ 45,742 =================== ===================
See accompanying notes to consolidated financial statements. EXPRESS SCRIPTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial statement note disclosures, normally included in financial statements prepared in conformity with generally accepted accounting principles, have been omitted in this Form 10-Q pursuant to the Rules and Regulations of the Securities and Exchange Commission. However, in the opinion of the Company, the disclosures contained in this Form 10-Q are adequate to make the information presented not misleading when read in conjunction with the notes to consolidated financial statements included in the Company's Annual Report on Form 10-K for the Year Ended December 31, 1997, as filed with the Securities and Exchange Commission on March 26, 1998. In the opinion of the Company, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Consolidated Balance Sheet at September 30, 1998, the Consolidated Statement of Operations for the three and nine months ended September 30, 1998 and 1997, the Consolidated Statement of Changes in Stockholders' Equity for the nine months ended September 30, 1998, and the Consolidated Statement of Cash Flows for the nine months ended September 30, 1998 and 1997. Operating results for the three months and nine months ending September 30, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. NOTE 2 - EARNINGS PER SHARE Statement of Financial Accounting Standards No. 128, "Earnings Per Share" requires a presentation of both "Basic" earnings per share and "Diluted" earnings per share. Basic earnings per share represents per share earnings using the weighted average number of common shares outstanding during the period, while diluted earnings per share represents per share earnings determined in the same manner as basic earnings per share but taking into account the number of additional common shares that would have been outstanding for the period if the potentially dilutive common shares had been issued. The only difference between the number of weighted average shares used in the basic and diluted calculation is stock options granted by the Company using the "treasury stock" method. On October 12, 1998, the Company announced a two-for-one stock split of its Class A and Class B common stock for stockholders of record on October 20, 1998, effective October 30, 1998. The split was effected in the form of a dividend by issuance of one additional share of Class A common stock for each share of Class A common stock outstanding and one additional share of Class B common stock for each share of Class B common stock outstanding. The earnings per share and the weighted average number of shares outstanding for basic and diluted earnings per share have been adjusted for the stock split. The number of shares included in the Consolidated Balance Sheet and the Consolidated Statement of Changes in Stockholders' Equity have been stated on a pre-split basis. NOTE 3 - ACQUISITION On April 1, 1998 the Company acquired all of the outstanding capital stock of Value Health, Inc. and Managed Prescription Network, Inc. (collectively, the "Acquired Entities") from Columbia/HCA Healthcare Corporation ("Columbia") for approximately $460 million in cash (which includes transactions costs of approximately $15 million), approximately $360 million of which was obtained through a five-year bank credit facility and the remainder from the Company's cash balances and short term investments. At closing, the Acquired Entities owned various subsidiaries that now or formerly conducted a pharmacy benefit management ("PBM") business, commonly known as "ValueRx". The acquisition has been accounted for using the purchase method of accounting and the results of operations of the Acquired Entities have been included in the consolidated financial statements since April 1, 1998. The purchase price has been preliminarily allocated based on the estimated fair values of net assets acquired at the date of the acquisition. The excess of purchase price over net assets acquired was allocated to other intangible assets consisting of customer contracts and non-compete agreements in the amount of $57,653,000 which are being amortized using the straight-line method over the estimated useful lives of 2 to 20 years and are included in other assets, and goodwill in the amount of $312,863,000 which is being amortized using the straight-line method over the estimated useful life of 30 years. In conjunction with the acquisition, the Acquired Entities and their subsidiaries retained the following liabilities (amounts in thousands): Fair value of assets acquired $ 669,898 Cash paid for the capital stock (460,137) ----------- Liabilities retained $ 209,761 =========== The following unaudited pro forma information presents a summary of combined results of operations of the Company and the Acquired Entities as if the acquisition had occurred at the beginning of the period presented, along with certain pro forma adjustments to give effect to amortization of goodwill, other intangible assets, interest expense on acquisition debt and other adjustments. The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transaction been effected on the assumed dates. Basic and diluted earnings per share have been adjusted for the effect of the stock split on October 30, 1998. (Amounts in thousands, except per share data)
Nine Months Ended September 30, 1998 1997 --------------------------- Net revenues $2,396,015 $2,114,328 Net income 30,900 24,233 Basic earnings per share 0.93 0.74 Diluted earnings per share 0.92 0.73
NOTE 4 - FINANCING On April 1, 1998, the Company executed a $440 million credit facility with a bank syndicate led by Bankers Trust Company, consisting of a $360 million term loan facility and an $80 million revolving loan facility. The agreement is for a period of five years and is guaranteed by the Company's domestic subsidiaries other than Practice Patterns Science, Inc. ("PPS"), and Great Plains Reinsurance Company ("Great Plains") and secured by certain of the Company's assets, including pledges of 100% (or, in the case of foreign subsidiaries, 65%) of the capital stock of the Company and its subsidiaries other than PPS and Great Plains. The provisions of this loan require quarterly interest payments and, beginning in April 1999, semi-annual principal payments. The interest rate is based on a spread ("Credit Rate Spread") over several London Interbank Offered Rates ("LIBOR") or base rate options, depending upon the Company's ratio of earnings before interest, taxes, depreciation and amortization to debt. However, the initial spread is fixed at 125 basis points for the first two quarters. The credit agreement contains customary financial covenants, such as interest coverage, leverage, and consolidated net worth. In addition, the Company is required to pay an annual fee of 30 basis points, payable in quarterly installments, on the unused portion of the revolving loan. There were no borrowings at September 30, 1998 under the revolving loan facility. The following represents the schedule of current maturities for the term loan facility (amounts in thousands):
Year Ended December 31, 1999 $ 54,000 2000 72,000 2001 90,000 2002 96,000 2003 48,000 ====================== $ 360,000 ======================
In conjunction with the credit facility, the Company entered into an interest rate swap with First National Bank of Chicago on April 3, 1998. Under the terms of the interest rate swap, the Company agrees to receive a floating rate of interest on the amount of the term loan facility based on a three month LIBOR rate in exchange for payment of a fixed rate of interest of 5.88% per annum. The notional amount of the swap amortizes in equal amounts with the principal balance of the term loan. As a result, the Company has, in effect, converted its variable rate term debt to fixed rate debt at 5.88% per annum for the entire term of the term loan, plus the Credit Rate Spread. NOTE 5 - RESTRUCTURING During the quarter ended June 30, 1998, the Company recorded a pre-tax restructuring charge of $1,651,000 ($1,002,000 after taxes) associated with the Company closing the operations of its wholly-owned subsidiary, PhyNet, Inc., and transferring certain functions of its Express Scripts Vision Corporation to another vision care provider. The restructuring charge includes $1,235,000 in impairment write-downs of assets and $416,000 in employee transition costs. As of September 30, 1998, the Company has not incurred any cash expenditures associated with this restructuring. The complete shutdown and transfer of all functions of the Company's managed vision operations occurred on October 1, 1998. Therefore, the Company expects to incur the majority of the restructuring costs during the fourth quarter of 1998. NOTE 6 - CONTINGENCIES As discussed in detail in the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1998, filed with the Securities and Exchange Commission on August 13, 1998 (the "Second Quarter 10-Q"), when the Company acquired the Acquired Entities and their subsidiaries, several of the entities were party to various legal proceedings, investigations or claims. The effect of these actions on the Company's future financial results is not subject to reasonable estimation because considerable uncertainty exists about the outcomes. Nevertheless, in the opinion of management, the ultimate liabilities resulting from any such lawsuits, investigations or claims now pending will not materially affect the consolidated financial position, results of operations or cash flows of the Company. A brief update of the most notable of the proceedings follows: As discussed in detail in the Second Quarter 10-Q, Value Health, Inc. ("VHI") and several of its subsidiaries are party to two securities litigation matters, BASH, ET AL. V. VALUE HEALTH, INC., ET AL., No. 3:97cv2711 (JCH)(D.Conn.), and FREEDMAN, ET AL. V. VALUE HEALTH, INC., ET AL., No. 3:95 CV 2038 (JCH)(D.Conn). The two lawsuits, filed in 1995, allege that VHI and certain other defendants made false or misleading statements to the public in connection with VHI's acquisition of Diagnostek, Inc. in 1995. On April 24, 1998, the two lawsuits were consolidated. On August 18, 1998, the plaintiffs moved for class certification. The defendants opposed this motion on September 21, 1998, and the plaintiffs' reply was filed on November 6, 1998. The parties are now awaiting the court's order. In connection with the Company's acquisition, Columbia has agreed to defend and hold the Company and its affiliates (including VHI) harmless from and against any liability that may arise in connection with either of the foregoing proceedings. Consequently, the Company does not believe it will incur any material liability in connection with the foregoing matters. NOTE 7 - NEW ACCOUNTING PRONOUNCEMENTS Effective with the first quarter of 1998, the Company adopted Statement of Financial Accounting Standards Statement 130, "Reporting Comprehensive Income." The Statement requires noncash changes in stockholders' equity be combined with net income and reported in a new financial statement category entitled "comprehensive income." Other than net income, the only component of comprehensive income for the Company is the change in the foreign currency translation account. In June 1997, the FASB issued Statement of Financial Accounting Standards Statement 131, "Disclosures about Segments of an Enterprise and Related Information" ("FAS 131"). The Statement requires that the Company report certain information if specific requirements are met about operating segments of the Company including information about services, geographic areas of operation and major customers. FAS 131 is effective for years beginning after December 15, 1997. In most cases, the Company provides integrated PBM services to its customers under a single contract. These services account for substantially all of the Company's net revenues on an annual basis. As a result, the Company believes that the majority of its operations will be in one reportable segment in 1998. In June 1998, the FASB issued Statement of Financial Accounting Standards Statement 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133"). The Statement requires all derivatives be recognized as either assets or liabilities in the statement of financial position and measure those instruments at fair value. In addition, the Statement specifies the accounting for changes in the fair value of a derivative based on the intended use of the derivative and the resulting designation. FAS 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 1999 and will be applicable to the Company's first quarter of fiscal year 2000. The Company's present interest rate swap (see Note 4 above) would be considered a cash flow hedge. Accordingly, the change in the fair value of the swap would be reported on the balance sheet as an asset or liability. The corresponding unrealized gain or loss representing the effective portion of the hedge will be initially recognized in stockholders' equity and other comprehensive income, and subsequently any changes in unrealized gain or loss from the initial measurement date will be recognized in earnings concurrent with the interest expense on the Company's underlying variable rate debt. At the present time, it is indeterminable how application of this Statement will impact the Company's statement of operations. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INFORMATION INCLUDED IN THIS QUARTERLY REPORT ON FORM 10-Q, AND INFORMATION THAT MAY BE CONTAINED IN OTHER FILINGS BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") AND RELEASES ISSUED OR STATEMENTS MADE BY THE COMPANY, CONTAIN OR MAY CONTAIN FORWARD-LOOKING STATEMENTS, INCLUDING BUT NOT LIMITED TO STATEMENTS OF THE COMPANY'S PLANS, OBJECTIVES, EXPECTATIONS OR INTENTIONS, INCLUDING AS TO YEAR 2000 ISSUES. SUCH FORWARD-LOOKING STATEMENTS NECESSARILY INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE PROJECTED OR SUGGESTED IN ANY FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE TO OCCUR INCLUDE, BUT ARE NOT LIMITED TO: (1) RISKS ASSOCIATED WITH THE CONSUMMATION OF ACQUISITIONS, INCLUDING THE ABILITY TO SUCCESSFULLY INTEGRATE THE OPERATIONS OF ACQUIRED BUSINESSES WITH THE EXISTING OPERATIONS OF THE COMPANY, CLIENT RETENTION AND RISKS INHERENT IN THE ACQUIRED ENTITIES OPERATIONS; (2) HEIGHTENED COMPETITION, INCLUDING INCREASED PRICE COMPETITION, IN THE PHARMACY BENEFIT MANAGEMENT BUSINESS; (3) THE POSSIBLE TERMINATION OF THE COMPANY'S CONTRACTS WITH CERTAIN KEY CLIENTS OR PROVIDERS; (4) CHANGES IN PRICING OR DISCOUNT PRACTICES OF PHARMACEUTICAL MANUFACTURERS; (5) THE ABILITY OF THE COMPANY TO CONSUMMATE CONTRACT NEGOTIATIONS WITH PROSPECTIVE CLIENTS; (6) COMPETITION IN THE BIDDING AND PROPOSAL PROCESS; (7) ADVERSE RESULTS IN CERTAIN LITIGATION AND REGULATORY MATTERS; (8) THE ADOPTION OF ADVERSE LEGISLATION OR REGULATIONS OR A CHANGE IN THE INTERPRETATION OF EXISTING LEGISLATION OR REGULATIONS; (9) THE IMPACT OF INCREASES IN HEALTH CARE COSTS AND UTILIZATION PATTERNS; (10) RISKS ASSOCIATED WITH THE DEVELOPMENT OF NEW PRODUCTS; (11) RISKS ASSOCIATED WITH THE "YEAR 2000" ISSUE, INCLUDING THE ABILITY OF THE COMPANY TO SUCCESSFULLY CONVERT ITS INFORMATION SYSTEMS AND ITS NON-INFORMATION SYSTEMS, AND THE ABILITY OF ITS VENDORS/TRADING PARTNERS TO SUCCESSFULLY CONVERT THEIR SYSTEMS, TO ACCOMMODATE DATES BEYOND DECEMBER 31, 1999; AND (12) OTHER RISKS DESCRIBED FROM TIME TO TIME IN THE COMPANY'S FILINGS WITH THE COMMISSION. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO RELEASE PUBLICLY ANY REVISIONS TO SUCH FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. COMPANY OVERVIEW The Company is a leading specialty managed care company and believes it is the largest full-service pharmacy benefit management ("PBM") company independent of pharmaceutical manufacturer ownership in North America. The Company provides healthcare management and administration services on behalf of thousands of clients that include health maintenance organizations ("HMO's"), health insurers, third-party administrators, employers and union-sponsored benefit plans. The Company's PBM services are provided to approximately 22.8 million members in the United States and Canada enrolled in health plans sponsored by the Company's clients through numerous networks of retail pharmacies which are under contract by the Company. The largest network includes more than 50,000 retail pharmacies, representing more than 99% percent of all retail pharmacies in the United States. The Company also delivers its PBM services through five mail-order pharmacy service centers owned and operated by the Company. The Company's PBM services include network claims processing, mail-order pharmacy services, benefit design consultation, drug utilization review, formulary management, disease management and medical and drug data analysis services. The Company also provides medical information management services, which include provider profiling and outcome assessments, through its Practice Patterns Science, Inc. ("PPS") subsidiary, infusion therapy services through its IVTx division ("IVTx"), and informed decision counseling services through its Express Health LineSM division. Prior to 1998, the Company's growth had primarily been through the generation of sales to new clients, internal growth of the membership base of existing clients, and development and sale of new products and services to existing clients. Future growth will be affected by the Company's continued focus on the above factors, along with acquisitions and alliance opportunities, if any. On April 1, 1998, the Company consummated its first major acquisition by acquiring the PBM operations of Columbia/HCA Healthcare Corporation ("Columbia"), commonly known as ValueRx. Specifically, the Company acquired all of the outstanding capital stock of Value Health, Inc. and Managed Prescription Network, Inc., the sole assets of which at closing were various subsidiaries each now or formerly conducting business as a PBM, including ValueRx Pharmacy Program, Inc., for approximately $460 million in cash, which includes transaction costs of approximately $15 million. The acquisition is being accounted for under the purchase method of accounting. As such, the Company's operating results include those of ValueRx from April 1, 1998. The net assets acquired have been recorded at their estimated fair value, resulting in $313 million of goodwill which is being amortized over 30 years. The acquisition provides the Company with additional resources and expertise, which will allow the Company to better serve its clients and competitively pursue new business in all segments of the market. Historically, while both the Company and ValueRx have served all segments of the market for PBM services, the Company primarily focused on managed care and smaller self-funded plan sponsors and ValueRx concentrated on health insurance carriers and large employer and union groups. As a result of the acquisition, the Company now has a strong presence in all market segments. As of October 1, 1998, the Company serves approximately 22.8 million members compared to approximately 12.2 million members at September 30, 1997, which represents an increase of 86.9%. The growth in membership is primarily due to the ValueRx acquisition and the Company's continuing ability to attract additional members through internal growth during the third quarter of 1998. RESULTS OF OPERATIONS (AMOUNTS IN THOUSANDS, EXCEPT MEMBERSHIP, SHARE AND PER SHARE DATA) The following table sets forth certain financial data of the Company for the periods presented as a percentage of net revenue and the percentage change in the dollar amounts of such financial data for the three months ended September 30, 1998 compared to 1997 and the nine months ended September 30, 1998 compared to 1997.
Percentage of Net Revenue Percentage Increase (Decrease) ---------------------------------------- ------------------------------------------------- Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended September 30, September 30, September 30, 1998 Over September 30, 1998 Over ------------------ ------------------ 1998 1997 1998 1997 1997 1997 -------- -------- -------- -------- ----------------------- ----------------------- Net revenues: Unrelated clients 98.6% 82.8% 92.7% 83.1% 200.5% 151.1% Related clients (1) 1.4% 17.2% 7.3% 16.9% (78.8%) (2.4%) ================== ================== Total net revenues 100.0% 100.0% 100.0% 100.0% 152.3% 125.1% ================== ================== Cost and expenses: Cost of revenues 91.5% 91.2% 91.7% 91.1% 153.3% 126.5% Selling, general and administrative 5.4% 4.9% 5.1% 4.8% 173.9% 136.6% Corporate restructuring expense - - 0.1% - nm nm ------------------ ------------------ 96.9% 96.1% 96.9% 95.9% 154.3% 127.2% ------------------ ------------------ Operating Income 3.1% 3.9% 3.1% 4.1% 103.5% 74.6% Other income(expense), net (0.6%) 0.5% (0.4%) 0.4% (423.9%) (297.5%) ------------------ ------------------ Income before income taxes 2.5% 4.4% 2.7% 4.5% 44.7% 36.3% Provision for income taxes 1.1% 1.7% 1.2% 1.7% 65.6% 52.4% ================== ================== Net Income 1.4% 2.7% 1.5% 2.8% 31.2% 26.1% ================== ================== nm = not meaningful (1) Related clients consist of NYLCare Health Plans, Inc., and its subsidiaries ("NYLCare"), wholly-owned subsidiaries of New York Life Insurance Company ("NYL"), which were sold to Aetna U.S. Healthcare, Inc. ("Aetna"), an unrelated party, on July 15, 1998. See "Other Matters" below.
NET REVENUES Net revenues for PBM services for the third quarter of 1998 and the first nine months of 1998 increased $482,275, or 156.5%, and $1,089,793, or 128.2%, compared to the third quarter of 1997 and the first nine months of 1997, respectively. The increases are primarily due to increased membership resulting from the acquisition of ValueRx and, to a lesser extent, to the Company's ability to retain existing clients and attract new clients. The increased membership base resulted in the number of pharmacy claims processed (which includes network pharmacy claims and mail order pharmacy claims at their network pharmacy claims equivalent) increasing 73.5% and 56.0% from the third quarter of 1997 and from the first nine months of 1997, respectively. The average net revenue per pharmacy claim (which includes network pharmacy claims and mail order pharmacy claims at their network pharmacy claims equivalent) increased 46.9% and 45.7% from the third quarter of 1997 and from the first nine months of 1997, respectively. The increases are primarily due to the following factors: (1) a larger number of customers using retail pharmacy networks established by the Company rather than retail pharmacy networks established by the Company's customers; (2) higher drug ingredient costs resulting from changes in therapeutic mix and dosage, increases in product acquisition costs for existing drugs, and new drugs introduced into the marketplace; and (3) the termination of mail order "inventory replacement programs" maintained for two large clients during the first four months of 1997 (affects only the nine month comparison). Increases in revenue from these factors were partially offset by lower pricing offered by the Company in response to continued competitive pressures. When customers use one of the Company's retail pharmacy networks, the drug ingredient cost, the dispensing fee and the Company's administrative fee are recorded as revenue, and the resulting cost is recorded in cost of revenue. For customers that contract their own retail pharmacy network, the Company records only its administrative fees as revenue. The number of customers using retail pharmacy networks established by the Company was significantly enhanced beginning in the second quarter of 1998 due to the acquisition of ValueRx, as substantially all ValueRx customers use the retail pharmacy networks established by ValueRx. As a result of this shift, gross margin percentages are reduced but the amount of the gross margin is not materially affected. Under the inventory replacement programs offered in 1997, the customer provided drug inventory to replenish drugs used by the Company to fill mail service prescriptions for members of the customer's plan and the Company included only its dispensing fee as net revenue. For the first nine months of 1998, all mail pharmacy clients utilized the Company's standard program in which the Company purchases the inventory used to fill the prescriptions and, therefore, includes the ingredient cost as well as the dispensing fee in net revenue. This change had the effect of increasing both revenue and cost of revenue during the first nine months of 1998 compared to 1997, but there was no significant effect on the Company's reported gross margin during the first nine months of 1998 from the conversion to the standard program. As of July 15, 1998, NYLCare was sold to Aetna and is no longer a related party to the Company. Therefore, only 1.3% of the third quarter 1998 net revenues from PBM services were from services provided to members of HMO's owned or managed by NYLCare or insurance policies administered by NYLCare, while it was a wholly-owned subsidiary of NYL. For the first nine months of 1998, the Company derived 6.8% of its net revenues from PBM services from services provided to members of HMO's owned or managed by NYLCare or insurance policies administered by NYLCare, while it was a wholly-owned subsidiary of NYL Net revenues for non-PBM services for the third quarter of 1998 and the first nine months of 1998 increased $5,107, or 43.5%, and $13,852, or 42.9%, compared to the third quarter of 1997 and the first nine months of 1997, respectively. The increases are primarily due to the continued growth in the number of members and/or clients who receive these services and the Company's ability to develop new products and services. Of the Company's net revenues for non-PBM services, 7.3% and 31.9% was for services provided to members of HMO's owned or managed by NYLCare or insurance policies administered by NYLCare, while it was a wholly-owned subsidiary of NYL, during the third quarter of 1998 and the first nine months of 1998, respectively. COST OF REVENUES Cost of revenues for PBM services for the third quarter of 1998 and the first nine months of 1998 increased $443,039, or 156.6%, and $1,006,083, or 128.9%, compared to the third quarter of 1997 and the first nine months of 1997, respectively. As a percentage of PBM services net revenue, cost of revenues for the third quarter of 1998 remained level compared to the third quarter of 1997. For the first nine months of 1998, the cost of revenue as a percentage of PBM services net revenue increased 0.3 percentage points over the first nine months of 1997. The stabilization of the gross margin during the third quarter was primarily due to the Company generating revenue from complementary PBM services, such as medical and drug data analysis, that provide higher gross margins. For the first nine months of 1998, the gross margin decreased primarily due to (1) the shift towards pharmacy networks established by the Company, as opposed to those established by its clients, (2) higher drug ingredient costs, (3) the shift in the mix of pharmacy claims processed, as mail-order pharmacy claims represented a higher percentage of total pharmacy claims processed (historically, the gross margin, as a percentage of the respective net revenue for mail-order pharmacy services has been lower than for network pharmacy services, but the actual gross margin per claim is higher than the gross margin per claim for network pharmacy claims; as the Company's mail order volume increases, the differential between the gross margins, expressed as a percentage of respective net revenues, should decrease), and (4) termination of the inventory replacement programs, as discussed above for "Net Revenues", along with the lower gross margins realized from the large employer market segment, due to the highly competitive nature of that segment. Cost of revenues for non-PBM services for the third quarter of 1998 and the first nine months of 1998 increased $3,915, or 45.2%, and $10,717, or 45.6%, compared to the third quarter of 1997 and the first nine months of 1997, respectively. The increases are primarily due to costs related to the continued expansion of these operations and a change in the product mix sold during the third quarter of 1998 and first nine months of 1998. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expenses for the third quarter of 1998 and the first nine months of 1998 increased $27,396, or 173.9%, and $58,456, or 136.6%, compared to the third quarter of 1997 and the first nine months of 1997, respectively. As a percentage of total net revenues, selling, general and administrative expenses increased 0.5 percentage points for the third quarter of 1998 over the third quarter of 1997 and 0.3 percentage points for the first nine months of 1998 over the first nine months of 1997. The increases are primarily attributable to the ValueRx acquisition (including amortization of goodwill and other intangible assets associated with the ValueRx acquisition, and expenses associated with the integration of ValueRx) and the additional expenditures required to expand the operational and administrative support functions to enhance management of the pharmacy benefit. Subsequent to the acquisition of ValueRx, the Company undertook the integration of ValueRx in an effort to reduce operating costs as a percentage of sales, excluding depreciation and amortization expense. During the third quarter, the Company continued to meet its integration goals by combining existing contracts and contracting procedures related to both suppliers and providers, implementing financial reporting systems and completing a systems integration plan for all other systems, including knowledge systems, claims adjudication and mail service systems, and consolidating financial operations. Integration goals for the fourth quarter of fiscal 1998 include the implementation of a new sales and marketing program for enhanced PBM services and continuing the integration of the computer platforms and systems applications. Except for certain systems development costs, the Company is expensing integration costs as incurred. Excluding depreciation and amortization of $6,224 and $1,232 for the third quarter of 1998 and 1997, respectively, and $12,511 and $3,293 for the first nine months of 1998 and 1997, respectively, selling, general and administrative expenses, as a percentage of total net revenues, remained constant. CORPORATE RESTRUCTURING EXPENSES On June 17, 1998, the Company announced that it had reached an agreement with Cole Managed Vision ("Cole"), a subsidiary of Cole National Corporation, pursuant to which Cole will provide certain vision care services for the Company's clients and their members. The agreement enables the Company to focus on its PBM business while still offering a vision care service to its members by transferring certain functions performed by its Express Scripts Vision Corporation to Cole, effective September 1, 1998. In conjunction with the agreement, the Company also announced plans to close the operations of its wholly-owned subsidiary, PhyNet, Inc. As a result, the Company recorded a one-time restructuring charge of $1,651, comprised of asset write-downs of $1,235 and expected employee transition cash payments of $416. As of September 30, 1998, the Company has not incurred any cash expenditures associated with this restructuring. The complete shutdown and transfer of all functions of the Company's managed vision operations occurred on October 1, 1998. Therefore, the Company expects to incur the majority of the restructuring costs during the fourth quarter of 1998. OTHER INCOME (EXPENSE) For the third quarter of 1998 and the first nine months of 1998, the Company recorded net other expenses of $5,118 and $8,110, compared to net other income of $1,580 and $4,106, for the third quarter of 1997 and the first nine months of 1997, respectively. The movement to other expense from other income is due to the Company incurring interest expense totaling $13,775 during the second and third quarters of 1998 related to the acquisition debt. PROVISION FOR INCOME TAXES The provision for income taxes for the third quarter of 1998 and the first nine months of 1998 was $9,201 and $23,738 compared to $5,556 and $15,580 for the third quarter of 1997 and the first nine months of 1997, respectively. The effective tax rate increased to 44.9% for the third quarter of 1998 compared to 39.2% for the third quarter of 1997. For the first nine months of 1998, the effective tax rate increased to 43.6% compared to 39.0% for the same period in 1997. The increases in the effective tax rate is primarily due to the addition of non-deductible goodwill and other intangible assets amortization expense derived from the ValueRx acquisition. It is expected that the effective tax rate will slowly decline as the Company's operating growth continues. NET INCOME As a result of the foregoing, net income for the third quarter ended and the nine months ended September 30, 1998, increased $2,690, or 31.2%, and $6,365, or 26.1%, compared to the same periods in 1997. Excluding the after-tax one-time restructuring charge for the managed vision business, net income for the nine months ended September 30, 1998 increased $7,367, or 30.2%, compared to 1997. EARNINGS PER SHARE For the third quarter of 1998, the Company reported basic earnings per share of $0.34 compared to $0.26 in 1997, a 30.8% increase. The weighted average number of shares used in the calculation was 33,121,000 in 1998 and 32,800,000 in 1997. Diluted earnings per share was $0.34 in the third quarter of 1998 compared to $0.26 in 1997, a 30.8% increase. The weighted average number of shares used in the calculation was 33,682,000 in 1998 and 33,187,000 in 1997. For the first nine months of 1998, the Company reported basic earnings per share of $0.93 compared to $0.75 in 1997, a 24.0% increase. The weighted average number of shares used in the calculation was 33,091,000 in 1998 and 32,624,000 in 1997. Diluted earnings per share was $0.91 in the first nine months of 1998 compared to $0.74 in 1997, a 23.0% increase. The weighted average number of shares used in the calculation was 33,635,000 in 1998 and 33,007,000 in 1997. On October 12, 1998, the Company announced a two-for-one stock split of its Class A and Class B common stock for stockholders of record on October 20, 1998, effective October 30, 1998. The split was effected in the form of a dividend by issuance of one additional share of Class A common stock for each share of Class A common stock outstanding and one additional share of Class B common stock for each share of Class B common stock outstanding. The earnings per share and the weighted average number of shares outstanding for basic and diluted earnings per share have been adjusted for the stock split. Excluding the after-tax one-time restructuring charge for the managed vision business, basic earnings per share and diluted earnings per share for the first nine months of 1998 would have been $0.96 and $0.94, or an increase of 28.0% and 27.0%, respectively. LIQUIDITY AND CAPITAL RESOURCES The Company continued to generate significant cash flow from operations. During the first nine months of 1998 the Company generated $99,772 of cash flow from operations compared to $32,526 for the same period in 1997. This cash generation includes the operations of ValueRx after April 1, 1998 and is the result of management's continued emphasis on the collection of accounts receivable balances, the management of inventories, and the management of payables to vendors and retail pharmacy providers. Management expects to fund its future anticipated capital expenditures, debt service, integration costs, Year 2000 costs, and other normal operating cash needs primarily with operating cash flow. During the first quarter of 1998, the Company negotiated a $440,000 credit facility with a bank syndicate led by Bankers Trust Company. The five-year agreement became effective April 1, 1998, and includes a $360,000 term loan facility and an $80,000 revolving loan facility; the term loan proceeds were utilized to consummate the acquisition of ValueRx from Columbia on April 1, 1998. The agreement is guaranteed by the Company's domestic subsidiaries other than PPS, and Great Plains Reinsurance Company ("Great Plains") and secured by certain of the Company's assets, including pledges of 100% (or, in the case of foreign subsidiaries, 65%) of the capital stock of the Company and its subsidiaries other than PPS and Great Plains. The provisions of this credit facility require quarterly interest payments and, beginning in April 1999, semi-annual principal payments of $27,000 increasing to $36,000 in April 2000, to $45,000 in April 2001, and to $48,000 in April 2002. The interest rate is based on a spread (the "Credit Rate Spread") over several London Interbank Offered Rates or base rate options, depending upon the Company's ratio of earnings before interest, taxes, depreciation and amortization to debt. However, the initial spread is fixed at 125 basis points for the first two quarters. The credit agreement also contains customary financial covenants, such as interest coverage, leverage, and consolidated net worth. In addition, the Company is required to pay an annual fee of 30 basis points, payable in quarterly installments, on the unused portion of the revolving loan. As a result of the new credit agreement, the Company canceled its $25,000 line of credit with Mercantile Bank of St. Louis on March 31, 1998. To alleviate interest rate volatility in connection with the above-described credit facility, the Company entered into an interest rate swap arrangement, effective April 3, 1998, with the First National Bank of Chicago agreeing to receive a floating rate of interest on the amount of the term loan facility based on a three month LIBOR rate in exchange for payment of a fixed rate of interest of 5.88% per annum. The notional amount of the swap amortizes in equal amounts with the principal balance of the term loan. As a result, the Company has, in effect, converted its variable rate term debt to fixed rate debt at 5.88% per annum for the entire term of the term loan, plus the Credit Rate Spread. As of September 30, 1998, the Company had repurchased a total of 237,500 (pre-split basis) shares of its Class A Common Stock under the open-market stock repurchase program announced by the Company on October 25, 1996, although no repurchases occurred during the first nine months of 1998. The Company's Board of Directors approved the repurchase of up to 850,000 (pre-split basis) shares, and placed no limit on the duration of the program. Future purchases, if any, will be in such amounts and at such times as the Company deems appropriate based upon prevailing market and business conditions, subject to certain restrictions in the credit agreement described above. The Company has reviewed and currently intends to continue to review potential acquisitions and affiliation opportunities. The Company believes that available cash resources, bank financing or the issuance of additional common stock could be used to finance such acquisitions or affiliations. The Company consummated the acquisition of ValueRx on April 1, 1998; however, there can be no assurance the Company will make other acquisitions or affiliations in 1998 or thereafter. OTHER MATTERS On March 16, 1998, the Company announced that, in connection with the consummation of the sale by NYL of NYLCare to Aetna (which occurred on July 15, 1998), the Company and Aetna had reached an agreement to extend the Company's HMO PBM services and infusion therapy services agreements through December 31, 2003. The existing PBM contract pricing is effective through December 31, 1999, and thereafter certain pricing adjustments (which the Company believes reflect an appropriate market price) will be instituted for the year 2000 and subsequent periods. The agreement between Aetna and the Company provides that the Company will continue providing PBM services to 1.4 million HMO members through 2003, which is comparable to the NYLCare HMO membership base served by the Company prior to the Aetna acquisition. The infusion therapy agreements are extended under their current terms until December 31, 2000, and thereafter limited price adjustments may take effect under certain circumstances. The existing agreements for managed vision care and informed decision counseling will continue until December 31, 1999. The Company will also continue to provide PBM services to members of the NYLCare indemnity programs until such members are converted to new health insurance policies. In connection with the Aetna arrangement, the Company and NYL have reached an agreement in principle whereby NYL may make certain transition-related payments to the Company in 1999. This agreement is subject to the approval of the Audit Committee of the Company's Board of Directors. The overall impact of this arrangement on earnings per share is not expected to be material in 1998 or 1999. Effective with the first quarter of 1998, the Company adopted Statement of Financial Accounting Standards Statement 130, "Reporting Comprehensive Income." The Statement requires noncash changes in stockholders' equity be combined with net income and reported in a new financial statement category entitled "comprehensive income." Other than net income, the only component of comprehensive income for the Company is the change in the foreign currency translation account. In June 1997, the FASB issued Statement of Financial Accounting Standards Statement 131, "Disclosures about Segments of an Enterprise and Related Information" ("FAS 131"). The Statement requires that the Company report certain information if specific requirements are met about operating segments of the Company including information about services, geographic areas of operation and major customers. FAS 131 is effective for years beginning after December 15, 1997. The Company provides integrated PBM services to its customers under a single contract. These services account for substantially all of the Company's net revenues on an annual basis. As a result, the Company believes that the majority of its operations will be in one reportable segment in 1998. In June 1998, the FASB issued Statement of Financial Accounting Standards Statement 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133"). The Statement requires all derivatives be recognized as either assets or liabilities in the statement of financial position and measure those instruments at fair value. In addition, the Statement specifies the accounting for changes in the fair value of a derivative based on the intended use of the derivative and the resulting designation. FAS 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 1999 and will be applicable to the Company's first quarter of fiscal year 2000. The Company's present interest rate swap (see "Liquidity and Capital Resources") would be considered a cash flow hedge. Accordingly, the change in the fair value of the swap would be reported on the balance sheet as an asset or liability. The corresponding unrealized gain or loss representing the effective portion of the hedge will be initially recognized in stockholders' equity and other comprehensive income and subsequently any changes in unrealized gain or loss from the initial measurement date will be recognized in earnings concurrent with the interest expense on the Company's underlying variable rate debt. At the present time, it is indeterminable how application of this Statement will impact the Company's statement of operations. YEAR 2000 The Company's operations rely heavily on information systems technology. In 1995, the Company began addressing the "Year 2000" issue which, in short, refers to the inability of certain computer systems to properly recognize calendar dates beyond December 31, 1999. This arises as a result of systems having been programmed with two-digits rather than four-digits to define the applicable year in order to conserve computer storage space, reduce the complexity of calculations and produce better performance. The two-digit system may cause computers to interpret the year "00" as "1900" rather than as "2000", which may cause system failures or produce incorrect results when dealing with date-sensitive information beyond the year 1999. The Company formed a Year 2000 task force to address this issue, which has performed a self-assessment and developed a compliance plan that addresses (i) internally developed application software, (ii) vendor developed application software, (iii) operating system software, (iv) utility software, (v) vendor/trading partner-supplied files, (vi) externally provided data or transactions, (vii) non-information technology devices that are material to the Company's business, and (viii) adherence to applicable industry standards. Progress in each area is monitored and management reports are given periodically. The Company has various applications and operating systems that are considered critical to its operations. Approximately 75% of these systems are in the process of being tested in an integrated environment by the Company for Year 2000 compliance and are expected to be fully tested by December 31, 1998. The remaining systems will either (i) be tested, if necessary, and modified as required to be compliant during the fourth quarter of 1998 and the first quarter of 1999, or (ii) information residing on such systems will be integrated into a Year 2000 compliant operating system (as outlined in the Company's integration plans discussed above). Testing of the applications and operating systems includes the adjudication process (retail network, mail order and member submit), the eligibility process, the billing and remittance process, the communication process and the reporting process (batch and on-line), including financial reporting. In addition, since 1995, all new internally developed software has been developed to be Year 2000 compliant and will be tested during the remainder of 1998 and 1999. The Company has sent out approximately 1,500 letters to critical vendor/trading partners requesting a status regarding their Year 2000 compliance. The Company has received responses for approximately 30% of the letters sent with the majority of the vendor/trading partners responding that they are currently addressing the Year 2000 issue and expect to be compliant. The Company expects to send a second request to the vendor/trading partners that have not responded during the fourth quarter of 1998. In addition, the Company expects to receive periodic updates from the vendor/trading partners. The Company has also contacted several hundred clients and several thousand pharmacies whose computer systems appear to the Company not to be Year 2000 compliant in an effort to increase awareness of the problem and minimize or eliminate any disruption in data transfer activity between such parties and the Company. The Company has developed date "windowing" logic which it believes will address various issues concerning retail pharmacies and clients with noncompliant systems. In addressing the Year 2000 issue, the Company will incur internal staff costs as well as external consulting and other expenses related to infrastructure enhancements necessary to prepare its systems for the new century. The Company does not believe the costs associated with addressing the Year 2000 issue, which are being expensed as incurred, are materially greater than the normal recurring costs associated with systems development and maintenance. To date, these costs have not had a material adverse effect on the Company's results of operations or financial condition, and are not expected to have a material adverse effect on the Company's future results of operations or financial condition. The Company believes that, with appropriate modifications to existing computer systems, updates by vendors and trading partners, and conversion to new software in the ordinary course of its business, the Year 2000 issue will not pose significant operational problems for the Company. However, if the above described conversions are not completed in a proper and timely manner by all affected parties, or if the Company's logic for communicating with noncompliant systems is ineffective, the Year 2000 issue could result in material adverse operational and financial consequences to the Company, and there can be no assurance that the Company's efforts, or those of vendors and trading partners (who are beyond the Company's control), to address the Year 2000 issue, will be successful. The Company is in the process of formalizing its contingency plans to address potential risks, including risks of vendor/trading partner noncompliance, as well as noncompliance of any of the Company's material operations. However, the formalization of the contingency plans is an ongoing process as the Company completes its testing and receives updates from vendor/trading partners. In addition, there can be no assurance that the Company's contingency plans will successfully address all potential circumstances or consequences, if any. IMPACT OF INFLATION Changes in prices charged by manufacturers and wholesalers for pharmaceuticals affect the Company's net revenues and cost of revenues. To date the Company has been able to recover price increases from its clients under the terms of its agreements. As a result, changes in pharmaceutical prices have not had a significant adverse affect on the Company. PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. As discussed in detail in the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1998, filed with the Securities and Exchange Commission on August 13, 1998 (the "Second Quarter 10-Q"), the Company acquired all of the outstanding capital stock of Value Health, Inc., a Delaware corporation ("VHI"), and Managed Prescription Network, Inc., a Delaware corporation ("MPN") from Columbia HCA/HealthCare Corporation ("Columbia") and its affiliates on April 1, 1998 (the "Acquisition"). VHI, MPN and/or their subsidiaries (collectively, the "Acquired Entities"), were party to various legal proceedings, investigations or claims at the time of the Acquisition. The effect of these actions on the Company's future financial results is not subject to reasonable estimation because considerable uncertainty exists about the outcomes. Nevertheless, in the opinion of management, the ultimate liabilities resulting from any such lawsuits, investigations or claims now pending will not materially affect the consolidated financial position, results of operations or cash flows of the Company. A brief update of the most notable of the proceedings follows: As discussed in detail in the Second Quarter 10-Q, VHI and several of its subsidiaries are party to two securities litigation matters, BASH, ET AL. V. VALUE HEALTH, INC., ET AL., No. 3:97cv2711 (JCH)(D.Conn.), and FREEDMAN, ET AL. V. VALUE HEALTH, INC., ET AL., No. 3:95 CV 2038 (JCH)(D.Conn). The two lawsuits, filed in 1995, allege that VHI and certain other defendants made false or misleading statements to the public in connection with VHI's acquisition of Diagnostek, Inc. in 1995. On April 24, 1998, the two lawsuits were consolidated. On August 18, 1998, the plaintiffs moved for class certification. The defendants opposed this motion on September 21, 1998, and the plaintiffs' reply was filed on November 6, 1998. The parties are now awaiting the court's order. In connection with the Acquisition, Columbia has agreed to defend and hold the Company and its affiliates (including VHI) harmless from and against any liability that may arise in connection with either of the foregoing proceedings. Consequently, the Company does not believe it will incur any material liability in connection with the foregoing matters. Item 5. OTHER INFORMATION. In accordance with the amended Bylaws of the Company, a stockholder who at any annual meeting of stockholders of the Company intends to nominate a person for election as a director or present a proposal must so notify the Secretary of the Company, in writing, describing such nominee(s) or proposal and providing information concerning such stockholder and the reasons for and interest of such stockholder in the proposal. Generally, to be timely, such notice must be received by the Secretary during the 30 day period that ends 90 days before the anniversary of the prior years' annual meeting. The Company's last annual meeting was held May 27, 1998, so any such notice must be received between January 27, 1999 and February 26, 1999 to be considered timely for purposes of the 1999 Annual Meeting. Any person interested in making such a nomination or proposal should request a copy of the relevant Bylaw provisions from the Secretary of the Company. These time periods also apply in determining whether notice is timely for purposes of rules adopted by the Securities and Exchange Commission relating to exercise of discretionary voting authority, and are separate from and in addition to the Securities and Exchange Commission's requirements that a stockholder must meet to have a proposal included in the Company's proxy statement. Stockholder proposals intended to be presented at the 1999 Annual Meeting must be received by the Company no later than December 24, 1998, in order to be eligible for inclusion in the Company's proxy statement and proxy relating to that meeting. Upon receipt of any proposal, the Company will determine whether to include such proposal in accordance with regulations governing the solicitation of proxies. Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS. See Index to Exhibits on page 28. (b) REPORTS ON FORM 8-K. (i) On July 20, 1998, the Company filed a Current Report on Form 8-K regarding a press release issued on behalf of the Company concerning the restructuring of its managed vision operations. (ii) On August 5, 1998, the Company filed a Current Report on Form 8-K regarding a press release issued on behalf of the Company concerning its second quarter 1998 financial performance. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EXPRESS SCRIPTS, INC. (Registrant) Date: November 12, 1998 By: /s/ Barrett A. Toan Barrett A. Toan, President and Chief Executive Officer Date: November 12, 1998 By: /s/ George Paz George Paz, Senior Vice President and Chief Financial Officer INDEX TO EXHIBITS (Express Scripts, Inc. - Commission File Number 0-20199) EXHIBIT NUMBER EXHIBIT 2.1 Stock Purchase Agreement by and among Columbia/HCA Healthcare Corporation, VH Holdings, Inc., Galen Holdings, Inc. and Express Scripts, Inc., dated as of February 19, 1998, and certain related Schedules, incorporated by reference to Exhibit No. 2.1 to the Company's Current Report on Form 8-K filed March 2, 1998 (all Schedules, other than those relating to the calculation of the Purchase Price [as defined therein] are omitted from this filing, but will be filed with the Commission supplementally upon request). 2.2 First Amendment to Stock Purchase Agreement by and among Columbia/HCA Healthcare Corporation, VH Holdings, Inc., Galen Holdings, Inc. and Express Scripts, Inc., dated as of March 31, 1998, and related Exhibits incorporated by reference to Exhibit No. 2.1 to the Company's Current Report on Form 8-K filed April 14, 1998 (all Exhibits are omitted from this filing, but will be filed with the Commission supplementary upon request). 3.1 Certificate of Incorporation, incorporated by reference to Exhibit No. 3.1 to the Company's Registration Statement on Form S-1 filed June 9, 1992 (No. 33-46974) (the "Registration Statement"). 3.2 Certificate of Amendment of the Certificate of Incorporation of the Company, incorporated by reference to Exhibit No. 10.6 to the Company's Quarterly Report on Form 10-Q for the quarter ending June 30, 1994. 3.3* Second Amended and Restated Bylaws, as amended. 4.1 Form of Certificate for Class A Common Stock, incorporated by reference to Exhibit No. 4.1 to the Registration Statement. 10.1* Lease Extension and Amendment Agreement dated as of July 24, 1998, between Faith A. Griefen and ValueRX Pharmacy Program, Inc., an indirect subsidiary of the Company. 10.2* Office Lease dated as of August 14, 1998 by and between Duke Realty Limited Partnership, by and through its general partner, Duke Realty Investments, Inc., and the Company. 10.3* Seventh Amendment to Lease dated as of August 14, 1998, by and between Duke Realty Limited Partnership, by and through its general partner, Duke Realty Investments, Inc., and the Company. 10.4* Eighth Amendment to Lease dated as of August 14, 1998, by and between Duke Realty Limited Partnership, by and through its general partner, Duke Realty Investments, Inc., and the Company. 27.1* Financial Data Schedule (provided for the information of the U.S. Securities and Exchange Commission only). * Filed herein. EX-27 2
5 3-MOS DEC-31-1998 SEP-30-1998 101,100 0 417,813 26,514 42,344 585,046 106,466 31,074 1,055,678 484,556 0 0 0 168 236,755 1,055,678 807,319 807,319 738,544 781,697 0 0 6,912 20,504 9,201 11,303 0 0 0 11,303 .34 .34 EPS HAS BEEN ADJUSTED FOR THE STOCK-SPLIT EFFECTIVE ON OCTOBER 30, 1998
