SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S-3/A No. 1 TO
REGISTRATION STATEMENT
Under
The Securities Act of 1933
______________________
Aquila Biopharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
Delaware 04-3307818
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
365 Plantation Street
Worcester, Massachusetts 01605
(508) 797-5777
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
______________________
ATTORNEY JANE V. HAWKES
BOWDITCH & DEWEY, LLP
311 Main Street
Worcester, Massachusetts 01608
(508) 791-3511
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
______________________
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box.
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. X
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount Maximum Maximum Amount Of
Title of Shares To Be Aggregate Aggregate Registration
To Be Registered Registered Price Offering Fee
Per Price(1)
Unit(1)
Common Stock, par 769,000 $5.50 $4,229,500 $1,248(2)
value $0.01 per
share............ 1,150,000 $4.96875 $5,714,062.50 $1,686
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of
1933, on the basis of the average of the high and low sale prices reported
on the NASDAQ National Market Automated Quotation System on
February 13,
1998 and April 16, 1998, respectively.
(2) Paid on February 19, 1998.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
AQUILA BIOPHARMACEUTICALS, INC.
FORM S-3
REGISTRATION STATEMENT
CROSS-REFERENCE SHEET
Form S-3 Item Location in Prospectus
1. Forepart of Registration Outside Front Cover Page of Prospectus
Statement and Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Available information; Information
Back Cover Pages of Prospectus Incorporated by Reference; Table of
Contents
3. Summary Information, Risk Prospectus Summary; Risk Factors
Factors and Ratio of Earnings
to Fixed Charges(a)
4. Use of Proceeds Use of Proceeds
5. Determination of Offering *
Price
6. Dilution *
7. Selling Security Holders Selling Security Holders
8. Plan of Distribution Plan of Distribution
9. Description of Securities to *
be Registered
10. Interest of Named Experts and Experts; Legal Matters
Counsel
11. Material Changes Material Changes; Business
12. Incorporation of Certain Information Incorporated by Reference
Information by Reference
13. Disclosure of Commission *
Position on Indemnification for
Securities Act Liability
(a) The Ratio of Earnings to Fixed Charges is not applicable and
is therefore omitted.
*Omitted since the answer is negative or the item is inapplicable.
PROSPECTUS
1,919,000 SHARES
AQUILA BIOPHARMACEUTICALS, INC.
COMMON STOCK
This prospectus relates to the offer and sale from time to time of up to
1,919,000 shares (the "Shares") of common stock, $.01 par value ("Common
Stock"), of Aquila Biopharmaceuticals, Inc., a Delaware corporation
("Aquila" or the "Company"), by the selling shareholders named herein (the
"Selling Shareholders"), or by their respective pledgees, donees,
transferees or other successors in interest that receive such Shares as a
gift, partnership distribution or other non-sale related transfer. The
Company issued the Shares to the Selling Shareholders on February 4, 1998
and April 13, 1998 in two private transactions. The Company will receive no
proceeds from the sale of Shares by the Selling Shareholders.
INVESTMENT IN THE SHARES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Shares covered under the Registration Statement of which this
Prospectus is a part may be offered for sale from time to time by or for
the account of the Selling Shareholders or their pledgees, donees,
transferees or other successors in interest, in the open market, on the
NASDAQ National Market or on one or more exchanges on which the Shares are
then listed, in privately negotiated transactions, in an underwritten
offering, in a combination of such methods, or by any other legally
available means, at market prices prevailing at the time of such sale, at
prices related to such prevailing market prices, at negotiated prices or
at fixed prices. The Shares are intended to be sold through one or more
broker-dealers or directly to purchasers. Such broker-dealer may receive
compensation in the form of discounts, concessions or commissions from
Selling Shareholders, their successors in interest and/or the purchasers
of the Shares for whom such broker-dealer may act as agent or to whom they
may sell as principal, or both (which compensation as to a particular
broker-dealer may be in excess of customary commissions). The Selling
Shareholders, their successors in interest and/or any broker-dealers
acting in connection with the sale of the Shares hereunder may be deemed
to be underwriters within the meaning of Section 2(11) of the Securities
Act and any commissions or other compensation received by them on the
resale of the Shares as principals may be deemed underwriting compensation
under the Securities Act. See "Selling Shareholders" and "Plan of
Distribution".