EX-10.1 3 EXHIBIT 10.1 LEASE EXTENSION AND AMENDMENT AGREEMENT This Lease Extension and Amendment Agreement ("Amendment") is made as of July 24, 1998, between Faith A. Griefen of 1010 Waltham Street, Lexington, MA 02173 ("Lessor"), and ValueRx Pharmacy Program, Inc. of 4700 Nathan Lane North, Plymouth, MN 55442-2599 ("Lessee"). BASIS OF AGREEMENT A. The parties have agreed to amend and extend that certain Lease dated the 12th day of June 1989, between Michael D. Brockelman and James S. Gratton, as trustees under agreement dated April 17, 1980 and Health Care Services, Inc., a copy of which is attached hereto as Exhibit B and made a part hereof (the "Lease"), under which Lessee now occupies 41,020 sq. ft. sited at and known as 3684 Marshall Lane, Bensalem, Pennsylvania 19020. Faith A. Griefen acquired ownership of the building and real property of which the Premises form a part by conveyance from Michael D. Brockelman and James S. Gratton. ValueRx Pharmacy Program, Inc. is a successor in interest to Health Care Services, Inc. B. The parties desire to set forth herein their agreement regarding the provisions of the Lease as amended and extended. C. All capitalized terms not otherwise defined herein shall have the meanings set for in the Lease. Now, therefore, the parties agree as follows: 1. Parties: All references in the Lease to "Lessor" shall be deemed to refer to Faith A. Griefen. All references in the Lease to "Lessee" shall be deemed to refer to ValueRx Pharmacy Program, Inc. 2. References: In 1996, the Premises were expanded as a result of certain space taken from Bombardier Transit Corp., an adjacent tenant of the building. As a result thereof, Lessee now occupies 41,020 square feet of the building. Exhibit A to this Amendment, which includes this additional space, hereby replaces existing Exhibit A to the Lease. All references in the Lease to "Premises" shall refer to the 41,020 square feet of space now occupied by Lessee as shown on Exhibit A. All references in the lease to "37,420 square feet" shall be deemed to refer to "41,020 square feet". Finally, to correct a typographical error, all references in the Lease to "3684 Meadow Lane" shall instead refer to "3684 Marshall Lane". 3. Extension of Term: The term of the Lease is hereby extended for an additional ten (10) years commencing July 1, 1999 and terminating at 11:59 p.m. on June 30, 2009. 4. Base Rent During Extension Term: The Base Rent during the extension term shall be as follows: a. For the first five (5) years commencing July 1, 1999 and terminating June 30, 2004, at the rate of $6.35 per sq. ft. per year ($260,477.00 payable in equal monthly installments of $21,706.42). b. For the second five (5) years commencing July 1, 2004 and terminating June 30, 2009 at a rate of $7.35 per sq. ft. per year ($301.497.00 payable in equal monthly installments of $25,124.75). 5. Cancellation: So long as the Lessee is not in default under the Lease, Lessee may terminate the Lease effective June 30, 2006 by giving notice in writing to the Lessor on or before December 31, 2005 of the Lessee's intention to terminate the Lease. Lessee agrees to a cancellation fee of six (6) months Base Rent plus six (6) months of Lessee's Share of Additional Rent which includes Real Estate Taxes and Operating Expenses, both to be paid together with the delivery of the notice of termination. 6. Renewal Options: Sections 3 and 4(c) of the Lease are hereby deleted and replaced with the following: First Renewal Option: Provided Lessee is not in default under the Lease, Lessee shall have the option to renew the Lease for an additional five (5) years commencing July 1, 2009 and terminating June 30, 2014. In the event Lessee elects to exercise this option, Lessee shall notify the Lessor in writing on or before June 30, 2008. In the event Lessee exercises this option, all terms of the Lease as amended and extended will remain in full force with the exception that the Base Rent payable during such extended term shall be the greater of either (a) $8.35 per sq. ft. per year ($342,517.00) or (b) an amount computed by multiplying the percentage increase of Bureau of Labor Statistics Consumer Price Index, all urban consumers (CPI/U) all items (1982-84 equals 100) for Philadelphia, Pennsylvania for June 2009 (as estimated by Lessee's accountant until actual statistics are available) over the same index for July 2004 times the sum of $301,497.00. Said amount shall be paid in equal monthly installments commencing July 1, 2009. Second Renewal Option: Provided Lessee has exercised its option as more fully outlined in the preceding paragraph, and provided Lessee is not in default under the Lease, Lessee shall have the option to renew the Lease agreement for an additional five (5) year period commencing July 1, 2014, and terminating June 30, 2019. In the event Lessee elects to exercise this option, Lessee shall notify Lessor, in writing, on or before June 30, 2013. In the event Lessee elects to exercise this option, all terms, conditions and covenants of the Lease as amended and extended will remain in full force and effect with the exception that the Base Rent payable during such extended term shall be the greater of $9.35 per sq. ft. per year ($383,537.00) or an amount computed by multiplying the percentage increase of the Bureau of Labor Statistics Consumer Price Index, all Urban Consumers (CPI/U), all items (1982-84 equals 100) for Philadelphia, Pennsylvania for June 2014 (as estimated by Lessee's accountant until actual statistics are available) over the same index for July 2009 times the annual Base Rent payable for the period commencing July 1, 2009 and terminating June 30, 2014. Said amount shall be paid in equal monthly installments commencing July l, 2014. 7. Expansion: Should any adjacent space become available in the building of which the Premises is a part, Lessor shall promptly notify Lessee of the same in writing. Prior to offering the space for lease to any other party and for a period of thirty (30) days from said notice, Lessee shall have an exclusive option to lease such space (and any and all parking rights appurtenant thereto) from Lessor upon the same terms and conditions set forth in the Lease, including, without limitation, annual Base Rent per square foot. Any such expansion space (and parking) accepted by Lessee shall become part of the "Premises" as such term is used in the Lease. Upon the request of either party, Lessor and Lessee shall execute an amendment to the Lease confirming the lease of such additional space (and parking). 8. Damage or Destruction to the Premises: Notwithstanding anything to the contrary set forth in Section 15 of the Lease, (i) if the Premises, or any portion thereof, shall be damaged by fire or any other casualty to the extent of more than 50% of the floor space thereof and Lessee is, as a result thereof, unable to operate its business therein, Lessee shall have the right to terminate the Lease upon 60 day's notice, such notice to be given within 30 days after the casualty, or (ii) if in any instance where Lessor is obligated or elects to restore the Premises and fails to complete such restoration within 120 days after the date of the damage or destruction, Lessee shall have the right to terminate the Lease upon 60 day's notice, such notice to be given within 30 days following the expiration of such 120 day period. 9. Eminent Domain: Notwithstanding anything to the contrary set forth in Section 16 of the Lease, (i) if the Premises, or any portion thereof, shall be taken under eminent domain proceedings, or transferred to a public authority in lieu of such proceedings, to the extent of more than 25% of the floor space thereof, or (ii) if any portion of the parking lot serving the building shall be taken such that there remains insufficient parking for Lessee's business operations after accounting for parking use by other tenants, THEN in either of such instances, Lessee shall have the right to terminate the Lease upon 60 days notice, ---- such notice to be given within 30 days after the taking or transfer. Notwithstanding anything to the contrary set forth in Section 16 of the Lease, Lessor shall not have the right to terminate the Lease if not more than 10% of the floor space of the Premises is taken or transferred. Provided the Lease is not terminated following any taking of the Premises or transfer in lieu thereof, Lessor shall promptly repair and restore the Premises and the Base Rent and Additional Rent shall abate during such repair in proportion to the amount of the Premises rendered unusable. Following any such repair and restoration, Base Rent and Additional Rent shall be permanently reduced in proportion to the amount of Premises so taken or transferred. 10. Quiet Enjoyment: The words "any mortgage, or other instruments now or hereafter created by the Lessor" set forth at the end of Section 20 are hereby deleted and replaced with the following words: "any first mortgage created by Lessor existing as of July 24, 1998 and any first mortgage created by Lessor subsequent to July 24, 1998, provided that, with respect to any first mortgage created by Lessor subsequent to July 24, 1998, this Lease shall be subject to such mortgage only if the holder of such mortgage shall have delivered to Lessee within 30 days following the execution of such mortgage a recordable non-disturbance agreement (a) containing a covenant binding upon such mortgagee to the effect that so long as there shall be no default on the part of Lessee entitling Lessor to terminate this Lease, or if such default shall exist, so long as Lessee's time to cure such default shall not have expired, (i) this Lease shall not be terminated or modified in any respect whatsoever nor shall the rights of Lessee hereunder or its occupancy of the Leased Premises be affected in any way by reason of such mortgage or any foreclosure action or other proceeding that may be instituted in connection therewith, and (ii) Lessee shall not be named as a defendant in any such foreclosure action or other proceeding, and (b) to the extent such recordable non-disturbance agreement contains other covenants and agreements, such other covenants and agreements shall be reasonably satisfactory to both Lessee and such mortgagee". 11. Environmental Matters: Notwithstanding anything to the contrary in Section 9 of the Lease, Lessee shall have no responsibility or liability for any "hazardous substances" at or on the Premises or the property of which the Premises form a part (i) which already existed at or on the Premises or the property of which the Premises form a part when Lessee's predecessor in interest first took possession of the Premises under the Lease, unless such hazardous substances were brought onto the Premises or the property by Lessee or Lessee's predecessors in interest under this Lease, or (ii) which was subsequently brought on to the Premises or the property of which the Premises form a part by any person or persons other than Lessee, Lessee's predecessors in interest under the Lease, and their respective officers, directors, employees, agents, guests and invitees. 12. Additional Rent, Operating Expenses and Real Estate Taxes: Notwithstanding anything to the contrary set forth in Sections 5 and 6 of the Lease, Lessor acknowledges and agrees (i) that Lessee and the other tenants of the building of which the Premises form a part each directly pay for utilities (electric, water, gas, sanitary sewer, telephone, etc.) used solely at their respective premises, (ii) that Lessee shall have no obligation whatsoever for any utilities used solely by any other tenant of the building at its premises and that neither Operating Expenses nor Real Estate Taxes shall include any such utility charges. Lessee hereby agrees to pay for all utilities used solely by Lessee at the Premises. 13. Insurance: Notwithstanding anything to the contrary in Section 14, Both Lessor and Lessee acknowledge and agree that Lessee's obligation to maintain property insurance shall apply only to Lessee's furniture, fixtures and equipment at the Premises and that Lessor maintains property insurance on the entire building of which the Premises form a part. 14. Memorandum of Lease; Subordination, Non-Disturbance and Attornment Agreement: The parties hereto agree to execute a memorandum of the Lease, as amended hereby, in form and content suitable for recording in the county records. Lessor further agrees to use its best efforts at Lessee's expense to cause any existing lender holding a lien on the property of which the Premises form a part to enter into a subordination, non-disturbance and attornment agreement with Lessee, the terms of which are mutually agreeable to such parties, such agreement to be suitable for recording in the county records. 15. Security Deposit: Lessor and Lessee both acknowledge that Lessor does not hold any security deposit. Section 7 of the Lease is hereby deleted and all references to a security deposit which may be set forth in any other provision of the Lease shall be of no further force or effect. 16. Inspection: The first reference to "Lessor" in the first line of Section 24 is hereby changed to "Lessee". 17. Notices: The text of Section 22 of the Lease is hereby deleted and replaced with the following: "All notices and other communication between the parties hereto shall be in writing and shall be sent by certified or registered mail, return receipt requested, by personal delivery against receipt or by overnight courier, shall be deemed to have been validly served, given or delivered immediately when delivered against receipt or one business day after deposit in the mail, postage prepaid, or with an overnight courier, and shall be addressed as follows: If to Lessor: Faith A. Griefen 1010 Waltham Street, F-16 Lexington, MA 02173 If to Lessee: ValueRx Pharmacy Program, Inc. 4700 Nathan Lane North Plymouth, MN 55442-2599 Attention: Mr. Thomas Rocheford Vice President, Facilities & Purchasing With a copy to: Express Scripts, Inc. 1400 Riverport Drive Maryland Heights, MO 63043 Attention: Mr. Thomas M. Boudreau Senior Vice President or to such other address as each party may designate for itself by notice given in accordance with this Section." 18. Confirmation of Lease: Except as amended of modified herein, the terms, conditions and delegations under the Lease not inconsistent with the terms hereof are hereby ratified and confirmed, and the Lease as amended shall continue in full force and effect during the extension term (and any renewal term). In Witness Whereof, the parties hereto have executed this agreement, intending to be legally bound as of the day and year first written above. Lessor: /s/ Faith A. Griefen Faith A. Griefen, Lessor Witness: /s/ Carolyn Shaw Bell Lessee: ValueRx Pharmacy Program, Inc., Lessee By: /s/ George Paz Print Name:George Paz Its:Senior Vice President and Chief Financial Officer Attested: /s/ Thomas A. Rocheford Print Name: Thomas A. Rocheford Its: Vice President Witness: Marta Alred EXHIBIT A This exhibit contains a pictorial layout of Leased Space EXHIBIT B LEASE AGREEMENT This Lease Agreement, made as of this 12th day of June, 1989, between MICHAEL D. BROCKELMAN and JAMES S. GRATTON as Trustees under agreement dated April 17, 1980, c/o R.V.M. & G, Inc., #1 Alewife Center, Cambridge, Massachusetts 02140 (hereinafter referred to as "Lessor"), and HEALTH CARE SERVICES, INC. 3684 Meadow Lane, Bensalem, Pennsylvania 19020, (hereinafter referred to as "Lessee"). W I T N E S S E T H: For and in consideration of the rental herein reserved, and of the covenants, conditions, agreements, and stipulations of the Lessee hereinafter expressed, the parties agree as follows: 1. PREMISES. The Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the following described premises: (a) ALL THAT CERTAIN space identified on Exhibit "A" attached hereto and made a part hereof, consisting of approximately 37,420 square feet of that approximately 64,500 square foot building located at 3684 Meadow Lane, Bensalem, Pennsylvania 19020 (the "Premises"). (b) Together with the right to use in common with Lessor, its employees, invitees and customers, and Lessor's other tenants and their employees invitees, and customers, the parking areas provided by the lessor, its successors, or assigns, in the designated areas for the parking of automobiles, which are contiguous to the building in which the leased premises are located, and, also identified on Exhibit "A"; provided that the Lessor retains the right to make reasonable rules and regulations with reference to the use of said parking area, including the right to provide for certain reserved parking as, from time to time, determined by the Lessor, and particularly provided that employees, agents, and principals of Lessee shall park in designated areas so as to assure Lessor's other tenants and Lessor's customers and visitors convenient and proximate parking contiguous to the building or buildings in which its tenants are located. (c) Lessee acknowledges that: (1) except for the work to be performed on the attached Exhibit "B", (if any), Lessee has inspected the leased premises and hereby accepts same in "as is" condition, and (2)Lessor has made no warranties and/or representations regarding the condition of the leased premises. 2. TERM. (a) The initial term of this Lease (the "Initial Term") shall commence on July 1, 1989 and shall expire on midnight, June 30, 1999, (the "Expiration Date"). If Lessee shall elect to extend the Initial Term for the Renewal Period pursuant to Paragraph 3 below, the term of this Lease (the "Term") shall mean the Initial Term together with the Renewal Period and the Expiration Date shall be June 30, 2004. (b) If, for any reason whatsoever, Lessor fails to deliver the Leased Premises to Lessee by August 15, 1989, Lessee shall have the right to terminate this Lease. If Lessor's failure to deliver the Leased Premises by August 1, 1989 is for any reason within Lessor's reasonable control, Lessor shall be liable to Lessee for Lessee's actual rent caused thereby including any rent Lessee incurs by reason of Lessee holding over under its Lease for the space which Lessee now occupies. 3. OPTIONS TO EXTEND. The Term of this Lease may be extended by Lessee, at Lessee's sole option (the "Renewal Option"), for one period of five (5) years (the "Renewal Period"), from and after the expiration of the Initial Term,, by giving Lessor prior written notice of the exercise of the Renewal option not less than nine (9) months before the expiration of the Initial Term. 4. BASE RENT. (a) FIRST FIVE LEASE YEARS. Lessee agrees to pay to Lessor as base rent ("Base Rent"), commencing on the Rent Commencement Date and continuing through the first five Lease Years, Four Dollars and Twenty-Five Cents ($4.25) per square foot of floor area in the Leased Premises per year. (b) SECOND FIVE LEASE YEARS. Lessee agrees to pay to Lessor as Base Rent, commencing on the first day of the sixth Lease Year and continuing through the remainder of the Initial Term, Five Dollars and Thirty-Five ($5.35) per square foot of floor area in the Leased Premises per year. 2 (c) BASE RENT DURING RENEWAL PERIOD. In the event Lessee exercises the Renewal option, the Base Rent for the Renewal Period shall be as follows: The minimum annual rental during each year of the Renewal Period shall be an amount equal to the greater of (a)the Base Rent in effect during the year preceding the commencement of the Renewal Period, or (b)the sum of the Base Rent in effect during the last year of the Initial Term hereof multiplied by a fraction (the "fraction")the numerator of which shall be the Index (as hereinafter defined) for the month preceding the commencement of the Renewal Period, and the denominator of which shall be the Index for the month preceding the commencement date of the Initial Term of this Lease. The "Index" shall mean: (1) the Consumer Price Index for All Urban Consumers (CPI-U)- U.S. Average, All Items (1967-100), published by the Bureau of Labor Statistics of the U.S. Department of Labor, or (c)if the index does not exist at that time the fair market value at the time, whichever is higher. (d) PAYMENT OF BASE Rent. Base Rent shall be paid in monthly installments equal to one-twelfth (1/12th) of the annual Base Rent payable during the applicable Lease Year, in advance, on the first day of each calendar month, commencing on the date on which Lessor delivers the Premises to Lessee ("Rent Commencement Date"). If the Rent Commencement Date does not occur on the first day of the month, the Base Rent for the partial month shall be pro-rated and shall be paid by Lessee when the Rent Commencement Date occurs. 5. ADDITIONAL RENT: OPERATING EXPENSES; REAL ESTATE TAXES. Lessee shall pay, as Additional Rent, Lessee's Share (as hereinafter defined) of the Operating Expenses (as hereinafter defined) and Real Estate Taxes (as herein defined). Additional Rent shall be paid together with Base Rent, in advance, in monthly installments equal to one-twelfth (1/12th) of the annual Additional Rent payable during the applicable Lease Year as reasonably estimated by Lessor. (a) OPERATING EXPENSES DEFINED. The term "Operating Expenses" shall mean those reasonable expenses paid by the Lessor in respect to the Building for those repairs set forth herein, charges for electricity, water, gas, sanitary sewer and other public utilities, snow removal, landscaping expenses, Building Common Area utilities, premiums for casualty insurance on the Building, and the cost, as reasonably amortized by the Lessor, of any capital improvement made after the first Lease Year which reduces other Operating Expenses, but in an amount not to exceed such reduction for the relevant year. Operating Expenses shall not include: (i) the cost and expense to Lessor for Major Repairs as defined herein), (ii) the cost to the Lessor of any work or service performed in any instance for any tenant (including the Lessee)at the cost of such tenant, (iii) the amortization of any capital improvement without Lessee's consent, (iv) Lessor's depreciation of the Building, debt service, capital expenditures other than included above, taxes on income, franchise taxes, payments to affiliates of Lessor not expressly approved by Lessee, management salaries or fees, tenant allowances and other expenditures in connection with the preparation of space for use by a tenant or a prospective tenant and casualty loss or damage and repairs and other expenses related thereto. (b) REAL ESTATE TAXES. "Real Estate Taxes" shall be defined as including the following items: (i) real estate taxes; (ii) assessments levied, assessed, or imposed against such land and/or buildings or the rents or profits therefrom to the extent that the same shall be in lieu of all or any portion of any items hereinabove set forth, and (iii) all water and sewer rents, charges, taxes, and frontage assessed or imposed. If due to a change in the method of taxation, any franchise, income, profit, or other tax, however designated, shall be levied against Lessor's interest in the property in whole or in part for or in lieu of any tax which would otherwise constitute Real Estate Taxes, such taxes shall be included in the term "Real Estate Taxes" for purposes hereof. All such payments shall be approximately prorated for any partial calendar years in which the term of this Lease shall commence or expire. A copy of the tax bill shall be sufficient evidence of the amount of Real Estate Taxes. Only Lessor shall be eligible to institute tax reduction or other proceedings to reduce the assessed valuation of the land and buildings. Should Lessor be successful in any such reduction proceedings and obtain a rebate for periods during which Lessee has paid its share of increases, and provided that Lessee is not in default in payment of rent or additional rent due under this Lease, Lessor shall, after deducting its expenses, including, without limitation, attorneys' fees and disbursements in connection therewith, promptly return Lessee's pro rata share of such rebate after Lessor has received such proceeds. Lessee may not obtain any portion of the benefits which may accrue to Lessor from any reduction in Real Estate Taxes for any year below those imposed in the Basic Tax Year. Along with notification of any increases in Real Estate Taxes for which the Lessor requests payment from Lessee, Lessor shall also furnish (i) a copy of the current tax bill, (ii) a copy of the tax bill for the base year, (iii) a statement showing calculation of Lessee's proportionate share of the increase in Real Estate Taxes for which payment is requested in sufficient detail to enable Lessee to verify the accuracy of the amount it is being requested to pay. (c) TENANT'S SHARE DEFINED. "Tenant's Share" shall mean the product derived by multiplying the sum of operating Expenses and Real Estate Taxes for the applicable Lease Year by a fraction, the numerator of which shall be 37,240 (the total square footage of floor area of the Leased Premises) and the denominator of which shall be 64,500 (the total square footage of the floor area of the Building); provided, however, that if any other tenant of the Building is a disproportionate user of any utilities not separately metered, or if any other tenant of the Building uses its premises in a manner which presents a casualty insurance risk significantly greater than Tenant, Tenant's Share shall be adjusted so as to equitably apportion the costs and expenses related thereto. (d) ADJUSTMENT OF PAYMENT. Within sixty (60) days after the end of each lease year, Landlord shall submit to Tenant an accurate statement certified by Landlord showing the actual Additional Rent for the year payable by Tenant. In the event that such statement or any audit by Lessee reveals that the amount of additional Rent due from Lessee is less than the amount actually paid by Lessee, then such excess shall be credited to the installment(s) of monthly rental payment next due, or if for the last year of the lease term be paid by Lessor to Lessee upon termination of the Lease Agreement and vacation of the leased premises. 7. SECURITY DEPOSIT. The Lessee shall deposit with the Lessor on or before the _____day of _______, 19 , the a sum equivalent to two (2) months rent in cash as security for the payment of the rent provided herein and for the observance and performance by the Lessee of all of the terms, provisions, and conditions of this Lease on its part to be kept and performed; and further to indemnify the Lessor for any loss, costs, fees, and expenses which the Lessor may incur by reason of any default by the Lessee. The Lessor shall repay an amount equal to one month's rent upon the expiration of one year from the date of the commencement of rental payments provided, all such payments were made on a timely basis and Lessee is not otherwise in default of any of the terms or conditions of this Lease Agreement, and, the Lessor shall repay to the Lessee the security deposit or any balance thereof upon the termination or expiration of the term of this Lease or any extension thereof. In the event of any failure in the payment of rent or other sum, or of any default by the Lessee in the performance of the terms, provisions and conditions of this Lease, the Lessor shall have the right to apply the security deposit against any loss, costs, fees, and expenses caused thereby. The security deposit shall bear no interest. 8. USE OF PREMISES. The Lessee shall use said premises for general office purposes, for manufacturing, packaging, warehousing and distributing pharmaceutical and other related products, and for retail sales of pharmaceutical and other related products, and/or for any other lawful purpose. Lessee shall comply with all present and future laws or ordinances applicable to the leased premises and shall not commit or suffer waste on the premises, or use or permit anything on the premises which may be illegal, or constitute a private or public nuisance or conflict with or invalidate or increase the cost of any of Lessor's fire and extended coverage insurance, or which may be dangerous to persons or the property of the Lessor or other tenants of Lessor's building, their agents, servants, employees, and customers. Notwithstanding the foregoing, Lessee's effecting an increase in the cost of any of Lessor's fire and extended insurance is curable by Lessee's payment of such increase in cost. Lessor shall deliver prior to occupancy a valid certificate of occupancy for the building indicating the uses of the building permitted by the local municipality, and Lessor warrants and represents that Lessor has not and will not make any physical changes to the Property subsequent to the issuance of the certificate of occupancy. 9. ENVIRONMENTAL MATTERS. a) Lessee shall, at its sole cost and expense, obtain any and all necessary governmental approvals necessary for its use of the building and property, INTER ALIA, as a retail pharmacy. Lessee further understands and agrees that it shall cause all activities at the Property during the term of this Lease Agreement, or any extension hereof to be conducted in compliance with all Environmental Statutes. Lessee shall cause all permits, licenses, or approvals to be obtained and shall cause all notifications to be made, as required by Environmental Statutes. Lessee shall, at all times, cause compliance with the terms and conditions of any such approvals or notifications. (b) During the term of this Lease Agreement, Lessee shall provide to Lessor copies of: (i) applications or other materials submitted to any governmental agency in compliance with Environmental Statutes; (ii) any notifications submitted to any person pursuant to Environmental Statutes; (iii) any permit, license, approval, amendment or modification thereto granted pursuant to Environmental Statutes; (iv) any record or manifest required maintained pursuant to Environmental Statutes; and (v) any correspondence, notice of violation, summons, order, complaint or other document received by Lessee, its sublessees or assigns, pertaining to compliance with any Environmental Statutes. (c) Site Contamination. (1) Lessee shall not permit contamination of the Property by hazardous substances during the term of this Agreement. Lessee shall, at all times during the term of this Agreement, cause hazardous substances to be handled on the Property in a manner which will not cause an undue risk of contamination of the Property. (2) For purposes of this section, the term "contamination" shall mean the uncontained presence of hazardous substances at the Property, or arising from the Property, which may require remediation under any applicable law. (3) For purposes of this section, "hazardous substances" shall mean "hazardous substances" as defined pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. section 9601-9657, AS AMENDED BY the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613 (Oct. 17, 1986), "regulated substances" within the meaning of subtitle I of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6991-6991li, AS AMENDED BY the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No 99-499, 100 Stat. 1613 (Oct. 17, 1986), and "hazardous wastes" as defined pursuant to the Pennsylvania Solid Waste Management Act, Pa. Stat. Ann. Tit. 35, Section 6018-101 to .1003 (Purdon Supp. 1987), or any other substances which may be the subject of liability pursuant to Sections 316 or 401 of 7. The Pennsylvania Clean Streams Law, Pa. Stat. Ann. Tit. 35, Section 691.1 to .1001 (Purdon 1977 and Supp. 1987). (c) INDEMNIFICATION. Lessee hereby agrees to indemnify and to hold harmless Lessor of, from and against any and all expenses, loss or liability suffered by Lessor by reason of Lessee's breach of any, of the provisions of this Section, including, but not limited to: (i) any and all expenses that Lessee may incur in complying with any Environmental Statutes; (ii) any and all costs that Lessor may incur studying or remedying any contamination of the Property; (iii) any and all fines, penalties or other sanctions (including a voiding of any transfer of the Property) assessed upon Lessor by reason of a failure of Lessee to have complied with Environmental Statutes; (iv) any and all loss of value of the Property by reason of (A) failure to comply with Environmental Statutes; (B) the presence on Property of any hazardous substances; and (v) any and all legal and professional fees and costs incurred by Lessor in connection with the foregoing. This indemnification shall survive the term of this Lease Agreement and any extension thereof. 10. REPAIR AND MAINTENANCE OBLIGATIONS. (A) LESSOR'S REPAIRS. Lessor shall maintain and repair, at its own cost and expense, which costs and expenses shall not be included in Operating Expenses determined herein, the structural integrity of the building, including, but not limited to the roof and roof cover, the foundation, the exterior walls, floors and the water, gas, electricity and telephone service connections into the Property (collectively, the "Major Repairs"); provided, however, that any structural or other damage caused by the negligence Lessee, its agents, employees or contractors shall repaired at Lessee's cost and expense. (B) LESSEE'S REPAIRS AND MAINTENANCE OBLIGATIONS. Lessee shall repair and maintain, at its sole cost and expense, (i) the Leased Premises, including all internal walls, glass windows, doors, non-structural floor coverage, plumbing, heating and air conditioning systems, all floors (except that Lessor shall maintain and repair the structural integrity of all floors), all exterior walls (except that Lessor shall maintain and repair the structural integrity of all exterior walls) and (ii) those parking areas, landscaped areas and entranceways and exits to and from the Building under control of Lessee all as shown on Exhibit A thereto. Lessee shall surrender the Leased Premises, at the termination of this Lease "broom clean", in good order and repair, reasonable wear and tear excepted. No property shall be left on the premises after the expiration or other termination of this Lease by Lessee without the prior written consent of the Lessor. 11. LESSEE'S WORK. (a) Lessee accepts the Premises in "as is" condition without any obligation for the performance of improvements or other work by Lessor. Lessee desires to perform certain improvements thereto (the "Work"), such Work to be in accordance with the specifications on Exhibit C hereto. Performance of the Work shall not serve to abate or extend the Rent Commencement Date. Lessee shall pay all costs associated with the Work whatsoever, including without limitation, all permits, inspection fees, fees of space planners, architects, engineers and contractors, the cost of all labor and materials, bonds (to be obtained at Lessee's option), insurance, and any structural or mechanical work, additional HVAC equipment or sprinkler heads, or modifications to any building mechanical, electrical, plumbing or other systems and equipment or relocation of any existing sprinkler heads, required as a result of the layout, design or construction of the Work. (b) Notwithstanding any other provision of this Lease, Lessor shall provide and maintain, at its sole cost and expense, water, gas, electricity and telephone service connections into the Premises, except, however if additional utility service is required due to Lessee's Work, all costs shall be borne solely by Lessee. 12. SIGNS. Lessee shall have the right upon the prior written consent of Lessor, which consent shall not be unreasonably withheld, at its sole cost and expense, to post, paint, construct, attach and maintain signs on the exterior of the Building identifying Lessee, provided however, that all local code compliance shall be the sole responsibility, cost, and expense of Lessee. 13. DAMAGE TO LESSEE'S PROPERTY OR PREMISES. (a) The Lessor and its agents shall not be liable in damages, by abatement in rent or otherwise, for any damage either to the person or the property of the Lessee, or for the loss of or damage to any property of the Lessee by theft or from any other cause whatsoever, whether similar or dissimilar to the foregoing. The Lessor or its agents shall not be liable for any injury or damage to persons or property, or loss or interruption to business resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain, snow, or leaks from any part of the building, or from the pipes, appliances, or plumbing works, or from the roof, street, or subsurface, or from any other place, or by dampness, or by any cause of whatsoever nature; nor shall the Lessor or its agents be liable for any damage caused by other tenants or persons in said building, or caused by operations in construction of any private or public or quasi-public work. None of the limitations of the liability of Lessor or its agents provided for in this subsection (a) shall apply if such loss, injury, or damages are proximately caused by the negligence or breach by the Lessor, its agents, employees, or independent contractor. (b) The Lessee shall be liable for any damage to the building or property therein which may be caused by its act or negligence, or the acts of its agent, employees, or customers, and the Lessor may, at its option, repair such damage, and the said Lessee shall thereupon reimburse and compensate the Lessor as additional rent, within five (5) days after rendition of a statement by the Lessor, for the total cost of such repair and damage. None of the limitations of the liability of Lessor or its agents provided for in this subsection (a) shall apply if such loss, injury, or damages are proximately caused by the negligence or breach by the Lessor, its agents, employees, or independent contractor. 14. INDEMNITY, LIABILITY INSURANCE, BUILDING INSURANCE, WAIVER OF SUBROGATION. (a) The Lessee hereby indemnifies and agrees to hold the Lessor harmless and free from damages sustained by person or property, and against all claims of third persons for damages arising out of the Lessee's use of the leased premises, and for all damages and monies paid out by Lessor in settlement of any claim or judgments, as well as for all expenses and attorneys' fees incurred in connection therewith. (b) Lessee shall, during the entire term of this Lease and any renewal hereof, keep in full force and effect a policy of public liability and property damage insurance with respect to the leased premises, and the business operated by Lessee. (i) Lessee shall, at all times from and after the date on which Lessor delivers the Premises to Lessee, at its sole cost and expense, maintain public liability insurance ("Tenant's Liability Insurance") covering any and all claims for injuries or death to persons or property arising in or upon the Leased Premises with a single limit of not less than One Million Dollars ($1,000,000.00). (ii) The policy for Lessee's Liability Insurance shall contain a provision granting thirty (30) days notice of cancellation of insurance to Lessor. (iii) Lessee, if it so elects, may carry Lessee's Liability Insurance under a primary public liability insurance policy or under a combination public liability and umbrella liability insurance policy. (c) PROVISIONS OF FIRE INSURANCE POLICY. (i) The amount of Lessor's Fire Insurance shall be not less than 90% of the Full Replacement Cost (as defined in this subparagraph (c) of the Building, including all Alterations thereof, and shall be an amount sufficient to prevent Lessor from becoming a co-insurer within the terms of the applicable policies of Lessor's Fire Insurance. The term "Full Replacement Cost" means the cost of replacing the Building. (ii) All policies of Lessor's Fire Insurance shall provide that the proceeds of any loss shall be payable to Lessor and to the holder (as its interest may appear) of any mortgage(s) , if any, to which this Lease is subordinate so long as such holder and future holders of such mortgage(s) are obligated to apply proceeds of insurance in the manner provided for in this Lease. 15. DAMAGE OR DESTRUCTION TO PREMISES. (a) If the leased premises, or any portion thereof, shall be damaged during the term by fire or any casualty insurable under the standard fire and extended coverage insurance policies, but are not wholly untenantable, the Lessor shall repair and/or rebuild the same as promptly as possible, provided that the proceeds from Lessor's insurance policies are available to Lessor. The Lessor shall not be required to repair or rebuild any fixtures, installations, improvements, or leasehold improvements made to the interior of the leased premises by Lessee, nor Lessee's exterior signs. Such repairs and/or replacements are to be made by Lessee. In such event, the Lease shall not terminate, but shall remain in full force and effect, and a proportionate reduction in the fixed minimum monthly rental shall be made from the time of such fire or casualty until said premises are repaired or restored, except (i) if the Lessee can use and occupy the leased premises without substantial inconvenience; or (ii) if said repairs are delayed at the request or by reason of any act on the part of the Lessee which prevents or delays the repair of said premises by Lessor, there shall be no reduction in rental while said premises are being repaired, nor for any period of delay caused by or requested by Lessee. Lessors obligation to repair shall be subject to any delays from labor troubles, material shortages, insurance claim negotiations, or any other causes, whether similar or dissimilar to the foregoing, beyond Lessor's control. (b) If the leased premises are rendered wholly untenantable by fire or other cause, or if the leased premises or the building in which they are located should be damaged or destroyed by fire or other casualty, to the extent of fifty percent (50%) or more of the monetary value of either thereof, whether the leased premises themselves be damaged or not, or so that fifty percent (50%) or more of the floor space contained in either thereof shall be rendered untenantable, then, and in that event, Lessor may, at its option, terminate this Lease or elect to repair or rebuild the same. If, as a result of any damage either to the leased premises or to the building of which they are a part, the Lessor determines to demolish or rebuild the premises, or the building of which they are a part, then, and in any such event, the Lessor may also terminate this Lease. In any of the foregoing instances, the Lessor shall notify the Lessee as to its election within sixty (60) days after the casualty in question. If the Lessor elects to terminate this Lease, then the same shall terminate three (3) days after such notice is given, and the Lessee shall immediately vacate the leased premises and surrender the same to the Lessor, provided, however, Lessee shall be granted a reasonable time to remove its personal property, paying the rent to the time of such vacation and surrender, subject to an equitable abatement from the time of said damage. If the Lessor does not elect to terminate this Lease, the Lessor shall repair and/or rebuild the leased premises as promptly as possible, subject to any delay from causes beyond its reasonable control, and the term shall continue in full force and effect, subject to equitable abatement in the fixed minimum monthly rental from the time of said damage or destruction until said premises are repaired or restored. (c) Notwithstanding anything else in subparagraphs (a) and (b) above, if Lessor is required or elects to repair or replace the Leased Premises following any damage or destruction, Lessor shall within thirty (30) days of such damage or destruction give Lessee written notice of the amount of time Lessor shall reasonably need to repair or replace the Leased Premises. If the Leased Premises cannot be repaired or replaced within one-hundred eighty (180) days after the date of the damage or destruction, Lessee shall have the right to terminate the Lease within thirty (30) days after receipt of Lessor's notice, and the Base Rent and Additional Rent Due hereunder shall be prorated to the date of the damage or destruction. 16. EMINENT DOMAIN. If the premises, or any part thereof, shall be taken under eminent domain proceedings, or transferred to a public authority in lieu of such proceedings, Lessor may terminate this Lease as of the date when possession is taken. All damages awarded for such taking shall belong to and be the property of Lessor. Lessee shall have no claim against Lessor by reason of such taking or termination and shall not have any claim or right to any portion of the amount that may be awarded or paid to Lessor as a result of any such taking, except that Lessee shall have the right to make a claim against such public authority for its loss of business and for any other relief available to Lessee by law in the event such taking involves the physical taking of all or a portion of the leased premises, arid, in such event, Lessee shall also have the right to terminate this Lease as of the date when possession is taken by the public authority. 17. ESTOPPEL CERTIFICATE STATEMENT, ATTORNMENT, SUBORDINATION, AND EXECUTION OF DOCUMENTS. (a) Lessee agrees that at any time and from time to time at reasonable intervals, within ten (10) business days after written request by lessor, Lessee will execute, acknowledge, and deliver to Lessor, Lessor's mortgagee, or others designated by lessor, a certificate in such form as may from time to time be provided, ratifying this Lease and certifying: (i) that this Lease is in full force and effect, and has not been assigned, modified, supplemented, or amended in any way (or if there has been any assignment, modification, supplement, or amendment, identifying the same) ; (ii) that this Lease represents the entire agreement between Lessor and Lessee as to the subject matter hereof (or if there has been any assignment, modification, supplement, or amendment, identifying the same); (iii) the Commencement Date and Termination Date; (iv) that all conditions under this Lease to be performed by Lessor have been satisfied (and if not what conditions remain unperformed); (V) that to the knowledge of the signer of such writing, no default exists in the enforcement of this Lease by lessor or specifying each default, defense, or offset of which the signer may have knowledge; (vi) that no rental has been paid in advance other than for the month in which such certificate is signed by Lessee; (vii) the amount of the security deposited with Lessor pursuant to Item 7 hereof; and (viii) the date to, which all rentals due hereunder have been paid under this Lease. (b) Lessee shall, in the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under any mortgage covering the leased premises, attorn to the purchaser upon any such foreclosure or sale and recognize such purchasers as the Lessor, subject to all of Lessee's duties obligations, rights, and options under this Lease. (c) upon request by the Lessor, Lessee shall subordinate its rights hereunder to the lien of any mortgage or mortgages, or the lien resulting from any other method of financing or refinancing, now or hereafter in force against the land and/or the buildings of which the leased premises are a part, or against any buildings hereafter placed upon the land of which the leased premises are a part, and to all advances made or hereafter to be made upon the security thereof; provided, however, that a condition precedent to Lessee's requirement to subordinate hereunder shall be that Lessee, upon any default in the terms of such financing by Lessor, shall have the right to pay the rental due hereunder directly to the mortgagee or other persons to whom Lessor may be obligated under such financing and, so long as Lessee does so pay the rentals as herein provided, this Lease and all Lessee's rights and options hereunder shall remain in full force and effect as to such mortgagee or other financing obligee of Lessor. (d) The Lessee, upon request of any party in interest, shall execute, within ten days of lessee's receipt, such instruments or certificates to carry out the intent off these paragraphs above as shall be requested by the Lessor. Provided, however, that nothing contained in such instruments or certificates required by lessor shall be in derogation of any rights granted to Lessee hereunder, nor expand Lessee's obligations hereunder, and if any such instruments or certificates would have the effect of accomplishing one or both of the foregoing, either explicitly or implicitly, then Lessee shall not be obligated to execute the same. 18. DEFAULT. (a) If the Lessee shall, at any time, be in default of the payment of either rent or any payments required of Lessee hereunder or any part thereof, Lessor shall provide written notice of such default and Lessee shall have three days subsequent to the issuance of said notice to cure the monetary default before Lessor may invoke any other remedies available under the terms of this Lease, or if Lessee shall be in default of any of the other covenants and conditions of this Lease to be kept, observed, and performed by Lessee for more than thirty (30) days after the giving of written notice by the Lessor to the Lessee of such default, provided, however, that if the nature of the specified obligation(s) is such that more than thirty (30) days are required for performance, then lessee shall not be in default if it commences performance within such 30 day period and thereafter diligently prosecutes the same to completion, or if Lessee shall vacate or abandon the premises, or fail to take possession of the premises and actively operate its business therein, or if Lessee shall be adjudged a bankrupt, or if a receiver or trustee shall be appointed and shall not be discharged within thirty (30) days from the date of such appointment, then and in any such events the Lessor may re-enter the leased premises by summary proceedings or otherwise, and thereupon may expel all persons and remove all property therefrom, without becoming liable to prosecution therefor, and may, among other remedies elect: (i) to relet said premises as the agent of the Lessee, and reserve the rent therefrom, applying the same first to the payment of the reasonable expense of such reentry, and then to the payment of the rent accruing hereunder; but whether or not the leased premises are relet, the Lessee shall remain liable for the equivalent of all rent and other charges provided for under this Lease, plus the cost of reletting, if any, which said amount shall be due and payable to the Lessor as damages, or rent, as the case may be, on the successive monthly rent days hereinabove provided; or (ii) To terminate this Lease and immediately resume possession of the leased premises, wholly discharged from any obligations under the term of this Lease, and may re-enter and repossess said premises, free form any and all claims on the part of the Lessee. Termination of the Lease does not discharge or in any way affect Lessee's obligation to pay Lessor all the rents or other charges or payments accruing under the Lease up to the date of termination. (b) Lessor shall not be in default unless it fails to perform the obligations required of Lessor by this Lease Agreement within thirty (30) days after written notice by Lessee to Lessor specifying which obligation(s) Lessor has failed to perform. Provided, however, that if the nature of the specified obligation(s) is such that more than thirty (30) days are required for performance, then Lessor shall not be in default if it commences performance within such 30-day period and thereafter diligently prosecutes the same to completion. If Lessor has not cured or commenced to cure the default set forth in said notice within said 30-day period, Lessee may at his option either (i) cure such default and deduct the reasonable costs and expenses incurred from the next and succeeding rent payment(s) or (ii) cancel this Lease and, in such event, this Lease shall thereupon cease, terminate, and come to an end with the same force and effect as though the original demised term had expired at that time. 19. SUBLETTING AND ASSIGNING. The Lessee shall not sublet any portion of the leased premises nor assign this Lease in whole or in part without the written consent of the Lessor as to both the terms of such assignment or sublease, and the identity of such assignee or sublessee, which consent shall not unreasonably be withheld, and in the event of a subletting so approved by Lessor, all rent in excess of Base Rent and all additional rent shall be due and payable at that time to Lessor. Lessee shall nevertheless remain obligated to Lessor under the terms of this Lease Agreement. Notwithstanding any of the foregoing, Lessee may assign this Lease or sublet the Premises to any subsidiary, parent corporation or affiliate of Lessee, or any entity controlled by or controlled with Lessee, without Lessor's consent, provided that Lessee shall remain obligated by the terms and conditions of this Lease. 20. QUIET ENJOYMENT. The Lessor covenants and agrees with the Lessee that upon the Lessee paying the said rent and performing all the covenants and conditions aforesaid on the Lessee's part to be observed and performed, the Lessee shall and may peaceably and quietly have, hold and enjoy the premises hereby leased, for the term aforesaid on the Lessee's part to be observed and performed, the Lessee shall and may peaceably and quietly have, hold, and enjoy the premises hereby leased, for the term aforesaid subject, however, to the terms of this Lease, any mortgage, or other instruments now or hereafter created by the Lessor. 21. MEMORANDUM OF LEASE. Lessee agrees that it will not record this Lease or otherwise make it a matter of public record unless required in any litigation involving Lessee, or as otherwise required by law. If the Lessee or Lessor request, the parties will enter into a short form lease, describing the premises and the term of this Lease, and including any other terms necessary to permit the recording of such short form lease. Such recording, if requested by Lessee, shall be at its cost and expense. 22. NOTICES. All notices to be given under this Lease shall be in writing and shall either be served personally or sent by certified mail, return receipt requested. All notices mailed as herein provided shall be deemed received two (2) days after mailing. Notices to Lessor shall be sent to the address set forth in the preamble hereof or such other address as the Lessor may specify in written notice to Lessee. Notices to Lessee shall be sent to Health Care Services, Inc., 3684 Meadow Lane, Bensalem, Pennsylvania 19020, with COPY to Dennis Evans, Chief Financial Officer, 3722 Eubank N.E., Albuquerque, NM 87111. Any amount due from Lessee to Lessor under this Lease which is not paid when due shall bear interest at the lesser of the highest legal rate allowed in the State of Pennsylvania or five (5) points above the prime rate of interest charged by the Provident Bank (or its successor) from the date due until paid; provided, however, the payment of such interest shall not excuse or cure the default upon which such interest is accrued. 23. INTEREST. Any amount due from Lessee to Lessor under this Lease which is not paid when due shall bear interest at the lesser of the highest legal rate allowed in the State of Pennsylvania or five (5) points above the prime rate of interest charged by the Provident Bank (or its successor) from the date due until paid; provided, however, the payment of such interest shall not excuse or cure the default upon which such interest is accrued. 24. INSPECTION. Lessor will permit Lessor, its agents, employees, and contractors to enter all parts of the Premises to inspect the same and to enforce or carry out any provisions of this Lease upon 24 hours notice of such inspection to Lessee. 25. NON-WAIVER. Lessor's or Lessee's failure to insist upon strict performance of any covenant of this Lease or to exercise any option or right herein contained shall not be a waiver or relinquishment for the future of such covenant, right, or option, but the same shall remain in full force and effect. 26. CAPTIONS. The captions and headings herein are for convenience and reference only and should not be used in interpreting any provision of this Lease. 27. APPLICABLE LAW. This Lease shall be governed by and construed under the laws of the State of Pennsylvania. If any provision of this Lease, or portion thereof, or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease shall not be affected thereby, and each provision of this Lease shall be valid and enforceable to the fullest extent permitted by law. Time is of the essence in this Lease. 28. SUCCESSORS. This Lease and the covenants and conditions herein contained shall inure to the benefit of and be binding upon Lessor, its successors, and assigns; and shall be binding upon Lessee, its heirs, executors, administrators, successors, and assigns; and shall inure to the benefit of Lessee and only such assigns of Lessee to whom the assignment by lessee has been consented to by Lessor. 29. FORCE MAJEURE. The time within which any of the parties hereto shall be required to perform any act or acts under this Lease, including the performance of Lessor's and Lessee's Work, shall be extended to the extent that the performance of such act or acts shall be delayed by acts of God, fire, windstorm, flood, explosion, collapse of structures, riot, war, labor disputes, delays or restrictions by governmental bodies, inability to obtain or use necessary materials, or any cause beyond the reasonable control of such party, other than lack of monies or inability to procure monies to fulfill its commitment or obligation under this Lease; provided, however, that the party entitled to such extension hereunder shall give prompt notice to the other party of the occurrence causing such delay. The provisions of this Item 29 shall not operate to excuse Lessee from prompt payment of rent, additional rent or any other payments required by the terms of this Lease. 30. BROKER. Lessor and Lessee each represents and warrants that it has dealt with no broker or brokers in connection with this Lease other than B. Kevin Hart Corporation whose commission will be paid by Lessor. Lessee and Lessor shall indemnify, defend and hold each other harmless from any breaches by the indemnifying party of the warranties and representations in the preceding sentence. 31. AMENDMENTS IN WRITING. This Lease and the Exhibits attached hereto and forming a part hereof set forth all the covenants, promises, agreements, conditions, and understandings between Lessor and Lessee concerning the Premises, and there are no covenants, promises, agreements, conditions, or understandings, oral or written, between them other than are herein set forth. Except as herein otherwise provided, no subsequent alteration, amendment, change or addition to this Lease shall be binding upon Lessor and Lessee unless reduced in writing and signed by both parties. 32. AUTHORITY. Lessee, if a corporation, warrants and represents to Lessor that Lessee's execution of this Lease has been duly authorized by the Lessee's Board of Directors. 33. COPIES. This Lease shall be executed in multiple copies, any one of which may be considered and used as an original. IN WITNESS WHEREOF, the parties have hereto executed this instrument on the day and year first above written. Witness: Lessor: Michael D. Brockelman and James S. Gratton, as Trustees, under agreement dated April 17, 1980, c/o R.V.M. & G, Inc. /s/ Ernest Miller BY: /s/ Michael D. Brockelman Michael D. Brockelman, Trustee /s/ Ernest Miller BY: /s/ James S. Gratton James S. Gratton, Trustee Lessee: Health Care Services, Inc. BY: /s/ Steven Dessel Steven Dessel, Executive Vice President Attest: Benny Crescenzi, Title: Vice President of CC. VALUERX Value RX A VALUE HEALTH COMPANY 3684 Marshall Lane Bensalem, PA 19020 Tel: (215)638-7855 Fax: (215)638-8572 August 2, 1996 Mr. Darrell Carnegie Manager, After Market Sales Bombardier Transit Corp. P.O. Box 250, Station A Kingston, Ontario K7M 2R2 Dear Mr. Carnegie, This letter serves as a preliminary, binding agreement between Bombardier Transit Corp., located at 3684 Marshall Lane, Bensalem, PA and ValueRx, located at 3684 Marshall Lane, Bensalem, PA for the subletting of 3,700 square feet of Bombardier Transit Corp.'s current warehouse space to ValueRx for the remainder of the 1996 year. This space is identified as Store Room 'B' on the building plan provided to ValueRx by Bombardier Transit Corp. This preliminary binding agreement will be replaced by a formal sublease agreement by September 30, 1996 at which time any further agreements regarding transfer of space can be incorporated. ValueRx shall take ownership of said space on August 1, 1996, and will bear all expenses of necessary renovations, including electrical panel upgrades to segregate Bombardier Transit Corp. and ValueRx electrical usage. The monthly lease rate payable by ValueRx to Bombardier Transit Corp. shall be the cost of the space currently remitted to the building owner by Bombardier Transit Corp. detailed as follows: Base Rate $5.72/sq ft Operating Expenses $0.36/sq ft Real Estate Taxes $1.03/sq ft Total $7.11/sq ft/12 months Monthly Rate $0.59/sq ft per month Square footage 3,700 Monthly Rate $2,183.00 The monthly payment shall be remitted to Bombardier Transit Corp. by the last business day of each month of occupancy, payments to begin September 30, 1996. All alterations to the building shall be agreed with the building owner prior to effecting any change to the building. Bombardier Transit Corp. shall not be liable and ValueRx hereby waives all claims against Bombardier Transit Corp. for any damage to any property or any injury to any person in or about the 3,700 square feet identified as Store Room 'B' or any other of Bombardier Transit Corp. leased space at 3684 Marshall Lane by or from any cause whatsoever. ValueRx shall hold Bombardier Transit Corp. harmless from and defend Bombardier Transit Corp. against any and all claims, liability or costs for any damage to any property and injury to any person occurring in, or about the 3,700 square feet identified as Store Room 'B' or any other of Bombardier Transit Corp. leased space at 3684 Marshall Lane. ValueRx agrees to extend insurance coverage detailed in the current lease between ValueRx and the building owner for the 3,700 square feet identified as Store Room 'B' from August 1, 1996 to December 31, 1996. Signed, /s/ Joseph C. Sanginiti Joseph C. Sanginiti ValueRx Inc. /s/ Darryl Carnegie Darryl Carnegie Bombardier Inc. EX-10.2 4 EXHIBIT 10.2 OFFICE LEASE This OFFICE LEASE ("Lease") is made and entered into as of this 14th day of August, 1998 by and between DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership, by and through its general partner, DUKE REALTY INVESTMENTS, INC., an Indiana corporation, authorized to do and doing business in the State of Missouri, as Landlord (hereinafter "Landlord") and EXPRESS SCRIPTS, INC., a Delaware corporation, authorized to do and doing business in the State of Missouri, as Tenant (hereinafter "Tenant"). SECTION I. BASIC LEASE PROVISIONS, NOTICES, LEASED PREMISES, USE, TERM, CONSTRUCTION AND SIGNAGE SS.1.01 BASIC LEASE PROVISIONS Land: Lot 1B of Lot 1 of Duke/Riverport Site No. 1 (See, EXHIBIT 1.01 for exact legal description) Building 13930 Riverport Drive Maryland Heights, St. Louis County, Missouri 63043 Leased Premises: All of the space in the Building to be constructed on the Land, which Building shall contain approximately 141,774 RSF, the Lot 1B Restricted Use Area and the use in common with other owners and tenants of the Common Property, as hereinafter more specifically set forth. The Land, the Building and the Leased Premises are sometimes hereinafter referred to collectively as the "Project." Commencement Date: May 20, 1999, or such earlier or later date as herein otherwise specifically provided Termination Date: October 31, 2008 Annual Base Rent: From the Commencement Date Through the Last Day of the 5th Lease Year Thereafter $1,716,883.20 ** From the First Day of the 6th Lease Year Through the Termination Date $1,794,858.70 ** ** Upon Substantial Completion, Base Rent shall be recalculated in accordance with SECTION 2.01, to reflect actual RSF Monthly Base Rent Installments: From the Commencement Date Through the Last Day of the 5th Lease Year Thereafter $143,073.60 ** From the First Day of the 6th Lease Year Through the Termination Date $149,571.56 ** ** Upon Substantial Completion, Base Rent shall be recalculated in accordance with SECTION 2.01, to reflect actual RSF Forwarded to: Duke Realty Limited Partnership P.O. Box 958092 St. Louis, Missouri 63195-0001 Notice Addresses: Landlord: Duke Realty Limited Partnership 635 Maryville Centre Drive - Suite 200 St. Louis, Missouri 63141-5819 Attn: W. Gregory Thurman, Vice President & General Manager, St. Louis Office Group Telephone: 314-434-3700 Facsimile: 314-434-7532 With copy to: Duke Realty Limited Partnership 635 Maryville Centre Drive - Suite 200 St. Louis, Missouri 63141-5819 Attn: James D. Eckhoff, Vice President and Corporate Attorney Telephone: 314-434-3700 Facsimile: 314-434-9684 Tenant: Express Scripts, Inc. 14000 Riverport Drive Maryland Heights, Missouri 63043 Attn: Thomas M. Boudreau, Senior Vice President and General Counsel Telephone: 314-770-1666 Facsimile: 314-770-1581 With copy to: Express Scripts, Inc. 4700 Nathan Lane Plymouth, Minnesota 55442-2599 Attn:Thomas A. Rocheford, Vice President Facilities/ Purchasing Telephone: 612-509-2761 Facsimile: 612-509-2778 If at the Commencement Date any of the provisions of this SECTION 1.01 do not accurately set forth the then agreements of the parties in the above regards, Landlord and Tenant shall execute a writing setting forth any necessary changes, if any, and such other matters, if any, then mutually acceptable to Landlord and Tenant. SS.1.02 NOTICES Any notice, demand, request, consent, approval or other communication which either party hereto is required or desires to give or make to the other shall be in writing and shall be deemed validly given (a) when personally delivered, (b) when sent by facsimile (with evidence of transmission and confirmation) (c) when deposited for "overnight" delivery [for example, Federal Express "Standard Overnight" (delivery by next business afternoon), United States Postal Service "Express Mail" or other comparable service] or (d) three (3) business days after deposit, prepaid in the United States mail, registered or certified, addressed to Landlord or Tenant, as the case may be, in each and every case, as in SECTION 1.01 above provided. Either party hereto may designate a different or additional address(es) or different facsimile instructions by notice similarly given. SS.1.02-1 NOTICES TO LENDER Landlord covenants, represents and warrants that as of the date hereof and as of the Commencement Date, there is and shall be no mortgage, deed of trust, or trust deed lien upon the Project. From and after the Commencement Date, Tenant agrees to furnish to any lender holding a mortgage, deed of trust, or trust deed (hereinafter "mortgage" or "deed of trust") lien upon the Project from time-to-time designated by Landlord in writing (and Landlord shall designate in writing each and every such lender to whom an interest in this Lease may be from time-to-time assigned), a copy of all notices sent to Landlord by Tenant of Landlord's default(s) hereunder and hereby grants said lender(s) the right, but not the obligation, to cure said default(s) within the same time period herein specifically provided for Landlord to cure said default(s). SS.1.03 LEASED PREMISES Landlord hereby demises and leases to Tenant all of the space in that certain Building to be constructed by or on behalf of Landlord on the Land [which said Building, as presently conceptually designed will be a three (3) story office building consisting of approximately 141,774 rentable square feet ("RSF") (approximately 147,394 gross square feet), together with the exclusive use of the landscape, parking and access areas immediately surrounding the Building, which said areas Landlord shall cause the "Trustees of Duke/Riverport Site No. 1" to cause to be designated as a "Restricted Use Area" (sometimes herein "RUA"), as such terms are more specifically defined in the Sub-Indenture described below [and which said specific RUA shall be herein sometimes referred to as the "Lot 1B Restricted Use Area" or the "Lot 1B RUA" (and shall NOT include other Restricted Use Areas)], and together with the use of the landscape, parking and access areas located, or to be located, on the "Common Property" as described in the Sub-Indenture (and Landlord shall cause the "Trustees of Duke/Riverport Site No. 1" to cause all of the areas identified in the Sub-Indenture as Common Property to be designated as such), all as more specifically provided in that certain "Declaration of Covenants Restrictions and Easements for Access and Parking for Property in the City of Maryland Heights, County of St. Louis, State of Missouri Known as Duke/Riverport Site No. 1 (hereinafter "Sub-Indenture"). The areas of the Lot 1B RUA (and the areas of the Lots 1A and 1C Restricted Use Areas) and the Duke/Riverport Site No. 1 Common Property are shown on EXHIBIT 1.03-A hereto. Tenant shall have the exclusive right to the use and enjoyment of the 329 parking spaces to be constructed within the Lot 1B RUA and in addition thereto shall have the right to the use an additional 484 of the 1696 parking spaces, some of which are presently existing and some of which are to be constructed on the Common Property, for a total of not less than 813 parking spaces. Within ninety (90) days of the date of this Lease, Landlord shall cause the Sub-Indenture (in the form attached hereto as EXHIBIT 1.03-B, unless changes thereto are mandated by the City of Maryland Heights, Missouri, in which case all such changes shall be subject to Tenant's approval, which said approval shall not be unreasonably withheld, conditioned or delayed) to be recorded in the Office of the Recorder of Deeds of St. Louis County, Missouri and shall provide to Tenant a copy of said Sub-Indenture bearing recording information. Immediately following the recordation of the Sub-Indenture, Landlord shall cause the Trustees of Duke/Riverport Site No. 1 to execute a Resolution (in form and substance substantially similar to EXHIBIT 1.03-C attached hereto and made a part hereof) whereby the said Trustees designate and assign the 484 parking spaces within the Common Property identified in the Resolution for the benefit of Landlord and Tenant. Tenant shall also have the right to use and enjoy all other accretions, easements, rights-of-way and appurtenances belonging or in any way appertaining to the Project and, to the extent Tenant's use does not materially interfere with Landlord's obligations to perform its obligations hereunder, use of the Building's mechanical and equipment rooms and the like. Landlord hereby grants and conveys to Tenant (for Tenant's and Tenant's officers, employees, representatives, guests and invitees use) a non-exclusive easement for ingress and egress over and through the Common Property for access to all public or common roadways within "Riverport," and Tenant shall also have the non-exclusive right to use in common with other tenants and owners the Riverport "Common Ground," as defined and described in that certain First Revised And Restated Trust Indenture For The Property Known As Riverport In The City Of Maryland Heights, County Of St. Louis, State Of Missouri, dated August 10, 1987 and recorded at Book 8191 Page 380 of the St. Louis County, Missouri records; which was amended by an Amendment to the First Revised and Restated Trust Indenture dated November 4, 1988, and recorded in Book 8465 Page 1068 of the St. Louis County, Missouri, Records; which was further amended by a certain Second Amendment to the First Revised and Restated Trust Indenture dated June 12, 1991, and recorded in Book 9013 Page 1955 of the St. Louis County, Missouri, Records; which was further amended by another Second Amendment to the First Revised and Restated Trust Indenture dated July 21, 1994, and recorded in Book 10263 Page 1872 of the St. Louis County, Missouri, Records; which was further amended by that certain Third Amendment of the First Revised and Restated Trust Indenture dated December 18, 1995, and recorded in Book 10694 Page 1868 of the St. Louis County, Missouri, Records; which was further amended by that certain Fourth Amendment To The First Revised And Restated Trust Indenture For The Property Known As Riverport In The City Of Maryland Heights, County Of St. Louis, State Of Missouri dated March 5, 1997, and recorded in Book 11104 Page 991 of the St. Louis County, Missouri, Records; which was further amended by that certain Fifth Amendment To The First Revised And Restated Trust Indenture For The Property Known as Riverport In The City Of Maryland Heights, County Of St. Louis, State Of Missouri, and recorded in Book 11304 Page 1396 of the St. Louis County, Missouri Records, which said Indenture, as amended as aforesaid, shall hereinafter be referred to merely as the "Riverport Indenture." All of the foregoing are collectively referred to herein as the "Leased Premises". The Trustees appointed pursuant to the terms of the Riverport Indenture shall hereinafter be referred to merely as the "Riverport Trustees." The Trustees appointed pursuant to the terms of the Sub-Indenture (Trustees of Duke/Riverport Site No. 1) shall sometimes hereinafter be referred to merely as the "Sub-Trustees." Upon written request from Tenant, Landlord shall use all reasonable efforts to cause the Riverport Trustees and the Sub-Trustees to enforce the Riverport Indenture and the Sub-Indenture, respectively. Notwithstanding the foregoing, if any appointees of Landlord serve as a Riverport Trustee or a Trustee of Duke/Riverport Site No. 1, upon written request from Tenant, Landlord shall cause such appointees to exercise their rights and duties under the Riverport Indenture and the Sub-Indenture to cause enforcement of the Riverport Indenture and the Sub-Indenture. Landlord shall promptly notify Tenant in writing of any proposed amendment to the Indenture and/or Sub-Indenture, and shall promptly furnish a copy of such proposed amendment to Tenant. Notwithstanding the foregoing, Landlord shall not consent or agree to any amendment of the Sub-Indenture or any action thereunder which would affect in a material, adverse manner Tenant's rights with respect to the Lot 1B RUA or the Common Property, as in this Lease specifically provided, without the prior written consent of Tenant, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding anything to the contrary herein, as between Landlord and Tenant, and in the event of any inconsistency or conflict between the terms and provisions of the Riverport Indenture and/or the Sub-Indenture and the terms and provisions of this Lease, the terms and provisions of this Lease shall prevail. Landlord hereby designates Tenant as its representative for purposes of consenting to (i) any Special Assessments pursuant to Section 3.4 of the Sub-Indenture, (ii) any Special Assessments "for the initial construction of Common Property improvements, except for those improvements reasonably necessary for the preservation and protection of the then existing Common Property" (which latter Special Assessments require the unanimous consent of the Owners) as in Section 3.4 of the Sub-Indenture provided, and (iii) any change proposed by the Trustees of Riverport Site No. 1 in the Lot 1B RUA as authorized by Section 4.1 of the Sub-Indenture (provided, however, in each of the foregoing cases such consent shall not be unreasonably withheld, conditioned or delayed). Said designations shall be evidenced by specific reference in the Memorandum of Lease to be recorded as in SECTION 3.17 hereof provided. SS.1.03-1 BOMA STANDARD For purposes of this Lease, the Building Owners and Managers Association International ("BOMA") Standard Method of Measuring Floor Area In Office Buildings (American National Standard ANSI-65.1-1996 approved June 7, 1996 by American National Standards Institute, Inc.) ("BOMA Standard"), has been and shall be utilized. Terms defined in the BOMA Standard shall have the meaning therein set forth. SS.1.04 USE Subject to the provisions of this Lease, the Project may be used and occupied by Tenant for office use and any other lawful use permitted under the Riverport Indenture and /or the Sub-Indenture (hereinafter sometimes the "Permitted Uses"). Except as herein otherwise specifically provided, both Landlord and Tenant shall, at their own expense, comply with all laws, rules, regulations, requirements, and ordinances enacted or imposed by any governmental unit having jurisdiction over the Landlord or the Tenant and their businesses, respectively. Without limiting the generality of the foregoing provisions of this SECTION 1.04: (a) During the Lease Term (hereinafter defined), including renewals or extensions thereof, both Landlord and Tenant agree to comply [and shall cause their respective contractors, agents, officers, employees, representatives, guests and invitees (for this SUBSECTION (A), collectively "Representatives") to comply] with all federal, state and local statutes, regulations, executive orders and ordinances concerned with the emissions, spill, release, discharge or disposal of any hazardous or solid waste into the air, soil, surface or groundwater, or any sewer or waste treatment, storage or disposal system servicing the Project (collectively "Environmental Laws") respectively applicable to each. Notwithstanding the foregoing or anything in this Lease to the contrary, it is understood and agreed that (i) neither Tenant nor its Representatives shall have any responsibility for any Hazardous Substance (as hereinafter defined) at, on, under or adjacent to the Project on the Commencement Date or any violation of Environmental Law with respect to the Project which exists on the Commencement Date, and (ii) Landlord shall remediate and remove any Hazardous Substance existing at, on or under the Project on the Commencement Date and shall cause the Project to be in compliance with Environmental Laws on the Commencement Date. (b) Landlord represents and warrants to Tenant that (i) it has not received any notice of alleged violation with respect to the Project of any Environmental Laws; and (ii) to the best of Landlord's knowledge, information and belief there are no violations of any Environmental Laws with respect to the Project. Landlord and Tenant shall promptly notify the other of any discussions between it or its agents, employees or attorneys and any federal, state or local officials concerning any alleged violations at or about the Project of any Environmental Laws. Landlord represents, warrants, covenants and agrees that the Building Shell (as hereinafter defined) shall be completed Hazardous Substance free and in compliance, at Substantial Completion (as hereinafter defined), with all applicable codes, ordinances, laws and regulations, the Riverport Indenture and the Sub-Indenture and all conditions, restrictions and other matters of record. (c) In the event either Landlord or Tenant fails to comply with any Environmental Laws applicable to it, or with any order or judgment issued against it for failure to comply with such Environmental Laws, during the Lease Term, the other, or its agents, is specifically granted the right, but not the obligation, to enter any portion of the Project [except in the case of extreme emergencies, giving reasonable advance written notice of said proposed entry and the reason(s) therefor to the other] and to take such actions as deemed reasonably necessary to comply with any statute, regulation, executive order, ordinance, order or judgment to protect the Project; provided, however, neither Landlord nor Tenant shall have the right to take any actions specified in this SECTION 1.04(C) while the alleged violator is involved in good faith negotiations with any federal, state or local officials concerning any such environmental obligation it may have, except for actions that may be reasonably necessary to avoid material risk of personal injury or property damage. (d) Nothing in this SECTION 1.04 shall be construed to prevent Landlord or Tenant from storing on or about, and transporting from the Project any Hazardous Substance utilized by either in the conduct of its normal business activity. As used in this Section, "Hazardous Substance" shall be defined as any "hazardous chemical," "hazardous substance," or a similar term as defined in the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. Section 9601, ET. SEQ.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901, ET. SEQ.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251, ET. SEQ.; the Federal Air Pollution Prevention and Control Act (the "Clean Air Act"), as amended, 42 U.S.C. Section 7401, ET. SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 300f, ET. SEQ.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136, ET. SEQ.; the Oil Pollution Act, 33 U.S.C. Section 2701 (1990), all as amended or supplemented from time-to-time and any rules or regulations promulgated thereunder; or any other applicable federal, state, or local statute, regulation or ordinance dealing with environmental protection; asbestos; petroleum and its by-products; and any commercial product which through its use becomes a hazardous substance. (e) Following the Commencement Date, responsibility for compliance with the Americans With Disabilities Act (the "ADA") shall be as follows: (i) all ADA required maintenance, repair or alteration within the Building (exclusive of fire stairs and elevators) shall be the responsibility of and at the sole and separate cost of Tenant; (ii) all ADA required maintenance, repair, alteration, restoration or replacement with respect to fire stairs and elevators located within the Building and with respect to the Lot 1B RUA and the Common Property shall be the responsibility of and at the sole and separate cost of Landlord; except in each case if ADA required maintenance, repair, alteration, restoration and/or replacement is at the request of a party hereto and for said party's primary benefit, then said ADA required maintenance, repair, alteration, restoration and/or replacement, regardless of where same is to be performed, shall be the responsibility of and at the sole cost and expense of the party hereto requesting same. Insurance and/or condemnation proceeds reasonably allocated to ADA required restoration(s) and/or replacement(s) shall be made available to the party who by the terms hereof has the obligation to make such restoration(s) and/or replacement(s), any provision of this Lease, if any, to the contrary notwithstanding. (f) Landlord represents, warrants and covenants that (i) it has possession of the Project and the unqualified right to become vested with good and marketable fee simple title to the Project, including the Leased Premises, with full right and authority to grant the estate demised in this Lease and to execute and perform all of the terms and conditions of this Lease which are the responsibility of Landlord, (ii) as of the date hereof and as of the Commencement Date, there are no zoning laws, ordinances, regulations or other restrictions which would prevent the use of the Leased Premises for general office and headquarters use, (iii) as of the date hereof and as of the Commencement Date, the Project shall be subject to no leases or tenancies other than this Lease and shall be free and clear of liens for taxes, except for current taxes not yet due and payable, (iv) as of the date hereof the restrictions, agreements, encumbrances, liens, easements and other rights affecting the Project are those set forth in EXHIBIT 1.04(F) hereto ("Title Exceptions") and that as of the Commencement Date there shall be no other or additional restrictions, agreements, encumbrances, liens, easements or other rights affecting the Project other than those set forth in EXHIBIT 1.04(F) and restrictions, agreements, encumbrances, liens, easements and other rights, if any, which may be created between the date hereof and the Commencement Date specifically in accordance with the specific provisions of this Lease, (v) to the best of the knowledge, information and belief of Landlord none of the restrictions, agreements, encumbrances, liens, easements and other rights presently existing and/or as may be created as in sub-section (iv) immediately above specifically provided will prevent or impair the use of the Leased Premises for office use, and (vi) there is no claim, litigation, governmental or administrative proceeding or action by any private or public individual or entity pending, or to Landlord's actual knowledge, threatened against the Project (or any portion thereof) or against Landlord and relating to the Project (of any portion thereof). (g) Tenant represents, warrants and covenants that it has full right and authority to execute and perform all of the terms and conditions of this Lease which are the responsibility of Tenant. (h) Landlord and Tenant agree to indemnify and hold harmless the other from and against any and all liabilities, damages, judgments, causes of action, claims and expenses which may be incurred by the Landlord or Tenant as the case may be relating to or arising out of any breach by the indemnifying party of the covenants set forth in SUBSECTIONS "(A)" THROUGH "(G)" hereof. The foregoing indemnification shall survive the expiration or earlier termination of this Lease. SS.1.05 TERM This Lease shall be for a term (the "Lease Term") commencing on the Commencement Date specified in SECTION 1.01 hereof [or such earlier date following not less than twenty (20) days advance written notice from Landlord to Tenant that the Leased Premises will be Substantially Completed and the Leased Premises are actually delivered by Landlord to Tenant on such earlier date or later date as in this Lease otherwise specifically provided] and terminating on the Termination Date specified in said SECTION 1.01 hereof. For purposes hereof, a "Lease Year" shall consist of a period of 365 days (366 days in a leap year). The first Lease Year shall begin on the Commencement Date and each subsequent Lease Year shall commence on the anniversary of said Commencement Date. SS.1.06-1 PRE-TERM ACCESS BY TENANT Landlord and Tenant shall in good faith cooperate to provide access to the Leased Premises during the period commencing approximately one hundred twenty (120) days prior and ending approximately ninety (90) days prior to the then reasonably projected Commencement Date to afford Tenant and its contractors (hereinafter sometimes "Tenant's Contractors") the opportunity to install above ceiling cabling, above ceiling telephone and data lines and similar equipment; provided, however, said installations shall be done at a time and in such a manner so as not to materially interfere with the Substantial Completion (hereinafter defined) of the Project. Presently the projected beginning and ending dates for completing such work as set forth in the Project Schedule (a copy of which is attached hereto, made a part hereof and marked EXHIBIT 1.06-1) are as follows: BEGINNING DATE ENDING DATE Third Floor January 18, 1999 January 29, 1999 Second Floor February 1, 1999 February 12, 1999 First Floor February 15, 1999 February 26, 1999 SS.1.06-2 PRE-TERM ACCESS BY TENANT FOR FIXTURING On or about April 22, 1999, (said date being sometime herein referred to as the "Tenant Third Floor Fixturing Date") Tenant and Tenant's Contractors shall have access to the third floor of the Building for purposes of installing Tenant supplied furniture and fixtures; providing, however, that said installations do not interfere with the Substantial Completion of the Project. On or about May 6, 1999, Landlord shall deliver the second floor of the Building to Tenant and Tenant's Contractors for the purposes aforesaid (the "Tenant Second Floor Fixturing Date"). On or about May 20, 1999, Landlord shall deliver the first floor of the Building to Tenant and Tenant's Contractors for the purposes aforesaid (the "Tenant First Floor Fixturing Date"). Said date shall be subject to change for Force Majeure and Tenant Delays. Revised dates, if any, shall be set forth in a revised Project Schedule. Landlord and Tenant shall in good faith coordinate their respective efforts so as to cause the Project and Tenant's said installations to be completed at the earliest reasonably practicable date at the lowest reasonably practicable cost. No Rent (hereinafter defined) shall be payable during Tenant's use of the Building as in this SECTION 1.06-2, or as in SECTION 1.06-1 specifically provided. Tenant (or Tenant's Contractors) shall, however, pay any costs and expenses, if any, which would not otherwise be incurred by Landlord (such as additional construction cleanings, material utility charges, damages to the Project, etc.) resulting solely and directly from Tenant's said use of the Project as in SECTIONS 1.06-1 and 1.06-2 specifically provided. The presently contemplated dates for access by Tenant and Tenant's Contractors as in these SECTIONS 1.06-1 and 1.06-2 hereinbefore and on the Project Schedule set forth may be amended from time-to-time as herein specifically provided or as may from time-to-time be otherwise agreed by and between the parties hereto. SS.1.06-3 DELAYED DELIVERY In the event that the Project is not Substantially Completed (as hereinafter defined) and delivered to Tenant by May 20, 1999, then Tenant shall receive, as liquidated damages (and not as a penalty), a credit against monthly installment(s) of Base Rent next coming due equal to two (2) times the daily Base Rent which would have otherwise been payable by Tenant to Landlord as in this Lease provided for each day beyond May 20, 1999 that the Project is not Substantially Completed and delivered to Tenant. SS.1.06-4 FORCE MAJEURE DELAYS For purposes of SECTION 1.06-3 above and otherwise in this Lease, delays in Substantial Completion resulting from Force Majeure Delays (hereinafter defined) shall cause each of the applicable dates specified in this Lease (including, specifically the May 20, 1999 date set forth in SECTION 1.06-3 above and the Commencement Date) to be extended for the number of days in the aggregate (taking into consideration concurrent Force Majeure Delays) that Substantial Completion was actually delayed as a result of said Force Majeure Delay(s). For purposes of SECTION 1.06-3 above (and elsewhere in this Lease where applicable) "Force Majeure Delays" means any delay in the performance of any obligation hereunder (except the obligation of either party to pay money, including Rent and Additional Rent and other like and unlike monetary obligations) (but no Rent shall be due or payable until the actual Commencement Date if said Commencement Date is delayed as a result of a Force Majeure Delay) when such delay(s) is occasioned by causes beyond the performing party's control including, but not limited to, a delay caused by fire or other man-made or natural casualty; work stoppages, boycotts, slowdowns or strikes; inability to obtain materials, equipment, or energy which is not related to pricing; riot or insurrection; significantly unusual weather conditions; and/or war, invasion or hostility. Notwithstanding the foregoing, absent Tenant's written consent (which consent shall not be unreasonably withheld, conditioned or delayed) delays caused by the failure of cognizant governmental authorities to grant the necessary approvals for the Project (providing such failure is not caused or materially contributed to by Tenant (a "Tenant Delay", as hereinafter defined) ("governmental delay") and delays caused by Landlord's failure for whatever cause to acquire fee simple title to Duke/Riverport Site No. 1 [and Landlord hereby agrees that it shall acquire fee simple title to Duke/Riverport Site No. 1 at the earliest reasonably practical date, but not later than the Commencement Date (and shall promptly advise Tenant, in writing, when such fee simple title has been acquired)] shall NOT be deemed to be Force Majeure Delays. Anything herein to the contrary notwithstanding, the parties hereto agree to in good faith cooperate with a view toward mitigating any adverse consequences which may be suffered by either party hereto as a result of any Force Majeure Delays and/or any governmental delay. Landlord and Tenant shall cause the Project Schedule to be from time-to-time amended to reflect any Force Majeure Delays. SS.1.06-5 TENANT DELAYS The number of days of delay arising, directly or indirectly, out of or on account of Tenant's failure to meet dates specifically set out in this Lease and/or on the Project Schedule, or indirectly out of or on account of the failure of Tenant's Contractors to complete work to be performed on behalf of Tenant, if any, which in any such case(s) actually delays the Substantial Completion of the Project, except to the extent such delays are caused through the fault of Landlord or Landlord's agents, employees, contractor (and its subcontractors) and/or representatives, shall constitute "Tenant Delays." Tenant shall have the right to make changes to the Tenant Improvement Work at any time by way of written change orders ("Change Orders") providing that any delay in the construction of the Tenant Improvement Work (hereinafter defined) resulting from such Change Order(s) which actually results in a delay in the Substantial Completion of the Project (net of any savings of time resulting from Change Orders, if any) shall be deemed a Tenant Delay. The date for commencement of Tenant's obligation to pay Rent and Additional Rent under this Lease shall not be delayed or postponed on account of any Tenant Delays. Landlord and Tenant shall cause the Project Schedule to be from time-to-time amended to reflect any Tenant Delays. SS.1.06-6 LIMITED RIGHT OF TERMINATION In the event the Project is not Substantially Completed by September 30, 1999, subject to extension day-for-day for Force Majeure and Tenant Delays, then Tenant shall have the right to terminate this Lease upon written notice to Landlord and thereupon all of Landlord's further obligations for payment of liquidated damages as in SECTION 1.06-3 provided and all other obligations of Landlord and Tenant one to the other hereunder shall cease and determine. Landlord and Tenant entered into a Letter Agreement dated June 3, 1998, a copy of which is attached hereto, made a part hereof and marked EXHIBIT 1.06-6. Any provisions of said Letter Agreement or herein to the contrary notwithstanding, if any, Tenant shall have no obligation to Landlord to reimburse Landlord as in said Letter Agreement provided upon the exercise of its Limited Right of Termination as in this SECTION 1.06-6 provided. SS.1.06-7 RENEWAL OPTIONS Landlord hereby grants to Tenant the right and option to extend the term of this Lease [the "Renewal Option(s)"] with respect to all or a portion of the Leased Premises in excess of ninety thousand (90,000) RSF [provided, however, the Leased Premises shall at no time be less than ninety thousand (90,000) RSF nor, absent Landlord's consent to the contrary, shall the space remaining available within the Building for lease to others be non-contiguous or less than one-half of one floor within the Building (and said remaining space shall have reasonable access from and to the Building and the Building's common areas)], for two (2) five (5) year terms (the "First Five Year Renewal Term" and the "Second Five Year Renewal Term"). Provided that Tenant is not then in default under the terms of this Lease beyond any applicable period(s) of notice and/or cure at the time it exercises a Renewal Option, Tenant shall have the right to exercise its First Five Year Renewal Term and if exercised, its Second Five Year Renewal Term, upon the giving of not less than twelve (12) months advance written notice to Landlord prior to the expiration of the then existing Lease Term. The Renewal Term(s) shall be upon the same terms and conditions contained in this Lease for the initial Lease Term except that the Base Rent for each Renewal Term shall be adjusted as in SECTION 2.02 hereof provided for the portion of the Premises subject to the Renewal Option. Time shall be deemed to be of the essence in the giving of notices hereby required. Failure of Tenant to timely give any notice required hereby to be given shall be deemed a waiver by Tenant of its option to extend this Lease as in this Section provided. In the event Tenant elects to extend the term of this Lease during either Renewal Term for only a portion of the Leased Premises, then Tenant's Rent during the applicable Renewal Term(s) shall be determined by multiplying the rental rate determined as in SECTION 2.02 provided (95% of Effective Market Base Rent Rate) times the RSF contained in such portion of the Leased Premises and Tenant's Additional Rent and other monetary obligations hereunder shall be equitably adjusted in proportion to the RSF contained within the then Leased Premises as compared to the RSF of the Building. In other words, Tenant shall be obligated to pay only its prorata share of Additional Rents (as hereinafter defined), including, but not limited to Real Estate Taxes, Assessments, utilities and other similar items which are payable by Tenant hereunder and Tenant's maintenance obligations and all other obligations hereunder shall be equitably apportioned in the ratio that the then Leased Premises bears to the total RSF of the Building. In the event Tenant takes less than all of the space in the Building as hereinbefore provided, Landlord shall pay all Real Estate Taxes, Assessments, utilities and other similar items and shall bear all maintenance and other obligations as provided herein with respect to the portions of the Building which are not then a part of Tenant's then Leased Premises. SS.1.07 EXPANSION OPTIONS Landlord hereby grants to Tenant a Right of First Offer ("ROFO") with respect to the following spaces (collectively, the "ROFO Spaces") in buildings currently owned by Landlord in the immediate vicinity of the Building: (a) All of the space in that certain building commonly known as "The Schultz Company Building," which said building contains approximately 45,200 square feet of space and bears a street address of 14090 S. Riverport Drive; (b) All of the space in that certain building commonly known as "The Riverport Distribution Center," having a street address of 14042 Riverport Drive, currently occupied by Sverdrup Investments, Inc., which said space contains approximately 10,000 square feet; and (c) All of the space in that certain building commonly known as "The Riverport Distribution Center," having a street address of 14042 Riverport Drive, currently occupied by Citicorp Mortgage, Inc., which said space contains approximately 77,635 square feet. The termination dates of the leases of the tenants currently occupying the ROFO Spaces referenced in SECTIONS 1.07 (A), (B) AND (C) hereof are January 15, 1999, February 28, 2000 and December 31, 2002, respectively. None of the tenants occupying said ROFO Spaces have any right(s) to renew their leases beyond the termination dates aforesaid. With respect to the ROFO Space referenced in SECTION 1.07 (A) hereof, not earlier than September 1, 1998 and not later than September 30, 1998, and with respect to the ROFO Space referenced in SECTION 1.07 (B) hereof, not earlier than August 1, 1999 and not later than August 31, 1999, and with respect to the ROFO Space referenced in SECTION 1.07 (C) hereof, not earlier than December 1, 2001, and not later than March 31, 2002, Landlord shall advise Tenant, in writing, of the terms and conditions, including rent and term, that Landlord will offer each said ROFO Space, respectively, to the market for lease effective as of the date immediately following the termination date of the lease of the existing tenant as above specified (which said terms and conditions shall be in all material respects substantially similar to the terms and conditions then generally appertaining in the market for space of substantially similar size and character). Tenant shall have fifteen (15) business days within which to notify Landlord in writing whether it will accept each of Landlord's said offers. If Tenant fails to accept any of Landlord's said offers within the periods aforesaid, said offer shall be deemed rejected and Landlord shall have no further obligation to offer the subject space to Tenant; provided, however, if following Tenant's rejection as aforesaid, Landlord offers the subject space to another tenant upon economic terms and conditions [when viewed in their entirety having a present value which is less than ninety percent (90%) of the present value of the economic terms and conditions proposed to Tenant (in each instance using a 10% discount rate for future economic obligations)], then before entering into a lease with another tenant for said space, Landlord shall again offer said space to Tenant upon such amended economic terms and conditions and Tenant shall have another fifteen (15) business day period within which to again accept or reject Landlord's said offer. Upon acceptance of any of Landlord's offers given pursuant to the terms of this SECTION 1.07, Landlord and Tenant shall promptly execute a lease in which all of the terms and conditions of Landlord's said offer are set forth with specificity and such other terms as may be mutually agreed upon by and between Landlord and Tenant. Landlord has possession of and has the contractual right to obtain fee simple title to Lot 2 of Duke/Riverport Site No. 1. From the date of this Lease through December 1, 1999, Landlord agrees that it will not develop a portion of that property containing not less than ten (10) acres [which said ten (10) acre site shall have contiguity with the property presently being leased by Landlord and Tenant at 14000 Riverport Drive and shall have access to Riverport Drive via the then Common Property], in order that said acreage shall remain available to Tenant for the potential future expansion of its business. Landlord represents and warrants that during the period aforesaid it will take all action necessary to preserve its right to obtain fee simple title to said acreage in accordance with the terms of Landlord's presently existing contractual agreements. During the period aforesaid Tenant shall have the right to purchase from Landlord said property for the use aforesaid, but not for the purpose of offering said property to others for sale and/or development, at a price equal to the fair market value of said property. In addition, from the date of this Lease through December 1, 1999, Landlord agrees that, upon Tenant's request and Tenant's agreement to lease at least one-half (1/2) of a building to be constructed by Landlord for a term of ten (10) years, Landlord will construct on such portion of Lot 2 of Duke/Riverport Site No. 1 as aforesaid, a building containing approximately one hundred thousand (100,000) square feet of space. The rent, terms and conditions of Tenant's said lease (other than term) (which said rent, terms and conditions shall be in all material respects substantially similar to the rent, terms and conditions then generally appertaining in the market for space of substantially similar size and character to that to be contained in said building at the time said building is scheduled to be substantially completed) shall be agreed upon by and between Landlord and Tenant. In the event of disagreement between Landlord and Tenant as to whether the terms and conditions to apply to any ROFO Space or the terms and conditions to apply to the space in the building to be constructed, or as to the fair market value of the property which Tenant has an option to purchase all, as hereinbefore in this SECTION 1.07, specifically provided, then the said terms and conditions or said fair market value shall be determined by the procedure established for determination of the Effective Market Base Rent Rate as in SECTION 2.02 hereof provided. SS.1.08 RIGHT OF FIRST REFUSAL TO PURCHASE PROJECT If Landlord receives a bona fide offer to purchase the Building from an independent third party purchaser (whether or not solicited by Landlord) ("Third Party Offer") at any time during the Lease Term, as and if extended, and provided Tenant is not then in default of the terms and provisions of this Lease beyond any applicable period(s) of notice and/or cure, Tenant shall have a first right of refusal to purchase the Building for the same price and upon the same terms and conditions as set forth in said Third Party Offer. Tenant shall have twenty (20) business days from receipt of written notice from Landlord in which the price, terms and conditions of the Third Party Offer are set out with reasonable specificity ("Offer Notice") in which to accept or reject Landlord's said offer. In the event Tenant fails to notify Landlord in writing of its intent to purchase within said twenty (20) day period, such failure shall be conclusively deemed a rejection of Landlord's said offer and Landlord can proceed to close the sale with the third party for the price and upon all material terms and conditions set out in said Third Party Offer, but none other. In the event of any material change in the price or in the event of any material change in the terms and conditions of said Third Party Offer, Landlord shall again provide the Tenant with an Offer Notice and the Tenant shall, once again, have twenty (20) business days in which to accept or reject such revised offer. If Tenant accepts said offer, the Closing of said purchase shall occur at the time and in accordance with the terms and conditions specified in the Third Party Offer. At least twenty (20) business days prior to formally offering the Building to potential third party purchasers, Landlord shall advise Tenant, in writing, of its intention to offer the Project for sale and the proposed price, terms and conditions of said offer. Said notice shall be deemed to be an Offer Notice and Tenant shall have twenty (20) business days from receipt thereof to notify Landlord, in writing, of its intent to purchase the Building for said price and upon said terms and conditions. In the event Tenant notifies Landlord that it will not purchase the Building for said price and upon said terms and conditions or if Tenant fails to respond to Landlord's aforesaid Offer Notice, then Landlord may proceed to offer and sell the Building to any third party purchaser for the price and upon all material terms and conditions set out in the said Offer Notice for a period of six (6) months following the giving by Landlord to Tenant of the notice aforesaid and in the event of any material change in the price or any material change in the terms and conditions [and an offer in which the present value of the economic terms of said offer (when view in their entirety) are less than ninety-six percent (96%) of the present value of the economic terms set out in the Offer Notice (in each instance using a 10% discount rate for future economic obligations) shall be deemed material] or in the event that a binding contract for sale is not entered into within said six (6) month period [and closed within six (6) months of the execution of said contract] then Landlord shall again offer the Building to Tenant upon the changed price, terms and/or conditions as aforesaid; provided, however, Tenant shall respond to any such "re-offering" within ten (10) business days of Landlord's said "re-offer". The sale of the Building to an affiliate or the transfer among affiliated entities of interests in the Building shall not trigger the Rights of Purchase in favor of Tenant. For purposes hereof, "affiliate" or "affiliated entity" shall mean any entity controlling or controlled by Landlord or any entity in which Landlord has an ownership interest of fifty percent (50%) or more. SS.1.09 BUILDING SHELL CONSTRUCTION Landlord agrees to cause the Building to be constructed on the Land and to cause all means of ingress and egress to the Building and all above ground and below ground infrastructure improvements and all other exterior improvements in connection with the Project, including, but not limited to parking, driveways, walkways and landscaping to be constructed on the Lot 1B RUA, on the Lot 1C RUA and on the Common Property (hereinafter, sometimes the "Building Shell" or "Building Shell Work"), all in accordance with that certain "Building Shell Description," attached hereto, made a part hereof and marked EXHIBIT 1.09-1 and in accordance with the Building Plans ("Building Plans") and in accordance with the Project Schedule (EXHIBIT 1.06-1). The latest editions of the Building Plans have been reviewed and approved by Landlord and Tenant, are identified on EXHIBIT 1.09-2, and are incorporated herein by reference. The Building Architect and other design professionals, as appropriate, shall certify that the Building Plans have been prepared in accordance with all applicable codes, ordinances, laws and regulations and are complete in all material respects. The Building Shell shall contain all new systems, including, without limitation, mechanical, electrical, plumbing, heating, ventilation and air conditioning. Notwithstanding the foregoing, Landlord represents, warrants, covenants and agrees that the Building Shell Work shall be completed (i) in a good and workmenlike manner, free of any mechanics liens and any other liens which could cause a forfeiture of any of Tenant's rights hereunder or which could interfere with Tenant's quiet enjoyment of the Leased Premises for the Permitted Uses [and if any such forfeiture or interference is actually threatened, Landlord shall provide for the release of such lien(s) by bonding or otherwise, at its sole cost and expense], (ii) Hazardous Substance free and (iii) in compliance, at Substantial Completion (as hereinafter defined), with all applicable codes, ordinances, laws and regulations, the Riverport Indenture, the Sub-Indenture and all conditions, restrictions and other matters of record. SS.1.10 TENANT IMPROVEMENT WORK All work to be completed in connection with the Project by Landlord or Landlord's affiliate which is over and above the Building Shell Work shall be deemed to be "Tenant Improvement Work". Landlord, or Landlord's affiliate, shall serve as the General Contractor for the Tenant Improvement Work. Tenant shall have the right to require Landlord to competitively bid subcontracts and/or to require Landlord to obtain at least three (3) competitive bids for each major trade necessary to complete the Tenant Improvement Work. Copies of all said bids for the Tenant Improvement Work shall be provided by Landlord to Tenant. Landlord, or its affiliate, shall receive seven percent (7%) of the "Tenant Improvement Construction Cost" (hereinafter defined) as its fee for serving as General Contractor of the Tenant Improvement Work. For purposes of this SECTION 1.10, "Tenant Improvement Construction Cost" shall be the total of (a) the final subcontract sums of all construction subcontracts, including sales, use or similar taxes, procured by Landlord or its affiliate for the Tenant Improvement Work (but this shall not preclude Tenant from contracting directly for improvements or installations to the Leased Premises, such as data and telephone cabling and modular partition installations, which if contracted directly and the completion of which is not supervised by Landlord or Landlord's affiliate shall not be deemed to be a Tenant Improvement Construction Cost but rather shall be deemed to be "Tenant Improvements By Tenant"), (b) remuneration, including welfare or other benefits payable to personnel of Landlord's (or Landlord's affiliate) when stationed at the Project field office, but in an amount not to exceed $25,000.00 in the aggregate, (c) subject to prior written approval of Tenant, fees of testing laboratories and services, if any, (d) costs, including transportation and maintenance, of all materials, supplies, equipment, and temporary facilities reasonably and necessarily used or consumed in the performance of the Tenant Improvement Work, (e) losses and expenses, not compensated by insurance or otherwise, sustained by Landlord or Landlord's affiliate in connection with the Tenant Improvement Work, provided said loss or expense is not due to Landlord or Landlord's affiliate's negligence, but in an amount not to exceed $10,000.00 in the aggregate, (f) costs of the building permit for the Tenant Improvement Work and for other permits, licenses and inspections reasonably and necessarily attendant to the Tenant Improvement Work, (g) subject to prior written approval of Tenant, the portion of reasonable travel and subsistence expenses of Landlord or its affiliate's officers or employees incurred while traveling in the discharge of their duties reasonably, necessarily and specifically connected with the Tenant Improvement Work. Except as specifically provided above, no other costs or expenses (including, without limitation, general conditions) shall be included in the Tenant Improvement Construction Costs. Tenant shall have the right to select specific trade subcontractors to perform the Tenant Improvement Work, subject to Landlord's reasonable approval, which approval shall not be unreasonably withheld, conditioned or delayed. Nonetheless, Landlord shall have the right to reject subcontractors so selected by Tenant if in Landlord's reasonable opinion the selection of said subcontractors will have a negative affect on the Substantial Completion of the Project and/or on the Project Schedule. Plans for the Tenant Improvement Work shall be prepared by Tenant's interior space designer (in cooperation with Landlord, Tenant and the Building Architect) ("Tenant Improvement Plans") and Tenant's interior space designer shall certify that said Tenant Improvement Plans have been prepared in accordance with all applicable codes, ordinances, laws and regulations and are complete in all material respects. Landlord shall cause the Tenant Improvement Work to be completed (i) in a good and workmenlike manner, free of any mechanics liens or any other liens which could cause a forfeiture of any of Tenant's rights hereunder or which could interfere with Tenant's quiet enjoyment of the Leased Premises or the Permitted Uses [and if any such forfeiture or interference is actually threatened, Landlord shall provide for the release of such lien(s) by bonding or otherwise], at its sole cost and expense and (ii) in accordance with said Tenant Improvement Plans and the Project Schedule. The reasonable and necessary Tenant Improvement Construction Costs of the Tenant Improvement Work actually incurred shall be paid by Landlord on a percentage of completion basis [but with a retention (absent an agreement between Landlord and Tenant to the contrary) of not less than five percent (5%)] following receipt of appropriate invoices (and Landlord shall promptly provide copies of said invoices for the Tenant Improvement Work to Tenant and shall keep Tenant generally appraised of all payments made for said Tenant Improvement Construction Cost). Landlord shall apply, pro tanto, the Tenant Improvement Allowance (as hereinafter defined) toward the Tenant Improvement Construction Cost as the cost thereof becomes payable. Landlord's application of the Tenant Improvement Allowance to the Tenant Improvement Construction Cost shall be subject to reasonable rights of review and approval of each such application by Tenant. To the extent the Tenant Improvement Construction Costs exceed the Tenant Improvement Allowance, Tenant shall reimburse Landlord, on a monthly basis, following receipt by Tenant from Landlord of invoices in reasonable detail for Tenant Improvement Construction Costs for completed Tenant Improvement Work in excess of the Tenant Improvement Allowance. Upon Substantial Completion of the Project, if any portion of the Tenant Improvement Allowance is not expended as aforesaid or otherwise in this Lease provided, Landlord shall, at Tenant's direction pay any remaining portion directly to Tenant's Contractors for Tenant Improvements By Tenant or shall pay said sum directly to Tenant or shall apply same to Rent next coming due pursuant to the terms of this Lease. Any disputes between Landlord and Tenant as to the construction and completion of Tenant Improvement Work or the Tenant Improvement Construction Costs shall be submitted to Dispute Resolution as provided in SECTION 3.22 hereof. SS.1.11 SUBSTANTIAL COMPLETION The Project shall be deemed "Substantially Completed" (sometimes herein "Substantially Completed" or "Substantial Completion") when all of the following conditions and requirements have been met: (a) Landlord shall have substantially completed construction of the Building Shell and the Tenant Improvement Work (or, if applicable, a portion thereof) and shall have provided to Tenant the Building Architect's certificate (and with respect to the Tenant Improvement Work the certificate of Tenant's interior space designer) that the Building Shell and the Tenant Improvement Work are sufficiently complete in accordance with the Building Shell Description, the Building Plans and/or the Tenant Improvement Plans so that the Project can be utilized by Tenant for its intended purpose [except for items of minor "punch list" work, the completion of which will not materially affect the use of the Project for its intended purpose(s)]. At least ten (10) business days prior to substantial completion of any portion or portions of the Project, Landlord shall advise Tenant, the Building Architect and Tenant's interior space designer of the fact that same is sufficiently complete to allow the inspection thereof for purposes of completing the punch list. Promptly thereafter, Tenant, Landlord, the Building Architect and Tenant's interior space designer shall jointly complete an inspection of the Project (or applicable portions thereof) and shall complete a written listing (punch list) of items to be finished or completed by Landlord [which Landlord agrees to complete as soon as reasonably possible following the completion of said punch-list but not later than thirty (30) days following the Commencement Date] [provided, however, that if in order to complete a punch list item a long lead time type item is reasonably required (such as special order wall covering) and said punch list item cannot be reasonably completed within such time period without said long lead time item [(and Landlord has advised Tenant of said fact, in writing, within ten (10) business days of receipt of the punch-list and placed any necessary order within said ten (10) day period], then the time within which that specific punch-list item is to be completed shall be extended day for day for the period between the date such long lead time type item was ordered and the date such item is received (and Landlord and the contractors shall use all reasonable efforts to obtain any long lead time items at the earliest reasonably practicable date)]; (b) Landlord shall have delivered or caused to be delivered all parking and access areas in the Lot 1B RUA and in the other Common Property (including the Lots 1A and 1C Restricted Use Areas) Substantially Completed; (c) issuance of an occupancy permit(s) by cognizant governmental authorities which permits legal occupancy of the entire Project or all material portions thereof [and in this regard both Landlord and Tenant shall timely take all steps reasonably required of them by said authorities prerequisite to the issuance of said permit(s), if any, and failure of either to do so shall be deemed a (Landlord) delay and/or a Tenant Delay, as applicable; provided, however, to the extent that any such authority requests that Tenant take any step which, under the terms of this Lease, is the responsibility of Landlord, such request shall be deemed a request of Landlord]. SS.1.12 SIGNAGE Tenant shall have the right to install signage on the face of the Building or at such other location(s) reasonably acceptable to Landlord, providing said signage meets all requirements of the Indenture and the requirements of all cognizant governmental authorities. Landlord agrees to cooperate in good faith with Tenant, in Tenant's dealings with the Riverport Trustees under the Indenture and with cognizant governmental authorities, to meet Tenant's reasonable signage requirements. SS.1.13 INSPECTION Tenant and its agents, representatives and employees shall have the right at any time following the date hereof and prior to the Commencement Date to enter upon the Project in order to inspect the Building Shell Work and the Tenant Improvement Work, provided such entry shall not unreasonably interfere with the Building Shell Work or the Tenant Improvement Work. SECTION II. RENT, ALLOWANCES, ADJUSTMENTS TO RENT, SERVICES SS.2.01 RENT Tenant's "Base Rent" for the periods hereinafter in this SECTION 2.01 specified shall be as follows: From The Commencement Date Through The Last Day Of The 5th Lease Year Thereafter $ 12.11/RSF From the First Day Of The 6th Lease Year Through The Termination Date $ 12.66/RSF Tenant shall pay to Landlord during the Lease Term the Base Rent calculated as in this SECTION 2.01 provided, together with the Additional Rents herein reserved (Base Rent and Additional Rents are herein sometimes collectively referred to as "Rent" or "Rents"), all of which shall be payable without any setoff or deduction whatsoever, except as specifically provided in SECTION 3.07-8 and elsewhere in this Lease. Base Rent and Additional Rents shall be paid to Landlord in the monthly installments as specified in SECTION 1.01 hereof, in advance, on the first day of each calendar month, during the entire Lease Term at Landlord's address specified in SECTION 1.01 for payments, or to such other person or entity or to such other address as Landlord may from time-to-time designate in writing. Tenant's obligation to pay all Rent due under this Lease shall survive the expiration or earlier termination of this Lease. In the event the Commencement Date or Termination Date are other than the first and last day of a month, respectively, Rents payable hereunder for the months in which the Commencement Date and Termination Date occur shall be apportioned (30 days to a month) and said apportioned Rent for the partial month in which the Commencement Date occurs shall be paid as and with the Rent payable on the first day of the month following the month in which the Commencement Date occurs. Notwithstanding anything to the contrary herein, Tenant shall have the use of the Lot 1B RUA and the Common Property rent free during the Lease Term and any Renewal Term (but this shall not be construed to relieve Tenant of any obligations to pay maintenance, utility and other like expenses associated with said Lot 1B RUA and Common Areas as in the Sub-Indenture or otherwise herein specifically provided). SS.2.01-1 ALLOWANCES The Tenant Improvement Allowance shall be Three Million Dollars ($3,000,000.00) ($25.00/RSF*120,000 RSF) and shall be applied by Landlord to the Tenant Improvement Construction Costs of the Tenant Improvement Work as in SECTION 1.10 hereinbefore provided. In addition to the Tenant Improvement Allowance, Landlord shall pay to Tenant or to Tenant's designee toward the cost of the design of the Leased Premises and toward the cost of completion of the Tenant Improvement Plans the sum of One Hundred Twenty Thousand Five Hundred Eight Dollars ($120,508.00) ("Tenant Design Allowance"). In addition to the Tenant Improvement Allowance and the Tenant Design Allowance, Landlord shall pay to Tenant or to Tenant's designee toward the cost of the design and installation of signage, as in SECTION 1.12 hereinbefore specified, the sum of Eight Thousand Dollars ($8,000.00) ($3,000.00 for exterior signage and $1,000.00 for each of 5 entry drive signs) ("Tenant Signage Allowance"). In addition to the Tenant Improvement Allowance, the Tenant Design Allowance and the Tenant Signage Allowance, Landlord shall pay to Landlord's affiliate, or such other person and/or entities completing such work toward the cost of the design and installation of a computer room(s), the sum of Two Hundred Thousand Dollars ($200,000.00) ("Computer Room Allowance") and toward the cost of the interior decorations of three elevator cabs the sum of Twenty-Two Thousand, Five Hundred Dollars ($22,500.00) ($7,500.00 for each of 3 elevator cabs) ("Elevator Cab Allowance"). Any portion of any of the foregoing Allowances which are not fully expended shall be paid to Tenant. Any costs to complete the work for which any of the aforesaid Allowances has been provided in excess of said Allowances shall be borne by Tenant and shall be paid to Landlord or to Landlord's designee as in SECTION 1.10 herein provided. SS.2.01-2 CHANGE ORDERS If following the execution of this Lease, the scope of work set out in the Building Shell Description is changed by written agreement