The Common Stock of the Company is traded on the NASDAQ National
Market under the symbol "AQLA". On April 16, 1998 the closing price
of the Company's Common Stock as reported on the NASDAQ National Market
was $5.00.
THE DATE OF THIS PROSPECTUS IS APRIL ___, 1998.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files periodic reports, proxy materials and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy materials and other information filed
by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington DC 20549, and at the following of its Regional
Offices of the Commission: New York Regional Office, 7 World Trade
Center, 13th Floor, New York, New York 10048; and Midwest Regional Office,
Citicorp Center, 500 W. Madison Street, Suite 1400, Chicago, IL 60661-
2511; and copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington
DC 20549 at prescribed rates. The Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission,
including the Company, located at http:\\www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are hereby incorporated by reference:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1997.
2. Current Report on Form 8-K dated April 13, 1998.
In addition, all documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act since the end of
the fiscal year covered by the Annual Report on Form 10-K referred to
above, and prior to the termination of the offering of the Shares, shall
be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such documents.
The Company will provide without charge to each person (including a
beneficial owner) to whom a copy of this Prospectus is delivered, upon
written or oral request, a copy of any or all of the information
incorporated by reference as a part of this Prospectus (other than
exhibits to such documents unless such exhibits themselves are
specifically incorporated by reference therein). Requests should be
directed to Ann Charlton, Aquila Biopharmaceuticals, Inc., 365 Plantation
Street, Worcester, Massachusetts 01605, telephone number (508) 797-5777.
The Company's principal executive offices are located at 365 Plantation
Street, Worcester, Massachusetts 01605, telephone number (508) 797-5777.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any statement so modified shall not be deemed,
except as so modified, to constitute a part of this Prospectus. Any
statement so superseded shall not be deemed to constitute a part of this
Prospectus.
No person is authorized to give any information or to make any
representations, other than those contained in this Prospectus, in
connection with the offering described herein, and, if given or made, such
information or representations must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, nor shall there be any sale
of the securities by any person in any jurisdiction in which it is
unlawful for such person to make such offer, solicitation or sale.
Neither the delivery of this Prospectus nor any sale made hereunder shall
under any circumstances create an implication that the information
contained herein is correct as of any time subsequent to the date hereof.
PROSPECTUS SUMMARY
The Company
The Company is developing and commercializing products which modulate
the immune system for use in treating, controlling or preventing certain
infectious diseases and cancers. The Company's proprietary products
include the Quilimmune(TM) human products for pneumococcal infections,
malaria and tick-born diseases and the Quilvax(TM) animal vaccines for bovine
mastitis, canine lyme disease and feline leukemia. These products
incorporate the Company's Stimulon(TM) adjuvants, which are also included in
products under development by the Company's six corporate partners.
The Offering
Common Stock Offered 1,919,000 shares for the account of
Selling Shareholders
Common Stock Outstanding 6,979,673 shares
as of April 16, 1998
NASDAQ Symbol AQLA
Summary Financial Information
(In thousands, except per share data)
Years Ended December 31,
1994 1995 1996 1997
Statement of Operations Data:
Revenues:
Product sales $ 676 $ 554 $ 890 $ 1,319
Research and development 4,334 5,174 5,683 5,609
----- ----- ----- -----
Total revenues 5,010 5,728 6,573 6,928
Expenses:
Cost of sales 1,318 961 1,468 1,023
Research and development 5,068 5,826 5,250 5,020
General and administrative 7,051 5,455 5,027 4,521
Loss on impairment of assets 2,880 - - -
------ ------ ------ -----
Total expenses 16,317 12,242 11,745 10,564
Other income, net 360 2,162 5,777 4,370
Income (loss) before
reorganization items,
and income taxes (10,947) (4,352) 605 734
Reorganization items ( 869) ( 813) (1,715) -
Income tax benefit 208 - - -
-------- ------- ------- -------
Income (loss) from
continuing operations (11,608) (5,165) (1,110) 734
Discontinued operations:
Income (loss) from
operations ( 3,186) 223 1,452 -
Gain (loss) on disposal ( 7,482) - 7,657 191
-------- ------ ------ ------
Income (loss) before
extraordinary loss (22,276) (4,942) 7,999 925
Extraordinary loss on
reorganization - - (2,040) -
------- ----- ------ -------
Net income(loss) (22,276) (4,942) 5,959 925
Years Ended December 31,
1994 1995 1996 1997
Income (loss) per share:
Continuing operations $ (3.40) $(1.50) $(0.30) $ 0.14
Discontinued operations (3.12) .06 2.45 0.04
Extraordinary loss on
reorganization - - (0.55) -
------ ------ ------ ------
Net income (loss) $(6.52) $(1.44) $ 1.60 $ 0.18
Weighted average number
of common shares outstanding 3,416 3,442 3,717 5,142
(Diluted)
The weighted average shares outstanding has been adjusted to reflect a 7.6
to 1 stock exchange on October 21, 1996
Balance Sheet data December 31, 1997
(In thousands)
Actual Adjusted As (1)
Cash and cash equivalents $16,897 $20,593
Working capital 16,029 19,604
Total assets 20,667 24,362
Deferred revenue and long term debt 364 1,664
Total Shareholders Equity $17,887 $20,161
(1) As adjusted to reflect the sale of 769,000 shares of the Company's
Common Stock at a price of $4.63 and to reflect the merger of Aquila
Acquisition, Inc., a wholly owned subsidiary of the Company, with and into
VacTex, Inc.
FORWARD LOOKING STATEMENTS
This Prospectus and the documents incorporated herein contain forward
looking statements which involve a number of risks and uncertainties.
Actual results may differ materially from those projected by the Company.
The following factors, among others, could effect the Company's actual
results: general economic conditions; risks in product and technology
development; delays and difficulties in the regulatory approval process;
difficulties in obtaining raw materials and supplies for the Company's
products; failure of corporate partners to commercialize successfully
products using the Company's technology; competition from other companies;
the costs of acquiring additional technology; failure to obtain the
funding necessary for the Company's planned activities; and other risks
and uncertainties identified in this Prospectus and the Company's Security
and Exchange Commission filings and the exhibits thereto, including those
set forth under "Risk Factors" below.
RISK FACTORS
Investment in the Shares offered hereby involves a high degree of risk.
Accordingly, prospective investors should carefully consider the following
factors, among others, relating to the Company.
HISTORY OF OPERATING LOSSES
The Company and its predecessor, Cambridge Biotech Corporation,
experienced significant operating losses in 1995, 1996 and 1997. The Company
expects to incur additional operating losses over the next several years
and expects cumulative losses to increase as the Company's research and
development and clinical trial efforts expand. See "Business - Aquila's
Strategy".
The Company's ability to achieve profitable operations is dependent in
large part upon obtaining regulatory approvals of its products, entering
into agreements for product development and commercialization, expanding
manufacturing capacity and developing marketing capabilities, either
independently or with a corporate partner. There can be no assurance that
the Company will ever achieve a profitable level of operations.