of the parties hereto ("Change Order") (and Landlord and Tenant shall in good faith cooperate to make any changes in the Building Shell Description which do not materially change from the perspective of both Landlord and Tenant the general nature and scope of the Project or the quality thereof), then the net increase in costs of such Change Order(s) [which shall include Landlord's actual cost of labor and materials necessary to complete said change plus a seven percent (7%) overhead charge on any net increase in costs] shall be paid by Tenant to Landlord or Landlord's designee. When reasonably practicable, Change Orders shall be competitively bid. Tenant may elect to have the net increase in costs of such Change Order(s) paid from the Tenant Improvement Allowance. During the subcontractor bidding of the Building Shell Work, Landlord and Tenant shall identify and establish unit pricing as may be applicable to the Building Shell Work which may be affected by a Change Order. Presently anticipated unit price items include VAV boxes, diffusers/grills, wood doors with hardware, sprinkler heads, light fixtures and electrical devices. To the extent Change Order(s) result in a reduction of the cost of the Building Shell, the net decrease in costs of said Change Order(s) shall be credited to Tenant's benefit by a dollar for dollar increase in the amount of the Tenant Improvement Allowance. To the extent such Change Order(s) actually results in a delay in the Substantial Completion of the Project, such delay shall be deemed a Tenant Delay. SS.2.02 RENEWAL TERM RENT Base Rent for any Renewal Term, as in SECTION 1.06-7 hereof provided, shall be ninety-five percent (95%) of the projected "Effective Market Base Rent Rate," as at the commencement date of the Renewal Term which said Effective Market Base Rent Rate shall be the rate charged to tenants for space of comparable size, location, and conditions in comparable property within a five (5) mile radius of the Building. Said Effective Market Base Rent Rate shall take into consideration the following: location, quality, age, floor levels, common area factors, finish allowances, rental abatement, parking charges, lease assumptions, moving allowances, space planning allowances, refurbishment allowances, and any other concession or inducement. In additional, other consideration such as credit standing of Tenant, lease term, and any other issues that would be relevant in making a market rate determination should be considered. Landlord shall inform Tenant, in writing, of Landlord's proposed Effective Market Base Rent Rate for a Renewal Term at least fifteen (15) months prior to the expiration of the then Lease Term. If Landlord and Tenant should be unable to agree as to the Base Rent for any Renewal Term within twenty (20) days of receipt by Tenant of Landlord's said notice, then Landlord and Tenant shall each select a qualified real estate appraiser (as hereinafter defined) to determine the Effective Market Base Rent Rate. Said appraisers shall render their written decision within twenty (20) days after the date of their selection. If the difference between the high appraisal and the low appraisal is ten percent (10%) or less of the low appraisal, then the Effective Market Base Rent Rate shall be the average between the low appraisal and the high appraisal and the Base Rent for the Renewal Term shall be ninety-five percent (95%) thereof. In the event said difference is in excess of ten percent (10%), then the appraisers shall mutually select a third appraiser who shall render a written decision of the Effective Market Base Rent Rate within twenty (20) days of his/her selection. The Rent during the Renewal Term shall be ninety-five percent (95%) of the Effective Market Base Rent Rate as established by the third appraiser; provided, however, that said Rate shall not be greater than the initial high appraisal or be less than the initial low appraisal nor shall the Renewal Term Base Rent Rate be less than the Base Rent Rate payable by Tenant to Landlord as of the Termination Date of the immediately preceding Lease Term. In the event that the two appraisers fail or refuse to select a third appraiser, either party may make application, upon written notice to the other, to the Chief Judge of the United States District Court for the Eastern District of Missouri, Eastern Division, who shall select the third appraiser. Either party may, within three (3) business days of the making of application to the Chief Judge, submit a list of not more than five (5) qualified (as herein specified) real estate appraisers for the guidance of the Chief Judge. Each party shall pay the appraiser selected by it and the costs of the third appraiser, if any, shall be borne equally by Landlord and Tenant. If it shall become necessary to select appraisers in accordance with the terms of this SECTION 2.02, said appraisers shall be either (i) a disinterested commercial real estate broker with at least ten (10) years professional experience in the St. Louis, Missouri metropolitan office market, or (ii) a disinterested person with at least ten (10) years professional experience in commercial real estate appraisal in the St. Louis, Missouri metropolitan area, and a member in good standing in at least one of the following professional organizations: The Society of Real Estate Appraisers (holding the SREA designation), or the American Institute of Real Estate Appraisers (holding the MAI designation). SS.2.03 ADDITIONAL RENT All sums hereinafter designated Additional Rent and all other sums provided in this Lease to be paid by Tenant to Landlord, and all charges, costs, and expenses for any services, goods or material furnished by Landlord at Tenant's request, which are not required to be furnished by Landlord under this Lease, together with interest at the rate of ten percent (10%) per annum that may accrue thereon in the event Tenant fails to pay such amount within ten (10) days of notice from Landlord of the amount then due, and all damages, costs and expenses, including reasonable attorneys' fees (whether paid to Landlord's in-house counsel or otherwise), which Landlord may incur by reason of any default of Tenant or failure on the Tenant's part to comply with the terms of this Lease, shall be deemed to be "Additional Rents," and in the event of non-payment thereof by Tenant, except for permitted setoffs and deductions, the Landlord shall have all of the rights and remedies with respect thereto as Landlord has for non-payment of the Rent herein reserved to be paid. SS.2.04 TENANT'S OBLIGATIONS TO MAINTAIN During the Lease Term and any Renewal Term(s), Tenant, either directly or indirectly through a contractor or contractors of its choosing [providing that such contractor(s) is/are qualified and reputable], shall, at its sole cost and expense (unless herein otherwise specifically provided) maintain in good operation, order, condition and repair, as and when needed, the following consistent with other substantially similar office buildings located within Riverport or at a substantially similar office complex or building within a five (5) mile radius of the Building: (a) All mechanical, ventilating, heating and air conditioning, plumbing, fire sprinkler, security/card access and electrical and other utility systems in or serving the Building (including that installed for Tenant's specific and exclusive use, whether as part of the Tenant Improvement Work or subsequently installed) including, for example, and without limitation, the elevators, air conditioning, restroom facilities and electrical and janitorial closets and interior and exterior window washing at least annually; and, (b) the Lot 1B RUA including, without limitation, lawn and landscaped areas (including tree and shrub replacements), walkways (including, also, the portions of the "covered walkway" being constructed on the Lot 1C RUA as part of the Building Shell Work), driveways and parking areas (including snow and ice removal), but only to the extent not the obligation of the Riverport Trustees and/or the Sub-Trustees under the Riverport Indenture or the Sub-Indenture; and, (c) the interior of the Building (including, specifically, but not by way of limitation, the Building common areas, such as lobbies, stairs, atriums, interior plantings, corridors and restrooms); except, in each of the cases above, (i) for repairs or maintenance required by reason of the misuse or neglect of Landlord or any of its employees, agents or contractors, (ii) Major Repairs (as hereinafter defined) and (iii) Capital Expenditures (as hereinafter defined). In connection with the foregoing, Tenant shall establish and maintain throughout the Lease Term a preventative maintenance program, including the maintenance of service contracts, as appropriate, which follow, at a minimum, the reasonable preventative maintenance recommendations of the manufactures of all Building systems, covering, but not by way of limitation, the following: mechanical, heating, ventilating and air-conditioning, elevators, fire sprinkler, security, electrical distribution, fire alarm panel and plumbing systems. In the event that maintenance and repairs which are the responsibility of Tenant are not completed in a reasonable time after receipt of written notice from Landlord, then Landlord may, but shall not be obligated to, perform such maintenance or repairs and make demand upon Tenant for reimbursement of the reasonable and necessary cost thereof plus interest from the date the expenditure is made at the rate of ten percent (10%) per annum, in which event Tenant agrees to make or cause such reimbursement to be made within thirty (30) days of receipt of such demand. SS.2.04-1 EXCEPTIONS TO MAINTENANCE OBLIGATIONS Nothing herein shall obligate Tenant to pay for Capital Expenditures (as hereinafter defined), Major Repairs (as hereinafter defined) or to pay for required repair or maintenance resulting from a defect in the construction of the Project constructed by Landlord pursuant to the terms of this Lease or for repairs or maintenance, if any, which by the specific terms of the Lease are the responsibility of Landlord to perform or for repairs or maintenance resulting from the negligence of Landlord, its employees, agents, contractors and/or representatives. Nothing herein shall require, or be construed to require, Tenant to make or pay for any structural changes to the Project (which shall be and remain the sole obligation of Landlord as elsewhere in this Lease provided), unless such structural changes shall be ordered or necessitated by alteration or improvements made to the Project after the Commencement Date by Tenant or by Tenant's conduct of business at the Project, or unless such structural changes shall be the natural result of such alterations or improvements or such conducting of business. SS.2.05 TENANT TO PAY TAXES Tenant shall pay or cause to be paid, directly to the governmental entity to which same are due, on or before the date due or within twenty (20) days of receipt of a statement(s) therefor from either the governmental entity or Landlord, whichever is later, all real estate taxes, whether federal, state, county or municipal which are imposed either directly or indirectly through the Riverport Trustees and/or the Sub-Trustees upon the Land and the Lot 1B RUA and/or improvements and appurtenances thereto ("Real Estate Taxes"). The foregoing notwithstanding, Real Estate Taxes shall be payable by Tenant only to the extent they relate to the Lease Term and to the extent any Real Estate Taxes benefit the Land and the Lot 1B RUA for a period prior to or beyond the Lease Term, Tenant's liability therefore shall be limited to that portion of said Real Estate Taxes that would, pursuant to generally accepted accounting principals consistently applied, be equitably allocated to the Land and the Lot 1B RUA for the term of the Lease only. Landlord shall cause the Land to be designated as a separate tax parcel. Landlord shall use its best efforts to cause the Lot 1B RUA to be designated as a separate tax parcel or to have the land and improvements located within the Lot 1B RUA to be assessed with the Land if no separate tax parcel may be accomplished. Landlord shall promptly provide to Tenant any tax statements applicable to the Land and the Lot 1B RUA received by it. Real Estate Taxes shall not include federal, state and local income taxes, transfer taxes, capital gains taxes, corporate taxes, inheritance taxes, payroll taxes or taxes on rents or gross receipts, excess profits taxes, franchise and capital stock taxes, any other taxes which are imposed or measured by Landlord's income or profits unless such income or profits tax is based exclusively on Landlord's income or profits from the Land and/or the Lot 1B RUA and the same are in lieu of Real Estate Taxes or penalties or interest for late payment of taxes except to the extent such penalties and/or interest resulted from a default by Tenant in paying Real Estate Taxes. Notwithstanding anything to the contrary herein, (i) Real Estate Taxes shall not include real estate taxes for the Lot 1A RUA, the Lot 1C RUA or the Common Property (except those Real Estate Taxes applicable to the Common Property (other than Restricted Use Areas) which may be a part of the "Assessments" under the Sub-Indenture and as therein defined and limited). Either Landlord or Tenant shall have the right to contest or cause the Riverport Trustees and/or the Sub-Trustees to contest unreasonable Real Estate Taxes (using counsel and appraisers mutually acceptable to both Landlord and Tenant) provided that neither Landlord nor Tenant shall accept any settlement of the assessed value of the Land, the Lot 1B RUA, the Common Property or the Common Ground or any part thereof without the prior written approval of the other, which approval shall not be unreasonably withheld, conditioned or delayed and providing further that in contesting any such Real Estate Taxes the contesting party(ies) shall take all required action to prevent a lien for delinquent taxes from being imposed upon the Land, the Lot 1B RUA, the Common Property or the Common Ground or any part thereof, including the payment of all said contested taxes under protest, if required. Landlord and Tenant shall in good faith cooperate toward the end that the Real Estate Taxes with respect to the Land, the Lot 1B RUA, the Common Property and the Common Ground are at all times during the Lease Term reasonable and proper and to the extent appropriate as low as reasonably practicable. Neither Landlord nor Tenant shall be required to join in any proceeding or contest brought by the other to contest Real Estate Taxes unless the provisions of law or the Indenture or the Sub-Indenture require that the proceeding or contest be brought by or in the name of Landlord and Tenant. In that case, the other party shall join in the proceeding or contest or permit it to be brought in said other party's name or the name of the Riverport Trustees or the Sub-Trustees, as the case may be, and the requesting party shall reimburse the other party for its actual reasonable out-of-pocket costs and expenses incurred in connection with such proceeding or contest. Any refund resulting from such a proceeding or contest brought either by Landlord or Tenant or by them jointly shall be applied or paid first to reimburse Landlord and Tenant prorata for their actual reasonable out-of-pocket costs and expenses incurred in connection with such proceeding and then to reimburse Tenant for any overpayment of Real Estate Taxes for the period(s) covered by such contest or proceeding, together with interest on such amount at ten percent (10%) per annum, and any remaining balance shall be paid to Landlord. In the event Tenant fails to pay any Real Estate Taxes required by the terms hereof by Tenant to be paid by the date hereinbefore provided (providing said Real Estate Taxes are not contested as hereinbefore provided), Landlord may notify Tenant in writing of such failure, and, if Tenant fails thereafter to pay said Real Estate Taxes, plus any penalties and interest that may be due thereon, within thirty (30) days after said notice, then Landlord may pay said Real Estate Taxes, plus any penalties and interest that may be due thereon (but Landlord shall not be required to do so), and, in such event, Tenant shall reimburse Landlord for such payment(s) as Additional Rent. SS.2.06 TENANT TO PAY ASSESSMENTS Tenant shall pay or cause to be paid, directly to the Riverport Trustees and/or the Sub-Trustees on or before the date due or within twenty (20) days of receipt of a statement(s) therefor from either the Riverport Trustees, the Sub-Trustees or Landlord, whichever is later, all assessments of said Trustees with respect to the Land, the Building and the Lot 1B RUA as in the Riverport Indenture and/or the Sub-Indenture specifically provided, but only as therein specifically provided. The foregoing notwithstanding, regular and special, if any, assessments shall be payable by Tenant only to the extent they relate to the Lease Term and to the extent any assessments benefit the Land, the Building and the Lot !B RUA for a period prior to or beyond the Lease Term, Tenant's liability therefore shall be limited to that portion of said assessments that would, pursuant to generally accepted accounting principals consistently applied, be equitably allocated to the Land, the Building and the Lot 1B RUA for the term of the Lease only. Notwithstanding the foregoing or anything to the contrary herein, Tenant shall not be liable for (i) assessments under the Sub-Indenture for any Restricted Use Areas other than the Lot 1B RUA, (ii) Common Property Assessments under the Sub-Indenture or Assessments under the Indenture except as in the Sub-Indenture and the Indenture, respectively, specifically defined, provided and limited and (iii) assessments under the Indenture and/or the Sub-Indenture to the extent such assessments are made with respect to, or relate to Capital Expenditures (as hereinafter defined) or to any other expenditures (including, but not limited to real estate taxes and insurance) which pursuant to the terms of this Lease are the obligation of Landlord. In other words, expenses which pursuant to the specific provisions of this Lease are the responsibility of Landlord shall not become the responsibility of Tenant merely because they are passed onto Tenant indirectly by way of an assessment under the Indenture and/or the Sub-Indenture, but rather all such expenses shall be and remain the sole and separate liability of Landlord as herein specifically provided. Either Landlord or Tenant shall have the right to contest assessments of the Trustees and/or the Sub-Trustees. Landlord and Tenant shall in good faith cooperate toward the end that said assessments are at all times during the Lease Term reasonable and proper and to the extent appropriate as low as reasonably practicable but without jeopardizing the quality of the Project and/or Riverport. In the event Tenant fails to pay any such assessments required by the terms hereof by Tenant to be paid by the date hereinbefore provided, Landlord may notify Tenant in writing of such failure, and, if Tenant fails thereafter to pay said assessments, plus penalties and interest, if any, that may, pursuant to the Riverport Indenture and/or the Sub-Indenture, be due thereon, within thirty (30) days after said notice, then Landlord may pay said assessments, plus any said penalties and interest (but Landlord shall not be required to do so), and, in such event, Tenant shall reimburse Landlord for such payment(s) as Additional Rent. Tenant shall have the same rights, if any, that Landlord may from time-to-time have with respect to the examination of the books and records of the Riverport Trustees and/or the Sub-Trustees. Landlord hereby represents and warrants that no cost or expense of the presently mandated expansion of Riverport Drive from two lanes to four lanes shall be included in the assessments of either the Riverport Trustees or the Sub-Trustees and Tenant shall have no responsibility for the same. Pursuant to certain agreements between Landlord and Sverdrup/MDRC Joint Venture ("Sverdrup"), Sverdrup agreed to construct, at its own expense, the mandated expansion of Riverport Drive. Landlord shall use its best efforts to cause Sverdrup to timely construct and complete the mandated expansion of Riverport Drive, and Landlord shall not consent to, acquiesce in, or take any action which would relieve Sverdrup of its obligation with respect thereto. SS.2.07 TENANT TO PAY UTILITIES Effective as at the Commencement Date, Tenant shall contract directly with all applicable utility providers for all utility services required at and about the Building and the Lot 1B RUA, including, but not limited to, electric, telephone, water, sewer and gas, if applicable, and for any and all other utility service(s) which may from time-to-time during the Lease Term be necessary and/or desirable to the use, maintenance and repair of the Building and the Lot 1B RUA (but excluding any utilities which pursuant to the terms of the Indenture and/or the Sub-Indenture are to be provided and paid for by the Riverport Trustees and/or the Sub-Trustees) and except as otherwise provided herein, shall cause all charges (including customer deposits, if any) in connection with the providing of such services to be timely paid directly to said utility providers. In the event Tenant fails to pay any such charges, Landlord may notify Tenant in writing of such failure, and, if Tenant fails thereafter to pay said charges, plus any penalties and interest that may be due thereon, within thirty (30) days after said notice, then Landlord may pay said charges, plus any penalties and interest that may be due thereon (but Landlord shall not be required to do so), and, in such event, Tenant shall reimburse Landlord for such payment(s) as Additional Rent. Tenant acknowledges that any one or more of the above services may be suspended by reason of accident, repair, alterations or the making of necessary improvements, strikes, lockouts, governmental requirements or causes beyond the reasonable control of Landlord. No such interruption, change or malfunction of any of said services shall constitute an eviction or disturbance of Tenant's use and possession of the Project or a breach by the Landlord of any of its obligations hereunder or render Landlord liable for damages or entitle Tenant to be relieved from any of its obligations hereunder or grant Tenant any right of setoff or recoupment. Landlord will, however, in good faith cooperate with Tenant (but without out-of-pocket cost or expense to Landlord) to cause any such interrupted services to be promptly restored. Notwithstanding anything to the contrary herein, Landlord shall be responsible for and shall pay all tap-in, connection and similar charges imposed by any utility provider in connection with the completion of the Building Shell Work. SS.2.08 LANDLORD REPAIR, MAINTENANCE, RESTORATION AND REPLACEMENT OLIGATIONS During the Lease Term and any Renewal Term(s), and notwithstanding anything to the contrary in SECTION 2.04, Landlord shall, at its sole cost and expense: (i) maintain in good operation, order, condition and repair, as and when needed, the exterior surface of the Building (including roof and all curtain wall systems (including glass, but excluding routine cleaning thereof), all structural parts of the Building, both exterior and interior, including, without limitation, floor slabs (unless overloaded by Tenant), and all utility lines from the point of access at the street (or other junction) to the Building; (ii) make all Major Repairs (as defined below) and replacements to the Building and the Lot 1B RUA (and portions thereof) requiring Major Repairs or replacements thereof, including, but not by way of limitation, mechanical systems, heating, ventilating and air-conditioning systems; elevators; fire sprinklers; electric distribution, plumbing and other utility systems, concrete flat work and curbs, concrete and/or asphalt parking lots and driveways, and the fire alarm panel (but excluding any security/card access system which shall be replaceable, if replaced, at Tenant's sole cost and expense). As used herein, "Major Repair" and "Major Repairs" shall mean repairs to any system or component thereof whereby the cost to repair such system or component, as applicable, exceeds fifty-five percent (55%) of the cost to replace such system or component, as applicable. ("Capital Expenditures" or "Capital Expenses" shall mean all expenditures made or to be made for Major Repairs and replacements.) Under no circumstances shall Tenant have any obligation to pay any of the following costs and expenses (either directly or indirectly by way of assessments under the Indenture or the Sub-Indenture) associated with the Project (whether considered Capital Expenditures or otherwise), such costs and expenses being the responsibility of Landlord: (a) Costs of correction of defects in the initial construction of the Project or costs or expenses for repairs, replacements, or improvements arising from the initial construction of the Project to the extent such expenses are reimbursed or reimbursable to Landlord by virtue of warranties from contractors or suppliers; (b) Costs of repairs, maintenance, restoration and/or replacement in connection with the roof, structure and curtain wall (including glass) systems, unless caused or materially contributed to by the negligence of Tenant or Tenant's Representatives; (c) depreciation; (d) interest, principal payments and other costs and expenses made with respect to mortgages and deeds of trust and other loans (secured or unsecured) in connection with the Project, if any, or the refinancing thereof; (e) ground lease payments; (f) income, excess profits, franchise and/or capital gains taxes measured by income or revenue of Landlord from the operation of the Project; (g) salaries, wages or other compensation paid to officers or executives of Landlord in their capacities of officers or executives; (h) market study fees; (i) any monies paid by Landlord because it is in default under any kind of agreement; (j) salaries, wages or other compensation and related expenses paid to employees of Landlord who are not assigned to the operation, management, maintenance or repair of the Project; (k) Landlord's general corporate overhead; (l) costs for repairs or restoration or for damage to persons and/or property, including, without limitation, the Project, for which Landlord receives insurance benefits or should have received insurance benefits if it had carried insurance for a covered loss as in this Lease specifically provided (except for the amount of any insurance deductible); (m) repairs or other work occasioned by the exercise of the right of eminent domain; (n) except as herein otherwise specifically provided, costs or expenses associated with bringing the Project into compliance with any local, State or Federal law enacted subsequent to the Commencement Date; (o) costs relating to maintaining Landlord's existence, either as a corporation, partnership, or other entity such as annual fees, partnership organization or administration expenses, deed recordation expenses, legal and accounting fees (other than with respect to Project operations); (p) fines or penalties resulting from violations of laws, or governmental rules, regulations or agreements by Landlord; (q) overhead and profit paid to subsidiaries or affiliates of Landlord for services on or to the Project, to the extent only that the costs of such services exceed competitive costs for such services where they were not so rendered by a subsidiary or affiliate; (r) real estate brokers' leasing commissions or compensation, advertising expenses or any other expenses in leasing space in the Building; (s) costs attributable to other tenant's space in the Building, including, without limitation, utility costs and expenses, alterations, capital repairs or replacements and repair and maintenance costs and expenses; and (t) costs of initial capital improvements to Riverport or to the Common Property (unless Tenant consents to a Special Assessment therefor as in SECTION 1.03 hereof provided). In the event of any dispute between Landlord and Tenant as to whether any system or component thereof requires a Major Repair or replacement, such matter shall be submitted to Dispute Resolution as provided in SECTION 3.22 hereof. SS.2.09 BROKERAGE COMMISIONS Tenant warrants that it has had no dealings with any real estate broker or agent except Grubb & Ellis/Krombach Partners in connection with this Lease. Landlord warrants that it has had no dealings with any real estate broker or agent except Duke Realty Services, Inc. in connection with this Lease. Landlord agrees to pay Grubb & Ellis/Krombach Partners a leasing commission equal to the sum of Three Hundred Sixty-Eight Thousand, Nine Hundred Sixty-Two and 96/100 Dollars ($368,962.96), one-half (1/2) of which shall be payable within thirty (30) days of the execution of this Lease and the remaining one-half (1/2) of which shall be payable within thirty (30) days of the Commencement Date. Tenant agrees to indemnify and hold Landlord harmless from and against any actions, suits, or claims (including, without limitation, reasonable legal fees, costs and expenses) for a brokerage, finder or other commission or fee arising out of any dealings had by Tenant with any broker or finder concerning the renting of the Project to Tenant other than Grubb & Ellis/Krombach Partners. Landlord agrees to indemnify and hold Tenant harmless from and against any actions, suits or claims (including, without limitation, reasonable legal fees, costs and expenses) for a brokerage, finder or other commission or fee arising out of any dealings had by Landlord with any broker or finder concerning the renting of the Project to Tenant. SECTION III. GENERAL PROVISIONS SS.3.01 DAMAGE OR DESTRUCTION In the event the Project is damaged or destroyed in whole or in part due to fire or other casualty during the Lease Term or any Renewal Term, Landlord and Tenant shall promptly meet and confer and attempt to mutually agree in writing with regard to the percentage of the Project damaged or destroyed and the time (inclusive of any reasonable period of insurance adjustment) within which the damage or destruction can be repaired, restored and/or replaced (hereinafter in this SECTION 3.01 together and individually as the content so requires, called "repaired"). For purposes of determining such time of repair there shall be included therein the time required to repair those portions of the Project reasonably necessary for Tenant's use or occupancy of the Project such as, but not limited to, HVAC, electrical, mechanical and plumbing systems and those portions of the Project which afford access thereto. If the Landlord and Tenant cannot agree upon the percentage of the Project damaged or destroyed and/or the time within which the Project can be repaired within thirty (30) days after the date of the damage or destruction, Landlord and Tenant shall immediately submit the unresolved issues to The Henderson Group, the Building Architect, or a like architectural firm acceptable to Landlord and Tenant, which shall render an opinion in writing at the earliest reasonably practical date binding on Landlord and Tenant, with the costs of said opinion being borne equally by Landlord and Tenant. In the event the parties are unable to agree upon an architectural firm, in the event the Henderson Group is unable or unwilling to act as hereinbefore provided, then the selection of the alternative architectural firm shall be submitted for Dispute Resolution as in SECTION 3.22 hereof provided. In the event the damage or destruction of the Project is total, Landlord or Tenant may elect to terminate the Lease as to all of the Project by giving written notice to the other within thirty (30) days after the agreement of the parties or after receipt of the architect's opinion, as aforesaid (hereinafter the "Damage Determination Date"). For purposes hereof, a total destruction shall be defined as damage or destruction which leaves at least seventy-five percent (75%) of the Leased Premises in the Building unfit for use or occupancy by Tenant. In the event of such a total destruction of the Project and neither Landlord nor Tenant elects to terminate as hereinabove provided, or in the event there is not such a total destruction of the Project, the following shall govern: (a) if the damage or destruction to the Project cannot reasonably be repaired within two hundred and ten (210) days of the date of the occurrence of the casualty, Tenant may elect, by giving written notice to Landlord within thirty (30) days of the Damage Determination Date, to terminate this Lease as to all of the Project (but not less than all of the Project), effective as of the date of the occurrence of the casualty; (b) if the Project can be repaired within two hundred ten (210) days of the date of the occurrence of the casualty or if this Lease is not terminated by reason of such casualty as aforesaid, then Landlord shall repair and restore the Project (including specifically, but not limited to, the Building, the Tenant Improvement Work, Tenant Improvements By Tenant and the parking and access areas on the Restricted Use Areas, the Common Property and the Common Ground) at Landlord's expense, with all reasonable speed and promptness, subject to Force Majeure Delays and Tenant Delays; provided, however, that Landlord shall not be required to restore any alterations, additions, or improvements made by or for Tenant which would not belong to Landlord upon the expiration of this Lease nor, since Tenant has the obligation hereunder for providing adequate insurance as in SECTION 3.11 hereof provided, shall Landlord be required to expend sums in so doing in excess of available insurance proceeds. Rent shall abate proportionately during the period from the date of casualty to the date repairs required to be made by Landlord are Substantially Completed and to the extent that the Project is unfit for use or cannot practicably be used by Tenant in the ordinary conduct of its business due to damage which is Landlord's obligation to repair. Landlord agrees that all proceeds from insurance payable with respect to said damage shall be payable to a Trustee (mutually acceptable to Landlord and Tenant and they agree that the holder of any first trust deed on the damaged property if an insurance company, bank or federally insured savings bank, is acceptable to them) under an insurance trust arrangement whereby said Trustee (or its designated agent or representative) is required to distribute the proceeds directly to those contractors and others performing the restoration work on a percentage of completion basis [with a retention, however of not less than five (5%) percent]. The exact terms of said insurance trust arrangement shall be mutually agreed to by and between Landlord and Tenant, which agreement neither Landlord nor Tenant shall unreasonably withhold or delay. Landlord shall cause each mortgage or deed of trust encumbering the Project to permit the application of insurance proceeds as required under this Lease; (c) the foregoing notwithstanding, if said damage or destruction should occur within the last two (2) years of the Lease Term [as said term may by the terms hereof be extended (whether before or after the date of said damage)] which shall render more than fifty percent (50%) of the Leased Premises in the Building unfit for use or occupancy by Tenant, then either Landlord or Tenant may exercise the right to terminate this Lease as of the date of such casualty upon not less than thirty (30) days written notice to the other. S.3.02 RULES AND REGULATIONS Tenant shall obey all rules and regulations of Landlord contained and set forth on EXHIBIT 3.02 hereof and all rules and regulations of the Riverport Trustees (if any, from time-to-time promulgated strictly in accordance with the terms of the Indenture by said Trustees) from time-to-time applicable to the Project, provided, however, said rules and regulations shall in no wise be construed to modify or amend this Lease in any way. If there is any conflict between the terms of this Lease and any such rules and regulation, the terms of this Lease shall prevail. Landlord shall use all reasonable efforts to assure that any said rules and regulations, if any, shall be consistently and uniformly enforced. Landlord shall not be liable to Tenant for failure of any tenant (including Tenant) to obey any such rules and regulations. Tenant shall prohibit smoking within the Building except in areas specifically designated by Tenant for smoking and any area designated for smoking within the Building must be equipped with a ventilating system with direct exhaust to the outdoors. Smoking outdoors shall be allowed in areas mutually acceptable to Landlord and Tenant only. Tenant shall take reasonable efforts to enforce the aforesaid non-smoking/smoking provisions. SS.3.03 QUIET ENJOYMENT Landlord agrees that so long as this Lease remains in full force and effect, Tenant shall peacefully and quietly have, hold and enjoy the Project and accretions, easements, rights of way, appurtenances and rights and rights of use in this Lease specifically described, subject, nevertheless, to the obligations of this Lease. Tenant's use of the Project shall not unreasonably interfere with the rights of owners and tenants of adjoining properties to peacefully and quietly have, hold and enjoy their properties. SS.3.04 RIGHT OF ENTRY Landlord and its agents shall have the right to enter the Land, and/or the Building, and/or the Leased Premises at all reasonable hours (with reasonable advance notice, except in the case of emergencies) for the purpose of examining the same, or for making any repairs, alterations or additions which it is required to make under this Lease or which it shall reasonably deem necessary for the safety or maintenance of the Project. In order to assure Landlord's access for the purposes aforesaid, (i) all locks in and about the Project shall be appropriately mastered and mastered access shall be provided to Landlord, (ii) Tenant shall not change any locks in and about the Project without notice to and the prior consent of Landlord, (iii) all keying changes shall be at the sole and separate cost of Tenant, and (iv) Tenant, at its sole cost and expense, shall provide Landlord with an adequate supply of security/access cards. Landlord shall use due diligence with respect to the making of such repairs, alterations or additions and shall perform such work, except in case of emergency, at times reasonably convenient to Tenant and otherwise in such a manner as will not materially interfere with Tenant's use and enjoyment of the Project. SS.3.05 ASSIGNMENT AND SUBLETTING Tenant shall not sublet the Leased Premises or any part thereof, nor assign this Lease or any interest therein, without the written consent of Landlord (which consent shall not be unreasonably withheld, conditioned or delayed), and shall not suffer or permit any assignment or transfer by operation of law or otherwise of the estate or interest of Tenant in the Leased Premises acquired in, by or through this Lease (and the transfer of the shares of stock of Tenant, a publicly traded company, shall not be deemed to be such an assignment or transfer). Any request by Tenant to assign or sublease shall be in writing and accompanied by (i) a true copy of the proposed documents of assignment or subletting, and (ii) information respecting the responsibility, reputation, financial condition and business of the proposed assignee or subtenant. Such request shall create in Landlord an option to terminate this Lease as to the portion of the Leased Premises covered by the request and if terminated by Landlord shall reduce Tenant's obligations hereunder in proportion to the portion so terminated. Said option must be exercised within twenty (20) days after receipt of such request, and if exercised, Landlord shall not thereafter lease all or any portion of the Building to the proposed assignee or sub-tenant during the remaining term of this Lease. Notwithstanding any consent by Landlord to an assignment or subletting, the Tenant shall remain jointly and severally liable (along with each approved assignee or subtenant who shall automatically become liable for all obligations of Tenant hereunder) and Landlord shall be permitted to enforce the provisions of this instrument directly against the undersigned Tenant and/or assignee or subtenant without proceeding in any way against any other person. In the event that Tenant shall assign or sublet the Leased Premises with Landlord's consent for a rental in excess of the rent provided for herein, then, notwithstanding any other provision contained in this Lease to the contrary, Tenant shall pay to Landlord as Additional Rent hereunder fifty percent (50%) of such "excess" rent actually received (and Tenant shall be entitle to keep the remaining 50% of such "excess" rent). In determining whether the rental is in excess of the rent provided for herein, however, there shall be no Tenant Improvement Allowance in connection with any such work. Tenant's actual and reasonable out-of-pocket costs and expenses associated with the sublease and/or assignment, including brokerage fees, fit-up costs, legal fees and rent concessions, shall be deducted from the rent or other consideration received or to be received. Notwithstanding the above, Tenant may assign or sublet the Leased Premises, or any portion thereof, without Landlord's consent, to any entity which controls, is controlled by or is under control with Tenant, or to any entity resulting from a merger or consolidation with Tenant, or to any person or entity which acquires all the assets of Tenant as a going concern of the business that is being conducted in the Leased Premises or to any affiliate, provided, however, that Tenant shall remain jointly or severally liable for all covenants hereunder as above provided. For purposes hereof, "affiliate" shall mean any entity in which Tenant has an ownership interest of fifty percent (50%) or more. SS.3.06 TENANT IMPROVEMENTS No alteration, addition, improvement or refinishing of or to the Project nor any installation or use of any air conditioning unit, security system, boiler, furnace, or any other similar apparatus having in any case aforesaid a material adverse affect upon the structural elements of the Building and/or the Building's plumbing, HVAC, electrical, life safety, security/card access and/or other primary Building systems shall be made by Tenant without the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned; provided, however, this shall not prevent Tenant from installing or having installed its furniture and fixtures or vending machines. It shall not be unreasonable for Landlord to require that any and all such alterations, additions, improvements and/or refinishing be performed by Landlord's affiliate as the General Contractor and in this regard the terms and conditions set forth in SECTION 1.10 hereof with respect to the Tenant Improvement Work so far as reasonably practicable, including specifically, but not limited to, the obligation of Landlord's affiliate to obtain not less than 3 competitive bids and the provisions thereof with respect to the fee of Landlord's affiliate) (and in addition thereto Landlord's affiliate must be capable of performing any such work in a timely manner) shall apply; provided at the time of seeking Landlord's consent, Tenant shall obtain from Landlord Landlord's decision as to whether the proposed alteration, addition, improvement or refinishing (other than trade fixtures and personal property of Tenant) shall be required by Landlord to be removed by Tenant or whether such alteration, addition, improvement or refinishing may remain upon the expiration or other sooner termination of this Lease. If Landlord conditions its approval upon the removal of the alteration, addition, improvement or refinishing as aforesaid, the Tenant shall, upon Landlord's request at or about the termination of the Lease, remove same, at Tenant's cost. In all events, the cost of any such work shall include a reasonable amount to provide Landlord with a complete set of "as built" drawings in CADD format and on a diskette readable by Landlord (including architectural, structural, mechanical, electrical, plumbing and fire protection, where applicable) of any such material alterations, additions or improvements made to the Project, and a wiring schematic for all voice and data cabling. Tenant's furniture, furnishings, trade fixtures, moveable equipment and other like property shall not be deemed to be improvements to the Project and may be removed and/or replaced by Tenant at any time during the Lease Term. Notwithstanding the foregoing, Landlord's consent shall not be required for, and Tenant shall not be required to use Landlord (or any affiliate of Landlord) as a General Contractor with respect to, (i) the installation or removal of Tenant's furniture, fixtures or equipment or (ii) any decorating or redecorating, including, without limitation, painting, wallpapering, carpeting or tiling. In addition, Tenant shall not be required to use Landlord (or any affiliate of Landlord) (but shall be required to obtain Landlord's prior consent, which shall not be unreasonably withheld, conditioned or delayed) in connection with the moving from time-to-time of non-structural interior walls and doors, providing such movements do not affect in excess of five percent (5%) of the non-structural interior walls and doors then in the Leased Premises. Anything herein to the contrary notwithstanding, all voice and data cabling installed by Tenant or for its account at anytime during the Lease Term (including that installed during the initial Tenant Improvement Work) shall be removed and the ceiling shall be restored by Tenant at the expiration of this Lease, at Tenant's cost. SS.3.06-1 MECHANIC'S LIENS Tenant shall not permit any mechanic's lien to be filed against any part of the Project or against the Tenant's leasehold interest therein by reason of work, labor, services or materials supplied or claimed to have been supplied to the Tenant or anyone holding any part of the Project through or under the Tenant, whether prior or subsequent to the Commencement Date. If any such mechanic's lien shall at any time be filed against any part of the Project and Tenant shall fail to remove same or fail to give adequate security therefor by bonding or otherwise within sixty (60) days after Tenant receives notice thereof, it shall constitute an Event of Default under the provisions of this Lease. SS.3.06-2 WASTE AND MISUSE During the term of this Lease, Tenant shall neither commit nor permit any waste, misuse or neglect of any part of the Project and/or its apparatus or appurtenances by its officers, directors, employees, agents, contractors, representatives, guests and/or invitees, nor will Tenant permit any abuse or destructive use of same and shall pay for all damages caused by any such waste, misuse, neglect, abuse or destructive use by Tenant, its officers, directors, employees, agents, contractors, representatives, guests and/or invitees. When leaving the Building at the close of business, or at other times when the Building is unoccupied, Tenant shall cause all means of access to the Building to be reasonably and adequately secured. SS.3.07 DEFAULT The following shall be deemed to be "Events of Default" by Tenant under this Lease: SS.3.07-1 FAILURE TO PAY RENT If Tenant shall fail to pay any installment of Rent or any part thereof, or shall fail to pay any item of Additional Rent or any other monetary obligation hereunder and such failure shall continue for ten (10) days after written notice thereof from Landlord, except to the extent permitted under SECTION 3.07-8 of the Lease; or SS.3.07-2 FAILURE TO PERFORM TERMS If Tenant shall fail to perform any of the terms, covenants, or conditions of this Lease, other than those specified in SUBSECTION 3.07-1 above, on the part of Tenant to be performed or observed, and such failure shall continue for thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that no Event of Default shall be deemed to occur so long as the curing of such default reasonably may not be completed within such thirty (30) day period and Tenant has commenced to cure such default and thereafter with reasonable diligence pursues its efforts to cure to conclusion; or SS.3.07-3 VACATION OR ABANDONMENT If Tenant shall vacate or abandon the Project in its entirety and permits the same to remain unoccupied and unattended for more than ninety (90) days, unless such condition is caused by Force Majeure or Tenant has given Landlord written notice of its intent to vacate and has provided Landlord commercially reasonable assurances of its intent to continue to perform all of the obligations of this Lease to be performed by Tenant; or SS.3.07-4 EXECUTION OR ATTACHMENT LIEN If an execution or attachment lien shall be issued against Tenant's interest in the Project or any property located therein, and such execution or attachment shall not be vacated or removed by Court Order, bonding or otherwise, within a period of thirty (30) days after the issuance thereof; or SS.3.07-5 INSOLVENCY If Tenant becomes insolvent, makes an assignment for the benefit of creditors, or makes a transfer in fraud of creditors, any of which materially affects Tenant's ability to perform the terms and conditions of this Lease; or SS.3.07-6 BANKRUPTCY If any petition shall be filed against Tenant in any court, whether or not pursuant to any statute of the United States or any State, in any bankruptcy, reorganization, or insolvency proceedings, and Tenant shall thereafter be adjudicated a bankrupt, or such petition shall be approved by the Court, or if such proceedings shall not be dismissed within ninety (90) days after the institution of the same, or if any such petition shall be so filed by Tenant. SS.3.07-7 REMEDIES ON DEFAULT Upon the occurrence of an Event of Default, Landlord, without further notice, may (in addition to and/or as an alternative to all other legal and/or equitable remedies): (a) Terminate this Lease and thereupon all of Landlord's and Tenant's rights and obligations one to the other hereunder (including specifically but not limited to Tenant's right to possession of the Project) shall cease; or (b) Terminate only the Tenant's right to possession of the Project, without terminating this Lease or releasing Tenant in whole or in part from Tenant's obligations hereunder for the full term hereof; or (c) Without terminating this Lease or Tenant's right to possession of the Project, enter upon any portion of the Project and do and perform whatever Tenant is obligated to do under the terms of this Lease. In the event Landlord exercises its right under SUBPARAGRAPH (A) OR (B) immediately above, Landlord may expel and remove Tenant, or any other person or persons in occupancy of the Project, together with their goods and chattels. In the event Landlord shall elect to exercise its rights under SUBPARAGRAPH (B) immediately above, (i) Landlord may, at its option, accelerate the entire amount then remaining unpaid under the Lease and recover the net present value thereof [using a discount rate equal to the Prime Rate (hereinafter defined)] forthwith from Tenant, together with all other charges recoverable hereunder (including, but not limited to, the unamortized portion of the Tenant Improvement Allowance, the Tenant Design Allowance, the Tenant Signage Allowance and Leasing Commission paid by Landlord pursuant to SECTION 2.09 hereof (for purposes hereof being deemed to be fully amortizing, with interest at 12%, over the initial five (5) year Lease Term) and reasonable legal expenses and attorney's fees and (ii) Landlord shall use its best efforts to relet the Project or any part thereof for the account of the Tenant, to any person, firm, or corporation for such Rent, for such term (including a term beyond the term hereof), and upon such terms and conditions as Landlord, in Landlord's sole reasonable discretion, shall determine, and Landlord shall apply all rents received (including any benefits, if any, received as a result of utilization of the Tenant Improvement Work and/or Tenant Improvements By Tenant) upon such a reletting as follows: (x) First to the payment of such expenses as Landlord may have incurred in recovering possession of the Project, including reasonable legal expenses and attorney's fees (whether or not suit is filed), and in putting the same into good order or condition, of preparing or altering the same for rental and reletting, and all other reasonable expenses, commissions, and charges paid, reasonably and necessarily assumed or incurred by Landlord in or about reletting the Project; and (y) Then to the fulfillment of the covenants of Tenant hereunder. If the consideration collected by Landlord upon any such reletting is not sufficient to satisfy in full all of Tenant's covenants hereunder together with all costs and expenses above enumerated, then Tenant shall pay to Landlord the amount of any deficiency upon demand. Any excess consideration received (after giving credit to Tenant for all amounts paid by Tenant to Landlord as hereinbefore provided) shall be paid to Tenant. For purposes hereof, and elsewhere in this Lease where specified, "Prime Rate" shall mean the rate of interest for its preferred customers from time-to-time announced by Mercantile Bank, N.A., or its successor, and if no such successor a bank of similar size and standing within the St. Louis, Missouri metropolitan area. SS.3.07-8 LANDLORD'S DEFAULT In the event Landlord defaults in any of its obligations hereunder and no specific remedy in the event of such a default is otherwise herein specifically provided (any specifically provided remedies shall, in all cases, be deemed conclusively applicable), then the remedies set forth in this SECTION 3.07-8 shall apply. If Landlord's default is the failure to pay money (a "monetary default"), after giving not less than ten (10) days prior written notice to Landlord in which Landlord's alleged default has been set forth with specificity, Tenant may, if (i) Landlord has not paid said sum by the expiration of said ten (10) day period or (ii) within said ten (10) day period filed suit in a court of competent jurisdiction wherein said alleged default is contested and a final decision has not been rendered within one hundred twenty (120) days of the filing of said suit, deduct (set-off) said sum together with interest at the rate of ten percent (10%) per annum from the date of the occurrence of the uncured default in payment, from the Base Rent and Additional Rent thereafter coming due pursuant to the provisions of this Lease. If Landlord defaults in the performance of any obligation under this Lease other than the payment of money to Tenant and such default continues for thirty (30) days after written notice thereof from Tenant to Landlord; provided, however, that no default by Landlord shall be deemed to occur so long as the curing of such default reasonably may not be completed within such thirty (30) day period and Landlord has commenced to cure such default within said thirty (30) day period and thereafter with reasonable diligence pursues its efforts to conclusion [or if Landlord files suit, as in "(ii)" above, Landlord shall be deemed to be pursuing reasonable efforts to cure the default], then Tenant may cure such default of Landlord and the cost thereof with interest at ten percent (10%) per annum may be deducted from the next accruing installments of Base Rent and Additional Rent. Anything in this Lease to the contrary notwithstanding, if at anytime after the date hereof Landlord should consent or agree to any amendment of the Sub-Indenture, or to any action thereunder, or to any amendment of the Resolution "...which would affect in a material, adverse manner Tenant's rights with respect to the Lot 1B RUA or the Common Property..." (as said rights pertain to parking and access) (but for the purposes of this SECTION 3.07-8, parking and access rights only) (as in SECTION 1.03 hereof provided), then the parties hereto agree that such consent or agreement shall constitute a default by Landlord hereunder and shall be deemed to be a "construction eviction" of Tenant from the Project, entitling Tenant to all rights and remedies at law or in equity provided in the case of such a "constructive eviction". The specified remedies herein shall be non-exclusive of each other and in addition to any other remedies available to Tenant at law or in equity. SS.3.08 SURRENDER & TERMINATION Upon the termination of this Lease, whether by lapse of time or otherwise, Tenant shall, without demand, surrender and deliver up the Project peaceably to Landlord, together with all its apparatus and appurtenances in good condition, and, if alterations, additions or improvements are removed at Landlord's request as in this Lease specifically provided, properly restored, ordinary wear and tear, damage by fire or other casualty and conditions which, under the terms of this Lease, Landlord is obligated to maintain excepted, and will surrender all original and duplicate keys and/or cards of the several doors and such other things as appertain to the Project. Any and all of Tenant's furniture, furnishings, trade fixtures, moveable equipment and like property not removed by Tenant on or about the Termination Date shall be deemed to have been abandoned by Tenant and may be appropriated, sold, destroyed or otherwise disposed of by Landlord without notice to Tenant or obligation to compensate Tenant or to account to Tenant therefor, and Tenant shall pay Landlord, on demand, all costs reasonably incurred by Landlord in connection with such abandonment. If without Landlord's prior written consent, Tenant shall remain in possession of the Project, or any material part thereof, one day after the termination of this Lease, whether by lapse of time or otherwise, Tenant shall be deemed guilty of an unlawful detainer of the Project under the statutes of the State of Missouri and shall be subject to eviction and removal forcibly or otherwise with process of law. After the commencement of a suit, or after final judgment, for possession of the Project, Landlord may receive and collect any Rent due from Tenant, and the payment of said Rent shall not waive or affect said suit or said judgment. All rights of Landlord in the event of default herein enumerated shall be in addition to and without prejudice to any remedy or remedies which Landlord may have at law or in equity for nonpayment of Rent or for breaches of the covenants and agreements hereof. Notwithstanding the foregoing, if Tenant continues to occupy the Leased Premises after the last day of the term hereof with Landlord's prior written consent, unless said consent specifically otherwise provides, a monthly tenancy terminable by either party on not less than one month's prior written notice shall be created, which shall be upon the same terms and conditions, including Rent, as those herein specified which are in effect immediately prior to the termination of such term. SS.3.09 LIABILITY Except where caused by Landlord's negligence or the negligence of Landlord's agents, employees, contractors and/or representatives, all of Tenant's personal property in, at or about the Project (including but not limited to furniture, furnishings, trade fixtures, equipment and the like) shall be kept therein at the risk of the Tenant only, and Landlord, its officers, directors, employees, agents and representatives shall not be liable for any damage to said personal property occasioned by Landlord's failure(s) hereunder nor shall Landlord, its officers, directors, employees, agents and representatives be liable for any damage done to said personal property by or from electric current, plumbing, gas, water, steam, sewage, odors, or the bursting, leaking, running or failure of operation of any radiator, tank, water closet, washstand, waste pipe, air conditioning or any other apparatus in, above, upon or about the Project, nor for damage occasioned by water, snow, or ice being upon any sidewalk or entranceway, or being upon or coming through such entranceway or any skylight, roof or any other opening in said Project, nor for loss resulting from theft or mysterious disappearance, or any interference with light or air, nor for any damages arising from the negligence of Tenant, co-tenants or other occupants of the Project, if any, or of any owners or occupants of adjacent or contiguous property. Under no circumstances arising out of or in connection with the terms