UNCERTAINTY OF PRODUCT DEVELOPMENT AND SUCCESSFUL COMMERCIALIZATION
The Company's future success is largely dependent upon its ability to
develop, manufacture and market advanced new products. To date, the
Company has commercialized only one product, Quilvax-FeLV(TM), its feline
leukemia vaccine. The products currently under development will require
significant additional research and development efforts, including
extensive clinical testing and regulatory approval. Each of the steps
involves a significant period of time and significant expense. Once
approved, products must be manufactured in commercial quantities and
marketed successfully. The success of the Company's products also heavily
depends on the choice of antigen, which is frequently made by the
Company's collaborators. Products being developed by collaborators and
licensees incorporating the Company's Stimulon(TM) adjuvants have advanced to
human clinical trials. The Company has two animal products in clinical
trials, one human product in Phase I clinical trials and one human product
which has proceeded to Phase II trials. See "Business - Aquila's Product
Development Programs" and "Business - Corporate Partner Programs"
The Company's potential products will be subject to the risks of failure
inherent in the development of pharmaceutical products based on new
technologies. These risks include the possibilities that the Company's
technical approach will not be successful; that any or all potential
products will not be found to be safe and effective; that the products may
fail to meet applicable regulatory standards or receive necessary
regulatory clearances; that the potential products, even if safe and
effective, will be difficult to develop into commercially viable products,
difficult to manufacture on a large scale, or uneconomical to market; that
proprietary rights of third parties will preclude the Company from
marketing such products; or that third parties will market superior or
equivalent products.
As results of particular preclinical studies and clinical trials are
received by the Company, the Company may abandon projects which it might
otherwise have believed to be promising, some of which may be described in
this Prospectus. There can be no assurance that the Company's research
and development activities will result in any commercially viable
products.
FUTURE FUNDING NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING
The Company will need to raise substantial additional capital in order
to continue its research and development programs, conduct preclinical and
clinical testing of its product candidates and conduct full scale
manufacturing of any pharmaceutical products that may be developed. The
Company's capital requirements will depend on numerous factors, including
but not limited to, the progress of its research and development programs,
the progress of preclinical and clinical testing, the time and costs
involved in obtaining regulatory approvals, the cost of filing,
prosecuting, defending and enforcing any patent claims and other
intellectual property rights, competing technological and market
developments, changes in the Company's existing research relationships,
the ability of the Company to establish collaborative arrangements, the
development of commercialization activities and arrangements, and the
purchase of additional facilities and capital equipment. While the
Company receives license fees, research funding by licensees and
collaborators, product sales revenue, and interest earned from
investments, these revenues, in the aggregate, are not likely to be
sufficient to meet the Company's operating expenses and capital
requirements prior to commercialization of its products. In addition,
there can be no assurance that changes in the Company's research and
development plans or other events affecting its operations will not result
in accelerated or unexpected expenditures or that the expected revenues
will materialize, or that financing will be available on acceptable terms.
The Company believes that its available cash, cash equivalents and short-
term and long-term investments and funds from license agreements and
product sales should be sufficient to meet its cash requirements for at
least the next two years. Continued operations of the Company beyond such
period will be dependent upon the Company's ability to generate
substantial operating revenue or procure additional funding. There can be
no assurance that the Company's products will prove successful or generate
significant sales or earnings in the future or that, if needed, the
Company will be able to obtain future funding on reasonable terms, if at
all, or at the appropriate time for its planned activities.
If adequate funds are not available, the Company may be required to
delay, reduce the scope of or eliminate one or more of its research or
development programs; to obtain funds through arrangements with
collaborative partners or others that may require the Company to
relinquish rights to certain of its technologies, product candidates or
products that the Company would otherwise seek to develop or commercialize
itself; or to license the rights to such products on terms that are less
favorable to the Company than might otherwise be available. If the
Company raises additional funds by issuing equity securities, dilution to
shareholders may result and such investors could have rights superior to
existing shareholders.
RISKS ASSOCIATED WITH COLLABORATIVE ARRANGEMENTS
The Company's commercialization strategy relies in part on license
agreements permitting certain companies to use the Stimulon(TM) adjuvant.