and/or provisions of this Lease or the relationship of the parties hereto hereunder, whether as Landlord and Tenant or otherwise shall either Landlord or Tenant be liable to the other for consequential or incidental damages. SS.3.10 WAIVER OF SUBROGATION & MUTUAL RELEASE Anything herein to the contrary notwithstanding, the parties hereto agree that all rights of subrogation of their respective insurers, if any against the other party are hereby waived and agree that each policy of insurance shall contain a provision waiving subrogation against the other party to this Lease regardless of whether such loss or damage is caused in whole or in part by the negligence or sole negligence of the other party. Without regard to such insurance or the negligence of a party, to the extent the loss or damage suffered by a party ("Injured Party") is of the type covered by (i) the Injured Party's insurance, (ii) the insurance that the Injured Party is required to carry under the first paragraph of SECTION 3.11 hereof, if said coverage is for any reason not in effect, (iii) deductibles under any of said Injured Party's policies and/or (iv) self-insurance by the Injured Party, then the Injured Party releases and holds the other party harmless from all damage, loss or expense arising from losses due to the claims hereinbefore described. SS.3.11 INSURANCE From and after the Commencement Date of this Lease and throughout the Lease Term and any Renewal Term(s): Tenant shall, at its sole cost and expense, keep constantly insured against loss or damage by fire, windstorm, earthquake, lightning, malicious mischief, vandalism and those perils insured from time-to-time in a so-called "all-risk" form extended coverage insurance endorsement, boiler insurance contracts and sprinkler leakage insurance contracts generally issued in the State of Missouri, the Land, the Building and the Lot 1B RUA (but not the Common Property other than the Lot 1B RUA) and all other improvements which shall from time-to-time constitute a part of the Land, the Building and the Lot 1B RUA (including coverage for the Tenant Improvement Work and Tenant Improvements By Tenant) in an amount equal to the full replacement value thereof, excluding foundation and excavation costs (the "Property Insurance"). The Property Insurance policy(ies) shall name Landlord as the primary insured and any lender of Landlord, Tenant and the assignees of either as additional insureds, as their interests may from time-to-time appear. If Landlord and Tenant shall be unable to agree upon the amount of insurance to be carried by Tenant in compliance with the foregoing requirements, either party may give the other written notice that an independent determination is desired, and in such event the amount of insurance to be maintained shall be determined by an insurance appraisal or contractor's estimate. Neither party shall seek to have such an independent determination made more frequently than once every three (3) years. In the event Tenant fails to pay the premiums for the insurance required by the terms hereof by Tenant to be paid, Landlord may pay said premiums (but shall not be required to do so), and, in such event, Tenant shall reimburse Landlord for such premiums as Additional Rent. Tenant shall, at its sole cost and expense, throughout the term of this Lease keep (or cause to be kept) in force liability insurance granting coverage to Landlord and Tenant and their respective partners, directors, officers, employees, agents, contractors and representatives in an aggregate amount of not less than Ten Million ($10,000,000.00) for bodily injury and for damage to property. The amount hereinbefore set forth shall be increased at least once every five (5) years during the term of this Lease, as and if extended, by a factor equal to one (1) plus the increase in the CPI as herein defined. For purposes hereof (and otherwise in this Lease) the "CPI" is defined as follows: Consumer Price Index, All Urban Consumers, U.S. City Average, All Items, 1982-1984 = 100 or most current base converted to 1982-1984 = 100, using Bureau of Labor statistics conversion form should 1982-1984 = 100 no longer be published. (For reference purposes, December, 1997 equals 161.3). All insurance provided for under this SECTION 3.11 shall be effected with insurers authorized to do business in the State of Missouri and rated by Best's Insurance Reports in its most recent edition or other comparable rating agency as "A" or better. Each said policy of insurance shall provide that the same may not be canceled or renewal refused without at least thirty (30) days prior written notice to Landlord. Upon commencement of the Lease Term and on or before the expiration dates of expiring policies, originals or certificates of the policies provided for in this SECTION 3.11 shall be delivered to Landlord. Tenant may satisfy the foregoing requirements by means of blanket policies of insurance covering the subject premises and other property, but having the same coverage and provisions as are herein required. If such blanket insurance is furnished, Tenant shall deliver a certificate from the insurer in standard form stating that the coverage is primary to the Project, the Land, the Building and/or the Lot 1B RUA, as the case may be, and that the amount and type of coverage(s) shall not be subject to reduction by reason of other losses covered by the policy. SS.3.12 REMEDIES & ENFORCEMENT All of the remedies herein are cumulative, and given without impairing any other rights or remedies of either party hereto hereunder, at law or in equity and Landlord and Tenant, as the case may be, shall pay and discharge all reasonable costs, expenses and attorneys' fees that shall arise from the successful enforcement of the covenants of this Lease by the other. Whenever attorneys' fees are recoverable by the terms hereof, same shall be recoverable irrespective of whether fees were incurred by either Tenant's or Landlord's in-house counsel, provided, however, in every case said fees shall be reasonably comparable to fees which would otherwise have been paid or payable to Tenant's or Landlord's outside counsel. The fact that a party hereto does not exercise its right hereunder in the event of breach of covenant herein by the other shall not be deemed a waiver of such rights as to subsequent breaches. SS.3.13 BENEFITS All the terms of this Lease shall extend to and be binding upon the respective heirs, executors, administrators, successors and assigns of the respective parties hereto and their permitted successors and assigns. Nothing in this Lease shall be construed to grant to any person or entity not a party to this Lease any rights and/or benefits hereunder. Landlord and Tenant each acknowledge and agree that all of the covenants and conditions set forth in the Lease are mutual and dependent and have been given in reliance of one another. SS.3.14 CONDEMNATION If all of the Project is taken by condemnation, this Lease shall terminate on the date so taken, and the Rent shall be apportioned as of that date. If part of the Project is taken by condemnation and (i) the Project is thereby rendered not reasonably suitable for the continued conduct of Tenant's business, as determined by Tenant in its good faith judgment, taking into consideration the nature, size and scope of such business immediately prior to the taking, (ii) more than 100 parking spaces (in the aggregate) are taken within the Restricted Use Areas (and the Common Property other than the Restricted Use Areas), or (iii) more than ten thousand (10,000) RSF of the Building Leased Premises is taken, then Tenant may elect, by giving thirty (30) days written notice to Landlord, to terminate this Lease and in the event of such termination, all Rent, Additional Rent and/or other charges hereunder shall be apportioned as of the date of said taking. If Tenant does not elect to terminate this Lease as above-specified, then with respect to the part not taken the Rent shall be reduced by the value that the condemned part bears to the total value of the Project, in which event the Landlord shall promptly restore the Project (including the Tenant Improvement Work and Tenant Improvements By Tenant) to an architecturally complete unit. Except as otherwise provided herein, all compensation awarded or paid upon such a total or partial taking of the Project shall belong to and be the property of the Landlord without any participation by the Tenant. Notwithstanding the foregoing, Tenant shall be entitled to any award made specifically for its personal property, trade fixtures, unamortized leasehold improvements, loss of business, business dislocation (and moving expenses) and nothing contained herein shall be construed to preclude the Tenant from prosecuting any claim directly against the condemning authority in such condemnation proceedings. SS.3.15 SUBORDINATION At the request of Landlord, Tenant will enter into a recordable agreement with the holder of any first mortgage or deed of trust placed against the Project subsequent to the recording of a memorandum of this Lease making this Lease subject and subordinate to such mortgage or deed of trust, and all renewals, modifications, consolidations, replacements and extensions thereof, provided that such agreement contains a covenant binding upon the mortgagee or beneficiary, as the case may be, to the effect that so long as there shall be no default on the part of Tenant entitling Landlord to terminate the Lease, or if such default shall exist, so long as Tenant's time to cure such default shall not have expired, (i) this Lease shall not be terminated or modified in any respect whatsoever nor shall the rights of Tenant hereunder or its occupancy of the Leased Premises be affected in any way by reason of such mortgage or deed of trust, as applicable, or any foreclosure action or other proceeding that may be instituted in connection therewith, and (ii) Tenant shall not be named as a defendant in any such foreclosure action or other proceeding. Said agreement shall also provide that with respect to matters arising under this Lease, in the event that there shall be a conflict between the terms of this Lease and the terms of any such mortgage or deed of trust, the terms of this Lease shall prevail. In all other respects such agreement must be satisfactory to Tenant in its reasonable discretion. SS.3.16 RELEASING At any time during the Lease Term and any Renewal Terms, upon reasonable advance notice to Tenant and during reasonable hours, Landlord may show the Project to prospective purchasers and/or lenders. During the last twelve (12) months of the Lease Term if the Lease is not extended or during the last twelve (12) months of any Renewal Term, if the Lease has not been further extended, Landlord may show, upon reasonable advance notice and during reasonable hours, the Project to prospective tenants and may exhibit a "For Lease" sign on the Land and at such other reasonable location(s) at or about the Project as Landlord shall reasonably determine. Tenant shall have the right to accompany Landlord during any showing to any prospective purchaser, lender or tenant, and Tenant shall have the right to limit or restrict access to such portion or portions of the Leased Premises as may be reasonably necessary to protect Tenant's business interests. Landlord shall not disturb, interrupt or interfere with Tenant's business operations during any such showing. SS.3.17 RECORDING OF LEASE Recording of this Lease will be done by a Memorandum of Lease, in form and substance substantially similar to EXHIBIT 3.17 hereto, only, and shall be accomplished within thirty (30) days after the date hereof. SS.3.18 LANDLORD'S RESPONSIBILITIES The term "Landlord" as used in this Lease, so far as covenants or obligations on the part of the Landlord are concerned, shall be limited to mean and include only the owners at the time in question of the fee simple title to the Project, and in the event of the sale of said fee simple estate, provided the Landlord is not then in default under any material term, condition or provision of this Lease, then the party conveying said fee simple estate shall be automatically relieved after the date of such transfer, of all personal liability as respects the performance of any obligations on the part of the Landlord contained in this Lease arising out of acts thereafter occurring or covenants thereafter to be performed, it being intended hereby that all the obligations contained in this Lease on the part of the Landlord shall be binding upon Landlord, its successors and assigns, only during and in respect of their respective periods of ownership of said fee simple estate. SS.3.19 HEADINGS & MARGINAL NOTES It is agreed that the headings and marginal notes as to the contents of particular paragraphs of this Lease are inserted only as a matter of convenience and for reference, and in no way are or are intended to be a part of this Lease, nor in any way to define, limit or describe the scope or intent of the particular paragraph to which they refer. Where in this instrument pronouns or words indicating the singular number appear, such words shall be considered as masculine, feminine or neuter pronouns or words indicating the plural number where the context indicates the propriety of such use. SS.3.20 CONSENT NOT UNREASONABLY WITHHELD Unless otherwise specifically provided, whenever consent or approval of Landlord or Tenant is required under the terms of this Lease such consent or approval shall not be unreasonably withheld, conditioned or delayed. If either party withholds any consent or approval, such party shall, on written request, deliver to the other party a written statement giving the reasons therefor. SS.3.21 ESTOPPEL CERTIFICATE Both Landlord and Tenant agree from time-to-time within thirty (30) days after request of the other [but not more often than two (2) times during a Lease Year], to deliver to the other, or its designee, an estoppel certificate stating that this Lease is in full force and effect, the date to which Rent has been paid, the unexpired term of this Lease and such other matters pertaining to this Lease as may be reasonably requested. It is understood and agreed that the obligation to furnish such estoppel certificate in a timely fashion is a material inducement for the execution of this Lease. SS.3.22 DISPUTE RESOLUTION Either party hereto may from time-to-time notify the other party of the need to use the dispute resolution procedure contained in this SECTION 3.22 to resolve a controversy arising hereunder that has not, as of that date, been capable of resolution by negotiations between the parties (herein "Dispute Resolution"). If the management of the parties have not resolved all relevant issues within ten (10) days of the notice invoking this Section (or such shorter time as the foregoing provisions of this Lease would specifically mandate), then the unresolved issues shall be submitted for the personal consideration of Landlord's President or Landlord's Executive Vice President Office (or a like top executive position of Landlord) and Tenant's President or Tenant's Executive Vice President (or a like top executive position of Tenant) (the "Decision Makers"), who shall meet to discuss them within ten (10) business days thereafter. If the Decision Makers are not able to resolve all the open issues within ten (10) business days of their initial meeting hereunder, then the parties hereto shall thereafter have the right to take any action permitted under this Lease or permitted under law or in equity to resolve such dispute. SS.3.23 ARBITRATION Landlord and Tenant MAY agree to have claims, disputes and other matters in question arising out of or relating to this Lease or any breach or default hereunder, decided by arbitration in the manner hereinafter provided and upon such an agreement the remedy of bringing an action in specific performance in a court of competent jurisdiction as elsewhere herein provided or as provided at law or in equity shall be abrogated, although an arbitrator(s) shall have the right to order specific performance and if so ordered an action may be brought in a court of competent jurisdiction for specific performance of such order. The parties hereto SHALL NOT be deemed to have agreed to determine any dispute arising out of this Lease by arbitration unless specifically provided herein. In any circumstances where the parties have agreed herein or agree in writing to arbitrate a dispute with respect to this Lease, the original party so desiring arbitration shall give notice to that effect to the other party and to the American Arbitration Association (the "AAA") requesting appointment by the AAA, or its successor, of an arbitrator to arbitrate the submitted dispute at St. Louis, Missouri or at such other location as the parties hereto may mutually agree. The arbitration shall be conducted, to the extent consistent with this SECTION 3.23 and other applicable provisions of this Lease, in accordance with the then prevailing rules of the AAA or such other procedures as are agreed to by the parties hereto. The arbitrator shall render his/her decision and award in writing, within thirty (30) days after his/her appointment. Such decision and award shall be final and conclusive on the parties, and counterpart copies thereof shall be delivered to each of the parties. In rendering such decision and award, the arbitrator, shall not add to, subtract from or otherwise modify the provisions of this Lease. Judgment may be had on the decision and award of the arbitrator so rendered in any court of competent jurisdiction. The fees and expenses of the arbitration (including the fees and expenses of the arbitrator) (other than the fees and disbursements of attorneys or witnesses for each party) shall be borne by the parties equally. The legend above the signature blocks below shall not be construed to require arbitration of any claim, dispute, breach, default or other matter under this Lease, except for a disagreement as to the Effective Market Base Rent rate as provided in and in accordance with SECTION 2.02, if the parties do not otherwise agree to arbitrate such matter. SS.3.24 ENTIRE AGREEMENT This Lease constitutes the sole and entire contract between the parties relative to the Project. No representations as to the Project have been made by the Landlord to the Tenant either directly or indirectly prior to or at the execution of this Lease that are not herein expressed. The terms, covenants, and conditions of this Lease may not be changed orally but only by an instrument in writing signed by the party against whom enforcement of the change is sought. IN WITNESS WHEREOF, the parties have executed this Office Lease as of this 14th day of August, 1998, it being agreed that the Lease relates to property in the State of Missouri and shall be construed in accordance with the laws thereof. THIS OFFICE LEASE CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES. LANDLORD DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership By: DUKE REALTY INVESTMENTS, INC., an Indiana corporation, its general partner By: /s/ W. Gregory Thurman W. Gregory Thurman Vice President and General Manager St. Louis Office Group (Seal) Attest: /s/ James D. Eckhoff James D. Eckhoff Vice President and Assistant Secretary TENANT EXPRESS SCRIPTS, INC., a Delaware corporation By:/s/ Barrett Toan Barrett Toan President (SEAL) ATTEST: /s/ Thomas M. Boudreau Secreaty Title LANDLORD: STATE OF MISSOURI ) ) SS. COUNTY OF ST. LOUIS ) On this 14th day of August, 1998, before me appeared W. GREGORY THURMAN, to me personally known, who, being by me duly sworn did say that he is the Vice President and General Manager, St. Louis Office Group, of DUKE REALTY INVESTMENTS, INC., a corporation of the State of Indiana, and General Partner in DUKE REALTY LIMITED PARTNERSHIP, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that said instrument was signed and sealed on behalf of said corporation, by authority of its Board of Directors; and said W. Gregory Thurman acknowledged said instrument to be the free act and deed of said corporation and said partnership. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. /s/ Kathleen M. Dolan Notary Public TENANT: STATE OF MISSOURI ) ) SS. COUNTY OF ST. LOUIS ) On this 14th day of August, 1998, before me appeared Barrett Toan, to me personally known, who, being by me duly sworn did say that he is the President, of EXPRESS SCRIPTS, INC., a corporation of the State of Delaware, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that said instrument was signed and sealed on behalf of said corporation, by authority of its Board of Directors; and said Barrett Toan acknowledged said instrument to be the free act and deed of said corporation. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. /s/ Kathleen M. Dolan Notary Public INDEX OF EXHIBITS 1.01 Legal Description 1.03-A Restricted Use Areas and Common Property 1.03-B Declaration of Covenants, Restrictions and Easements for Access and Parking for Property in the City of Maryland Heights, County of St. Louis, State of Missouri known as Duke/Riverport Site No. 1 1.03-C Resolution 1.04(f) Title Exceptions 1.06-1 Project Schedule 1.06-6 June 3, 1998 Letter Agreement 1.09-1 Building Shell Description 1.09-2 Listing of Building Plans 3.02 Rules and Regulations 3.17 Memorandum of Lease EXHIBIT 1.01 Lot 1B of Duke/Riverport Site No. 1, as per the Plat thereof recorded at Book ____, page ____ of the St. Louis County, Missouri records. Landlord hereby agrees that it will with dispatch cause the Re-Subdivision Plat creating Lots 1A, 1B and 1C of Duke/Riverport Site No. 1 to be prepared, submitted to the City of Maryland Heights, Missouri for approval and recorded. Upon recordation, Landlord shall provide to Tenant a copy of the Re-Subdivision Plat bearing recording information. Thereupon the Book and page of recordation shall be inserted into this Exhibit 1.01 and the revised Exhibit 1.01 (sans this paragraph) shall be substituted in lieu hereof. EXHIBIT 1.03A This Exhibit contains pictorials of Restricted Use Areas and Common Property EXHIBIT 1.03-B DECLARATION OF COVENANTS, RESTRICTIONS AND EASEMENTS FOR ACCESS AND PARKING FOR PROPERTY IN THE CITY OF MARYLAND HEIGHTS, COUNTY OF ST. LOUIS, STATE OF MISSOURI, KNOWN AS DUKE/RIVERPORT SITE NO. 1 DUKE REALTY LIMITED PARTNERSHIP, DECLARANT August ____, 1998 INDEX ARTICLE/SECTION PAGE NUMBER CAPTION NUMBER I PROPERTY SUBJECT TO DECLARATION 3 1.1 Existing Property 3 1.2 Additions To Existing Property 3 II TRUSTEES 4 2.1 Membership 4 2.2 Qualification 4 2.3 Election Of Trustees 4 2.4 Term Of Office 5 2.5 Procedures 6 2.6 Duties And Powers 6 2.7 Power To Assess 7 2.8 Eminent Domain 7 III ASSESSMENTS 8 3.1 Assessment 8 3.2 Annual Assessments For Common Property 8 3.3 Restricted Use Area Assessments 10 3.4 Special Assessments 10 3.5 Notice To Owners 10 3.6 Commencement Date Of Annual Assessment 11 3.7 Due Date Of Assessments 11 3.8 Owner's Personal Obligation For Payment Of Assessments 11 3.9 Assessment Lien And Foreclosure 12 3.10 Common Property Exempt 13 IV COMMON PROPERTY 13 4.1 Establishment Of Common Property And Restricted Use Areas ("RUA") 13 4.2 Easements For The Use Of Common Property And RUA 14 4.3 Title To Common Property 15 4.4 Extent Of Easements 16 4.5 Trustees Management Of Common Property 16 4.6 Maintenance Of RUA And Common Property 17 4.7 Construction Of Parking Structures and Additional Parking Areas 21 V MISCELLANEOUS PROVISIONS 23 5.1 Duration 23 5.2 Amendment 23 5.3 Enforcement 24 5.4 Severability Of Provisions 25 5.5 Notice 25 5.6 Title 26 5.7 Singular And Plural 26 5.8 Binding Effect 26 5.9 Conflicting Terms 16 THIS DECLARATION OF COVENANTS, RESTRICTIONS AND EASEMENTS FOR ACCESS AND PARKING ("Declaration"), is made as of this ______ day of _____________, 1998, by W. Gregory Thurman, Timothy J. McCain and Lisa G. Bulczak, Trustees of Duke/Riverport Site No. 1 ("Trustees"), and Duke Realty Limited Partnership, a partnership organized pursuant to the laws of the State of Indiana ("Duke Realty"). WITNESSETH: WHEREAS, Duke Realty is the owner of certain real property located in St. Louis County, Missouri known as Lot 1 of Duke/Riverport Site No. 1, pursuant to the Plat thereof recorded at Book _____ Page _____ of the St. Louis County, Missouri Records (herein sometimes referred to as " Lot 1 of Duke/Riverport Site No. 1" and/or the "Property"); and WHEREAS, Duke/Riverport Site No. 1 is subject to that certain First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri, dated August 10, 1987, and recorded in Book 8191, Page 380 in the St. Louis County Records, which was amended by (i) an Amendment to the First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri, dated November 4, 1988, and recorded in Book 8465, Page 1068 of the St. Louis County Records, (ii) a Second Amendment to the First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri, dated June 12, 1991, and recorded in Book 9013, Page 1955 of the St. Louis County Records, (iii) another Second Amendment to the First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri dated July 21, 1994, and recorded in Book 10263, Page 1872 of the St. Louis County Records, (iv) a Third Amendment to the First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri dated December 18, 1995 and recorded in Book 10694, Page 1868, St. Louis County Records, (v) a Fourth Amendment to the First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri dated March 5, 1997 and recorded in Book 11104, Page 992, St. Louis County Records, and (vi) a Fifth Amendment to the First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri dated September 25, 1997 and recorded in Book 11304, Page 1396, St. Louis County Records (said Trust Indenture, as heretofore and hereafter amended, being hereinafter referred to as the "Riverport Indenture"); WHEREAS, Duke Realty is desirous of subjecting the said Lot 1 of Duke/Riverport Site No. 1 to the further covenants, restriction and easements hereinafter set forth, to insure for all present and future owners of any part of said Lot 1 of Duke/Riverport Site No. 1 and their respective successors, assigns, invitees, agents, employees, tenants, contractors and licensees certain access and parking rights, each and all of which is and are for the benefit of said Property and shall inure to the benefit of and pass with said Property and each and every part thereof; and WHEREAS, Duke Realty desires to hereby convey by special warranty deed certain rights and interests in the hereinafter specified common, access and parking areas to the Trustees hereinafter named and to define the right, title, interests, duties, privileges, easements, and liabilities with respect thereto and to provide for the improvement, maintenance, management, control and operation of such common, access and parking areas for the mutual benefit of the owners of all or any part of Lot 1 of Duke/Riverport Site No. 1. NOW, THEREFORE, Duke Realty hereby declares that Lot 1 of Duke/Riverport Site No. 1 and each and every part thereof, shall be held, transferred, sold, conveyed and occupied subject to the covenants, restrictions and easements hereinafter set forth. ARTICLE I PROPERTY SUBJECT TO DECLARATION 1.1 EXISTING PROPERTY. The real property which is, and shall be held, transferred, sold, conveyed, and occupied subject to this Declaration is located in St. Louis County, Missouri, is known as Lot 1 of Duke/Riverport Site No. 1, and is herein sometimes referred to as such and/or the "Property," and each and every such lot or parcel from time to time located within said Property shall be hereinafter referred to as a "Parcel" (including, but not limited to Lots 1A, 1B and 1C of Lot 1 of Duke/Riverport Site No. 1. 1.2 ADDITIONS TO EXISTING PROPERTY. Duke Realty, its successors or assigns, may from time to time add to the Property now subject to this Declaration, additional lands; provided, however, that said additions may be used only for the same or similar purposes as the existing Property; that said additions be contiguous to the existing Property or subsequent additions thereto; that said additions include sufficient additional parking so that, at a minimum, the minimum parking requirements as then prescribed by the zoning ordinances of the City of Maryland Heights or other governmental authority having jurisdiction over the Property will be met; and that if said additions be made by any person, firm, or corporation other than Duke Realty or its successors and/or assigns, that the Trustees hereinafter named give their prior written consent thereto, which consent shall not be unreasonably withheld, conditioned or delayed. The additions authorized under this Article I shall be made by executing and delivering to the Trustees hereinafter named and filing of record in St. Louis County, Missouri, a Supplementary Declaration which shall extend the provisions of this Declaration to such additional property. Such Supplementary Declarations may contain additional and complimentary provisions as may be necessary to reflect the different character, if any, of the added property as are not inconsistent with the scheme of this Declaration. ARTICLE II TRUSTEES 2.1 MEMBERSHIP. There is established a Board of Trustees, which shall consist of three (3) members who shall serve without remuneration. The Trustees shall sometimes be referred to as the "Trustees of Duke/Riverport Site No. 1" or the "Trustees." 2.2 QUALIFICATION. Except as specifically provided otherwise, to qualify as a member of the Board of Trustees, a person must be an Owner (as defined herein), an officer of an Owner or the duly appointed representative of an Owner. The owners of fee simple title to the Parcels comprising Duke/Riverport Site No. 1 shall sometimes be referred to individually as the "Owner" and collectively as the "Owners." 2.3 ELECTION OF TRUSTEES. The Owners of Parcels in Duke/Riverport Site No. 1 (and if additions to the Property are made as provided in SECTION 1.2 hereof, the Owners of all Parcels then comprising the Property) shall elect the Trustees. Each Parcel shall be entitled to a vote(s) based upon the number of parking spaces located in the "Common Property" (but not the "Restricted Use Areas") (as said terms are hereinafter defined) from time-to-time designated and/or assigned by the Trustees to that Parcel in relation to the total number of parking spaces then existing in the Common Property (but not including the Restricted Use Areas) calculated as a percentage (hereinafter referred to as the Owner's "Pro-Rata Interest"). Trustees shall be elected at an annual meeting of the Owners to be called by the Trustees giving written notice to the Owners of same at least thirty (30) days in advance. Owners of at least sixty percent (60%) of the Pro-Rata Interest, present in person or represented by written proxy, shall constitute a quorum for the election of Trustees. All proxies must be in writing, signed by the voting Owner granting the proxy, and filed with the Trustees prior to the election. The exact procedure of voting shall be as determined by the Trustees from time-to-time consistent with the Owners' Pro-Rata Interests. When two or more persons or entities hold an undivided interest in any Parcel, the vote(s) for said Parcel shall be made as they among themselves determine in their sole discretion. In all said elections, Owners may cast their votes for as many Trustees to be elected or may cumulate their vote and give one candidate as many votes as the number of Trustees to be elected multiplied by the number of votes, or to distribute the votes on the same principle among as many candidates as said Owner may see fit (cumulative voting). 2.4 TERM OF OFFICE. The Trustees presently serving hereunder and who shall serve until their successors are duly elected or appointed, are: W. Gregory Thurman Timothy J. McCain Lisa G. Bulczak The term of office for each Trustee shall be one (1) year and shall run from the first day of January through the thirty first day of December of that year (except that the term of the Trustees herein named shall commence on the date hereof and shall continue until December 31, 1998). Upon the expiration of the term of a Trustee, or whenever any one or more of the Trustees or their successors appointed as herein provided shall die, be unable to act, resign, or shall cease to have an interest in the above described property as an Owner, an officer of an Owner, or a duly appointed representative of an Owner, as applicable, his replacement shall be elected by the then Owners for the remainder of his term. Should said Owners fail, within thirty (30) days, to elect a replacement, then the remaining Trustee(s) shall appoint an interim Trustee(s) to serve for the unexpired term. 2.5 PROCEDURES. The Trustees shall keep minutes of their proceedings. Any Trustee may call a meeting of the Trustees upon fifteen (15) days' written notice thereof; provided, however, that such notice may be waived by unanimous consent of the Trustees. Any two Trustees at any meeting regularly called may exercise the powers of the Trustees, except for actions requiring unanimous consent hereunder. Two Trustees shall constitute a quorum. Action of the Trustees shall be by a majority vote of the Trustees except for actions requiring unanimous consent hereunder. The Trustees shall serve without pay, except for expenses reasonably incurred. 2.6 DUTIES AND POWERS. The Trustees shall have the right, power, and authority to enforce the covenants, restrictions and easements herein set forth, to provide for the management, maintenance and any alteration or improvement of the Common Property which they may deem necessary or desirable, to establish such procedures and policies necessary or deemed desirable to provide for the general welfare of the Owners and the tenants of the Owners, in accordance with the purpose and intent of this Declaration, to enter into contracts as may be necessary or desirable to carry out the provisions of this Declaration (including the power to enter into long-term contracts extending beyond the term of the Trustees then in office), and to retain the services of professionals as deemed necessary by the Trustees. The powers of the Trustees herein set forth are intended to augment rather than to restrict the authority of the Trustees. Any other provision of this Declaration to the contrary, if any, notwithstanding, the Trustees shall make suitable provision for compliance with (i) all subdivision and other ordinances, rules and regulations of St. Louis County, Missouri, the City of Maryland Heights, Missouri and/or such other governmental entity then having jurisdiction over the Property, and (ii) the Riverport Indenture. 2.7 POWER TO ASSESS. The Trustees shall have the right, power, and authority to levy and collect assessments against the Property, as hereinafter specifically provided, for the purpose of carrying out their powers and duties herein specified. 2.8 EMINENT DOMAIN. In the event it shall become necessary for any public agency to acquire all or any part of the Common Property (including the Restricted Use Areas) conveyed to the Trustees, for any public purpose, the Trustees are hereby authorized to negotiate with such public agency for such acquisition and to execute instruments necessary for that purpose, including deeds of conveyance. Should acquisitions by eminent domain become necessary, only the Trustees need be made parties. To the extent reasonably necessary to carry out the powers and duties herein specified, the proceeds received shall be held by the Trustees for the benefit of those entitled to the use of the Common Property. All excess proceeds (after deducting all reasonable expenses incurred by the Trustees in any such eminent domain proceeding), if any, as determined by the Trustees in their sole discretion, shall be distributed to the Owners as their interests appear; providing, however, that if there are mortgage liens of record, said excess proceeds shall be distributed jointly to said Owner(s) and its lender(s). Notwithstanding the above, all excess proceeds derived from the taking of any Restricted Use Areas (after deducting all reasonable expenses incurred by the Trustees in any such eminent domain proceeding) shall be distributed to the Owners to which those Restricted Use Areas have been assigned; providing, however, that if there are mortgage liens of record, said excess proceeds shall be distributed jointly to said Owner(s) and its lender(s). ARTICLE III ASSESSMENTS 3.1 ASSESSMENT. Each Owner of a Parcel in the Property by acceptance of a deed therefor, whether or not it shall be so expressed in any such deed or other conveyance, shall be deemed to covenant and agree to pay (i) annual assessments or charges, not including Restricted Use Area assessments; (ii) Restricted Use Area assessments; and (iii) special assessments, such assessments to be established and collected from time-to-time as hereinafter provided. The foregoing assessments shall to be in addition to any other assessments established under this Declaration or under the Riverport Indenture. 3.2 ANNUAL ASSESSMENTS FOR COMMON PROPERTY. By December 1st of each year, the Trustees shall estimate the expenses to be incurred by the Trustees in connection with the Common Property (exclusive of the Restricted Use Areas) pursuant to the terms hereof for the ensuing calendar year and shall notify each Owner in writing as to the amount of said estimate; provided, however, a failure by the Trustees to so estimate and notify by said date shall not relieve any Owner from responsibility for payment of assessments. The estimated annual cash required by the Trustees to meet its aforesaid expenses during the ensuing calendar year shall then be assessed against the Owners according to each Owner's Pro-Rata Interest (as defined in SECTION 2.3 hereof). On the first day of January of each year each Owner shall be obligated to pay to the Trustees, or as the Trustees may direct, the said annual assessment. In the event that, at any time during the year, the Trustees shall determine that the operating expenses to be incurred by the Trustees in connection with the Common Property (exclusive of the Restricted Use Areas) pursuant to the terms hereof during the remainder of the calendar year will be in excess of its December 1st estimate, the Trustees may revise its said estimate for the balance of the calendar year and the Trustees shall, within thirty (30) days of such revision, notify the Owners in writing, as to the amount of the revised estimate, with the particulars therein itemized. The revised cash required by the Trustees to meet its aforesaid revised expenses during the remainder of the then calendar year shall then be assessed against the Owners according to each Owner's Pro-Rata Interest. On the first day of the following full month, each Owner shall be obligated to pay to the Trustees the full additional annual assessment amount due based upon the revised estimate. The first annual assessment for the Common Property (exclusive of the Restricted Use Areas) for the initial calendar year (or partial calendar year, as the case may be) shall be established by the majority vote of the Trustees. Subsequent annual assessments for the Common Property (exclusive of the Restricted Use Areas) may be increased only by majority vote of the Trustees; provided, however, the following increases shall be automatically assessed by the Trustees and shall not require a vote by the Trustees or the approval of the Owners: (i) an increase of up to ten percent (10%) of the immediately preceding annual assessment (annualized if the immediately preceding assessment was for a partial calendar year) shall be automatically allowed in the amount of estimated increase in the estimated cash requirements (but not to exceed 10%), and (ii) increases due to an increase in taxes assessed or levied against the Common Property and/or improvements to the Common Property (exclusive in each case of the Restricted Use Areas). All other increases in the annual assessments must also be approved by a majority of the Owners. On or before March 31 of each calendar year, the Trustees shall determine the actual cash expenditures for the previous year, and should a surplus exist at the end of any calendar year (including the initial partial calendar year), the Trustees shall reduce the next total annual assessment by an amount equal to said surplus less amounts which the Trustees then consider reasonably necessary as a reserve for future needs. Should there be a deficit at the end of any year, the Trustees shall increase the next annual assessment by an amount equal to said deficit which amount shall be paid immediately. 3.3 RESTRICTED USE AREA ASSESSMENTS. Restricted Use Area assessments may be assessed against the Owner benefited by such Restricted Use Areas as set forth herein by the majority vote of the Trustees and do not require the approval of the Owners. 3.4 SPECIAL ASSESSMENTS. In addition to the annual assessments for the Common Property (exclusive of the Restricted Use Areas) and the Restricted Use Area Assessments herein authorized, the Trustees may, by majority vote, levy in any assessment year or years a special assessment for the purpose of defraying, in whole or in part, the cost of any reconstruction, unexpected repair or replacement of any Common Property improvements, including the necessary fixtures and personal property related thereto. Special assessments must also be approved by a majority of the Owners; provided, however that under no circumstances may a special assessment be made for the initial construction of Common Property improvements, except for those improvements reasonably necessary for the preservation and protection of the then existing Common Property, without the unanimous consent of the Owners (or the consent of any tenant or other person, if any, to whom the Owner or Owners of a specific Parcel have from time-to-time specifically delegated said Owner's or Owners' specific right to so consent in a writing placed of record with the St. Louis County Recorder of Deeds). 3.5 NOTICE TO OWNERS. Approval by Owners as herein required may be with or without a meeting. If without a meeting, the necessary written consent of the Owners shall be made a part of the record of proceedings of the Trustees. If a meeting is called for such purpose, written notice of same shall be given to all Owners at least thirty (30) days in advance and shall set forth the purpose of the meeting and the amount of the increase proposed or of the special assessment and the proposed due and delinquent dates thereof as the case may be. 3.6 COMMENCEMENT DATE OF ANNUAL ASSESSMENT. The first annual assessments provided for herein shall commence with the year 1999 and shall continue thereafter from year to year. 3.7 DUE DATE OF ASSESSMENTS. The annual assessments shall become due and payable on the first day of January and shall become delinquent if not paid by the fifteenth of that month. The due date and delinquent date of any Restricted Use Area assessment or special assessment shall be fixed in the resolution authorizing such assessment. Should a Parcel become subject to assessments after January 1 in any year, and should an annual or special assessment have been levied for that year, then such assessment shall be adjusted so that such Parcel shall be charged with that portion of the assessment prorated for the balance of that year. 3.8 OWNER'S PERSONAL OBLIGATION FOR PAYMENT OF ASSESSMENTS. The annual assessments, Restricted Use Area assessments and special assessments provided for herein shall be the personal and individual debt of the Owner(s) of the Parcel on the date same shall become due. No Owner may exempt himself from liability for such assessments. In the event of default in the payment of any assessment, when due, annual, Restricted Use Area or special, the Owner(s) of the Parcel shall be obligated to pay interest from the due date on the unpaid amount at the prime rate on January 1 of each year (and adjusted on January 1 each year thereafter), at the Mercantile Bank of St. Louis, Missouri (or any other bank the Trustees may from time-to-time designate) plus three percent (3%) per annum, together with all costs and expenses of collection, whether or not suit is instituted, including reasonable attorneys' fees. 3.9 ASSESSMENT LIEN AND FORECLOSURE. Notwithstanding any provision to the contrary herein provided, if any, all sums assessed in the manner herein provided but unpaid, shall, together with interest, costs, expenses, and attorneys' fees, become a continuing lien and charge on the Parcel covered by such assessment, or in the case of a lien arising out of unpaid Restricted Use Area assessments, a lien on the Parcel benefited by such Restricted Use Area, which shall bind such Parcel in the hands of the Owner(s), his heirs, devisees, personal representatives, successors and assigns. The aforesaid lien shall take precedence over and be superior to all other liens and charges against the said Parcel, including, but not limited to any and all mortgages and deeds of trust, except the lien of assessments under the Riverport Indenture. Sale or transfer shall not affect any lien created pursuant hereto. To evidence the aforesaid assessment lien, the Trustees shall prepare a written notice of assessment lien setting forth the amount of the unpaid indebtedness, the name of the Owner(s) of the Parcel covered by such lien and a description of the Parcel. Such notice shall be signed by one of the Trustees and shall be filed and recorded in the offices of the Circuit Clerk of St. Louis County, Missouri and the Recorder of Deeds of St. Louis County, Missouri. A copy of said notice shall be sent by certified mail, return receipt requested, to the last known record address of each Owner of the affected Parcel, of each tenant with a lease of record affecting said Parcel, and of each person or entity having a mortgage lien of record affecting said Parcel. Such lien for payment of assessments may be enforced by foreclosing on the defaulting Owner's Parcel by the Trustees in like manner as a mortgage on real property subsequent to the recording of a notice of assessment lien as provided above, or the Trustees may institute suit against the Owner(s) personally obligated to pay the assessment and/or for foreclosure of the aforesaid lien judicially. In any foreclosure proceeding, whether judicial or non-judicial, the Owner(s) shall be required to pay the costs, expenses, and reasonable attorney's fees incurred. The Trustees shall have the power to bid on the Parcel at foreclosure or other legal or equitable sale and to acquire, hold, lease, mortgage, convey or otherwise deal with the same. Upon payment of such assessment so recorded, together with interest, costs, expenses and attorneys' fees, satisfaction thereof shall be acknowledged and recorded by the Trustees at the expense of the Owner(s) against whom the lien was filed. 3.10 COMMON PROPERTY EXEMPT. The Common Property owned by the Trustees and which has not been designated as a Restricted Use Area subject to this Declaration shall be exempt from the assessments, charges and liens created herein; provided, however no property hereunder shall be exempt from assessments or the lien thereof under the Riverport Indenture. The Trustees, as record owners, of the Common Property shall not be considered "Owners" for any purposes hereunder. ARTICLE IV COMMON PROPERTY 4.1 ESTABLISHMENT OF COMMON PROPERTY AND RESTRICTED USE AREAS. The "Common Property" (i) shall be all of Lot 1 of Duke Riverport Site No. 1, except Lots 1A, 1B and 1C and is herein referred to as such, (ii) shall be owned by the Trustees, and (iii) shall be subject to the terms and conditions contained herein. Notwithstanding anything herein to the contrary, those areas of the Common Property which are from time-to-time reserved for the exclusive use (subject only to reasonable utility easements as are necessary to provide underground utility service to the Property and rights reserved herein to the Trustees) of certain Parcels, including but not limited to parking areas, parking garages, lawn areas, landscaping, lighting, ponds, fountains and other amenities adjacent to and/or from time-to-time designated for the exclusive use of a certain Parcel or Parcels shall be considered "Restricted Use Areas," and shall be governed by the terms and conditions hereof relating to Restricted Use Areas. For the purpose of establishing Restricted Use Areas, the Trustees shall have the power to grant non-perpetual easements to the Restricted Use Areas for the exclusive benefit of one or more Parcels, but the Trustees shall not be required to do so but rather may designate an area as a Restricted Use Area herein or hereby or in an amendment hereto or by a separate writing of record designating an area as such. Restricted Use Areas as of the date of this Declaration hereby assigned and designated are shown on Exhibit A hereto and may be from time-to-time hereafter changed or modified by an amendment to this Declaration or by way of another duly recorded instrument designating an area as a Restricted Use Area. The Trustees shall not, however, change or modify the Restricted Use Areas designated for the exclusive use of a particular Parcel without first obtaining the prior written consent of the Owner or Owners of said Parcel (as the case may be) (or the consent of any tenant or other person, if any, to whom the Owner or Owners of a specific Parcel have from time-to-time specifically delegated said Owner's or Owners' specific right to so consent in a writing placed of record with the St. Louis County Recorder of Deeds) affected by such change or modification. 4.2 EASEMENTS FOR THE USE OF COMMON PROPERTY AND RESTRICTED USE AREAS. Every Owner and tenant of the Property (herein sometimes referred to individually as the "Benefited Party" and collectively as the "Benefited Parties") and their respective successors and assigns, invitees, agents, employees, tenants, contractors and licensees shall have a right and non-exclusive perpetual easement of enjoyment in and to the Common Property (exclusive of the Restricted Use Areas as from time-to-time designated) for the limited purpose of ingress, egress, parking and loading, subject only to such reasonable rules and regulations as may from time to time be established by the Trustees, including, but not limited to the designation and assignment of certain parking areas within the Common Property (exclusive of the Restricted Use Areas) for the benefit of the respective Owners and occupants of the Parcels and the establishment of Restricted Use Areas. In addition, every Owner and tenant of a specified Parcel to whom a Restricted Use Area has been specifically assigned and designated and their respective invitees, agents, employees, tenants, contractors and licensees shall have a right and exclusive, non-perpetual easement of enjoyment in and to the specified Restricted Use Area (but said specified Restricted Use Area only) for the purposes of ingress, egress, parking and loading and such other purposes as are consistent herewith and not in violation of any applicable laws and/or regulations and/or the Riverport Indenture, subject only to such reasonable rules and regulations as may from time to time be established by the Trustees which are consistent with the provisions hereof. In addition, the Trustees shall grant to the Owners of each Parcel, and third parties as is reasonably necessary, such non-exclusive utility easements as are reasonably necessary to provide underground utility service to the Parcels and Common Property. 4.3 TITLE TO COMMON PROPERTY. Title to the Common Property, including the Restricted Use Areas, shall be and remain with the Trustees. Any conveyance or change of ownership of all or any part of a Parcel in Duke/Riverport Site No. 1 shall convey with it a beneficial interest in the Common Property (exclusive of the Restricted Use Areas) and in the Restricted Use Area assigned to a particular Parcel, if any, but no such interest in the Common Property or a Restricted Use Area shall be conveyed except in conjunction with a conveyance of a Parcel. Any conveyance of all or any part of a Parcel shall carry with it all rights and interests in and to the Common Property (exclusive of the Restricted Use Areas) and in and to the Restricted Use Area assigned to a particular Parcel, if any, although such is not expressly mentioned; provided, however, that no right or power conferred upon the Trustees shall be abrogated. 4.4 EXTENT OF EASEMENTS. The rights and easements of enjoyment in the Common Property (including the Restricted Use Areas) created hereby shall be subject to the following: (a) The right of the Trustees to prescribe reasonable rules and regulations for the use, enjoyment, improvement, and maintenance of the Common Property and Restricted Use Areas; (b) Subject to the provisions of SECTION 4.1 hereof, the right of the Trustees to purchase, alter, and use the Common Property and Restricted Use Areas, or any part thereof; (c) The right of the Trustees to sell or convey the Common Property and Restricted Use Areas, or any part thereof, in the event of condemnation or taking by a public agency972451523; (d) The right of the Trustees to designate Restricted Use Areas or grant easements to Restricted Use Areas for the exclusive benefit of one or more Parcels; and (e) All other rights reserved to the Trustees in this Declaration and all rights reserved in the Riverport Indenture but only to the extent that such rights are applicable to the Property. 4.5 TRUSTEES MANAGEMENT OF COMMON PROPERTY. Except as otherwise provided herein, the Common Property shall be for the benefit and use of all Owners and future Owners in Duke/Riverport Site No. 1 and it is deemed to be in the best interests of all Owners and future Owners to vest in the Trustees the exclusive powers to manage, control, improve, maintain and keep in repair the Common Property. The Trustees are (subject to the limitations with respect to the Restricted Use Areas herein specifically provided) therefore authorized and empowered to: (i) keep the Common Property open at all times for the benefit and use of the Benefited Parties; (ii) secure to such Benefited Parties the rights, benefits and advantages of having ingress and egress from and to, over, along and across the Common Property and of frequenting and using and enjoying the Common Property in such manner and to such an extent as will enable such Owners, their lessees, tenants, employees and customers to equitably enjoy and mutually derive the maximum benefit from the Common Property, taking into account the character of the occupancy and the use to which the Parcels are put from time-to-time; (iii) assign to the Owners of Parcels benefited by the Restricted Use Areas, the duty to manage, control, improve, maintain and keep in repair such Restricted Use Areas, in a manner consistent with this Declaration, the Riverport Indenture and subject to the rights reserved by the Trustees herein; (iv) make and enforce reasonable rules and regulations governing the use of the Common Property; (v) to employ attendants; to require identification; (vi) to allot or assign spaces; to make charge, in a non-discriminatory manner, for parking spaces where appropriate; (vii) to reconfigure the parking areas; and (viii) to restrict the use of certain parking areas and to make any other reasonable regulations for the general welfare of all of the Benefited Parties, to the end that so far as is reasonably possible of accomplishment, the Benefited Parties collectively shall enjoy the maximum and most beneficial use of the Common Property. It is understood and agreed by the Benefited Parties that it will not be possible for the Trustees to so manage the Common Property that the use is necessarily proportionate or equal among the Owners. Notwithstanding anything herein to the contrary, each Benefited Party shall at all times be entitled to the minimum number of parking spaces required for general office use by the zoning ordinances of the City of Maryland Heights, Missouri or other governmental authority then having jurisdiction over the Property. 4.6 MAINTENANCE OF RESTRICTED USE AREAS AND COMMON PROPERTY. (a) Each Owner shall be responsible for the maintenance and repair of the Restriced Use Areas designated for the use of each Owner's Parcel and shall: (i) keep all portions of the Restricted Use Areas desigated for the use of the Owner's Parcel in good order and repair and free of litter, weeds, trash and debris; (ii) maintain all lawn areas and landscaping within each portion of the Restricted Use Areas designated for the use of the Owner's Parcel, including regular mowing of all lawn areas and trimming, maintenance and, when necessary, replacement of trees and shrubbery; (iii) police and protect the Restricted Use Areas; (iv) maintain standard extended coverage and public liability insurance covering the Restricted Use Areas with coverage reasonably acceptable to the Trustees and such other insurance as the Trustees shall reasonably determine from time-to-time to be desireable; and (v) be responsible for the all costs and expenses associated with the Restricted Use Areas, including but not limited to, taxes, insurance, and utilities. Owners may take reasonable actions to restrict parking and access to their Restricted Use Areas, including, but not limited to, the erection of gates and/or card entry systems; provided, however, that: (1) such actions do not operate to unreasonably restrict the Benefited Parties' use and enjoyment of the remaining Parcels or the other Common Property (exclusive of the Restricted Use Areas) consistent with this Declaration; (2) such actions are not in violation of the zoning ordinances, rules or regulations of the City of Maryland Heights or any other governmental authority having jurisdiction over the Property; (3) no such action is taken without the prior written consent of the Trustees; and (4) no such action is in violation of the Riverport Indenture. Notwithstanding anything herein to the contrary, the Owners shall not assign, lease, convey, encumber or otherwise dispose of any Restricted Use Areas without the unanimous prior written consent of the Trustees. In the event an Owner fails to perform its obligations with regard to the Restricted Use Areas, the Trustees may perform such obligations of the Owner and assess the Owner for the costs actually and reasonably incurred (sometimes referred to herein as "Restricted Use Area assessments"). (b) Except (i) as provided in foregoing SUBSECTION (A) above and (ii) repair, maintenance or replacement of the Common Property which is the responsibility of any utility company or public or quasi-public body, the Trustees shall maintain all Common Property in good order and repair. The Trustees shall not, however, be liable to any Owner, tenant or other person or entity for damages to property or injury or death to persons arising out of any failure to repair and maintain any Common Property. Maintenance, repair or replacement by the Trustees of any Common Property shall be performed in a manner which does not unreasonably delay or interfere with the Owners' use of the Common Property (exclusive of the Restircted Use Areas), a Restricted Use Area designated for the use and enjoyment of a specific Parcel, or an Owner's use of its Parcel. The Trustees shall have reasonable access over and across any Parcel to all Common Property to the extent necessary to permit the Trustees to maintain, repair or replace such Common Property. Maintenance by the Trustees of the Common Property, except as provided in the Riverport Indenture, shall include, but not be limited to, the following: (1) The private roadways and sidewalks within the Common Property (exclusive of the Restricted Use Areas) shall be swept and, to the extent reasonably possible, snow and ice shall be removed therefrom. (2) The lighting, signs, islands and other private street improvements located within the Common Property (exclusive of the Restricted Use Areas) shall be maintained in good repair. (3) Landscaping, including lawn areas, trees and shrubbery at all entrances to the Property, shall be maintained in a first-class condition by cutting, trimming, feeding and weeding. (4) The land and any improvements lawfully constructed on the Common Property shall be restored to the extent damaged in connection with the maintenance, repair or replacement of any easement. (5) The Trustees shall be entitled to replace any improvement constituting a part of the Common Property when necessary for the proper functioning of the Common Property. (6) The Trustees shall maintain insurance coverage as follows: 972451524(i) All improvements upon the Common Property (excluding the Restricted Use Areas) shall be insured in an amount equal to the maximum insurance replacement value, and afford protection against loss or damage by fire or other hazards covered by a standard extended coverage endorsement and such other risks as the Trustees reasonably determine from time-to-time, including, vandalism; (ii) Public liablility, including medical payments insurance, in such amounts and with such coverage as shall be reasonably determined by the Trustees; 972451525(iii) Workmen's compensation insurance meeting the requirements of the laws of Missouri; 972451526and (iv) Fidelity insurance on the Trustees and all other persons or entities handling funds of behalf of the Owners of Duke/Riverport Site No. 1, in an amount equal to a minimum of one hundred fifty percent (150%) of the estimated annual operating expenses. All expenses incurred or to be incurred by the Trustees in connection with the foregoing (and such other expenses recoverable by the Trustees as herein otherwise provided) shall be recoverable by the Trustees by way of the Annual Assesments For Common Property as in SECTION 3.2 hereof provided. (c) The Trustees shall have the duty and power to pay the general and special taxes, if any, assessed against the Common Property, excluding the Restricted Use Areas, and to receive, hold, convey, dispose of and administer in trust any gift, grant, conveyance or donation of any money or real or personal property for the purpose of executing this trust. The Owners shall have the duty to pay all general and special taxes assessed against the Restricted Use Areas which have been designated for the use of each respective Owner's Parcel and as assessed against the Parcel. Taxes for the Restricted Use Areas shall be equitably allocated among the Owners to which the Restricted Use Areas are assigned by the Trustees and shall be based upon the assessed value of the Restricted Use Areas as determined by the St. Louis County Assessor's Office or other taxing authority then having jurisdiction over the Property. 