The Company has entered into various arrangements with corporate,
government and academic collaborators, licensors, licensees and others.
The success of these outside parties in performing their responsibilities
may affect the timing and amount of license fee payments, royalties, and
revenue from product sales. There can be no assurance that the Company
will be able to establish additional acceptable collaborative arrangements
or license agreements should the Company deem this necessary to develop
and commercialize its potential pharmaceutical products, or that existing
or future collaborative arrangements or license agreements will be
successful. See "Business - Corporate Partner Programs"
PATENTS AND PROPRIETARY RIGHTS
The Company's success will depend, in part, upon its ability to develop
patentable products and technologies and obtain patent protection for the
proposed products and technologies both in the United States and Europe.
The Company is not aware of any issued third party patents which would
interfere with development of any of its products, but there can be no
assurance that the Company will not infringe on existing or future patents
owned by others, that third parties will not bring suit against the
Company for infringement of such patents, that the Company could obtain
necessary or desirable licenses on acceptable terms, or that the Company
could design around such patents. CSL International ACN ("CSL") has a
patent application pending in Europe, which, if issued, may dominate QS-21
for use in certain formulations. CSL and Seed Capital, Inc. have filed an
opposition against the issuance of the Company's QS-21 patent in Europe.
See "Business - Patents and Propreitary Rights."
Any litigation instituted by third party patent holders could expose the
Company to significant expense and the risk of adverse determination. There
can be no assurance that patent applications owned or licensed by the Company
will issue as patents, that patent protection will be secured for any
particular technology, or that, if issued, such patents will be valid or
that they will provide the Company with meaningful protection against
competitors with a competitive advantage. There can be no assurance that
the patents will not be challenged or designed around by others.
Proceedings brought against the Company's patents could expose the Company
to significant expense and the risk of adverse determinations.
The Company relies on trade secrets and other unpatented proprietary
technology. See "Business - Patents and Propreitary Rights."
There can be no assurances that the Company will be able to
meaningfully protect its rights to such unpatented technology or that others
will not independently develop substantially equivalent technology or
otherwise gain access to the technology. The Company seeks to protect its
trade secrets and proprietary know-how, in part, through confidentiality
agreements with its employees, consultants, advisors and collaborators.
There can be no assurance that these agreements will not be violated by the
other parties, that the Company will have adequate remedies for any breach,
or that its trade secrets will not otherwise become known or be independently
developed by competitors.
COMPETITION AND TECHNOLOGICAL CHANGE
The biotechnology and pharmaceutical industries are subject to rapid and
significant technological change. Competitors of the Company's business
in the United States and abroad are numerous. They include, among others,
major pharmaceutical companies, specialized biotechnology firms,
universities and other research institutions. The Company is aware of
certain programs and products under development by others which may
compete with its programs and products, including adjuvants under
development by Ribi ImmunoChem Research, Inc., Corixa Corporation, Virus
Research Institute and Chiron Corporation. There can be no assurance that
competitors will not succeed in developing technologies and products that
are more effective than any which are being developed by the Company or
which would render the Company's technology and products obsolete and
noncompetitive. Many of these competitors have substantially greater
financial and technical resources and production and marketing
capabilities than the Company. In addition, some of the Company's
competitors have greater experience than the Company in conducting
clinical trials of pharmaceutical products and obtaining approvals from
the United States Food and Drug Administration ("FDA"), the United States
Department of Agriculture ("USDA") and other regulatory agencies of
products for use in healthcare. Accordingly, its competitors may succeed
in obtaining FDA or USDA approval for products more rapidly than the
Company. There can be no assurance that the products under development
will be able to compete successfully with existing products or products
under development by other companies, universities and other institutions,
or that they will attain regulatory approval in the United States or
elsewhere. If the Company commences significant commercial sales of its
products, it will also be competing with respect to manufacturing and
marketing capabilities, areas in which it has limited or no experience. A
significant amount of research in the field is also being carried out at
academic and government institutions. These institutions are becoming
increasingly aware of the commercial value of their findings and are
becoming more aggressive in pursuing patent protection and negotiating
licensing arrangements to collect royalties for use of technology that
they have developed. These institutions may also market competitive
commercial products on their own or in collaboration with competitors and
will compete with the Company in recruiting highly qualified scientific
personnel. See "Business - Competition"
GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY APPROVAL
The Company's research and development activities, preclinical studies
and clinical testing, and ultimately the production and marketing of its
products, are subject to extensive regulation by numerous governmental
authorities in the United States, including the FDA and the USDA. Similar
regulatory requirements exist in other countries where the Company will
seek to test and market its products. The rigorous clinical testing
requirements and regulatory approval process of the FDA, the USDA and
foreign regulatory authorities can take a number of years and require the
expenditure of substantial resources. The Company has limited experience
in conducting and managing the clinical testing necessary to obtain
government approvals. There can be no assurance that the Company will be
granted the necessary approvals for clinical testing or for the
manufacturing and marketing of any of its products on a timely basis, if
at all. See "Business - Government Regulation."