4.7 CONSTRUCTION OF PARKING STRUCTURES AND ADDITIONAL PARKING AREAS. (a) From time to time it may be necessary or desirable to construct one or more parking structures and/or additional parking areas, so that, at a minimum, the minimum parking requirements as prescribed by the zoning ordinances of the City of Maryland Heights or of any governmental authority then having jurisdiction over the Property will be met. All costs and expenses of construction of said parking structure and/or parking areas shall be borne by the Owners of said Parcels for whose use such parking structures and/or parking areas are constructed and none of the cost and expense associated therewith shall be the responsibility of the Trustees nor shall the Trustees make any assessment in connection with the initial construction of said parking structure and/or parking areas without the unanimous consent of the Owners. Prior to commencement of construction of any improvements, architectural approval must be obtained from the Trustees and as required by the Riverport Indenture. In addition, the Owners of said Parcels must provide the Trustees hereunder with reasonable assurances of Owners financial ability to complete the construction of the parking structure and/or parking areas. Not less than thirty (30) days prior to commencement of construction of any parking structure and/or improvements on the Common Property, the involved Owner hereunder shall notify all other Owners and each person or entity having a mortgage lien of record of the nature and extent of said assurances. The parking structure and/or parking areas constructed by the Owners as provided herein (partially or fully completed) shall be the property of the Trustees and held pursuant to the terms hereof, unless fee simple title to the real estate and parking structure and/or improvements thereon is conveyed to the Owner of any Parcel. Following initial construction, the Owners shall have the duty to make all necessary and proper improvements and repairs to the parking structure and/or parking areas which have been designated as Restricted Use Areas assigned to each Owner's Parcel; to pave, surface, grade or otherwise fit the same for use; to keep the areas in repair, light, police and protect the same. (b) The Trustees shall have the right to grant easements on, over (air) and under the Common Property for reasonable and necessary utility easements and easements between the various Parcels, subject, however, to the reasonable right of each Parcel Owner to reasonably restrict access to its Parcel. (c) The Trustees shall have the power to prohibit any person, firm or corporation from obstructing or occupying with building materials, soil or other objects, the Common Property so as to in any manner obstruct the free use thereof, but the Trustees may permit temporary obstructions of necessity for reasonable periods of time and to this end shall have power to require a reasonable deposit to be made by any such person making temporary use of the Common Property in connection with necessary building or other operations, to guarantee that such obstructions will be removed and the Common Property restored to a condition equal to that existing before the commencement of the work, otherwise such restoration is to be done by the Trustees and paid for from such deposit. ARTICLE V MISCELLANEOUS PROVISIONS 5.1 DURATION. This Declaration and the covenants, restrictions and easements set out herein shall run with and bind the land, and shall inure to the benefit of and be enforceable by the Trustees, and every Owner of every Parcel and their respective legal representatives, heirs, successors, and assigns, for a term beginning on the date this Declaration is recorded, and continuing indefinitely. Provided, however, that should this Declaration or any part thereof be held invalid or unenforceable as a result of the term of same being perpetual, then the term hereof shall be deemed to continue through and including December 31, 2033 after which time said covenants shall be automatically extended for successive periods of ten (10) years unless an amendment is approved as set forth below. Provided, however, that no such change shall be effective until the recording of a certified copy of such resolution in the Recorder of Deeds Office, St. Louis County, Missouri. Upon the expiration of this Declaration or the earlier vacation of all of the Common Property, fee simple title to the Common Property shall vest in the then Owners, as tenants in common, each owning that proportion of interest therein according to each Owner's Pro-Rata Interest; provided further that, title to Restricted Use Areas reserved for the exclusive use of an individual Parcel, shall vest in the Owner of the Parcel to which the Restricted Use Areas is reserved. The rights of said tenants in common shall only be exercisable appurtenant to and in conjunction with said Owners' ownership of Parcels within Duke/Riverport Site No. 1. The Owners agree to cooperate as necessary to subdivide the Property and take all other actions necessary to accomplish the foregoing. 5.2 AMENDMENT. Except as herein otherwise specifically provided, for five (5) years from and after the date that this Declaration is recorded with the St. Louis County Recorder of Deeds, same may be amended by the unanimous vote of the Trustees voting in person or by proxy, at a meeting duly called for such purpose and, thereafter, any amendment (except those requiring the unanimous consent of Owners as herein provided) may be made by a two-thirds (2/3) vote of the Owners; providing, however, that no amendment shall at anytime be made without the unanimous consent of the Owners and each person or entity having a mortgage lien of record (which consent shall not be unreasonably withheld, conditioned or delayed): (i) which would have the effect of denying an Owner of his voting rights in connection with the election of Trustees; or (ii) which would have the effect of unreasonably denying the substantive rights of the Owners and/or their mortgage lenders herein specified. Any amendment shall become effective when an instrument is filed for record in the Recorder of Deeds Office, St. Louis County, Missouri, with the signatures of the Trustees indicating the approval of the Owners and/or mortgage lenders, if required. No such amendment shall: (1) reduce the number of Trustees on the Board of Trustees as herein provided; or (2) eliminate the requirement of any cognizant governmental authority that unfilled vacancies on the Board of Trustees be filled by said cognizant governmental authority. 5.3 ENFORCEMENT. The Trustees shall have the duty and each and every Owner, tenant and/or person or entity having a mortgage lien of record of any part of the Property or on a Parcel or part thereof shall have the right (but not the duty) to enforce the covenants and restrictions set out in this Declaration (and any rules and regulations promulgated by the Trustees hereunder) as same may be from time to time amended. Enforcement of the covenants and restrictions shall be by any proceeding at law or in equity against any person or persons violating or attempting to violate any protective conditions, covenant, restriction, or reservation (or any rules and regulations promulgated by the Trustees hereunder) either to restrain violation and/or to recover damages, and against the Property, and/or any Parcel to enforce any lien created by these protective conditions, restrictions, reservations, and covenants (and any rules and regulations promulgated by the Trustees hereunder). Failure by the Trustees or any Owner, tenant and/or mortgage lender to enforce any such protective condition, covenant, restriction or reservation shall in no event be deemed a waiver of the right to do so thereafter. 5.4 SEVERABILITY OF PROVISIONS. If any Article, section, paragraph, sentence, clause or phrase of this Declaration shall be or become unenforceable, illegal, null, or void for any reason or shall be held by any court of competent jurisdiction to be illegal, null, or void, the remaining Articles, sections, paragraphs, sentences, clauses, or phrases of this Declaration shall continue in full force and effect and shall not be affected thereby. It is hereby declared that said remaining Articles, sections, paragraphs, sentences, clauses, and phrases would have been and are imposed irrespective of the fact that any one or more other Articles, sections, paragraphs, sentences, clauses, or phrases shall become or be illegal, null, or void. 5.5 NOTICE. Wherever written notice to Duke Realty, a Trustee, or Owner, tenant, or mortgage lender of a Parcel within Duke/Riverport Site No. 1 is permitted or required hereunder, such shall be given by United States, registered or certified, mail, return receipt requested, postage prepaid, to the address appearing on the records of the Trustees, or delivered in person or by facsimile (unless written notice has been given to the Trustees of a different address, in which event such notice shall be sent to the address so designated). Any notice so given shall conclusively be deemed to have been given at the time of placing same in the United States mail, properly addressed, whether received by the addressee or not, or upon receipt or refusal if delivered personally or by facsimile. 5.6 TITLE. The titles, headings, and captions which have been used throughout this Declaration are for convenience only and are not to be used in construing this Declaration or any part thereof. 5.7 SINGULAR AND PLURAL. Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to including any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires. 5.8 BINDING EFFECT. This Declaration shall bind the heirs, legal representatives, successors and assigns of the parties hereto. 5.9 CONFLICTING TERMS. If any provision of this Declaration violates any provision of the Riverport Indenture, then such provision of this Declaration shall be automatically modified to the minimum extent necessary to comply with the Riverport Indenture. IN WITNESS WHEREOF, W. Gregory Thurman, Timothy J. McCain and Lisa G. Bulczak, Trustees of Duke/Riverport Site No. 1, and Duke Realty Limited Partnership, an Indiana limited partnership, have caused this instrument to be executed as of the day and year first above written. TRUSTEES OF DUKE/RIVERPORT SITE NO. 1 - -------------------------- W. Gregory Thurman - -------------------------- Timothy J. McCain - -------------------------- Lisa G. Bulczak DUKE REALTY LIMITED PARTNERSHIP, An Indiana limited partnership S E A L By: DUKE REALTY INVESTMENTS, INC., An Indiana Corporation, Its General Partner ATTEST: By:________________________________ W. Gregory Thurman _____________________________ Vice president and General Manager James D. Eckhoff St. Louis - Office Assistant Secretary STATE OF MISSOURI ) ) SS COUNTY OF ST. LOUIS ) On this ____ day of ______________, 1998, before me, a Notary Public in and for the County of St. Louis, State of Missouri, duly commissioned and sworn, personally appeared W. Gregory Thurman, Timothy J. McCain and Lisa G. Bulczak, known to me to be named herein as the TRUSTEES OF DUKE/RIVERPORT SITE NO. 1 and also known to me to be the persons who executed the foregoing instrument, the said W. Gregory Thurman; Timothy J. McCain and Lisa G. Bulczak having stated to me that they executed the foregoing instrument as their free act and deed. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal in the County of St. Louis, State of Missouri, the day and year in this certificate first above written. ---------------------------------- Notary Public STATE OF MISSOURI ) ) SS COUNTY OF ST. LOUIS` ) On this ____ day of ____________, 1998, before me a Notary Public in and for the County of St. Louis, State of Missouri, duly commissioned and sworn, personally appeared W. Gregory Thurman, known to me to be the Vice President and General Manager, St. Louis - Office of DUKE REALTY INVESTMENTS, INC., the corporation described in the foregoing instrument, and also known to me to be the person who executed the foregoing instrument, the said W. Gregory Thurman having stated to me that he executed said instrument on behalf of the corporation therein named, and acknowledged that such corporation executed the same as the free act and deed of said corporation and with full authority of its Board of Directors, and as General Partner, with authority, of DUKE REALTY LIMITED PARTNERSHIP. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal in the County of St. Louis, State of Missouri, the day and year in this certificate first above written. ---------------------------------- Notary Public EXHIBIT A (TO DECLARATION) This Exhibit contains a pictorial of Site No. 1 EXHIBIT 1.03-C RESOLUTIONS The undersigned, being all of the Trustees of Duke/Riverport Site No. 1 pursuant to that certain Declaration of Covenants, Restrictions and Easements for Access and Parking for Property in the City of Maryland Heights, County of St. Louis, State of Missouri, known as Duke/Riverport Site No. 1, dated __________________, 1998 (the "Parking Indenture"), and recorded at Book _____ Page _____ of the St. Louis, County, Missouri records, hereby consent and agree to the following resolutions and waive notice of a meeting of the Trustees and the holding of such meeting, it being intended that this consent shall have the same force and effect as the vote of the Trustees at a regular or special meeting of the Trustees duly called and held. The resolutions to which the undersigned consent and agree to are as follows: BE IT RESOLVED, that in accordance with Section 4.2 of the Parking Indenture, the Trustees hereby assign and designate to the Owner of Lot 1A of Duke/Riverport Site No. 1, according to the plat thereof recorded at Book _____ Page ____ of the St. Louis, County, Missouri records (herein sometimes referred to as "Lot 1B"), from time to time and to its tenant, Express Scripts, Inc. ("Tenant"), and their respective successors and assigns, those certain 56 parking spaces (the "Designated Parking Spaces") within the Common Property (as described in the Parking Indenture) as shown and depicted on Exhibit 1 to this Resolution, for use by the Tenant and its directors, officers, employees, representatives, agents, guests and invitees; RESOLVED, that the Designated Parking Spaces shall continue to be within the Common Property and shall not be part of any Restricted Use Area (as described in the Parking Indenture); and be it further RESOLVED, that the Trustees hereby consent to the lease of the Restricted Use Area assigned and designated to Lot 1A under the Parking Indenture ("Lot 1A RUA") and the lease of the other Common Property (including the Designated Parking Spaces) by the Owner of Lot 1A to the Tenant; and be it further RESOLVED, that the Trustees confirm and ratify that the Lot 1A RUA shall be for the exclusive benefit of Lot 1A; and be it further RESOLVED, that Tenant shall have the right, at its sole cost and expense, to install signs identifying the Designated Parking Spaces for Tenant's use (subject to the Trustees' approval of the form and content of said signage, which approval shall not be unreasonably withheld, conditioned or delayed); and be it further RESOLVED, that the Trustees have received a copy of the that certain Eighth Amendment to Lease dated August 14, 1998, by and between Duke Realty Limited Partnership and Tenant, and acknowledge that the Owner of Lot 1A has delegated to Tenant certain consent rights set forth in the Parking Indenture, including the following: (1) consent rights with respect to Special Assessments as provided in Section 3.4 of the Parking Indenture, and (ii) consent rights with respect to any change or modification of Lot 1A RUA as provided in Section 4.1 of the Parking Indenture; and be it further RESOLVED, that these Resolutions and the rights herein conferred to Tenant shall run to and benefit Tenant and its successors and assigns and shall continue without revocation or amendment so long as Tenant leases all or a portion of Lot 1A (except to the extent Tenant otherwise consents to any revocation or amendment in writing), and in the event that at any time hereafter Tenant becomes the Owner of Lot 1A, the rights herein confirmed to Tenant shall run to Tenant as Owner of Lot 1A (and to subsequent Owners) without revocation or amendment (except to the extent the Owner(s) otherwise consents to any revocation or amendment in writing); and be it further RESOLVED, that each of the Trustees, be and here is authorized and directed to do all acts and things as may be necessary or desirable to carry out the purpose and intent of these resolutions, and that all of the acts and doings, whether heretofore or hereafter done or performed in connection herewith are hereby, in all respects, ratified, approved and confirmed. Dated"_______________, 1998 ___________________________________ W. Gregory Thurman ___________________________________ Timothy J. McCain ___________________________________ Lisa G. Bulczak BEING ALL OF THE TRUSTEES EXHIBIT 1 (TO RESOLUTION) This Exhibit contains a pictorial of Site No. 1 EXHIBIT 1.04(f) TITLE EXCEPTIONS (FROM SCHEDULE B - SECTION 2 OF TITLE COMMITMENT/ABSTRACT NO. 275195) 4. This Commitment attempts to make no statement as to the effect of any Federal Flood Control Act, Submerged Land Act, or other related legislation and makes no statement as to the effect, if any, of inconsistencies in the boundaries of the property described in Schedule A hereof, caused by accretions, relictions, avulsions or meanderings of the Missouri River (AS TO ALL TRACTS). 5. Restriction and conditions contained in instrument(s) recorded: Book 8192 Page 1332 (AFFECTS ALL TRACTS). 6. First Revised And Restated Trust Indenture For The Property Known As Riverport In The City Of Maryland Heights, County Of St. Louis, State Of Missouri, dated August 10, 1987 and recorded at Book 8191 Page 380 of the St. Louis County, Missouri records; which was amended by an Amendment to the First Revised and Restated Trust Indenture dated November 4, 1988, and recorded in Book 8465 Page 1068 of the St. Louis County, Missouri, Records; which was further amended by a certain Second Amendment to the First Revised and Restated Trust Indenture dated June 12, 1991, and recorded in Book 9013 Page 1955 of the St. Louis County, Missouri, Records; which was further amended by another Second Amendment to the First Revised and Restated Trust Indenture dated July 21, 1994, and recorded in Book 10263 Page 1872 of the St. Louis County, Missouri, Records; which was further amended by that certain Third Amendment of the First Revised and Restated Trust Indenture dated December 18, 1995, and recorded in Book 10694 Page 1868 of the St. Louis County, Missouri, Records; which was further amended by that certain Fourth Amendment To The First Revised And Restated Trust Indenture For The Property Known As Riverport In The City Of Maryland Heights, County Of St. Louis, State Of Missouri dated March 5, 1997, and recorded in Book 11104 Page 991 of the St. Louis County, Missouri, Records; which was further amended by that certain Fifth Amendment To The First Revised And Restated Trust Indenture For The Property Known as Riverport In The City Of Maryland Heights, County Of St. Louis, State Of Missouri, and recorded in Book 11304 Page 1396 of the St. Louis County, Missouri Records, which said Indenture, as amended as aforesaid, shall hereinafter be referred to merely as the "Riverport Indenture." (AFFECTS ALL TRACTS). 7. An easement disclosed by an instrument recorded in Book 8390 Page 1345, Book 8390 Page 1356 and Book 7960 Page 645 in favor of Metropolitan St. Louis Sewer District (AFFECTS TRACT I/PARCEL 3, TRACT II/PARCEL 4, AND TRACT III/PARCEL 5). 8. An easement disclosed by an instrument recorded in Book 8921 Page 2449 in favor of Union Electric Company (AFFECTS TRACT I/PARCEL 3 AND TRACT 2/PARCEL 4). 9. Infrastructure Easement Agreement by and among Sverdrup/MDRC Joint Venture, Riverport Board of Trustees and Harrah's Maryland Heights Corporation recorded in Book 10263 Page 1910 (AFFECTS ALL TRACTS). 10. Amended and Restated Roadway Easement Agreement by and among Riverport Board of Trustees, Harrah's Maryland Heights Corporation, Harrah's Maryland Heights, LLC and Riverside Joint Venture recorded in Book 10694 Page 1908 (AFFECTS ALL TRACTS). (NOTE: By instrument recorded in Book 10697 Page 2135, The Boatmen's National Bank of St. Louis has subordinated its lien of Deed of Trust recorded in Book 7957 Page 2042 to the Amended and Restated Roadway Easement Agreement recorded in Book 10694 Page 1908.) 11. Terms and provisions of the following ordinance: Ordinance Number: 95-973. A certified copy of which is recorded in Book 10646 Page 777 (AFFECTS ALL TRACTS). 12. Terms and provisions of the following ordinance: Ordinance Number: 95-980. A certified copy of which is recorded in Book 10646 Page 827 (AFFECTS ALL TRACTS). 13. Easement to Fred Weber, Inc., according to instrument recorded in Book 7845 Page 440 of the St. Louis County records (AFFECTS ALL TRACTS). 14. An easement for the purposes herein stated and incidental purposes, as disclosed by an instrument recorded in Book 9410 Page 636 for water pipe (AFFECTS TRACT V/PARCEL 9). 15. Unrecorded Lease dated as of April 29, 1992, by and between Riverport, Inc. and McDonnell Douglas Development Company - Irvine Partnership in Commendam (Lessor) and Express Scripts, Inc. (Lessee) as evidenced of record by Memorandum thereof recorded in Book 9303 Page 2155 and that certain unrecorded second amendment to lease dated May 28, 1993 as evidenced of record by second loan modification agreement recorded in Book 10059 Page 2078 (LEASEHOLD TITLE NOT EXAMINED) (AFFECTS TRACT V/PARCEL 9, TRACT III/PARCEL 5 AND TRACT IV/PARCEL 6). 16. An easement disclosed by an instrument recorded in Book 11099 Page 1588 in favor of Metropolitan St. Louis Sewer District (AFFECTS TRACT III/PARCEL 5). 17. An easement disclosed by an instrument recorded in Book 11175 Page 2364 in favor of Metropolitan St. Louis Sewer District (AFFECTS TRACT III/PARCEL 5). 18. Restrictions, conditions, and easements contained in instrument(s) recorded in: Plat Book 287 Pages 80 and 81 (AFFECTS TRACT III/PARCEL 5, TRACT I/PARCEL 3 AND TRACT II/PARCEL 4). 19. Restrictions, conditions, and easements contained in instrument(s) recorded in: Plat Book 281 Page 34 (AFFECTS TRACT IV/PARCEL 6 AND TRACT V/PARCEL 9). 20. Restrictions, conditions, and easements contained in instrument(s) recorded in: Plat Book 271 Pages 45 and 46 (AFFECTS TRACT I/PARCEL 3, TRACT II/PARCEL 4 AND TRACT III/PARCEL 5). 21. Restrictions, conditions, and easements contained in instrument(s) recorded in: Plat Book 305 Page 37 (AFFECTS TRACT IV/PARCEL 6 AND TRACT V/PARCEL 9). 22. Restrictions, conditions, and easements contained in instrument(s) recorded in: Plat Book 327 Pages 89-92 (AFFECTS TRACT IV/PARCEL 6 AND TRACT V/PARCEL 9). 23. Easement for the maintenance, repair and upkeep of the levee and flood wall according to instrument recorded in Book 8351 Page 1184 (AFFECTS TRACT V/PARCEL 9). 24. Restrictions, conditions and easements contained in instrument recorded in: Plat Book 273 Pages 8 and 9 (AFFECTS TRACT II/PARCEL 4, TRACT III/PARCEL 5 AND TRACT I/PARCEL 3). 25. Restrictions, conditions and easements contained in instrument recorded in: Plat Book 297 Pages 12 and 13 (AFFECTS TRACT I/PARCEL 3, AND TRACT II/PARCEL 4). 26. Easement Declaration recorded in Book 8795 Page 579 (AFFECTS TRACT I/PARCEL 3 AND TRACT II/PARCEL 4). EXHIBIT 1.06-1 This Exhibit contains a pictorial graph of Project Schedule EXHIBIT 1.06-6 DUKE REALTY INVESTMENTS June 3, 1998 Mr. Barrett Toan Express Scripts 14000 Riverport Drive Maryland Heights, MO 63043 Re: Proposed Lease Agreement (the "Lease") by and between Duke Realty Limited Partnership ("Duke") and Express Scripts Inc. ("Express Scripts") for leasing a 141,131 rentable+/- sq. ft. Building ("Building") that Duke will construct as part of its project at Riverport in Maryland Heights (the "Project") Dear Barrett: The purpose of this letter agreement is to acknowledge that Duke and Express Scripts have commenced and are engaged in negotiations concerning the terms and provisions of the proposed Lease. In this regard, Duke and Express Scripts have tentatively agreed upon certain dates for completion of the Building. Although Duke and Express Scripts have not yet executed the Lease, Duke has advised Express Scripts of the need to commence architectural, engineering and related design work in order to give Duke the opportunity to complete the Building in accordance with the tentative schedule. Duke has further advised Express Scripts that Duke is not willing to incur the cost and expense of such architectural, engineering and related design work prior to the execution of the proposed Lease. In view of the foregoing, and in consideration of the costs and expenses to be incurred by Duke pursuant to this letter agreement, Express Scripts hereby covenants and agrees that in the event that Duke and Express Scripts fail to come to a written agreement on terms of the Lease that are mutually satisfactory to both Duke and Express Scripts, that Express Scripts will reimburse Duke for Allowable Expenses (defined below) that Duke incurs prior to either party giving notice that Lease negotiations have terminated. As used herein, the term "Allowable Expenses" shall mean only those actual reasonable out-of-pocket costs and fees for civil engineering and design, architectural design, soil test borings, and topography and elevation investigation that Duke incurs in preparation for constructing the Building. In this regard, if Express Scripts gives notice to Duke that negotiations concerning the Lease have been terminated, Duke shall promptly submit to Express Scripts, as soon as practical, a summary of all such Allowable Expenses with reasonable supporting detail, including invoices, and Express Scripts shall, upon receipt of any such notice, promptly pay and/or reimburse Duke for any and all such Allowable Expenses up to an amount of One Hundred Fifty Thousand Dollars ($150,000.00) in the aggregate, and Duke will thereafter forward the work product of such costs to Express Scripts. The parties hereby agree that any costs or expenses incurred by Duke in connection with its enforcement of this letter agreement, including, without limitation, reasonable fees and expenses of Duke's legal counsel may also be included as Allowable Expenses in this $150,000.00. For purposes of this paragraph, notice shall be in writing and either delivered by prepaid commercial overnight delivery service, or by facsimile, addressed as follows: If to Express Scripts: Express Scripts 14000 Riverport Drive Maryland Heights, MO 63043 Fax: 314-770-1581 Attention: Thomas M. Boudreau, Senior Vice President If to Duke: Duke Realty Investments, Inc. 635 Maryville Centre Drive, Suite 200 St. Louis, Missouri 63141 Fax: 314-434-7532 Attention: Greg Thurman, Vice President & General Manager or such other address as is from time to time designated by notice pursuant hereto by the party receiving the notice. The date of service of such notices shall be the date notices are received or refused, as the case may be. The provisions of this letter agreement shall be binding upon and enforceable by and against the parties hereto. Duke and Express Scripts each hereby reserve the right to cancel and/or terminate negotiations concerning the terms and provisions of the proposed Lease. Notwithstanding any such termination, Express Scripts shall remain bound and obligated to pay and/or reimburse Duke in the manner set forth herein. Except for the limited obligation of reimbursement set forth above, Express Scripts has no obligation to Duke in connection with the Lease or the negotiation thereof, or the Project, and except for the limited obligation of reimbursement set forth in this letter, shall have no liability to Duke if for any reason negotiations terminate or a Lease is not executed. Upon successful negotiation and execution of the proposed Lease, this letter agreement shall be and become void and of no further force or effect. If the foregoing terms and provisions of this letter agreement are acceptable to you, please execute duplicate originals in the space provided below, and return one fully executed original to Duke at 635 Maryville Centre Drive, Suite 200, St. Louis, Missouri 63141, Attention: Greg Thurman. At that time, Duke will proceed with the work described in this letter agreement. Thank you in advance for your consideration. Sincerely, DUKE REALTY LIMITED PARTNERSHIP By: Duke Realty Investments, Inc., its General Partner By: /s/ W.Gregory Thurman W. Gregory Thurman Vice President & General Manager St. Louis Office Group Accepted and agreed to this _____ day of June, 1998. EXPRESS SCRIPTS, INC. By: /s/ Barrett Toan Printed: Title: EXHIBIT 1.09.1 EXPRESS SCRIPTS PROPOSED OFFICE BUILDING MARYLAND HEIGHTS, MISSOURI REVISED AUGUST 11, 1998 BUILDING SHELL DESCRIPTION GENERAL CHARACTERISTICS A. Proposed building site is the north quadrant of the Duke Parcel at the Riverport Development adjacent to the existing Express Scripts Facility. B. The proposed facility is a three (3) story office building approximately 147,394 gsf or 141,774 rsf. It has been anticipated Express Scripts shall occupy the first two (2) levels and a portion of the third level, the remaining space shall unoccupied shell space, intended as expansion space for Express Scripts. C. Automobile parking proposed: 813 spaces for the new building and 310 spaces relocated from across the street of the existing building. GENERAL CONDITIONS A. Construction General Conditions is based upon a construction schedule, dated 5/31/98 (revised 7/30/98). We shall provide all support personnel, temporary utilities and temporary facilities for full-time, on-site supervision for the Work as described within this Building Shell Description. B. Required Building and Site related permits from governing authorities will be obtained and have been included. It is anticipated this building shall be of the Business Use Group. C. Duke Construction has also included all quality control testing of engineered backfill, concrete, asphalt, structural connections and construction layout throughout the course of the Project. D. All final cleaning and set-up of base building systems will be provided before Occupancy. E. All architectural, civil, structural, mechanical, electrical engineering, landscape design necessary to provide Building Shell Construction Documents will be provided. F. Included is a complete labor and material guarantee for one (1) year. See Roofing Systems, HVAC for extended warranties. SITEWORK A. The sitework shall include with all site clearing and earthwork preparation to accommodate all paving areas, building pad, and landscape areas. All grading will be provided to +/-1/10 of a foot subgrade elevation and all fill material under paving and slab area will be compacted to 95% maximum dry density according to standard Proctor ASTM 698. B. Heavy duty, 4" thick, asphalt paving shall be placed within the drive path for trucks to the loading area at the eastern end of the building, having a base of Type I stone at 9" deep, compacted to 95% maximum dry density according to standard Proctor ASTM 698 and all placed over a soil stabilization fabric. Type X asphalt base course shall be 2-1/2" deep, being one (1) layer of course crushed stone and sand with 4% asphalt. The Type C wearing surface course shall be 1-1/2" deep, being one (1) layer of sand- stone composition with 4.5% to 5% asphalt. C. Standard duty, 3" thick asphalt paving shall be placed at the automobile parking areas having a base of Type I stone at 6" deep, compacted to 95% maximum dry density according to standard Proctor ASTM 698 and all placed over a soil stabilization fabric. The Type C asphalt paving course shall be 3" deep, being one (1) layer of sand-stone composition with 4.5% to 5% asphalt. White pavement markings and ADA signage have been included. D. Site concrete consists of; 8" thick, welded-wire mesh reinforced, 4,000 psi compressive strength at 28 days with a 6" Type I stone base at the entry drive apron from Riverport Drive and the Service Area which includes the trash dumpster area; 4" thick concrete sidewalk is located at the main office entries; and 6" extruded curbing at perimeter of car parking areas and all parking lot islands. control joint sealant of the site concrete and sidewalk is included. E. All storm sewers for roof drainage will be provided via underground pipe and/or sheet drainage to drainage ditches at the perimeter of the site. F. All utilities will extend to the building and final connections made for, electric, water, and sanitary. We will coordinate and provide access (three (3) empty conduits from building to property line) for telephone and communication contractors. G. Water service will be extended from the 12" main on Riverport Drive to the facility and connection made to building domestic and fire suppression systems. H. Site seeding, sod, irrigation and landscaping in accordance with local codes, ordinances and covenants has been included. Also, the perimeter along Riverport Drive of the proposed office building site and the existing Express Scripts facility shall have a continuous hedge row of thorny bushes along Riverport Drive to aide in the deterrence of trespassing. Landscaping, as described, shall be as shown on drawings prepared by Austin Tao & Associates sheet no. L1, dated 7/14/98. I. All allowance of $3,000 has been included for exterior signage at the building and a total allowance of $5,000 ($1,000 each) has been included for entry drive monument/signage. J. Exterior lighting will be provided to meet all zoning ordinances and local codes, 2- foot candles, average maintained shall be obtained by pole mounted fixtures in the automobile parking areas, controlled by photo-cell and time clock. See electrical section for further description. K. All entry and exit drives onto the proposed site and existing facility (five locations) shall have a electric operated traffic control barrier gate with local, card reader access and free gate egress. L. A covered pedestrian walk has been included from the existing Express Scripts Building entrance to the proposed office facility. The tube steel frame and canvas covering shall be 8' wide in a 12' wide areaway with landscaping. The existing parking area shall be modified and re-stripped to accommodate the connecting pedestrian walk area. FOUNDATIONS AND SLABS A. We have included deep soil treatment/consolidation and spread footing type foundations based upon 4,000 PSF bearing capacity. Final foundation size and type will be determined once geotechnical report and structural loads are complete. B. The building floor slab-on-grade shall be 4" thick, 4,000 psi concrete at 28 days, with 6 x 6 - W1.4 x W1.4 reinforcement on a 6 mil vapor barrier and minimum of 6" compacted stone base. The slab will be receiving a smooth trowel finish and crack control joints will be installed at a maximum distance of 15' on center. C. The building's floor slab-on-decks shall have a 4" overall thickness, 4,000 psi concrete at 28 days, with 6 x 6 - W1.4 x W1.4 reinforcement. The slab will be receiving a smooth trowel finish. Concrete vibration pad shall be provided for mechanical equipment as dictated by design for sound deadening. STRUCTURAL A. Building column bay spacing is approximately 30' x 30', please refer to schematic floor plate drawings. B. The buildings structural system shall be structural steel shapes for floor and roof deck supported by steel columns. Floor slab shall be designed for 100 lb/sf live load. C. Metal roof deck shall be prime painted 1-1/2" type B metal deck. Elevated slab deck shall be 2" steel deck. All deck shall be installed per SDI specifications. D. Three (3) stairwells have been included for access to each floor. Stair construction shall be concrete filled pan tread with concrete intermediate and floor landings. The two (2) building end stairs are for emergency egress. The third central, communication stairway shall be open and within the central atrium. E. Miscellaneous metal items provided as follows: 1. Roof equipment support frames for HVAC equipment as described in this proposal. 2. Roof ladder and hatch. 3. Guard posts at loading area door and trash enclosure. 4. Building stairs and handrails (stair pans are concrete filled). 5. Roof screen support. 6. Miscellaneous iron for elevators. ROOFING A. All roofing shall be warranted by the manufacturer for 10 years on labor and material. The warranty shall cover material only for an additional 10 years. Acceptable roofing manufacturers are Firestone and Carlisle. B. The roof will be drained by internal roof drains with overflows. C. The roof membrane shall be a single-ply, 45 mil EPDM, loose-laid, ballasted membrane system. The roofing system shall have a UL Class A rating and a Factory Mutual Class 1 fire rating (non-combustible). The stone ballast shall be applied at a uniform rate of 10 psf in the field, 12 psf at a 10' wide perimeter band, and 15 psf in an area of 10' x 10' at the corner. The ballast shall be washed, rounded river gravel. D. The roof insulation shall be rigid closed cell polyisocyanurate boards having a minimum density of 2 pcf, a minimum 16 psi compressive strength and a total assembly R value of 30. E. Manufacturer walkway pads will be provided at the roof access door and around all roof top mechanical units. F. Coping, Flashing, and Curbs 1. All membrane sidewall flashing shall be a minimum of 60 mil uncured EPDM material installed in accordance to the manufacturer's details and design criteria. 2. A rooftop mechanical units and other miscellaneous rooftop equipment shall be mounted on an insulated curb. All piping and vents, which penetrate the roof membrane, will be flashed using molded or fabricated EPDM or neoprene flashing. 3. A single 30" x 36" roof hatch with a steel ladder will be provided for roof access. EXTERIOR SKIN A. Exterior walls of the building to consist of solid, limestone mix, architectural precast spandrel panels and continuous strip windows, curtainwall entry feature and/or storefront windows at first level. The precast panels shall have horizontal and vertical rustication features, and medium sandblast surface texture treatment. Tenant shall have opportunity for review and approval of color and texture. B. Glazing shall consist of approximately 7'0" tall continuous strip windows around the perimeter of the building and storefront/curtainwall at the main entry and various elevation elements. The window framing systems shall have thermally broken, extruded aluminum mullions with anodized finish. The glazing shall consist of one (1) inch insulating, low-emistivity tinted glass. Interior window sills shall be extruded aluminum integral with the window framing system. Tenant shall have opportunity for review and approval of glazing color. C. Main entry includes a set of double medium stile 3'-0" wide and 7'-0" tall swing doors opening into a vestibule then into the main level lobby on the west elevation. The east elevation also includes a set of double medium stile 3'-0" wide and 7'-0" tall swing doors with vestibule. (i.e. two pair of doors total in each vestibule). D. The Service entry shall have a pair of 3' x 7' insulated, hollow metal doors, an exterior electric scissors lift shall be provided. E. Concrete wall panels to receive color matching joint sealant. Sealant to be a two component polyurethane base with a five (5) year material warranty. INTERIOR FINISHES A. The office side of concrete panel perimeter walls shall receive 5/8" gypsum wall board to 4" above the finish ceiling on metal studs. R-19 batt insulation with vapor barrier will be provided the entire height of the precast panel. B. Interior walls for the core area restrooms shall consist of 5/8" gypsum wall board on 3-5/8" x 25 ga. metal studs 16" on center to the underside of metal deck. 3-1/2" unfaced, acoustic insulation shall be provided in these walls. Moisture resistant gypsum board shall be used on the restroom and janitor closets wet walls. C. Shell building partitions shall be fire-rated assemblies where required by code at mechanical shafts and egress stairways. D. Columns, mechanical/electrical shafts and fire stairways shall be enclosed or furred out with metal stud framing and gypsum wallboard, or shaftwall as required by code. E. All exposed gypsum board shall be taped, finished and sanded in preparation for painting and/or wall coverings. Wall finishes to be included as part of the Tenant Finish Allowance. F. All floor areas shall be broom clean exposed concrete, for preparation of floor finishes. Floor finishes and wall base to be included as part of the Tenant Finish Allowance. G. Interior doors shall be 3'-0" x 7'-0" x 1-3/4" solid core, prefinished, plain sliced, red oak, flush wood doors set in a hollow metal frame. H. The hardware schedule shall be coordinated between Express Scripts and the contractor and shall conform to the requirements of the Building Code and ADA. Lockset hardware shall have removable cores. The hardware shall be of heavy duty, commercial grade, full mortise style. Acceptable manufacturers shall be Best or Schlage. I. The standard ceiling height shall be 10'-0" +/- above finished floor for the office areas and 9'-0" +/- above finished floor in the restrooms. Ceiling system to consist of 2' x 2', 15/15" exposed tee grid system with tegular, lay-in acoustical pads. The pads shall be an Armstrong Tundra Tegular or approved equal. J. The restrooms shall receive ceramic tile on the floors and 6' high on the wet walls. standard tile will be as manufactured by Dal Tile or American Olean. Remaining walls will be finished with a Type II vinyl wall covering. K. Janitors closets and electrical rooms shall have sealed, exposed concrete floors and drywall wall surface to the underside of deck (no ceilings). L. Restrooms include the following specialties: 1. Plastic Laminate counter tops with lay-in sink bowls. 2. Toilet room partitions will be floor-mounted and finished with standard, factory-applied, baked-on enamel. 3. Stainless steel accessories including: Towel dispenser/waste receptacles, toilet paper dispensers, in-counter soap dispensers, ADA grab bars, feminine napkin dispenser/receptacles. 4. Unframed, full length, continuous mirrors over the counters. 5. Restrooms in accordance with ADA requirements. M. The exterior windows of the office area shall be provided with 1" horizontal, solid mini-blinds by Levelor. N. Fire extinguishers in office area will be placed in semi-recessed cabinets as required by Code and Fire District for Shell Building. O. Lobbies include the following: 1. The Main Entry Area Lobby (approximately 900 sf) and vestibule shall have a Type II vinyl wall covering on the walls and a flamed granite floor tile with polished granite base. The entry lobby ceiling is a painted, drywall surface with reveals and fluorescent downlights. 2. Elevator lobbies on the 1st through 3rd floors shall have the walls and floors prepared to receive finishes, which are a continuation of the tenant area treatments. The elevator lobby ceilings are a continuation of the tenant space lay-in ceiling systems and fluorescent down lighting. P. Elevators are proposed based on the following criteria: 1. Two (2) passenger hydraulic, elevators with 3,500-lb capacity, minimum 150 FPM travel speed, cabs shall be finished as part of a $7,500/cab allowance. 2. One (1) swing type, hydraulic elevator, gurney size with 4,000-lb Capacity, minimum 110 FPM travel speed, cab finish for service elevator shall be finished as part of a $7,000/cab allowance. 3. Acceptable elevator manufacturers include: Dover, Otis, Schindler, Thyssen, Montgomery and Westinghouse. Q. The Service Area located at the west end of the building shall include a 6' x 7' opening with hollow metal double doors. This area shall also serve as the utility service entrance. R. The two (2) emergency egress stairways shall have sealed concrete threads and landings, a decorative steel handrail, painted (1-1/2" dia. top & bottom rail and handrail with 1/2" dia. verticals 4" o.c., painted) enclosed fluorescent light fixtures, painted gypsum board walls, acoustical tile ceiling at the top level, underside of stairs shall be painted. The center atrium stairway shall include sealed concrete filled stair pans with closed risers on a steel plate stringer system with landings supported by adjacent structural steel. An allowance of $72,500 has been established for the stairway handrail, atrium guardrail, and all applied finishes. Metal stud framing and gypsum wallboard (prepared for finishes) has been included at the perimeter of the floor openings from finish ceiling up to the floor line on two (2) sides, the other two (2) sides include full height metal stud/gypsum wallboard wall (prepared for finishes). Sliding fire doors have been included with the base building with rated walls at the elevator shaft and the atrium corridor. A full height window wall on the corridor side of the atrium has been included. S. An allowance of $200,000 has been established for the Computer Room, the allowance is intended for partitions, flooring, finishes, mechanical and electrical items particular to said Computer Room. T. The atrium includes an opaque skylight over the floor opening area with the structural members wrapped in metal stud and gypsum wallboard prepared for finishes. PLUMBING A. A complete plumbing system including supply, waste and vent piping, fixtures and equipment in accordance with all applicable codes and ordinances. The following components are provided at each occupied level: o (10) Wall Hung, Flush-O-Meter, Water Closets (White China Fixture) o ( 2) Wall-Hung, Flush-O-Meter, Urinals (White China Fixture) o ( 8) Lay-in lavatory bowls with Commercial grade, lever handle Faucets o Electric water heaters sized to accommodate Base Building Fixtures o ( 4) Floor Drains (one per restroom) o ( 1) Floor Type Mop Sink in Janitor Closet o ( 4) Electric Water Coolers o ( 2) Remote wet column locations The base building components include: o Roof Drains with Overflows o ( 3) Frost-free Wall Hydrants (Main Entries and Loading Area) B. 6" PVC interior sanitary sewer line to service restrooms with necessary 4" branches to serve interior mechanical service area and two (2) remote wet columns. This sanitary line is extended outside the building to the public sanitary pumping station across Riverport Drive. C. Interior drains, downspouts and underground drain piping extended outside the building to drainage structures and/or to site drainage swales. D. Above ground domestic water piping and horizontal roof-drain runouts and bodies will be insulated. E. Two (2) wet columns (1" supply, 4" waste and vent riser) have been located at interior columns for service to future, remote fixtures. F. Water service, valving and backflow prevention shall be provided for the irrigation system as identified in the Sitework Section. H.V.A.C. A. The Heating, Ventilating and Air Conditioning systems will be variable air volume system, designed and selected to satisfy the following conditions: 1. Outdoor Design Conditions: Summer: 95(Degree)F dry bulb/78(Degree)F wet bulb Winder: 0(Degree)F wet bulb 2. Indoor Design Conditions: Summer: 75(Degree)F dry bulb (+/- 2(Degree)F), 50% relative humidity +/- 5% Winter: 75(Degree)F dry bulb (+/- 2(Degree)F) 3. The HVAC system will meet ASHREA standards capable of furnishing 20 cfm/person of fresh air for a maximum occupancy of 7 people per 1,000 rsf per BOCA. 4. HVAC Calculations include: 120 SF/person 4 watts/sf miscellaneous power, connected 2.0 watts/sf lighting 5. Acceptable Manufacturers of major HVAC Equipment include: Trane, Carrier, McQuay, Mammoth, and York. B. The HVAC System also includes the following: o One thermostat/sensor per 1,000 rsf, installed. o Ductwork and distribution of the HVAC System will be based on slot supply diffusers installed one per 250 rsf in an open floor plan. The system will be designed per the interiors layout provided by Christner, Inc., sheet no's A1.1, A1.2 and A1.3 dated 7/22/98, excluding any special systems for kitchen or computer room. o Temperature controls and wiring. o Ductwork designed via static regain for NC 35 noise level o Air balance of system o One (1) year labor and material warranty o Five (5) year material warranty on refrigeration compressors o Restroom and janitor closet exhaust in accordance with Code requirements o A Direct Digital Control (DDC) energy management system will be provided which will control the building HVAC Systems. Acceptable manufacturers include: Trane, Andover, Johnson, and Krueter FIRE SUPPRESSION SYSTEMS A. The facility shall be completely protected by an automatic sprinkler system including all piping, valves, risers, fittings, post indicator valves, check valves, fire department connections, contacts for fire protection monitoring, flow switches, supports, anchors, hangers, sprinkler heads, accessories, test connections, drains, testing, inspections, design and engineering, permits and fees, approval by all governmental and fire district agencies, and any other items required for the complete design and installation of the wet pipe system. B. An 8" fire main shall extend from the building to the public main along Riverport Drive. Exterior fire hydrants have been included in accordance with local Fire District requirements. C. All sprinkler heads in the office areas, main lobby and elevator lobby shall be concealed type. Sprinkler heads to be centered in tile. The system will be designed per the interiors layout provided by Christner, Inc., sheet no's A1.1, A1.2 and A1.3 dated 7/22/98, excluding any special systems for kitchen or computer room. D. The office system shall be designed and installed per NFPA #13, Light Hazard Group and Factory Mutual requirements. BASE BUILDING ELECTRICAL A. SERVICE EQUIPMENT 1. Electrical service shall be provided by a ground-mounted transformer(s) furnished by the public utility company (Ameren/U.E.) and shall provide, 277/480 volt, three-phase, four wire power. 2. Provide 277/480 volt, three-phase, four wire panelboards for base building lighting and mechanical equipment. 3. Provide step-down transformers as required for base building items. 4. Provide 120/208 volt, three-phase, four wire panelboards for base building receptacle power (i.e. restrooms, HVAC, base building systems) 5. Include as Base Building Electrical, distribution panels to accommodate Tenant power, excluding lighting and mechanical systems, based on four (4) watts per square foot, connected. The base building work shall include risers, switches, panels and K-13 transformers with 200% rated neutrals at each level Electrical Room. 6. All electrical work will be coordinated with other trades and shall comply with all applicable codes. 7. Provide empty conduit(s) to property line for primary electric incoming cables and coordination of Ameren/U.E. service equipment (i.e. setting transformer pads). B. EXTERIOR LIGHTING 1. Photo cell and time clock shall control all exterior lighting. 2. Provide building exterior soffit downlights at entries. Loading Area lights mounted on building. 3. Provide a conduit raceway to monument sign located adjacent to building main entry. 4. Provide site lighting to illuminate to 2-foot candles, average maintained, include furnishing and installing concrete bases. 5. Provide six (6) light billiards at Main Entry sidewalk. C. INTERIOR LIGHTING 1. In Open Office Area provide 2' x 4' light fixtures, 18-cell parabolic fluorescent fixture, electronic ballast and T-8 lamps. One (1) light fixture per 80 rsf. 2. Lighting for each restroom to include two (2) fluorescent downlight type light fixtures and continuous overlapping fluorescent lamp fixtures with eggcrate type diffuser along toilet wall and above sinks. Include switching in room. 3. Provide emergency and exit lighting in accordance with local code requirements for shell construction. The fixtures shall be self-contained, battery operated. 4. Provide 4', two (2) lamp fluorescent strip fixtures for mechanical rooms, janitor closets, equipment rooms, include switching in room. D. POWER 1. Power to be provided to all base Building Equipment, as described in this Building Description. 2. Provide general purpose duplex receptacles for common areas and restrooms. 3. Provide weatherproof receptacle at roof top mechanical equipment. 4. Dedicated duplex receptacle for lawn irrigation system. 5. Provide weatherproof receptacles at Main Entry and Maintenance area. 6. Provide hook-up to plumbing water heaters. 7. Hook-up of drinking fountains. 8. Hook-up of elevator equipment for elevators. 9. We've included (80) 20 amp 120 volt circuits and forty-six (46) receptacle bay boxes per floor. We included tenant power based upon 4 watts per square foot, connected, for office duplex receptacles. E. TELEPHONE 1. Provide Eight (8) sleeves at each level for communication lines. 2. Provide 4' x 8' plywood sheets for mounting of equipment (four per level). F. FIRE ALARM 1. Provide a fire alarm monitoring system in accordance with and as required by Code; including but not limited to, monitoring of sprinkler flow and tamper switches, shut down roof top units and elevator control, system autodialer, audio and visual alarms as required in core area as required by ADA. G. ENGINEERING/PERMITS 1. Provide Professional Engineered signed/sealed drawings and submittals for permit and construction purposes. 2. Provide all necessary electrical permits and inspection fees. EXHIBIT 1.09-2 LISTING OF BUILDING PLANS CIVIL DRAWINGS PREPARED BY STOCK & ASSOCIATES CONSULTING ENGINEERS, INC., DATED 7/28/98 PHASE I C1 Title Sheet C2 Specification Sheet C3 Site & Grading Plan C4 Site Geometrics Plan & Pavement Details C5 Sewer Profiles & Hydralic Data Calculations C6 Sewer Details C7 Entrance Warping Plan C8 Drainage Area Map C9 Record Plat PHASE II C1 Title Sheet C2 Specification Sheet/Pavement Details C3 Key Map C4 Site & Grading Plan C5 Site Geometrics Plan C6 Ditch Grading Plan C7 Sewer Profiles & Hydralic Data Calculations C8 Sewer Details C9 Drainage Area Map C10 Record plat LANDSCAPING DRAWINGS PREPARED BY AUSTIN TAO & ASSOCIATES, INC., DATED 7/14/98 L1 Landscaping Plan ARCHITECTURAL DRAWINGS PREPARED BY HENDERSON GROUP, INC., DATED 7/20/98(8/3/98*) 01A201 First Floor Plan Unit "A"* 01A202 First Floor Plan Unit "B" 02A201 Second Floor Plan Unit "A"* 02A201 Second Floor Plan Unit "B" 03A201 Third Floor Plan Unit "A"* 03A201 Third Floor Plan Unit "B" A203 Reflected Ceiling Plans* A204 Reflected Ceiling Plans* A205 Roof Plan Unit "A"* A206 Roof Plan Unit "B"* A207 Enlarged Plans, Partition Types* A208 Enlarged Plans, Partition Types* A209 Enlarged Plans* A301 Elevations* A401 Wall Sections A402 Wall Sections A403 Wall Sections* A404 Atrium Section* A405 Stair Sections, Details* A406 Details* A407 Details* A501 Room / Door Finish Schedules* STRUCTURAL DRAWINGS PREPARED BY SMITH/ROBERTS AND ASSOCIATES, INC., DATED 7/9/98 F1.1 Foundation Framing Plan Unit A F1.2 Foundation Framing Plan Unit B F2.1 Foundation Details F2.2 General Foundation/ Concrete Notes & Foundation Details S1.1 Second Floor Framing Plan Unit A S1.2 Second Floor Framing Plan Unit B S1.3 Third Floor Framing Plan Unit A S1.4 Third Floor Framing Plan Unit B S1.5 Roof Floor Framing Plan Unit A S1.6 Roof Floor Framing Plan Unit B S1.7 Screen Wall Framing Plan S2.1 General Structural Notes & Structural Details S2.2 Structural Details S2.3 Structural Details and Precast Connections S3.1 Brace Elevations & Details PROJECT MANUAL PREPARED BY HEDERSON GROUP, INC., DATED 7/20/98 EXHIBIT 3.02 RULES AND REGULATIONS 1. Tenant shall not deposit any trash, refuse, cigarettes, or other substances of any kind within or without the Building, except in proper refuse containers. Tenant shall exercise its best efforts to keep the sidewalks, entrances, passages, courts, parking areas in and about the Building clean and free from rubbish. 2. Tenant shall not change any locks in the Building without first obtaining Landlord's written approval, and if Tenant changes any locks, keys must be appropriately mastered to Landlord's keying system at Tenants cost. 3. Tenant shall not install any radio, television or other antenna, satellite dish, loudspeaker, or other device on the roof or exterior walls of the Building without Landlord's prior written agreement, which consent shall not be unreasonably withheld, conditioned or delayed. No TV or radio or recorder shall be played in such a manner as to cause a nuisance. 4. No street parking will be permitted. Visitor and handicapped parking designations shall be observed. 5. Tenant shall not inscribe any inscription, or post, place or in any manner display any sign, notice or any advertising matter whatsoever, anywhere in or about the Building, visible from outside the Building, without first obtaining Landlord's written consent thereto or except as expressly provided in the Lease. 6. All exterior signs must be approved by Landlord or someone designated by it and the actual cost thereof shall be paid by the Tenant, and all such signs are so placed at the risk of the Tenant. 7. If a Tenant desires telegraphic or telephonic connections in addition to those installed in connection with the initial construction of the Building and the interior improvements thereto, the Landlord will direct the electricians as to where the wires are to be introduced and without such direction, no boring or cutting for wires shall be permitted. Landlord retains the right to designate the contractor(s) performing said work and also retains the right to designate service providers. 8. Tenant shall when leaving the Building at close of business, or at other times when the Building or Leased Premises are unoccupied, lock doors. 9. The Landlord retains the power to prescribe the weight and proper position of safes and all other heavy objects. All safes, furniture, boxes and bulky articles and packages shall be moved into or out of the Building or from one part of the Building to another under supervision of Landlord and at such times and according to such regulations as may be designated from time to time by Landlord and at the entrance designated by the Landlord. Tenant shall be responsible for all damage to the walls, floors or other parts of the Building caused by or connected with any moving or delivery into or removal from the Building of any safe, furniture, boxes or bulky article while in the Building at Tenant's request. No moving out shall occur without written consent of the Landlord in each instance. The premises shall not be overloaded. 