Additional government regulation may be established that could prevent
or delay regulatory approval of the Company's product candidates. Delays
in obtaining regulatory approvals would adversely affect the marketing of
any products developed by the Company and its ability to receive product
revenues or royalties. If regulatory approval of a potential product is
granted, such approval may include significant limitations on the
indicated uses for which such product may be marketed.
Even if initial regulatory approvals for the Company's product
candidates are obtained, the Company, its products and its manufacturing
facilities are subject to continual review and periodic inspection. The
regulatory standards for manufacturing are applied stringently by the FDA.
Discovery of previously unknown problems with a product, manufacturer or
facility may result in restrictions on such product or manufacturer or
facility, including warning letters, fines, suspensions of regulatory
approvals, product recalls, operating restrictions, delays in obtaining
new product approvals, withdrawal of the product from the market and
criminal prosecution. Other violations of FDA requirements can result in
similar penalties.
The Company will be subject to numerous environmental, health and
workplace safety laws and regulations, including those governing
laboratory procedures, exposure to blood-borne pathogens, and the handling
of biohazardous materials. Any violation of, and the cost of compliance
with, these laws and regulations could adversely impact the Company's
operations.
MANUFACTURING LIMITATIONS
The Company currently has limited capability to manufacture products for
commercial use. See "Business - Manufacturing and Scale-Up". The
Company may need to construct additional manufacturing
capacities but there can be no assurance that the Company will have the
resources to do so. The Company may choose to contract for manufacturing
services and may encounter delays or difficulties in establishing relationships
with manufacturers to produce, package and distribute its finished products
and clinical trials, market introduction and subsequent sales of such products
would be adversely affected. Moreover, contract manufacturers must
operate in compliance with Good Manufacturing Practices required by the
FDA and USDA. The Company's potential dependence upon third parties for
the manufacture of certain of its products may adversely affect its profit
margins and its ability to develop and deliver such products on a timely
and competitive basis.
Manufacturing facilities and processes must pass a pre-approval
inspection before the FDA or USDA will allow the marketing of products.
Should the Company determine to manufacture additional products
independently, the Company would be subject to the regulatory requirements
described above and would require substantial additional capital. While
the Company's Stimulon(TM) adjuvants are currently regulated by the FDA as
constituent materials used in drug preparation, the FDA may seek to
subject these products to more extensive regulation or the Company's
customers may seek to establish higher standards and controls. In
addition, there can be no assurance that the Company will be able to
continue to manufacture its products successfully and in a cost effective
manner or establish manufacturing capacity for new products.
See "Business - Government Regulation."