10. The water closets and other apparatus shall not be used for any purpose other than those for which they are constructed, and no sweepings, rubbish, rags or other substances shall be thrown therein. Any damage resulting to them from misuse shall be borne by Tenant. 11. No room or rooms shall be occupied or used as sleeping or lodging apartments. 12. No animal or bird shall be allowed in any part of the Building without the written consent of the Landlord. 13. The Landlord reserves the right to exclude from the Building all drunken persons, idlers and peddlers, solicitors and generally persons of a character or conduct to create disturbance and person entering in crowds or in such unusual numbers as to cause a nuisance. 14. Bicycles or other vehicles shall not be permitted anywhere inside or on the sidewalks outside of the Building, except in those areas designated by Landlord for bicycles or vehicle parking. 15. Window shades, blinds or curtains of a uniform building standard, color and pattern only shall be used throughout the Building to give uniform color exposure through exterior windows. 16. Landlord shall have the right to prohibit any publicity, advertising or use of the name of the Building by Tenant which, in Landlord's opinion, tends to impair the reputation of the Building or its desirability as a building for offices, and upon written notice from Landlord, Tenant shall refrain from or discontinue any such publicity, advertising or use of the Building name. 17. There shall not be used in any space, or in the public halls of the Building, either by any tenant or others, any hand trucks except those equipped with rubber tires and side guards or such other material handling equipment as Landlord may reasonably approve. 18. All common areas of the Building will be designated as non-smoking areas. Any tenant that has a non-smoking policy in their office will be required to provide a smoking area inside their Leased Premises (with an exhaust system to the exterior of the Building) or allow employees to smoke only on the rear loading dock or other area from time to time designated by Landlord (but this shall not obligate Landlord to so designate a smoking area). 19. These rules and Regulations are in addition to, and shall not be construed to in any way modify or amend the Lease to the premises in whole or in part. EXHIBIT 3.17 MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE, made and entered into as of this _____ day of August, 1998 by and between DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership (hereinafter referred to as "Landlord") and EXPRESS SCRIPTS, INC., a Delaware corporation (hereinafter referred to as "Tenant"). W I T N E S S E T H: WHEREAS, Landlord and Tenant have heretofore entered into an Office Lease dated as of August 14, 1998 (hereinafter referred to as the "Lease"); and WHEREAS, Landlord demised and leased to Tenant, and Tenant hired and took from Landlord, premises consisting of and described as all of the space in that certain Building ("Building") known as 13930 Riverport Drive, legally described as Lot 1B of Duke/Riverport Site No. 1, City of Maryland Heights, St. Louis County, Missouri (according to the plat thereof recorded in Plat Book______ page _____ of the St. Louis County, Missouri records) together with parking and access rights, among others, appurtenant thereto ([including specifically the exclusive right to use that certain "Restricted Use Area" adjacent to the aforesaid Lot 1B (including the 329 parking spaces to be constructed thereon) and the right to the use of an additional 484 of the 1696 parking spaces located or to be constructed on the Common Property, all as more particularly described in that certain Declaration of Covenants, Restrictions and Easements for Access and Parking for Property in the City of Maryland Heights, County of St. Louis, State of Missouri, Known as Duke/Riverport Site No. 1, recorded at Book ___ page ___ of the St. Louis County, Missouri records (hereinafter the "Sub-Indenture")] in the Lease and hereinafter referred to collectively as the "Leased Premises"); and WHEREAS, Landlord and Tenant desire to give notice of the Lease and as to certain rights and obligations of Landlord and Tenant; NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS: 1. That the Leased Premises are affected by and subject to the Lease. The Lease provides that Tenant has the EXCLUSIVE use of landscape, parking and access areas immediately surrounding the Building --------- (hereinafter "the Lot 1B Restricted Use Area") (including 329 parking spaces as aforesaid) as well as the right to the use of an additional 484 of the 1696 parking spaces located or to be constructed on the "Common Property" (all as more specifically provided in the Sub-Indenture). Tenant also has a non-exclusive easement for ingress and egress over and through the Common Property for access to all public or common roadways within Riverport, along with the non-exclusive right to use in common with other tenants and owners the Riverport "Common Ground" as more specifically provided in the Lease; 2. That the initial term of the Lease is to commence on or about the 20th day of May, 1999 and terminates on the 31st day of October, 2008, subject, however, to limited rights of termination as in the Lease specifically provided; 3. Tenant has the right and option to extend the Lease for two (2) additional terms of five (5) years (November 1, 2008 to October 31, 2013 being the "First Five Year Renewal Term" and November 1, 2013 to October 31, 2018 being the "Second Five Year Renewal Term"); 4. Tenant has a Right of First Offer with respect to space in the buildings located at 14090 and 14042 Riverport Drive (Lots 1 and 2 of Riverport Tract 2 according to the plat thereof recorded in Plat Book 279 Pages 84 and 85 of the St. Louis County Records, respectively, as more specifically provided in the Lease; 5. Until December 1, 1999, Tenant has certain rights to purchase a portion of Lot 2 of Duke/ Riverport Site No. 1, or to lease space in a building to be constructed on said Lot 2, as more specifically provided in the Lease; 6. Tenant has certain Rights of First Refusal to Purchase the Building; 7. In addition to the terms referred to herein, the Lease contains numerous other terms, covenants and conditions, and notice is hereby given that reference should be made to the Lease directly with respect to the details of such items, covenants and conditions. This Memorandum of Lease is executed in simplified short form for the convenience of the parties and for the purpose of recordation in the records of St. Louis County, Missouri, it being intended that this Memorandum of Lease shall be so recorded and shall give notice of and concern said Lease only. This Memorandum of Lease shall not have the effect of in any way modifying, supplementing, or abridging the Lease or any of its provisions as the same now or may hereafter be in force and effect. In the event of any inconsistency between this Memorandum of Lease and the Lease, the provisions in the Lease shall prevail and control the interpretation of the terms thereof. Reference is hereby made and should be made to the Lease for the specific terms thereof. 8. Landlord has, in the Lease, and does hereby designate Tenant during the entire Term of the Lease, as and if extended, as its representative for purposes of consenting to certain Special Assessments as in SECTION 3.4 of the Sub-Indenture and in the Lease more specifically provided, and for purposes of approving any change in the Restricted Use Area adjacent to Lot 1B as in the Lease and as in SECTION 4.1 of the Sub-Indenture more specifically provided. IN WITNESS WHEREOF, the undersigned have caused this Memorandum of Lease to be duly executed as of the day and year first above written. LANDLORD DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership By: Duke Realty Investments, Inc., an Indiana corporation, its general partner By:____________________________ W. Gregory Thurman (SEAL) Vice President and General Manager ATTEST: St. Louis Office Group - -------------------------------- James D. Eckhoff Vice President and Assistant Secretary TENANT EXPRESS SCRIPTS, INC., a Delaware corporation By:________________________________________ ---------------------------------------- Title (SEAL) ATTEST: - ---------------------------- - ---------------------------- Title TRUSTEES TRUSTEES OF DUKE/RIVERPORT SITE NO. 1, ----------------------------------------- W. Gregory Thurman ----------------------------------------- Timothy J. McCain ----------------------------------------- Lisa G. Bulczak LANDLORD: STATE OF MISSOURI ) ) SS. COUNTY OF ST. LOUIS ) On this _______ day of August, 1998, before me appeared W. GREGORY THURMAN, to me personally known, who, being by me duly sworn did say that he is the Vice President and General Manager, St. Louis Office Group, of DUKE REALTY INVESTMENTS, INC., a corporation of the State of Indiana, and General Partner in DUKE REALTY LIMITED PARTNERSHIP, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that said instrument was signed and sealed on behalf of said corporation, by authority of its Board of Directors; and said W. Gregory Thurman acknowledged said instrument to be the free act and deed of said corporation and said partnership. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. ------------------------------------------------------ Notary Public TENANT: STATE OF MISSOURI ) ) SS. COUNTY OF ST. LOUIS ) On this _______ day of August, 1998, before me appeared ________________________, to me personally known, who, being by me duly sworn did say that he is the _________________________, of EXPRESS SCRIPTS, INC., a corporation of the State of Delaware, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that said instrument was signed and sealed on behalf of said corporation, by authority of its Board of Directors; and said _______________________ acknowledged said instrument to be the free act and deed of said corporation. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. --------------------------------------------------- Notary Public TRUSTEES: STATE OF MISSOURI ) ) SS. COUNTY OF ST. LOUIS ) On this _______ day of August, 1998, before me appeared W. Gregory Thurman, Timothy J. McCain and Lisa G. Bulczak, to me personally known, who, being by me duly sworn did say that they are the TRUSTEES OF DUKE/RIVERPORT SITE NO. 1 and said Trusties acknowledged the foregoing instrument to be their free act and deed. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. --------------------------------------------------- Notary Public EX-10.3 5 EXHIBIT 10.3 SEVENTH AMENDMENT TO LEASE This Seventh Amendment to Lease (the "Seventh Amendment") is made and entered into as of this 14th day of August, 1998, by and between DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership, by and through its general partner, DUKE REALTY INVESTMENTS, INC., an Indiana corporation, authorized to do and doing business in the State of Missouri ("Landlord") and EXPRESS SCRIPTS, INC. ("Tenant"). WHEREAS, Riverport, Inc. and Douglas Development Company - Irvine Partnership in Commendam (collectively, the "Original Landlord") and Tenant entered into a lease dated March 3, 1992 (including all Exhibits and Addenda thereto, the "Original Lease") for a certain 64,000 square foot office/warehouse building (the "Building") to be designed and constructed by Landlord in accordance with plans and specifications referenced in the Lease; WHEREAS, in November, 1992, Original Landlord transferred all its right, title, and interest in the Building to Sverdrup/MDRC Joint Venture ("Successor Landlord") and said Successor Landlord assumed all of Original Landlord's duties and obligations under the Lease; WHEREAS, Successor Landlord and Tenant entered into a first Amendment to Lease dated December 29, 1992 (the "First Amendment") whereby Tenant agreed to pay for the cost of changes to the specifications of the Building in the amount of $47,987.00 by fully amortizing that amount over the balance of the term of the Lease; WHEREAS, Successor Landlord and Tenant entered into a Second Amendment to Lease dated May 28, 1993 (the "Second Amendment") to add an additional parking lot for 310 cars to the Premises; WHEREAS, Successor Landlord and Tenant entered into a Third Amendment to Lease dated October 15, 1993 (the "Third Amendment") to add an additional 12,365 square feet to the Premises (the "Additional Space"); and WHEREAS, Successor Landlord and Tenant entered into a Fourth Amendment to Lease dated March 24, 1994 (the "Fourth Amendment") to increase the size of the Property and to add an additional 55,000 square feet (the "Expansion Space") to the Building; and WHEREAS, Successor Landlord and Tenant entered into a Fifth Amendment to Lease dated June 30, 1994 (the "Fifth Amendment") whereby Tenant agreed to pay for the cost of changes to the specifications of the Building in the amount of $126,911.00 by fully amortizing that amount over the balance of the term of the Lease and deleted the Additional Space as part of the Premises (but with the agreement the Third Amendment would constitute a lease in and of itself for the Additional Space as provided in the Fifth Amendment); and WHEREAS, Successor Landlord and Tenant entered into a Sixth Amendment to Lease dated January 31, 1995 (the "Sixth Amendment") whereby Tenant and Landlord agreed to make the changes set forth in IOC#3 and IOC #4 attached thereto totaling $61,101.00 of additional cost: WHEREAS, on or about September 26, 1997, Successor Landlord transferred all of its right, title and interest under the Lease and in and to the Premises and in and to the deemed separate Lease ("Additional Space Lease") with respect to the Additional Space (being approximately 12,365 square feet of space in Landlord's Building located at 14042 Riverport Drive and commonly known as the "Riverport Distribution Center") to Landlord; and WHEREAS, Landlord and Tenant have as of the date hereof entered into a separate and distinct Office Lease ("Office Lease") for space in a building to be constructed by Landlord for Tenant's use on Lot 1B of Lot 1 of Duke/Riverport Site No. 1; and WHEREAS, Landlord and Tenant wish to extend the term of the Additional Space Lease until ten (10) days following the Commencement Date of the Office Lease. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of where are hereby acknowledged, Landlord and Tenant agree as follows: 1. The termination date of the Additional Space Lease (but said Lease only) is hereby extended from December 1, 1998 to the later of (i) August 1, 1999 or (ii) the date which is sixty (60) days following the Commencement Date (as defined in the Office Lease) of the Office Lease. 2. Except as specifically amended herein, all the terms of the Lease and the Additional Space Lease shall remain in full force and effect and shall not be modified hereby. IN WITNESS WHEREOF, Landlord and Tenant have set forth their hands as of the day and year first above written. LANDLORD DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership By: DUKE REALTY INVESTMENTS, INC., (SEAL) an Indiana corporation, its general partner ATTEST: By: /s/ Ramsey Maune Ramsey Maune /s/ James D. Eckhoff Vice President James D. Eckhoff St. Louis Industrial Group Assistant Secretary TENANT EXPRESS SCRIPTS, INC., (SEAL) a Missouri corporation ATTEST: By: /s/ Thomas M. Boudreau Printed: Thomas M. Boudreau Title: Senior Vice President of Administration /s/ Keith J. Ebling Keith J. Ebling Assistant Secretary (PLEASE PRINT NAME AND TITLE) LANDLORD: STATE OF MISSOURI ) ) SS. COUNTY OF ST. LOUIS ) On this 14th day of August, 1998, before me appeared RAMSEY F. MAUNE, to me personally known, who, being by me duly sworn did say that he is the Vice President General Manager St. Louis Industrial Group of DUKE REALTY INVESTMENTS, INC., general partner of DUKE REALTY LIMITED PARTNERSHIP, an Indiana Limited Partnership, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that said instrument was signed and sealed in behalf of said corporation, by authority of its Board of Directors for and with the authority of DUKE REALTY LIMITED PARTNERSHIP; and said RAMSEY F. MAUNE acknowledged said instrument to be the free act and deed of said corporation and said partnership. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. /s/ Laura A. Duncan Notary Public TENANT: STATE OF MISSOURI ) ) SS. COUNTY OF ST. LOUIS ) On this day of August, 1998, before me appeared Thomas M. Boudreau, to me personally known, who, being by me duly sworn did say that he is the Senior Vice President of EXPRESS SCRIPTS, INC., a corporation of the State of Missouri, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that said instrument was signed and sealed in behalf of said corporation, by authority of its Board of Directors; and said Thomas M. Boudreau acknowledged said instrument to be the free act and deed of said corporation. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. Kathleen M. Dolan Notary Public EX-10.4 6 EXHIBIT 10.4 EIGHTH AMENDMENT TO LEASE This Eighth Amendment to Lease (the "Eighth Amendment") is made and entered into as of this 14th day of August, 1998, by and between DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership, by and through its general partner, DUKE REALTY INVESTMENTS, INC., an Indiana corporation, authorized to do and doing business in the State of Missouri ("Landlord") and EXPRESS SCRIPTS, INC. ("Tenant"). WHEREAS, Riverport, Inc. and Douglas Development Company - Irvine Partnership in Commendam (collectively, the "Original Landlord") and Tenant entered into a lease dated March 3, 1992 (including all Exhibits and Addenda thereto, the "Original Lease") for a certain 64,000 square foot office/warehouse building (the "Building") to be designed and constructed by Landlord in accordance with plans and specifications referenced in the Lease; WHEREAS, in November, 1992, Original Landlord transferred all its right, title, and interest in the Building to Sverdrup/MDRC Joint Venture ("Successor Landlord") and said Successor Landlord assumed all of Original Landlord's duties and obligations under the Lease; WHEREAS, Successor Landlord and Tenant entered into a first Amendment to Lease dated December 29, 1992 (the "First Amendment") whereby Tenant agreed to pay for the cost of changes to the specifications of the Building in the amount of $47,987.00 by fully amortizing that amount over the balance of the term of the Lease; WHEREAS, Successor Landlord and Tenant entered into a Second Amendment to Lease dated May 28, 1993 (the "Second Amendment") to add an additional parking lot for 310 cars to the Premises; WHEREAS, Successor Landlord and Tenant entered into a Third Amendment to Lease dated October 15, 1993 (the "Third Amendment") to add an additional 12,365 square feet to the Premises (the "Additional Space"); and WHEREAS, Successor Landlord and Tenant entered into a Fourth Amendment to Lease dated March 24, 1994 (the "Fourth Amendment") to increase the size of the Property and to add an additional 55,000 square feet (the "Expansion Space") to the Building; and WHEREAS, Successor Landlord and Tenant entered into a Fifth Amendment to Lease dated June 30, 1994 (the "Fifth Amendment") whereby Tenant agreed to pay for the cost of changes to the specifications of the Building in the amount of $126,911.00 by fully amortizing that amount over the balance of the term of the Lease and deleted the Additional Space as part of the Premises (but with the agreement the Third Amendment would constitute a lease in and of itself for the Additional Space as provided in the Fifth Amendment); and WHEREAS, Successor Landlord and Tenant entered into a Sixth Amendment to Lease dated January 31, 1995 (the "Sixth Amendment") whereby Tenant and Landlord agreed to make the changes set forth in IOC#3 and IOC #4 attached thereto totaling $61,101.00 of additional cost; and WHEREAS, Landlord and Tenant entered into a Seventh Amendment to Lease dated as of the date hereof (the "Seventh Amendment") whereby Tenant and Landlord agreed to extend the term of the lease for the Additional Space; and WHEREAS, Landlord and Tenant have as of the date hereof entered into a separate and distinct Office Lease ("Office Lease") for space in an adjacent building to be constructed by Landlord for Tenant's use on adjacent property; and WHEREAS, Landlord has requested Tenant's approval to relocate the Supplemental Lot (as defined in the Second Amendment) such that 254 spaces will be relocated in a triangular shaped parking lot behind the Premises and another 56 spaces will be relocated in and designated in certain common property parking area located behind the Premises. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of where are hereby acknowledged, Landlord and Tenant agree as follows: 1. Landlord shall cause the "Trustees of Duke/Riverport Site No. 1" to cause to be designated as a "Restricted Use Area" (sometimes herein "RUA"), as such terms are more specifically defined in the Sub-Indenture described below [and which said specific RUA shall be herein sometimes referred to as the "Lot 1A Restricted Use Area" or the "Lot 1A RUA" (and shall NOT include other Restricted Use Areas)], --- those landscape, parking and access areas shown on EXHIBIT A hereto as "Lot 1A RUA" and made a part hereof, and Landlord shall cause the "Trustees of Duke/Riverport Site No. 1" to cause all of the areas identified in the Sub-Indenture as "Common Property" to be designated as such (including, without limitation, the landscape, parking and access areas located, or to be located, on the Common Property as shown on EXHIBIT A hereto), all as more specifically provided in that certain "Declaration of Covenants, Restrictions and Easements for Access and Parking for Property in the City of Maryland Heights, County of St. Louis, State of Missouri Known as Duke/Riverport Site No. 1 (hereinafter "Sub-Indenture"). The areas of the Lot 1A RUA (and the areas of the Lots 1B and 1C Restricted Use Areas) and the Duke/Riverport Site No. 1 Common Property are shown on EXHIBIT A hereto. Tenant shall have the exclusive right to the use and enjoyment of the 752 parking spaces existing and to be constructed within the Lot 1A RUA (498 parking spaces immediately adjacent to the Building and 254 parking spaces in the triangular parking area behind the Building) and in addition thereto shall have the right to the use of an additional 56 of the 1696 Common Property parking spaces, the location of which are to be designated as provided herein, some of which are presently existing and some of which are to be constructed on the Common Property, for a total of not less than 808 parking spaces. Within ninety (90) days of the date of this Eighth Amendment, Landlord shall cause the Sub-Indenture (in the form attached hereto as EXHIBIT B, unless changes thereto are mandated by the City of Maryland Heights, Missouri, in which case all such changes shall be subject to Tenant's approval, which said approval shall not be unreasonably withheld, conditioned or delayed) to be recorded in the Office of the Recorder of Deeds of St. Louis County, Missouri and shall provide to Tenant a copy of said Sub-Indenture bearing recording information. Immediately following the recordation of the Sub-Indenture, Landlord shall cause the Trustees of Duke/Riverport Site No. 1 to execute a Resolution (in form and substance substantially similar to EXHIBIT C attached hereto and made a part hereof) whereby the said Trustees designate and assign 56 parking spaces within the Common Property identified in the Resolution for the benefit of Landlord and Tenant, the location of which parking spaces are set forth in Exhibit 1 to the Resolution. 2. Upon construction and completion of the improvements to the parking areas in accordance with the Office Lease, Tenant shall thereafter use Lot 1A RUA and the 56 designated parking spaces in the Common Property for its parking needs as herein provided and for all other permitted purposes under the Original Lease, as amended, and the Sub-Indenture, and shall no longer use, nor have any responsibility for, the existing 310 space parking lot (the "Supplemental Lot") located across Riverport Drive from the Building. Lot 1A RUA and the 56 parking spaces designated in and identified in the Common Property are hereby made a part of the "Premises", as such term is defined in the Original Lease. 3. The Trustees appointed pursuant to the terms of the Sub-Indenture (Trustees of Duke/Riverport Site No. 1) shall sometimes hereinafter be referred to as the "Sub-Trustees." Upon written request from Tenant, Landlord shall use all reasonable efforts to cause the Sub-Trustees to enforce the Sub-Indenture. Notwithstanding the foregoing, if any appointees of Landlord serve as a Trustee of Duke/Riverport Site No. 1, upon written request from Tenant, Landlord shall cause such appointees to exercise their rights and duties under the Sub-Indenture to cause enforcement of the Sub-Indenture. Landlord shall promptly notify Tenant in writing of any proposed amendment to the Sub-Indenture, and shall promptly furnish a copy of such proposed amendment to Tenant. Notwithstanding the foregoing, Landlord shall not consent or agree to any amendment of the Sub-Indenture or any action thereunder which would affect in a material, adverse manner Tenant's rights with respect to the Lot 1A RUA or the Common Property, as in this Original Lease specifically provided, without the prior written consent of Tenant, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding anything to the contrary herein, as between Landlord and Tenant, and in the event of any inconsistency or conflict between the terms and provisions of the Sub-Indenture and the terms and provisions of the Original Lease, as amended, the terms and provisions of the Original Lease, as amended, shall prevail. Landlord hereby designates Tenant as its representative for purposes of consenting to (i) any Special Assessments pursuant to Section 3.4 of the Sub-Indenture, (ii) any Special Assessments "for the initial construction of Common Property improvements, except for those improvements reasonably necessary for the preservation and protection of the then existing Common Property" (which latter Special Assessments require the unanimous consent of the Owners) as in Section 3.4 of the Sub-Indenture provided, and (iii) any change proposed by the Trustees of Duke/Riverport Site No. 1 in the Lot 1A RUA as authorized by Section 4.1 of the Sub-Indenture (provided, however, in each of the foregoing cases such consent shall not be unreasonably withheld, conditioned or delayed). Said designations shall be evidenced by specific reference in an amendment to the existing memorandum of the Original Lease, as amended, and shall be recorded in the real estate records of St. Louis County, Missouri. Landlord and Tenant agree to execute and record such a memorandum upon Landlord's replatting of the real property within the Premises and the recordation of the Sub-Indenture. 4. Tenant shall have no obligation or liability with respect to the costs of the improvements to be made to Lot 1A RUA and the Common Property; the obligation for such improvements being Landlord's (as provided in the Office Lease). Following the construction of the improvements to Lot 1A RUA and the Common Property as required by the Office Lease, Tenant's maintenance obligations and other responsibilities with respect to Lot 1A RUA and the 56 parking spaces designated for the use and enjoyment of Tenant within the Common Property shall be the same (and no more) as with the existing parking adjacent to the Building and the Supplemental Lot; provided, however, with respect to the 56 parking spaces within the Common Property, Tenant shall reimburse the Sub-Trustees for a proportionate share of the costs and expenses which would otherwise be payable by Tenant under the terms of the Original Lease, as amended, such proportionate share to be based upon Tenant's 56 parking spaces to the total number of parking spaces within the Common Property (exclusive of Restricted Use Areas). 5. Anything in the Original Lease, as amended, to the contrary notwithstanding, if at anytime after the date hereof Landlord or the Sub-Trustees amend the Sub-Indenture, or take any action thereunder, or amend of the Resolution which would affect in a material, adverse manner Tenant's rights with respect to the Lot 1A RUA or the Common Property (as said rights pertain to parking and access) (but for the purposes of this paragraph, parking and access rights only) (as in paragraph 1 above hereof provided), then the parties hereto agree that such shall constitute a default by Landlord hereunder and shall be deemed to be a "construction eviction" of Tenant from the Premises, entitling Tenant to all rights and remedies hereunder, at law or in equity provided in the case of such a "constructive eviction" and default. The specified remedies herein shall be non-exclusive and in addition to any other remedies available to Tenant at law or in equity. 6. Except as specifically amended herein, all the terms of the Lease and the Additional Space Lease shall remain in full force and effect and shall not be modified hereby. IN WITNESS WHEREOF, Landlord and Tenant have set forth their hands as of the day and year first above written. LANDLORD DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership By: DUKE REALTY INVESTMENTS, INC., (SEAL) an Indiana corporation, its general partner ATTEST: By: /s/ Ramsey Maune Ramsey Maune /s/ James D. Eckhoff Vice President James D. Eckhoff St. Louis Industrial Group Assistant Secretary TENANT EXPRESS SCRIPTS, INC., (SEAL) a Missouri corporation ATTEST: By: /s/ Thomas M. Boudreau Thomas M. Boudreau Senior Vice President of Administration /s/ Keith J. Ebling Keith J. Ebling, Assistant Secreaty (PLEASE PRINT NAME AND TITLE) LANDLORD: STATE OF MISSOURI ) ) SS. COUNTY OF ST. LOUIS ) On this 14th day of August, 1998, before me appeared RAMSEY F. MAUNE, to me personally known, who, being by me duly sworn did say that he is the Vice President General Manager St. Louis Industrial Group of DUKE REALTY INVESTMENTS, INC., general partner of DUKE REALTY LIMITED PARTNERSHIP, an Indiana Limited Partnership, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that said instrument was signed and sealed in behalf of said corporation, by authority of its Board of Directors for and with the authority of DUKE REALTY LIMITED PARTNERSHIP; and said RAMSEY F. MAUNE acknowledged said instrument to be the free act and deed of said corporation and said partnership. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. /s/ Laura A. Duncan Notary Public TENANT: STATE OF MISOURI ) ) SS. COUNTY OF ST. LOUIS ) On this 14th day of August, 1998, before me appeared Thomas M. Boudreau, to me personally known, who, being by me duly sworn did say that he is the Senior Vice President of Administration of EXPRESS SCRIPTS, INC., a corporation of the State of Missouri, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that said instrument was signed and sealed in behalf of said corporation, by authority of its Board of Directors; and said Thomas M. Boudreau acknowledged said instrument to be the free act and deed of said corporation. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. Kathleen M. Dolan Notary Public EXHIBIT A TO EIGHTH AMENDMENT TO LEASE (TO LOT 1A RUA) (This Exhibit contains a pictorial of Site 1) EXHIBIT B TO EIGHTH AMENDMENT TO LEASE DECLARATION OF COVENANTS, RESTRICTIONS AND EASEMENTS FOR ACCESS AND PARKING FOR PROPERTY IN THE CITY OF MARYLAND HEIGHTS, COUNTY OF ST. LOUIS, STATE OF MISSOURI, KNOWN AS DUKE/RIVERPORT SITE NO. 1 DUKE REALTY LIMITED PARTNERSHIP, DECLARANT August ____, 1998 INDEX ARTICLE/SECTION PAGE NUMBER CAPTION NUMBER I PROPERTY SUBJECT TO DECLARATION 3 1.1 Existing Property 3 1.2 Additions To Existing Property 3 II TRUSTEES 4 2.1 Membership 4 2.2 Qualification 4 2.3 Election Of Trustees 4 2.4 Term Of Office 5 2.5 Procedures 6 2.6 Duties And Powers 6 2.7 Power To Assess 7 2.8 Eminent Domain 7 III ASSESSMENTS 8 3.1 Assessment 8 3.2 Annual Assessments For Common Property 8 3.3 Restricted Use Area Assessments 10 3.4 Special Assessments 10 3.5 Notice To Owners 10 3.6 Commencement Date Of Annual Assessment 11 3.7 Due Date Of Assessments 11 3.8 Owner's Personal Obligation For Payment Of Assessments 11 3.9 Assessment Lien And Foreclosure 12 3.10 Common Property Exempt 13 IV COMMON PROPERTY 13 4.1 Establishment Of Common Property And Restricted Use Areas ("RUA") 13 4.2 Easements For The Use Of Common Property And RUA 14 4.3 Title To Common Property 15 4.4 Extent Of Easements 16 4.5 Trustees Management Of Common Property 16 4.6 Maintenance Of RUA And Common Property 17 4.7 Construction Of Parking Structures and Additional Parking Areas 21 V MISCELLANEOUS PROVISIONS 23 5.1 Duration 23 5.2 Amendment 23 5.3 Enforcement 24 5.4 Severability Of Provisions 25 5.5 Notice 25 5.6 Title 26 5.7 Singular And Plural 26 5.8 Binding Effect 26 5.9 Conflicting Terms 16 THIS DECLARATION OF COVENANTS, RESTRICTIONS AND EASEMENTS FOR ACCESS AND PARKING ("Declaration"), is made as of this ______ day of _____________, 1998, by W. Gregory Thurman, Timothy J. McCain and Lisa G. Bulczak, Trustees of Duke/Riverport Site No. 1 ("Trustees"), and Duke Realty Limited Partnership, a partnership organized pursuant to the laws of the State of Indiana ("Duke Realty"). WITNESSETH: WHEREAS, Duke Realty is the owner of certain real property located in St. Louis County, Missouri known as Lot 1 of Duke/Riverport Site No. 1, pursuant to the Plat thereof recorded at Book _____ Page _____ of the St. Louis County, Missouri Records (herein sometimes referred to as " Lot 1 of Duke/Riverport Site No. 1" and/or the "Property"); and WHEREAS, Duke/Riverport Site No. 1 is subject to that certain First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri, dated August 10, 1987, and recorded in Book 8191, Page 380 in the St. Louis County Records, which was amended by (i) an Amendment to the First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri, dated November 4, 1988, and recorded in Book 8465, Page 1068 of the St. Louis County Records, (ii) a Second Amendment to the First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri, dated June 12, 1991, and recorded in Book 9013, Page 1955 of the St. Louis County Records, (iii) another Second Amendment to the First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri dated July 21, 1994, and recorded in Book 10263, Page 1872 of the St. Louis County Records, (iv) a Third Amendment to the First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri dated December 18, 1995 and recorded in Book 10694, Page 1868, St. Louis County Records, (v) a Fourth Amendment to the First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri dated March 5, 1997 and recorded in Book 11104, Page 992, St. Louis County Records, and (vi) a Fifth Amendment to the First Revised and Restated Trust Indenture for the Property known as Riverport in the City of Maryland Heights, County of St. Louis, State of Missouri dated September 25, 1997 and recorded in Book 11304, Page 1396, St. Louis County Records (said Trust Indenture, as heretofore and hereafter amended, being hereinafter referred to as the "Riverport Indenture"); WHEREAS, Duke Realty is desirous of subjecting the said Lot 1 of Duke/Riverport Site No. 1 to the further covenants, restriction and easements hereinafter set forth, to insure for all present and future owners of any part of said Lot 1 of Duke/Riverport Site No. 1 and their respective successors, assigns, invitees, agents, employees, tenants, contractors and licensees certain access and parking rights, each and all of which is and are for the benefit of said Property and shall inure to the benefit of and pass with said Property and each and every part thereof; and WHEREAS, Duke Realty desires to hereby convey by special warranty deed certain rights and interests in the hereinafter specified common, access and parking areas to the Trustees hereinafter named and to define the right, title, interests, duties, privileges, easements, and liabilities with respect thereto and to provide for the improvement, maintenance, management, control and operation of such common, access and parking areas for the mutual benefit of the owners of all or any part of Lot 1 of Duke/Riverport Site No. 1. NOW, THEREFORE, Duke Realty hereby declares that Lot 1 of Duke/Riverport Site No. 1 and each and every part thereof, shall be held, transferred, sold, conveyed and occupied subject to the covenants, restrictions and easements hereinafter set forth. ARTICLE I PROPERTY SUBJECT TO DECLARATION 1.1 EXISTING PROPERTY. The real property which is, and shall be held, transferred, sold, conveyed, and occupied subject to this Declaration is located in St. Louis County, Missouri, is known as Lot 1 of Duke/Riverport Site No. 1, and is herein sometimes referred to as such and/or the "Property," and each and every such lot or parcel from time to time located within said Property shall be hereinafter referred to as a "Parcel" (including, but not limited to Lots 1A, 1B and 1C of Lot 1 of Duke/Riverport Site No. 1. 1.2 ADDITIONS TO EXISTING PROPERTY. Duke Realty, its successors or assigns, may from time to time add to the Property now subject to this Declaration, additional lands; provided, however, that said additions may be used only for the same or similar purposes as the existing Property; that said additions be contiguous to the existing Property or subsequent additions thereto; that said additions include sufficient additional parking so that, at a minimum, the minimum parking requirements as then prescribed by the zoning ordinances of the City of Maryland Heights or other governmental authority having jurisdiction over the Property will be met; and that if said additions be made by any person, firm, or corporation other than Duke Realty or its successors and/or assigns, that the Trustees hereinafter named give their prior written consent thereto, which consent shall not be unreasonably withheld, conditioned or delayed. The additions authorized under this Article I shall be made by executing and delivering to the Trustees hereinafter named and filing of record in St. Louis County, Missouri, a Supplementary Declaration which shall extend the provisions of this Declaration to such additional property. Such Supplementary Declarations may contain additional and complimentary provisions as may be necessary to reflect the different character, if any, of the added property as are not inconsistent with the scheme of this Declaration. ARTICLE II TRUSTEES 2.1 MEMBERSHIP. There is established a Board of Trustees, which shall consist of three (3) members who shall serve without remuneration. The Trustees shall sometimes be referred to as the "Trustees of Duke/Riverport Site No. 1" or the "Trustees." 2.2 QUALIFICATION. Except as specifically provided otherwise, to qualify as a member of the Board of Trustees, a person must be an Owner (as defined herein), an officer of an Owner or the duly appointed representative of an Owner. The owners of fee simple title to the Parcels comprising Duke/Riverport Site No. 1 shall sometimes be referred to individually as the "Owner" and collectively as the "Owners." 2.3 ELECTION OF TRUSTEES. The Owners of Parcels in Duke/Riverport Site No. 1 (and if additions to the Property are made as provided in SECTION 1.2 hereof, the Owners of all Parcels then comprising the Property) shall elect the Trustees. Each Parcel shall be entitled to a vote(s) based upon the number of parking spaces located in the "Common Property" (but not the "Restricted Use Areas") (as said terms are hereinafter defined) from time-to-time designated and/or assigned by the Trustees to that Parcel in relation to the total number of parking spaces then existing in the Common Property (but not including the Restricted Use Areas) calculated as a percentage (hereinafter referred to as the Owner's "Pro-Rata Interest"). Trustees shall be elected at an annual meeting of the Owners to be called by the Trustees giving written notice to the Owners of same at least thirty (30) days in advance. Owners of at least sixty percent (60%) of the Pro-Rata Interest, present in person or represented by written proxy, shall constitute a quorum for the election of Trustees. All proxies must be in writing, signed by the voting Owner granting the proxy, and filed with the Trustees prior to the election. The exact procedure of voting shall be as determined by the Trustees from time-to-time consistent with the Owners' Pro-Rata Interests. When two or more persons or entities hold an undivided interest in any Parcel, the vote(s) for said Parcel shall be made as they among themselves determine in their sole discretion. In all said elections, Owners may cast their votes for as many Trustees to be elected or may cumulate their vote and give one candidate as many votes as the number of Trustees to be elected multiplied by the number of votes, or to distribute the votes on the same principle among as many candidates as said Owner may see fit (cumulative voting). 2.4 TERM OF OFFICE. The Trustees presently serving hereunder and who shall serve until their successors are duly elected or appointed, are: W. Gregory Thurman Timothy J. McCain Lisa G. Bulczak The term of office for each Trustee shall be one (1) year and shall run from the first day of January through the thirty first day of December of that year (except that the term of the Trustees herein named shall commence on the date hereof and shall continue until December 31, 1998). Upon the expiration of the term of a Trustee, or whenever any one or more of the Trustees or their successors appointed as herein provided shall die, be unable to act, resign, or shall cease to have an interest in the above described property as an Owner, an officer of an Owner, or a duly appointed representative of an Owner, as applicable, his replacement shall be elected by the then Owners for the remainder of his term. Should said Owners fail, within thirty (30) days, to elect a replacement, then the remaining Trustee(s) shall appoint an interim Trustee(s) to serve for the unexpired term. 2.5 PROCEDURES. The Trustees shall keep minutes of their proceedings. Any Trustee may call a meeting of the Trustees upon fifteen (15) days' written notice thereof; provided, however, that such notice may be waived by unanimous consent of the Trustees. Any two Trustees at any meeting regularly called may exercise the powers of the Trustees, except for actions requiring unanimous consent hereunder. Two Trustees shall constitute a quorum. Action of the Trustees shall be by a majority vote of the Trustees except for actions requiring unanimous consent hereunder. The Trustees shall serve without pay, except for expenses reasonably incurred. 2.6 DUTIES AND POWERS. The Trustees shall have the right, power, and authority to enforce the covenants, restrictions and easements herein set forth, to provide for the management, maintenance and any alteration or improvement of the Common Property which they may deem necessary or desirable, to establish such procedures and policies necessary or deemed desirable to provide for the general welfare of the Owners and the tenants of the Owners, in accordance with the purpose and intent of this Declaration, to enter into contracts as may be necessary or desirable to carry out the provisions of this Declaration (including the power to enter into long-term contracts extending beyond the term of the Trustees then in office), and to retain the services of professionals as deemed necessary by the Trustees. The powers of the Trustees herein set forth are intended to augment rather than to restrict the authority of the Trustees. Any other provision of this Declaration to the contrary, if any, notwithstanding, the Trustees shall make suitable provision for compliance with (i) all subdivision and other ordinances, rules and regulations of St. Louis County, Missouri, the City of Maryland Heights, Missouri and/or such other governmental entity then having jurisdiction over the Property, and (ii) the Riverport Indenture. 2.7 POWER TO ASSESS. The Trustees shall have the right, power, and authority to levy and collect assessments against the Property, as hereinafter specifically provided, for the purpose of carrying out their powers and duties herein specified. 2.8 EMINENT DOMAIN. In the event it shall become necessary for any public agency to acquire all or any part of the Common Property (including the Restricted Use Areas) conveyed to the Trustees, for any public purpose, the Trustees are hereby authorized to negotiate with such public agency for such acquisition and to execute instruments necessary for that purpose, including deeds of conveyance. Should acquisitions by eminent domain become necessary, only the Trustees need be made parties. To the extent reasonably necessary to carry out the powers and duties herein specified, the proceeds received shall be held by the Trustees for the benefit of those entitled to the use of the Common Property. All excess proceeds (after deducting all reasonable expenses incurred by the Trustees in any such eminent domain proceeding), if any, as determined by the Trustees in their sole discretion, shall be distributed to the Owners as their interests appear; providing, however, that if there are mortgage liens of record, said excess proceeds shall be distributed jointly to said Owner(s) and its lender(s). Notwithstanding the above, all excess proceeds derived from the taking of any Restricted Use Areas (after deducting all reasonable expenses incurred by the Trustees in any such eminent domain proceeding) shall be distributed to the Owners to which those Restricted Use Areas have been assigned; providing, however, that if there are mortgage liens of record, said excess proceeds shall be distributed jointly to said Owner(s) and its lender(s). ARTICLE III ASSESSMENTS 3.1 ASSESSMENT. Each Owner of a Parcel in the Property by acceptance of a deed therefor, whether or not it shall be so expressed in any such deed or other conveyance, shall be deemed to covenant and agree to pay (i) annual assessments or charges, not including Restricted Use Area assessments; (ii) Restricted Use Area assessments; and (iii) special assessments, such assessments to be established and collected from time-to-time as hereinafter provided. The foregoing assessments shall to be in addition to any other assessments established under this Declaration or under the Riverport Indenture. 3.2 ANNUAL ASSESSMENTS FOR COMMON PROPERTY. By December 1st of each year, the Trustees shall estimate the expenses to be incurred by the Trustees in connection with the Common Property (exclusive of the Restricted Use Areas) pursuant to the terms hereof for the ensuing calendar year and shall notify each Owner in writing as to the amount of said estimate; provided, however, a failure by the Trustees to so estimate and notify by said date shall not relieve any Owner from responsibility for payment of assessments. The estimated annual cash required by the Trustees to meet its aforesaid expenses during the ensuing calendar year shall then be assessed against the Owners according to each Owner's Pro-Rata Interest (as defined in SECTION 2.3 hereof). On the first day of January of each year each Owner shall be obligated to pay to the Trustees, or as the Trustees may direct, the said annual assessment. In the event that, at any time during the year, the Trustees shall determine that the operating expenses to be incurred by the Trustees in connection with the Common Property (exclusive of the Restricted Use Areas) pursuant to the terms hereof during the remainder of the calendar year will be in excess of its December 1st estimate, the Trustees may revise its said estimate for the balance of the calendar year and the Trustees shall, within thirty (30) days of such revision, notify the Owners in writing, as to the amount of the revised estimate, with the particulars therein itemized. The revised cash required by the Trustees to meet its aforesaid revised expenses during the remainder of the then calendar year shall then be assessed against the Owners according to each Owner's Pro-Rata Interest. On the first day of the following full month, each Owner shall be obligated to pay to the Trustees the full additional annual assessment amount due based upon the revised estimate. The first annual assessment for the Common Property (exclusive of the Restricted Use Areas) for the initial calendar year (or partial calendar year, as the case may be) shall be established by the majority vote of the Trustees. Subsequent annual assessments for the Common Property (exclusive of the Restricted Use Areas) may be increased only by majority vote of the Trustees; provided, however, the following increases shall be automatically assessed by the Trustees and shall not require a vote by the Trustees or the approval of the Owners: (i) an increase of up to ten percent (10%) of the immediately preceding annual assessment (annualized if the immediately preceding assessment was for a partial calendar year) shall be automatically allowed in the amount of estimated increase in the estimated cash requirements (but not to exceed 10%), and (ii) increases due to an increase in taxes assessed or levied against the Common Property and/or improvements to the Common Property (exclusive in each case of the Restricted Use Areas). All other increases in the annual assessments must also be approved by a majority of the Owners. On or before March 31 of each calendar year, the Trustees shall determine the actual cash expenditures for the previous year, and should a surplus exist at the end of any calendar year (including the initial partial calendar year), the Trustees shall reduce the next total annual assessment by an amount equal to said surplus less amounts which the Trustees then consider reasonably necessary as a reserve for future needs. Should there be a deficit at the end of any year, the Trustees shall increase the next annual assessment by an amount equal to said deficit which amount shall be paid immediately. 3.3 RESTRICTED USE AREA ASSESSMENTS. Restricted Use Area assessments may be assessed against the Owner benefited by such Restricted Use Areas as set forth herein by the majority vote of the Trustees and do not require the approval of the Owners. 3.4 SPECIAL ASSESSMENTS. In addition to the annual assessments for the Common Property (exclusive of the Restricted Use Areas) and the Restricted Use Area Assessments herein authorized, the Trustees may, by majority vote, levy in any assessment year or years a special assessment for the purpose of defraying, in whole or in part, the cost of any reconstruction, unexpected repair or replacement of any Common Property improvements, including the necessary fixtures and personal property related thereto. Special assessments must also be approved by a majority of the Owners; provided, however that under no circumstances may a special assessment be made for the initial construction of Common Property improvements, except for those improvements reasonably necessary for the preservation and protection of the then existing Common Property, without the unanimous consent of the Owners (or the consent of any tenant or other person, if any, to whom the Owner or Owners of a specific Parcel have from time-to-time specifically delegated said Owner's or Owners' specific right to so consent in a writing placed of record with the St. Louis County Recorder of Deeds). 3.5 NOTICE TO OWNERS. Approval by Owners as herein required may be with or without a meeting. If without a meeting, the necessary written consent of the Owners shall be made a part of the record of proceedings of the Trustees. If a meeting is called for such purpose, written notice of same shall be given to all Owners at least thirty (30) days in advance and shall set forth the purpose of the meeting and the amount of the increase proposed or of the special assessment and the proposed due and delinquent dates thereof as the case may be. 3.6 COMMENCEMENT DATE OF ANNUAL ASSESSMENT. The first annual assessments provided for herein shall commence with the year 1999 and shall continue thereafter from year to year. 3.7 DUE DATE OF ASSESSMENTS. The annual assessments shall become due and payable on the first day of January and shall become delinquent if not paid by the fifteenth of that month. The due date and delinquent date of any Restricted Use Area assessment or special assessment shall be fixed in the resolution authorizing such assessment. Should a Parcel become subject to assessments after January 1 in any year, and should an annual or special assessment have been levied for that year, then such assessment shall be adjusted so that such Parcel shall be charged with that portion of the assessment prorated for the balance of that year. 3.8 OWNER'S PERSONAL OBLIGATION FOR PAYMENT OF ASSESSMENTS. The annual assessments, Restricted Use Area assessments and special assessments provided for herein shall be the personal and individual debt of the Owner(s) of the Parcel on the date same shall become due. No Owner may exempt himself from liability for such assessments. In the event of default in the payment of any assessment, when due, annual, Restricted Use Area or special, the Owner(s) of the Parcel shall be obligated to pay interest from the due date on the unpaid amount at the prime rate on January 1 of each year (and adjusted on January 1 each year thereafter), at the Mercantile Bank of St. Louis, Missouri (or any other bank the Trustees may from time-to-time designate) plus three percent (3%) per annum, together with all costs and expenses of collection, whether or not suit is instituted, including reasonable attorneys' fees. 3.9 ASSESSMENT LIEN AND FORECLOSURE. Notwithstanding any provision to the contrary herein provided, if any, all sums assessed in the manner herein provided but unpaid, shall, together with interest, costs, expenses, and attorneys' fees, become a continuing lien and charge on the Parcel covered by such assessment, or in the case of a lien arising out of unpaid Restricted Use Area assessments, a lien on the Parcel benefited by such Restricted Use Area, which shall bind such Parcel in the hands of the Owner(s), his heirs, devisees, personal representatives, successors and assigns. The aforesaid lien shall take precedence over and be superior to all other liens and charges against the said Parcel, including, but not limited to any and all mortgages and deeds of trust, except the lien of assessments under the Riverport Indenture. Sale or transfer shall not affect any lien created pursuant hereto. To evidence the aforesaid assessment lien, the Trustees shall prepare a written notice of assessment lien setting forth the amount of the unpaid indebtedness, the name of the Owner(s) of the Parcel covered by such lien and a description of the Parcel. Such notice shall be signed by one of the Trustees and shall be filed and recorded in the offices of the Circuit Clerk of St. Louis County, Missouri and the Recorder of Deeds of St. Louis County, Missouri. A copy of said notice shall be sent by certified mail, return receipt requested, to the last known record address of each Owner of the affected Parcel, of each tenant with a lease of record affecting said Parcel, and of each person or entity having a mortgage lien of record affecting said Parcel. Such lien for payment of assessments may be enforced by foreclosing on the defaulting Owner's Parcel by the Trustees in like manner as a mortgage on real property subsequent to the recording of a notice of assessment lien as provided above, or the Trustees may institute suit against the Owner(s) personally obligated to pay the assessment and/or for foreclosure of the aforesaid lien judicially. In any foreclosure proceeding, whether judicial or non-judicial, the Owner(s) shall be required to pay the costs, expenses, and reasonable attorney's fees incurred. The Trustees shall have the power to bid on the Parcel at foreclosure or other legal or equitable sale and to acquire, hold, lease, mortgage, convey or otherwise deal with the same. Upon payment of such assessment so recorded, together with interest, costs, expenses and attorneys' fees, satisfaction thereof shall be acknowledged and recorded by the Trustees at the expense of the Owner(s) against whom the lien was filed. 3.10 COMMON PROPERTY EXEMPT. The Common Property owned by the Trustees and which has not been designated as a Restricted Use Area subject to this Declaration shall be exempt from the assessments, charges and liens created herein; provided, however no property hereunder shall be exempt from assessments or the lien thereof under the Riverport Indenture. The Trustees, as record owners, of the Common Property shall not be considered "Owners" for any purposes hereunder. ARTICLE IV COMMON PROPERTY 4.1 ESTABLISHMENT OF COMMON PROPERTY AND RESTRICTED USE AREAS. The "Common Property" (i) shall be all of Lot 1 of Duke Riverport Site No. 1, except Lots 1A, 1B and 1C and is herein referred to as such, (ii) shall be owned by the Trustees, and (iii) shall be subject to the terms and conditions contained herein. Notwithstanding anything herein to the contrary, those areas of the Common Property which are from time-to-time reserved for the exclusive use (subject only to reasonable utility easements as are necessary to provide underground utility service to the Property and rights reserved herein to the Trustees) of certain Parcels, including but not limited to parking areas, parking garages, lawn areas, landscaping, lighting, ponds, fountains and other amenities adjacent to and/or from time-to-time designated for the exclusive use of a certain Parcel or Parcels shall be considered "Restricted Use Areas," and shall be governed by the terms and conditions hereof relating to Restricted Use Areas. For the purpose of establishing Restricted Use Areas, the Trustees shall have the power to grant non-perpetual easements to the Restricted Use Areas for the exclusive benefit of one or more Parcels, but the Trustees shall not be required to do so but rather may designate an area as a Restricted Use Area herein or hereby or in an amendment hereto or by a separate writing of record designating an area as such. Restricted Use Areas as of the date of this Declaration hereby assigned and designated are shown on Exhibit A hereto and may be from time-to-time hereafter changed or modified by an amendment to this Declaration or by way of another duly recorded instrument designating an area as a Restricted Use Area. The Trustees shall not, however, change or modify the Restricted Use Areas designated for the exclusive use of a particular Parcel without first obtaining the prior written consent of the Owner or Owners of said Parcel (as the case may be) (or the consent of any tenant or other person, if any, to whom the Owner or Owners of a specific Parcel have from time-to-time specifically delegated said Owner's or Owners' specific right to so consent in a writing placed of record with the St. Louis County Recorder of Deeds) affected by such change or modification. 4.2 EASEMENTS FOR THE USE OF COMMON PROPERTY AND RESTRICTED USE AREAS. Every Owner and tenant of the Property (herein sometimes referred to individually as the "Benefited Party" and collectively as the "Benefited Parties") and their respective successors and assigns, invitees, agents, employees, tenants, contractors and licensees shall have a right and non-exclusive perpetual easement of enjoyment in and to the Common Property (exclusive of the Restricted Use Areas as from time-to-time designated) for the limited purpose of ingress, egress, parking and loading, subject only to such reasonable rules and regulations as may from time to time be established by the Trustees, including, but not limited to the designation and assignment of certain parking areas within the Common Property (exclusive of the Restricted Use Areas) for the benefit of the respective Owners and occupants of the Parcels and the establishment of Restricted Use Areas. In addition, every Owner and tenant of a specified Parcel to whom a Restricted Use Area has been specifically assigned and designated and their respective invitees, agents, employees, tenants, contractors and licensees shall have a right and exclusive, non-perpetual easement of enjoyment in and to the specified Restricted Use Area (but said specified Restricted Use Area only) for the purposes of ingress, egress, parking and loading and such other purposes as are consistent herewith and not in violation of any applicable laws and/or regulations and/or the Riverport Indenture, subject only to such reasonable rules and regulations as may from time to time be established by the Trustees which are consistent with the provisions hereof. In addition, the Trustees shall grant to the Owners of each Parcel, and third parties as is reasonably necessary, such non-exclusive utility easements as are reasonably necessary to provide underground utility service to the Parcels and Common Property. 