LIMITED SALES AND MARKETING EXPERIENCE
The Company has little or no experience in sales, marketing and
distribution of pharmaceutical products. The Company must either
establish marketing arrangements with other companies with distribution
organizations or establish a direct sales capability. If in the future
the Company decides to market its own products, it will need to develop a
marketing and sales force with technical expertise and distribution
capability. To the extent the Company enters into marketing or
distribution arrangements, any revenues received by it will depend upon
the efforts of third parties and there can be no assurance that such
efforts will be successful. The Company may retain the right to market
some of its products directly. There can be no assurance that the Company
will be able to establish sales and distribution capabilities or that it
or its collaborators will be successful in gaining market acceptance for
any products that may be developed by the Company.
DEPENDENCE ON RETENTION AND ATTRACTION OF KEY EMPLOYEES
In order to pursue its product development and marketing plans and to
exploit its scientific expertise, the Company must retain existing
management and will need to hire additional qualified management and
operating personnel. Recruiting and retaining qualified scientific
personnel to perform research and development work is critical to the
Company's success. The loss of the services of a combination of these
people might significantly delay the achievement of development objectives
and could have a material adverse effect on its business. The Company
does not maintain any key person life insurance policies. The Company
will face competition for qualified individuals from numerous
pharmaceutical and biotechnology companies, universities and other
research institutions. The failure to attract and retain such personnel
could adversely affect its business.
PRODUCT LIABILITY AND AVAILABILITY OF INSURANCE
The Company is exposed to potential liability risks that are inherent in
the testing, manufacturing and marketing of health care products. The use
of its product candidates in clinical trials may expose it to product
liability claims and possible adverse publicity. These risks also exist
with respect to the Company's product candidates that receive regulatory
approval for commercial sale. The Company currently has limited product
liability coverage for the clinical research use of its product candidates
such as its Stimulon(TM) adjuvants and Quilvax(TM) and Quilimmune(TM) products.
The Company maintains product liability insurance for the commercial sale
of its FeLV vaccine and the Company intends to obtain such coverage for
new products if and when new products are commercialized. However, there
can be no assurance that the Company will be able to obtain additional
insurance coverage at acceptable costs, if at all, and that such insurance
will provide adequate coverage against claims asserted, or that a product
liability claim would not materially adversely affect its business or
financial condition.
HAZARDOUS MATERIALS; ENVIRONMENTAL MATTERS
The Company is subject to federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of
hazardous materials and certain waste products. The Company's research
and development and manufacturing processes involve the controlled use of
hazardous, controlled and radioactive materials. Although the Company
maintains safety procedures for handling and disposing of such materials
that it believes comply with the standards prescribed by such laws and
regulations, the risk of accidental contamination, injury, or negligent
disposal by third party disposal firms cannot be completely eliminated.
If such an event occurs, the Company could be held liable for any damages
that result and any such liability could exceed the resources of the
Company. Although the Company believes that it is in compliance in all
material respects with applicable environmental laws and regulations,
there can be no assurance that the Company will not be required to incur
significant costs to comply with environmental laws and regulations in the
future, nor that the operations, business or assets of the Company will
not be materially or adversely affected by current or future environmental
laws or regulations. See "Business - Government Regulation."
UNCERTAINTY RELATED TO PRICING OF HEALTH CARE PRODUCTS AND REIMBURSEMENT
In both domestic and foreign markets, sales of the Company's or its
corporate partners' products, if any, will depend in part on the
availability of reimbursement from third-party payers such as government
health administration authorities, private health insurers, health
maintenance organizations, pharmacy benefit management companies and other
organizations. Both the federal and state governments in the United
States and foreign governments continue to propose and pass legislation
designed to contain or reduce the cost of health care, and regulations
affecting the pricing of pharmaceuticals and other medical products may
change or be adopted before any of the Company's or its corporate
partners' products are approved for marketing. Cost control initiatives
could decrease the price that the Company receives for any product it or
any of its corporate partners may develop in the future and may have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, third-party payers are increasingly
challenging the price and cost-effectiveness of medical products and
services. Significant uncertainty exists as to the reimbursement status
of newly approved health care products, including pharmaceuticals. There
can be no assurance that the Company's or its corporate partners'
products, if any, will be considered cost effective or that adequate third-
party reimbursement will be available to enable the Company or its
corporate partners to maintain price levels sufficient to realize a return
on their investment. In any such event, the Company may be materially
adversely affected.