4.3 TITLE TO COMMON PROPERTY. Title to the Common Property, including the Restricted Use Areas, shall be and remain with the Trustees. Any conveyance or change of ownership of all or any part of a Parcel in Duke/Riverport Site No. 1 shall convey with it a beneficial interest in the Common Property (exclusive of the Restricted Use Areas) and in the Restricted Use Area assigned to a particular Parcel, if any, but no such interest in the Common Property or a Restricted Use Area shall be conveyed except in conjunction with a conveyance of a Parcel. Any conveyance of all or any part of a Parcel shall carry with it all rights and interests in and to the Common Property (exclusive of the Restricted Use Areas) and in and to the Restricted Use Area assigned to a particular Parcel, if any, although such is not expressly mentioned; provided, however, that no right or power conferred upon the Trustees shall be abrogated. 4.4 EXTENT OF EASEMENTS. The rights and easements of enjoyment in the Common Property (including the Restricted Use Areas) created hereby shall be subject to the following: (a) The right of the Trustees to prescribe reasonable rules and regulations for the use, enjoyment, improvement, and maintenance of the Common Property and Restricted Use Areas; (b) Subject to the provisions of SECTION 4.1 hereof, the right of the Trustees to purchase, alter, and use the Common Property and Restricted Use Areas, or any part thereof; (c) The right of the Trustees to sell or convey the Common Property and Restricted Use Areas, or any part thereof, in the event of condemnation or taking by a public agency972451523; (d) The right of the Trustees to designate Restricted Use Areas or grant easements to Restricted Use Areas for the exclusive benefit of one or more Parcels; and (e) All other rights reserved to the Trustees in this Declaration and all rights reserved in the Riverport Indenture but only to the extent that such rights are applicable to the Property. 4.5 TRUSTEES MANAGEMENT OF COMMON PROPERTY. Except as otherwise provided herein, the Common Property shall be for the benefit and use of all Owners and future Owners in Duke/Riverport Site No. 1 and it is deemed to be in the best interests of all Owners and future Owners to vest in the Trustees the exclusive powers to manage, control, improve, maintain and keep in repair the Common Property. The Trustees are (subject to the limitations with respect to the Restricted Use Areas herein specifically provided) therefore authorized and empowered to: (i) keep the Common Property open at all times for the benefit and use of the Benefited Parties; (ii) secure to such Benefited Parties the rights, benefits and advantages of having ingress and egress from and to, over, along and across the Common Property and of frequenting and using and enjoying the Common Property in such manner and to such an extent as will enable such Owners, their lessees, tenants, employees and customers to equitably enjoy and mutually derive the maximum benefit from the Common Property, taking into account the character of the occupancy and the use to which the Parcels are put from time-to-time; (iii) assign to the Owners of Parcels benefited by the Restricted Use Areas, the duty to manage, control, improve, maintain and keep in repair such Restricted Use Areas, in a manner consistent with this Declaration, the Riverport Indenture and subject to the rights reserved by the Trustees herein; (iv) make and enforce reasonable rules and regulations governing the use of the Common Property; (v) to employ attendants; to require identification; (vi) to allot or assign spaces; to make charge, in a non-discriminatory manner, for parking spaces where appropriate; (vii) to reconfigure the parking areas; and (viii) to restrict the use of certain parking areas and to make any other reasonable regulations for the general welfare of all of the Benefited Parties, to the end that so far as is reasonably possible of accomplishment, the Benefited Parties collectively shall enjoy the maximum and most beneficial use of the Common Property. It is understood and agreed by the Benefited Parties that it will not be possible for the Trustees to so manage the Common Property that the use is necessarily proportionate or equal among the Owners. Notwithstanding anything herein to the contrary, each Benefited Party shall at all times be entitled to the minimum number of parking spaces required for general office use by the zoning ordinances of the City of Maryland Heights, Missouri or other governmental authority then having jurisdiction over the Property. 4.6 MAINTENANCE OF RESTRICTED USE AREAS AND COMMON PROPERTY. (a) Each Owner shall be responsible for the maintenance and repair of the Restriced Use Areas designated for the use of each Owner's Parcel and shall: (i) keep all portions of the Restricted Use Areas desigated for the use of the Owner's Parcel in good order and repair and free of litter, weeds, trash and debris; (ii) maintain all lawn areas and landscaping within each portion of the Restricted Use Areas designated for the use of the Owner's Parcel, including regular mowing of all lawn areas and trimming, maintenance and, when necessary, replacement of trees and shrubbery; (iii) police and protect the Restricted Use Areas; (iv) maintain standard extended coverage and public liability insurance covering the Restricted Use Areas with coverage reasonably acceptable to the Trustees and such other insurance as the Trustees shall reasonably determine from time-to-time to be desireable; and (v) be responsible for the all costs and expenses associated with the Restricted Use Areas, including but not limited to, taxes, insurance, and utilities. Owners may take reasonable actions to restrict parking and access to their Restricted Use Areas, including, but not limited to, the erection of gates and/or card entry systems; provided, however, that: (1) such actions do not operate to unreasonably restrict the Benefited Parties' use and enjoyment of the remaining Parcels or the other Common Property (exclusive of the Restricted Use Areas) consistent with this Declaration; (2) such actions are not in violation of the zoning ordinances, rules or regulations of the City of Maryland Heights or any other governmental authority having jurisdiction over the Property; (3) no such action is taken without the prior written consent of the Trustees; and (4) no such action is in violation of the Riverport Indenture. Notwithstanding anything herein to the contrary, the Owners shall not assign, lease, convey, encumber or otherwise dispose of any Restricted Use Areas without the unanimous prior written consent of the Trustees. In the event an Owner fails to perform its obligations with regard to the Restricted Use Areas, the Trustees may perform such obligations of the Owner and assess the Owner for the costs actually and reasonably incurred (sometimes referred to herein as "Restricted Use Area assessments"). (b) Except (i) as provided in foregoing SUBSECTION (A) above and (ii) repair, maintenance or replacement of the Common Property which is the responsibility of any utility company or public or quasi-public body, the Trustees shall maintain all Common Property in good order and repair. The Trustees shall not, however, be liable to any Owner, tenant or other person or entity for damages to property or injury or death to persons arising out of any failure to repair and maintain any Common Property. Maintenance, repair or replacement by the Trustees of any Common Property shall be performed in a manner which does not unreasonably delay or interfere with the Owners' use of the Common Property (exclusive of the Restircted Use Areas), a Restricted Use Area designated for the use and enjoyment of a specific Parcel, or an Owner's use of its Parcel. The Trustees shall have reasonable access over and across any Parcel to all Common Property to the extent necessary to permit the Trustees to maintain, repair or replace such Common Property. Maintenance by the Trustees of the Common Property, except as provided in the Riverport Indenture, shall include, but not be limited to, the following: (1) The private roadways and sidewalks within the Common Property (exclusive of the Restricted Use Areas) shall be swept and, to the extent reasonably possible, snow and ice shall be removed therefrom. (2) The lighting, signs, islands and other private street improvements located within the Common Property (exclusive of the Restricted Use Areas) shall be maintained in good repair. (3) Landscaping, including lawn areas, trees and shrubbery at all entrances to the Property, shall be maintained in a first-class condition by cutting, trimming, feeding and weeding. (4) The land and any improvements lawfully constructed on the Common Property shall be restored to the extent damaged in connection with the maintenance, repair or replacement of any easement. (5) The Trustees shall be entitled to replace any improvement constituting a part of the Common Property when necessary for the proper functioning of the Common Property. (6) The Trustees shall maintain insurance coverage as follows: 972451524(i) All improvements upon the Common Property (excluding the Restricted Use Areas) shall be insured in an amount equal to the maximum insurance replacement value, and afford protection against loss or damage by fire or other hazards covered by a standard extended coverage endorsement and such other risks as the Trustees reasonably determine from time-to-time, including, vandalism; (ii) Public liablility, including medical payments insurance, in such amounts and with such coverage as shall be reasonably determined by the Trustees; 972451525(iii) Workmen's compensation insurance meeting the requirements of the laws of Missouri; 972451526and (iv) Fidelity insurance on the Trustees and all other persons or entities handling funds of behalf of the Owners of Duke/Riverport Site No. 1, in an amount equal to a minimum of one hundred fifty percent (150%) of the estimated annual operating expenses. All expenses incurred or to be incurred by the Trustees in connection with the foregoing (and such other expenses recoverable by the Trustees as herein otherwise provided) shall be recoverable by the Trustees by way of the Annual Assesments For Common Property as in SECTION 3.2 hereof provided. (c) The Trustees shall have the duty and power to pay the general and special taxes, if any, assessed against the Common Property, excluding the Restricted Use Areas, and to receive, hold, convey, dispose of and administer in trust any gift, grant, conveyance or donation of any money or real or personal property for the purpose of executing this trust. The Owners shall have the duty to pay all general and special taxes assessed against the Restricted Use Areas which have been designated for the use of each respective Owner's Parcel and as assessed against the Parcel. Taxes for the Restricted Use Areas shall be equitably allocated among the Owners to which the Restricted Use Areas are assigned by the Trustees and shall be based upon the assessed value of the Restricted Use Areas as determined by the St. Louis County Assessor's Office or other taxing authority then having jurisdiction over the Property. 4.7 CONSTRUCTION OF PARKING STRUCTURES AND ADDITIONAL PARKING AREAS. (a) From time to time it may be necessary or desirable to construct one or more parking structures and/or additional parking areas, so that, at a minimum, the minimum parking requirements as prescribed by the zoning ordinances of the City of Maryland Heights or of any governmental authority then having jurisdiction over the Property will be met. All costs and expenses of construction of said parking structure and/or parking areas shall be borne by the Owners of said Parcels for whose use such parking structures and/or parking areas are constructed and none of the cost and expense associated therewith shall be the responsibility of the Trustees nor shall the Trustees make any assessment in connection with the initial construction of said parking structure and/or parking areas without the unanimous consent of the Owners. Prior to commencement of construction of any improvements, architectural approval must be obtained from the Trustees and as required by the Riverport Indenture. In addition, the Owners of said Parcels must provide the Trustees hereunder with reasonable assurances of Owners financial ability to complete the construction of the parking structure and/or parking areas. Not less than thirty (30) days prior to commencement of construction of any parking structure and/or improvements on the Common Property, the involved Owner hereunder shall notify all other Owners and each person or entity having a mortgage lien of record of the nature and extent of said assurances. The parking structure and/or parking areas constructed by the Owners as provided herein (partially or fully completed) shall be the property of the Trustees and held pursuant to the terms hereof, unless fee simple title to the real estate and parking structure and/or improvements thereon is conveyed to the Owner of any Parcel. Following initial construction, the Owners shall have the duty to make all necessary and proper improvements and repairs to the parking structure and/or parking areas which have been designated as Restricted Use Areas assigned to each Owner's Parcel; to pave, surface, grade or otherwise fit the same for use; to keep the areas in repair, light, police and protect the same. (b) The Trustees shall have the right to grant easements on, over (air) and under the Common Property for reasonable and necessary utility easements and easements between the various Parcels, subject, however, to the reasonable right of each Parcel Owner to reasonably restrict access to its Parcel. (c) The Trustees shall have the power to prohibit any person, firm or corporation from obstructing or occupying with building materials, soil or other objects, the Common Property so as to in any manner obstruct the free use thereof, but the Trustees may permit temporary obstructions of necessity for reasonable periods of time and to this end shall have power to require a reasonable deposit to be made by any such person making temporary use of the Common Property in connection with necessary building or other operations, to guarantee that such obstructions will be removed and the Common Property restored to a condition equal to that existing before the commencement of the work, otherwise such restoration is to be done by the Trustees and paid for from such deposit. ARTICLE V MISCELLANEOUS PROVISIONS 5.1 DURATION. This Declaration and the covenants, restrictions and easements set out herein shall run with and bind the land, and shall inure to the benefit of and be enforceable by the Trustees, and every Owner of every Parcel and their respective legal representatives, heirs, successors, and assigns, for a term beginning on the date this Declaration is recorded, and continuing indefinitely. Provided, however, that should this Declaration or any part thereof be held invalid or unenforceable as a result of the term of same being perpetual, then the term hereof shall be deemed to continue through and including December 31, 2033 after which time said covenants shall be automatically extended for successive periods of ten (10) years unless an amendment is approved as set forth below. Provided, however, that no such change shall be effective until the recording of a certified copy of such resolution in the Recorder of Deeds Office, St. Louis County, Missouri. Upon the expiration of this Declaration or the earlier vacation of all of the Common Property, fee simple title to the Common Property shall vest in the then Owners, as tenants in common, each owning that proportion of interest therein according to each Owner's Pro-Rata Interest; provided further that, title to Restricted Use Areas reserved for the exclusive use of an individual Parcel, shall vest in the Owner of the Parcel to which the Restricted Use Areas is reserved. The rights of said tenants in common shall only be exercisable appurtenant to and in conjunction with said Owners' ownership of Parcels within Duke/Riverport Site No. 1. The Owners agree to cooperate as necessary to subdivide the Property and take all other actions necessary to accomplish the foregoing. 5.2 AMENDMENT. Except as herein otherwise specifically provided, for five (5) years from and after the date that this Declaration is recorded with the St. Louis County Recorder of Deeds, same may be amended by the unanimous vote of the Trustees voting in person or by proxy, at a meeting duly called for such purpose and, thereafter, any amendment (except those requiring the unanimous consent of Owners as herein provided) may be made by a two-thirds (2/3) vote of the Owners; providing, however, that no amendment shall at anytime be made without the unanimous consent of the Owners and each person or entity having a mortgage lien of record (which consent shall not be unreasonably withheld, conditioned or delayed): (i) which would have the effect of denying an Owner of his voting rights in connection with the election of Trustees; or (ii) which would have the effect of unreasonably denying the substantive rights of the Owners and/or their mortgage lenders herein specified. Any amendment shall become effective when an instrument is filed for record in the Recorder of Deeds Office, St. Louis County, Missouri, with the signatures of the Trustees indicating the approval of the Owners and/or mortgage lenders, if required. No such amendment shall: (1) reduce the number of Trustees on the Board of Trustees as herein provided; or (2) eliminate the requirement of any cognizant governmental authority that unfilled vacancies on the Board of Trustees be filled by said cognizant governmental authority. 5.3 ENFORCEMENT. The Trustees shall have the duty and each and every Owner, tenant and/or person or entity having a mortgage lien of record of any part of the Property or on a Parcel or part thereof shall have the right (but not the duty) to enforce the covenants and restrictions set out in this Declaration (and any rules and regulations promulgated by the Trustees hereunder) as same may be from time to time amended. Enforcement of the covenants and restrictions shall be by any proceeding at law or in equity against any person or persons violating or attempting to violate any protective conditions, covenant, restriction, or reservation (or any rules and regulations promulgated by the Trustees hereunder) either to restrain violation and/or to recover damages, and against the Property, and/or any Parcel to enforce any lien created by these protective conditions, restrictions, reservations, and covenants (and any rules and regulations promulgated by the Trustees hereunder). Failure by the Trustees or any Owner, tenant and/or mortgage lender to enforce any such protective condition, covenant, restriction or reservation shall in no event be deemed a waiver of the right to do so thereafter. 5.4 SEVERABILITY OF PROVISIONS. If any Article, section, paragraph, sentence, clause or phrase of this Declaration shall be or become unenforceable, illegal, null, or void for any reason or shall be held by any court of competent jurisdiction to be illegal, null, or void, the remaining Articles, sections, paragraphs, sentences, clauses, or phrases of this Declaration shall continue in full force and effect and shall not be affected thereby. It is hereby declared that said remaining Articles, sections, paragraphs, sentences, clauses, and phrases would have been and are imposed irrespective of the fact that any one or more other Articles, sections, paragraphs, sentences, clauses, or phrases shall become or be illegal, null, or void. 5.5 NOTICE. Wherever written notice to Duke Realty, a Trustee, or Owner, tenant, or mortgage lender of a Parcel within Duke/Riverport Site No. 1 is permitted or required hereunder, such shall be given by United States, registered or certified, mail, return receipt requested, postage prepaid, to the address appearing on the records of the Trustees, or delivered in person or by facsimile (unless written notice has been given to the Trustees of a different address, in which event such notice shall be sent to the address so designated). Any notice so given shall conclusively be deemed to have been given at the time of placing same in the United States mail, properly addressed, whether received by the addressee or not, or upon receipt or refusal if delivered personally or by facsimile. 5.6 TITLE. The titles, headings, and captions which have been used throughout this Declaration are for convenience only and are not to be used in construing this Declaration or any part thereof. 5.7 SINGULAR AND PLURAL. Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to including any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires. 5.8 BINDING EFFECT. This Declaration shall bind the heirs, legal representatives, successors and assigns of the parties hereto. 5.9 CONFLICTING TERMS. If any provision of this Declaration violates any provision of the Riverport Indenture, then such provision of this Declaration shall be automatically modified to the minimum extent necessary to comply with the Riverport Indenture. IN WITNESS WHEREOF, W. Gregory Thurman, Timothy J. McCain and Lisa G. Bulczak, Trustees of Duke/Riverport Site No. 1, and Duke Realty Limited Partnership, an Indiana limited partnership, have caused this instrument to be executed as of the day and year first above written. TRUSTEES OF DUKE/RIVERPORT SITE NO. 1 - -------------------------- W. Gregory Thurman - -------------------------- Timothy J. McCain - -------------------------- Lisa G. Bulczak DUKE REALTY LIMITED PARTNERSHIP, An Indiana limited partnership S E A L By: DUKE REALTY INVESTMENTS, INC., An Indiana Corporation, Its General Partner ATTEST: By:________________________________ W. Gregory Thurman _____________________________ Vice president and General Manager James D. Eckhoff St. Louis - Office Assistant Secretary STATE OF MISSOURI ) ) SS COUNTY OF ST. LOUIS ) On this ____ day of ______________, 1998, before me, a Notary Public in and for the County of St. Louis, State of Missouri, duly commissioned and sworn, personally appeared W. Gregory Thurman, Timothy J. McCain and Lisa G. Bulczak, known to me to be named herein as the TRUSTEES OF DUKE/RIVERPORT SITE NO. 1 and also known to me to be the persons who executed the foregoing instrument, the said W. Gregory Thurman; Timothy J. McCain and Lisa G. Bulczak having stated to me that they executed the foregoing instrument as their free act and deed. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal in the County of St. Louis, State of Missouri, the day and year in this certificate first above written. ---------------------------------- Notary Public STATE OF MISSOURI ) ) SS COUNTY OF ST. LOUIS` ) On this ____ day of ____________, 1998, before me a Notary Public in and for the County of St. Louis, State of Missouri, duly commissioned and sworn, personally appeared W. Gregory Thurman, known to me to be the Vice President and General Manager, St. Louis - Office of DUKE REALTY INVESTMENTS, INC., the corporation described in the foregoing instrument, and also known to me to be the person who executed the foregoing instrument, the said W. Gregory Thurman having stated to me that he executed said instrument on behalf of the corporation therein named, and acknowledged that such corporation executed the same as the free act and deed of said corporation and with full authority of its Board of Directors, and as General Partner, with authority, of DUKE REALTY LIMITED PARTNERSHIP. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal in the County of St. Louis, State of Missouri, the day and year in this certificate first above written. ---------------------------------- Notary Public EXHIBIT A (TO DECLARATION) This Exhibit contains a pictorial of Site No. 1 EXHIBIT C TO EIGHTH AMENDMENT TO LEASE RESOLUTIONS The undersigned, being all of the Trustees of Duke/Riverport Site No. 1 pursuant to that certain Declaration of Covenants, Restrictions and Easements for Access and Parking for Property in the City of Maryland Heights, County of St. Louis, State of Missouri, known as Duke/Riverport Site No. 1, dated __________________, 1998 (the "Parking Indenture"), and recorded at Book _____ Page _____ of the St. Louis, County, Missouri records, hereby consent and agree to the following resolutions and waive notice of a meeting of the Trustees and the holding of such meeting, it being intended that this consent shall have the same force and effect as the vote of the Trustees at a regular or special meeting of the Trustees duly called and held. The resolutions to which the undersigned consent and agree to are as follows: BE IT RESOLVED, that in accordance with Section 4.2 of the Parking Indenture, the Trustees hereby assign and designate to the Owner of Lot 1A of Duke/Riverport Site No. 1, according to the plat thereof recorded at Book _____ Page ____ of the St. Louis, County, Missouri records (herein sometimes referred to as "Lot 1B"), from time to time and to its tenant, Express Scripts, Inc. ("Tenant"), and their respective successors and assigns, those certain 56 parking spaces (the "Designated Parking Spaces") within the Common Property (as described in the Parking Indenture) as shown and depicted on Exhibit 1 to this Resolution, for use by the Tenant and its directors, officers, employees, representatives, agents, guests and invitees; RESOLVED, that the Designated Parking Spaces shall continue to be within the Common Property and shall not be part of any Restricted Use Area (as described in the Parking Indenture); and be it further RESOLVED, that the Trustees hereby consent to the lease of the Restricted Use Area assigned and designated to Lot 1A under the Parking Indenture ("Lot 1A RUA") and the lease of the other Common Property (including the Designated Parking Spaces) by the Owner of Lot 1A to the Tenant; and be it further RESOLVED, that the Trustees confirm and ratify that the Lot 1A RUA shall be for the exclusive benefit of Lot 1A; and be it further RESOLVED, that Tenant shall have the right, at its sole cost and expense, to install signs identifying the Designated Parking Spaces for Tenant's use (subject to the Trustees' approval of the form and content of said signage, which approval shall not be unreasonably withheld, conditioned or delayed); and be it further RESOLVED, that the Trustees have received a copy of the that certain Eighth Amendment to Lease dated August 14, 1998, by and between Duke Realty Limited Partnership and Tenant, and acknowledge that the Owner of Lot 1A has delegated to Tenant certain consent rights set forth in the Parking Indenture, including the following: (1) consent rights with respect to Special Assessments as provided in Section 3.4 of the Parking Indenture, and (ii) consent rights with respect to any change or modification of Lot 1A RUA as provided in Section 4.1 of the Parking Indenture; and be it further RESOLVED, that these Resolutions and the rights herein conferred to Tenant shall run to and benefit Tenant and its successors and assigns and shall continue without revocation or amendment so long as Tenant leases all or a portion of Lot 1A (except to the extent Tenant otherwise consents to any revocation or amendment in writing), and in the event that at any time hereafter Tenant becomes the Owner of Lot 1A, the rights herein confirmed to Tenant shall run to Tenant as Owner of Lot 1A (and to subsequent Owners) without revocation or amendment (except to the extent the Owner(s) otherwise consents to any revocation or amendment in writing); and be it further RESOLVED, that each of the Trustees, be and here is authorized and directed to do all acts and things as may be necessary or desirable to carry out the purpose and intent of these resolutions, and that all of the acts and doings, whether heretofore or hereafter done or performed in connection herewith are hereby, in all respects, ratified, approved and confirmed. Dated"_______________, 1998 ______________________________ W. Gregory Thurman _______________________________ Timothy J. McCain _______________________________ Lisa G. Bulczak BEING ALL OF THE TRUSTEES EXHIBIT 1 TO RESOLUTIONS (LOT 1a RUA) (This Exhibit contains a pictorial of Site 1 - Designated Parking Spaces) EX-3.3 7 EXHIBIT 3.3 SECOND AMENDED AND RESTATED BYLAWS of EXPRESS SCRIPTS, INC. Adopted September 24, 1997 (As Amended) 1. MEETINGS OF STOCKHOLDERS. 1.1 ANNUAL MEETING. The annual meeting of stockholders shall be held on the date and at the time fixed from time to time by the board of directors (the "Board"), provided, that each successive annual meeting shall be held on the fourth Wednesday in May of each year if not a legal holiday, and if a legal holiday then on the next succeeding day not a legal holiday, or on such other date or time and at such place in May, June, July, August or September as may be determined from time to time by resolutions adopted by the Board of Directors. 1.2 SPECIAL MEETINGS. Special meetings of the stockholders may be called by resolution of the Board and shall be called by the president or secretary upon the written request of holders of shares entitled to cast at least 50% of the votes of all outstanding shares entitled to vote. Only business related to the purposes set forth in the notice of the meeting may be transacted at a special meeting. 1.3 PLACE AND TIME OF MEETINGS. Meetings of the stockholders may be held in or outside Delaware at the place and time specified by the Board. 1.4 NOTICE OF MEETING; WAIVER OF NOTICE. Written notice of each meeting of stockholders shall be given to each stockholder entitled to vote at the meeting, except that (a) it shall not be necessary to give notice to any stockholder who submits a signed waiver of notice before or after the meeting, and (b) no notice of an adjourned meeting need be given except when required under Section 1.5 of these Bylaws or by law. Each notice of a meeting shall be given, personally or by mail, not less than 10 nor more than 60 days before the meeting and shall state the time and place of the meeting, and unless it is the annual meeting, shall state at whose direction or request the meeting is called and the purposes for which it is called. If mailed, notice shall be considered given when deposited in the United States mail with postage prepaid addressed to a stockholder at his address on the corporation's records. The attendance of any stockholder at a meeting, without protesting at the beginning of the meeting that the meeting is not lawfully called or convened, shall constitute a waiver of notice by him. 1.5 QUORUM. At any meeting of stockholders, the presence in person or by proxy of the holders of shares entitled to cast a majority of the votes of all outstanding shares entitled to vote shall constitute a quorum for the transaction of any business. In the absence of a quorum a majority in voting interest of those present or, if no stockholders are present, any officer entitled to preside at or to act as secretary of the meeting, may adjourn the meeting until a quorum is present. At any adjourned meeting at which a quorum is present any action may be taken which might have been taken at the meeting as originally called. No notice of an adjourned meeting need be given if the time and place are announced at the meeting at which the adjournment is taken except that, if adjournment is for more than thirty days or if, after the adjournment, a new record date is fixed for the meeting, notice of the adjourned meeting shall be given pursuant to Section 1.4. 1.6 VOTING; PROXIES. Corporate action to be taken by stockholder vote, other than the election of directors, shall be authorized by a majority of the votes of shares present in person or represented by proxy and entitled to vote at a meeting of stockholders, except as otherwise provided by law. Directors shall be elected in the manner provided in Section 2.1 of these Bylaws. Voting need not be by ballot unless requested by a stockholder at the meeting or ordered by the chairman of the meeting; however, all elections of directors shall be by written ballot, unless otherwise provided in the certificate of incorporation. Each stockholder entitled to vote at any meeting of stockholders or to express consent to or dissent from corporate action in writing without a meeting may authorize another person to act for such stockholder by proxy. Every proxy must be signed by the stockholder or his attorney-in-fact. No proxy shall be valid after three years from its date unless it provides otherwise. 1.7 LIST OF STOCKHOLDERS. Not less than 10 days prior to the date of any meeting of stockholders, the secretary of the corporation shall prepare a complete list of stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of such stockholder. For a period of not less than 10 days prior to the meeting, the list shall be available during ordinary business hours for inspection by any stockholder for any purpose germane to the meeting. During this period, the list shall be kept either (a) at a place within the city where the meeting is to be held, if that place shall have been specified in the notice of the meeting, or (b) if not so specified, at the place where the meeting is to be held. The list shall also be available for inspection by stockholders at the time and place of the meeting. 1.8 NOTICE OF STOCKHOLDER NOMINEE.(1) Only persons who are nominated in accordance with the procedures set forth in this paragraph shall be eligible for election by the stockholders as directors of the corporation. Nominations of persons for election to the Board may be made at a meeting of stockholders (a) by or at the direction of the Board, (b) by the holders of shares entitled to cast at least 50% of the votes of all outstanding shares entitled to vote, or (c) by any stockholder of the corporation entitled to vote for the election of directors at such meeting who complies with the procedures set forth in this paragraph. All nominations by stockholders shall be made pursuant to timely notice in proper written form to the secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation (i) in the case of an annual meeting that is called for a date that is within 30 days before or after the anniversary date of the immediately preceding annual meeting of stockholders, not less than 90 days nor more than 120 days prior to such anniversary date, and (ii) in the case of an annual meeting that is called for a date that is not within 30 days before or after the anniversary date of the immediately preceding annual meeting, or in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever occurs first. To be in proper written form, such stockholders' notice to the secretary shall set forth in writing (a) as to each person whom such stockholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including, without limitation, such person's written consent to being named in the proxy statement as a nominee and to serving as director if elected; and (b) as to such stockholder (i) the name and address, as they appear on the corporation's books, of such stockholder, and (ii) the class and number of shares of the corporation which are beneficially owned by such stockholder. At the request of the Board, any person nominated by the Board for election as a director shall furnish to the secretary of the corporation that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election by the stockholders as a director unless nominated in accordance with the procedures set forth in the Bylaws of the corporation. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination as not made in accordance with the procedures prescribed by the Bylaws of the corporation, and if he or she shall so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded. 1.9 STOCKHOLDER PROPOSALS.(1) At any special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting by or at the direction of the Board. At any annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (a) by or at the direction of the Board, (b) by the holders of shares entitled to cast at least 50% of the votes of all outstanding shares entitled to vote, or (c) by any stockholder who complies with the procedures set forth in this paragraph. For business properly to be brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in proper written form to the secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation (i) in the case of an annual meeting that is called for a date that is within 30 days before or after the anniversary date of the immediately preceding annual meeting of stockholders, not less than 90 days nor more than 120 days prior to such anniversary date, and (ii) in the case of an annual meeting that is called for a date that is not within 30 days before or after the anniversary date of the immediately preceding annual meeting, not later than the close of business on the tenth day following the day on which notice of the date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever occurs first. To be in proper written form, such stockholder's notice to the secretary shall set forth in writing as to each matter such stockholder proposed to bring before the annual meeting (a) the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the corporation's books, of such stockholder, (c) the class and number of shares of the corporation which are beneficially owned by such stockholder, and (d) any material interest of such stockholder in such business. Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this paragraph. The chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this paragraph, and, if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. 1.10 PUBLIC DISCLOSURE. For purposes of Sections 1.8 and 1.9 hereof, "public disclosure" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press, Reuters or Corporate News Service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. 1.11 MEETING REQUIRED. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, such vote may only be taken at an annual or special meeting with prior notice, except as provided in the Restated Certificate of Incorporation, as amended. 1.12 ELECTION OUT OF SECTION 203. Pursuant to the corporation's original Certificate of Incorporation, the corporation has expressly elected not to be governed by Section 203 of the General Corporation Law of the State of Delaware. 2. BOARD OF DIRECTORS. 2.1 NUMBER, QUALIFICATION, ELECTION AND TERM OF DIRECTORS. The business and affairs of the corporation shall be managed by or under the direction of the Board. The number of directors may be fixed or changed from time to time by resolution of a majority of the entire Board or by the stockholders, or, if the number is not fixed, the number shall be ten, but no decrease may shorten the term of any incumbent director. Directors shall be elected at each annual meeting of stockholders by a plurality of the votes of shares present in person or represented by proxy and entitled to vote on the election of directors and shall hold office until the next annual meeting of stockholders and until the election and qualification of their respective successors, subject to the provisions of Section 2.9. As used in these Bylaws, the term "entire Board" means the total number of directors which the corporation would have if there were no vacancies on the Board. 2.2 QUORUM AND MANNER OF ACTING. A majority of the entire Board shall constitute a quorum for the transaction of business at any meeting, except as provided in Section 2.10 of these Bylaws. In the absence of a quorum a majority of the directors present may adjourn any meeting from time to time until a quorum is present. Unless otherwise provided by law or these Bylaws, the affirmative vote of a majority of the directors comprising the entire Board shall be required to take action in respect of any matter presented to or requiring the approval of the Board, including, but not limited to, the following actions by the corporation: (a) declaring or paying any dividends or any distributions upon any of the stock of the corporation; (b) authorizing, issuing or executing any agreement providing for the issuance (contingent or otherwise) of any equity securities (or any securities convertible into or exchangeable for any equity securities); (c) merging or consolidating the corporation with any entity or any other business combination, acquisition, liquidation, reorganization, recapitalization or dissolution or entering into any agreement providing for any of the foregoing; (d) selling, leasing or otherwise disposing of any material portion of the corporation's assets outside of the ordinary course of business in any transaction or series of related transactions; (e) entering into or amending any employment or consultant agreement with any individual to provide for compensation in excess of $250,000 per annum or paying any bonus in excess of $100,000 to any employee; (f) selecting and engaging the corporation's principal accountants, corporate counsel and investment bankers; (g) approving the corporation's annual budget; (h) making any capital expenditure not specifically approved in the corporation's annual budget in excess of $500,000 for any expenditure or $1,000,000 in the aggregate per year; (i) subject to Section 3.3 hereof, adopting, amending, modifying or terminating any stock option, employee stock ownership, pension, profit-sharing or other employee benefit or welfare plan or granting any options or rights to acquire shares of capital stock of the corporation; (j) creating, incurring or assuming any indebtedness for borrowed money in excess of $500,000 in the aggregate at any one time outstanding or making any loans or advances to, guarantees for the benefit of, or investments in, any entity in excess of $500,000 in the aggregate for all loans or advances at any one time outstanding, $500,000 in the aggregate for all guarantees at any one time outstanding, and $500,000 in the aggregate for all investments at any one time outstanding, except for (1) short-term investments having a stated maturity no greater than one year from the date the corporation makes such investment in (A) obligations of the United States government or any agency thereof or obligations guaranteed by the United States government, (B) certificates of deposit of commercial banks having combined capital and surplus of at least $250,000,000, or (C) commercial paper with a rating of at least "Prime-1" by Moody's Investors Service, Inc., and (2) investments approved in the corporation's annual budget; (k) changing the nature, purpose or strategic direction of the corporation; or (l) entering into any contract, lease or other commitment that is not in the ordinary course of business, and pursuant to which the corporation is obligated to make payments in excess of $1,000,000. For purposes of the preceding sentence, "ordinary course of business" means any lease or any contract with customers or suppliers, which is repetitive in nature, which does not vary in substantial terms and conditions from similar leases or contracts of the Company, and which is customary in the business. 2.3 PLACE OF MEETINGS. Meetings of the Board may be held in or outside Delaware. 2.4 ANNUAL AND REGULAR MEETINGS. Annual meetings of the Board for the election of officers and consideration of other matters shall be held either (a) without notice immediately after the annual meeting of stockholders and at the same place, or (b) as soon as practicable after the annual meeting of stockholders, on notice as provided in Section 2.6 of these Bylaws. Regular meetings of the Board may be held without notice and, unless otherwise specified by the Board, shall be held once during every other calendar month at such times and places as the Board determines. If the day fixed for a regular meeting is a legal holiday, the meeting shall be held on the next business day. 2.5 SPECIAL MEETINGS. Special meetings of the Board may be called by the chairman of the board, the president or by a majority of the directors in office. 2.6 NOTICE OF MEETINGS; WAIVER OF NOTICE. Notice of the time and place of each special meeting of the Board, and of each annual meeting not held immediately after the annual meeting of stockholders and at the same place, shall be given to each director in advance of the time set for such meeting as provided herein. Notice of a special meeting need not state the purpose or purposes for which the meeting is called. Notice need not be given to any director who submits a signed waiver of notice before or after the meeting or who attends the meeting without protesting at the beginning of the meeting the transaction of any business because the meeting was not lawfully called or convened. Notice of any adjourned meeting need not be given, other than by announcement at the meeting at which the adjournment is taken. Notice of a special meeting may be given by any one or more of the following methods and the method used need not be the same for each director being notified: (a) Written notice sent by mail at least three days prior to the meeting; (b) Personal service at least twenty-four (24) hours prior to the time of the meeting; (c) Telegraphic notice at least twenty-four (24) hours prior to the time of the meeting, said notice to be sent as a straight full-rate telegram; (d) Telephonic notice at least twenty-four (24) hours prior to the time of the meeting; or (e) Facsimile transmission at least twenty-four (24) hours prior to the time of the meeting. 2.7 BOARD OR COMMITTEE ACTION WITHOUT A MEETING. Any action required or permitted to be taken by the Board or by any committee of the Board may be taken without a meeting if all of the members of the Board or of the committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents by the members of the Board or the committee shall be filed with the minutes of the proceeding of the Board or of the committee. 2.8 PARTICIPATION IN BOARD OR COMMITTEE MEETINGS BY CONFERENCE TELEPHONE. Any or all members of the Board or of any committee of the Board may participate in a meeting of the Board or of the committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at the meeting. 2.9 RESIGNATION AND REMOVAL OF DIRECTORS. Any director may resign at any time by delivering his or her resignation in writing to the president or secretary of the corporation, to take effect at the time specified in the resignation; the acceptance of a resignation, unless required by its terms, shall not be necessary to make it effective. Any or all of the directors may be removed at any time, either with or without cause, by vote of the stockholders. 2.10 VACANCIES. Any vacancy in the Board, including one created by an increase in the number of directors, may be filled for the unexpired term by a majority vote of the remaining directors, though less than a quorum. 2.11 COMPENSATION. Directors shall receive such compensation as the Board determines, together with reimbursement of their reasonable expenses in connection with the performance of their duties. A director may also be paid for serving the corporation, its affiliates or subsidiaries in other capacities. 2.12 NOTICE TO MEMBERS OF THE BOARD OF DIRECTORS. Each member of the Board of Directors shall file with the Secretary of the corporation an address to which mail or telegraphic notices shall be sent and a telephone number to which a telephonic or facsimile notice may be transmitted. A notice mailed, telegraphed, telephoned or transmitted by facsimile in accordance with the instructions provided by the director shall be deemed sufficient notice. Such address or telephone number may be changed at any time and from time to time by a director by giving written notice of such change to the Secretary. Failure on the part of any director to keep an address and telephone number on file with the Secretary shall automatically constitute a waiver of notice of any regular or special meeting of the Board which might be held during the period of time that such address and telephone number are not on file with the Secretary. A notice shall be deemed to be mailed when deposited in the United States mail, postage prepaid. A notice shall be deemed to be telegraphed when the notice is delivered to the transmitter of the telegram and either payment or provision for payment is made by the corporation. Notice shall be deemed to be given by telephone if the notice is transmitted over the telephone to some person (whether or not such person is the director) or message recording device answering the telephone at the number which the director has placed on file with the Secretary. Notice shall be deemed to be given by facsimile transmission when sent to the telephone number which the director has placed on file with the Secretary. 3. COMMITTEES. 3.1 EXECUTIVE COMMITTEE. The Board, by resolution adopted by a majority of the entire Board, may designate an Executive Committee consisting of five directors or such other number as may be specified by the Board; the Executive Committee shall be vested with the powers of the Board of Directors, including, without limitation, the power to approve any matter set forth in section 2.2, when the Board is not in session, except as otherwise provided in the resolution, by these Bylaws, section 141(c) of the General Corporation Law of the State of Delaware, or any other applicable law. The members of the Executive Committee shall serve at the pleasure of the Board. All action of the Executive Committee shall be reported to the Board at its next meeting. Unless otherwise specified by the Board or the Executive Committee, meetings of the Executive Committee shall be held once during every calendar month in which a meeting of the Board is not scheduled. 3.2 AUDIT COMMITTEE. (a) The Board, by resolution adopted by a majority of the entire Board, may designate an Audit Committee consisting of three directors or such other number as may be specified by the Board, which shall review the internal controls of the corporation, any transactions with related parties of the corporation of a magnitude such that it would be required to be disclosed in the corporation's proxy statement under the Securities and Exchange Commission's rules and regulations as in effect at the time of the transaction, and the objectivity of its financial reporting, and have such other powers and duties as the Board determines. The members of the Audit Committee shall serve at the pleasure of the Board. All action of the Audit Committee shall be reported to the Board at its next meeting. (b) A majority of the directors on the Audit Committee shall be persons who are not directors of New York Life Insurance Company or its subsidiaries (other than the corporation), or officers or employees of New York Life or its subsidiaries. The Audit Committee shall not act at any time that the requirements of the preceding sentence are not met. 3.3 COMPENSATION COMMITTEE. The Board, by resolution adopted by a majority of the entire Board, may designate a Compensation Committee consisting of three directors or such other number as may be specified by the Board, which shall administer the corporation's compensation plans and have such other powers and duties as the Board determines. The members of the Compensation Committee shall serve at the pleasure of the Board. All action of the Compensation Committee shall be reported to the Board at its next meeting. 3.4 OTHER COMMITTEES. The Board, by resolution adopted by a majority of the entire Board, may designate other committees of directors of one or more directors, which shall serve at the Board's pleasure and have such powers and duties as the Board determines. 3.5 RULES APPLICABLE TO COMMITTEES. The Board may designate one or more directors as alternate members of any committee (other than the Audit Committee), who may replace any absent or disqualified member at any meeting of the committee. All action of a committee shall be reported to the Board at its next meeting. Each committee shall adopt rules of procedure and shall meet as provided by those rules or by resolutions of the Board. A majority of the members of a committee shall constitute a quorum for the transaction of business at any meeting. The affirmative vote of a majority of the members of a committee shall be required to take action in respect of any matter presented to or requiring the approval of the committee. 3.6 ELECTION PURSUANT TO SECTION 141(C)(2). By resolution of the Board of Directors, the corporation has elected pursuant to Section 141(c) of the Delaware General Corporation Law to be governed by paragraph (2) of Section 141(c) in respect of committees of the Board of Directors. 4. OFFICERS. 4.1 NUMBER; SECURITY. The executive officers of the corporation shall be the chairman of the board, the president, one or more vice presidents (including executive vice president(s) and senior vice president(s) if the Board so determines), a secretary and a treasurer. Any two or more offices may be held by the same person. The Board may require any officer, agent or employee to give security for the faithful performance of his duties. 4.2 ELECTION; TERM OF OFFICE. The executive officers of the corporation shall be elected annually by the Board, and each such officer shall hold office until the next annual meeting of the Board and until the election of his successor, subject to the provisions of Section 4.4. 4.3 SUBORDINATE OFFICERS. The Board may appoint subordinate officers (including assistant secretaries and assistant treasurers), agents or employees, each of whom shall hold office for such period and have such powers and duties as the Board determines. The Board may delegate to any executive officer or to any committee the power to appoint and define the powers and duties of any subordinate officers, agents or employees. 4.4 RESIGNATION AND REMOVAL OF OFFICERS. Any officer may resign at any time by delivering his resignation in writing to the president or secretary of the corporation, to take effect at the time specified in the resignation; the acceptance of a resignation, unless required by its terms, shall not be necessary to make it effective. Any officer elected or appointed by the Board or appointed by an executive officer or by a committee may be removed by the Board either with or without cause, and in the case of an officer appointed by an executive officer or by a committee, by the officer or committee who appointed him or her or by the president. 4.5 VACANCIES. A vacancy in any office may be filled for the unexpired term in the manner prescribed in Sections 4.2 and 4.3 of these Bylaws for election or appointment to the office. 4.6 CHAIRMAN OF THE BOARD. The chairman of the board shall preside at all meetings of the Board and of the stockholders and shall have such powers and duties as the Board assigns to him. 4.7 PRESIDENT. The president shall be the chief executive officer of the corporation. Subject to the control of the Board, he or she shall have general supervision over the business of the corporation and shall have such other powers and duties as chief executives of corporations usually have or as the Board assigns to him or her. 4.8 VICE PRESIDENT. Each vice president shall have such powers and duties as the Board or the president assigns to him or her. 4.9 TREASURER. The treasurer shall be the chief financial officer of the corporation and shall be in charge of the corporation's books and accounts. Subject to the control of the Board, he or she shall have such other powers and duties as the Board or the president assigns to him or her. 4.10 SECRETARY. The secretary shall be the secretary of, and keep the minutes of, all meetings of the Board and of the stockholders, shall be responsible for giving notice of all meetings of stockholders and of the Board, and shall keep the seal and, when authorized by the Board, apply it to any instrument requiring it. Subject to the control of the Board, he or she shall have such powers and duties as the Board or the president assigns to him or her. In the absence of the secretary from any meeting, the minutes shall be kept by the person appointed for that purpose by the presiding officer. 4.11 SALARIES. The Board may fix the officers' salaries, if any, or it may authorize the president to fix the salary of any other officer. 5. SHARES. 5.1 SHARES OF THE CORPORATION. The shares of the corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the corporation by the Chairman or Vice Chairman of the Board of Directors or by the President or a Vice-President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, representing the number of shares registered in certificate form. The signatures of any such officers thereon may be facsimiles. The seal of the corporation shall be impressed, by original or by facsimile, printed or engraved, on all such certificates. The certificate shall also be signed by the transfer agent and a registrar and the signature of either the transfer agent or the registrar may also be facsimile, engraved or printed. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon any such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the corporation with the same effect as if such officer, transfer agent, or registrar had not ceased to be such officer, transfer agent, or registrar at the date of its issue. 5.2 STOCK RECORDS. The corporation or a transfer agent shall keep stock books in which shall be recorded the number of shares issued, the names of the owners of the shares, the number owned by them respectively, whether such shares are represented by certificates or are uncertificated, and the transfer of such shares with the date of transfer. 5.3 TRANSFERS. Transfers of stock shall be made only on the stock transfer record of the corporation upon surrender of the certificate or certificates being transferred which certificate shall be properly endorsed for transfer or accompanied by a duly executed stock power, except in the case of uncertificated shares, for which the transfer shall be made only upon receipt of transfer documentation reasonably acceptable to the corporation. Whenever a certificate is endorsed by or accompanied by a stock power executed by someone other than the person or persons named in the certificate, or the transfer documentation for the uncertificated shares is executed by someone other than the holder of record thereof, evidence of authority to transfer same shall also be submitted with the certificate or transfer documentation. All certificates surrendered to the corporation for transfer shall be canceled. 5.4 REGULATIONS GOVERNING ISSUANCE AND TRANSFERS OF SHARES. The Board of Directors shall have the power and authority to make all such rules and regulations as it shall deem expedient concerning the issue, transfer and registration of shares of stock of the corporation. The Board may require satisfactory surety before issuing a new certificate to replace a certificate claimed to have been lost or destroyed. 5.5 TRANSFER AGENTS AND REGISTRARS. The Board may appoint, or authorize one or more officers to appoint, one or more transfer agents and one or more registrars. 5.6 DETERMINATION OF STOCKHOLDERS OF RECORD. The Board may fix, in advance, a date as the record date for the determination of stockholders entitled to notice of or to vote at any meeting of the stockholders, or to express consent to or dissent from any proposal without a meeting, or to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action. The record date may not be more than 60 or less than 10 days before the date of the meeting or more than 60 days before any other action. 6. MISCELLANEOUS. 6.1 SEAL. The Board shall adopt a corporate seal, which shall be in the form of a circle and shall bear the corporation's name and the year and state in which is was incorporated. 6.2 FISCAL YEAR. The Board may determine the corporation's fiscal year. Until changed by the Board, the corporation's fiscal year shall be the calendar year. 6.3 VOTING OF SHARES IN OTHER CORPORATIONS. Shares in other corporations which are held by the corporation may be represented and voted by the president or a vice president of this corporation or by proxy or proxies appointed by one of them. The Board may, however, appoint some other person to vote the shares. 6.4 AMENDMENTS. Bylaws may be amended, repealed or adopted by the stockholders or by a majority of the entire Board, but any bylaw adopted by the Board may be amended or repealed by the stockholders. - -------- (1) As amended October 7, 1998 -----END PRIVACY-ENHANCED MESSAGE-----