VOLATILITY OF STOCK PRICE; LIMITED TRADING VOLUME
The market for the Common Stock has been volatile. Factors such as
announcements by the Company or its competitors of technological
innovations, new commercial products, major financing agreements, or
patent or proprietary right developments, and public concern as to the
safety of biotechnology, as well as period to period fluctuations in
financial results, may have a significant impact on the market price of
the Common Stock.
There is limited trading volume in the Common Stock. There is no
assurance that greater trading volume or a more active market for the
Common Stock will develop.
SHARES ELIGIBLE FOR FUTURE SALE
As of February 17, 1998, approximately 5,733,402 shares of the Common
Stock may be freely traded by public shareholders who are not affiliates
of the Company. The Company's officers and directors and members of their
immediate families hold approximately 36,726 shares. As of February 17,
1998, approximately 856,655 additional shares of the Common Stock will be
issuable upon the exercise of outstanding options, of which 469,488 are
currently exercisable, with exercise prices ranging from $2.80 to $6.69
per share.
DIVIDENDS
The Company has never paid any cash dividends on the Common Stock and
does not anticipate paying cash dividends in the foreseeable future. The
Company currently intends to retain earnings, if any, for the development
of its business.
USE OF PROCEEDS
All the Shares offered hereby are being offered for the account of the
Selling Shareholders. Accordingly, the Company will receive no proceeds
from the sale of the Shares by the Selling Shareholders.
BUSINESS
The Company creates and commercializes products which modulate the immune
system to control, prevent or treat infectious diseases and cancers.
Aquila's technology and product development programs are based on
enhancement of the immune system using the Stimulon(TM) family of adjuvants.
Advances in biotechnology and immunology have enabled scientists to
develop a new generation of products which contain disease specific agents
and components which specifically modulate the immune system so that an
effective immune response is achieved. Traditional vaccines can prevent
infection through antibody based immune responses. While antibodies alone
can be effective in preventing or eliminating pathogen infection in
certain diseases, scientists now recognize that the cell mediated
response, where cytotoxic T lymphocytes ("CTL") are activated, is probably
necessary to eliminate intracellular pathogens. By stimulating a CTL
response it may be possible to develop therapeutic products to treat
diseases involving herpes, hepatitis and HIV infections or cancers.
The Stimulon(TM) family of adjuvants have been shown to enhance the quality
and the quantity of the immune response to a variety of antigens, both in
pre-clinical studies and in a number of human clinical trials. Aquila
believes that the Stimulon(TM) adjuvants will allow scientists to design
products which can activate specific T cell responses and result in a new
highly effective class of vaccines for both therapeutic and prophylactic
applications. The market potential of such products is high since this
new understanding of the immune system will allow expansion of the market
to address new areas and the development of safer, more effective
substitutions for older products. New applications include diseases
involving poorly immunogenic antigens such as polysaccharides or
populations, such as the elderly, whose immune systems have deteriorated
so that they do not respond to traditional approaches. New therapeutic
products for treating people with diseases such as chronic hepatitis
infection, malaria, acquired immune deficiency syndrome ("AIDS") or
various cancers where a CTL response is thought to be essential may be
possible using the Stimulon(TM) adjuvants.
Aquila's product development programs include the Quilimmune(TM) human health
products and the Quilvax(TM) products for animal health. Phase I clinical
trials of the Company's lead product, Quilimmune-P(TM) for preventing
S. pneumonia infections in people over the age of 65 years, have been
completed. Phase II trials have been initiated. Aquila's lead animal
health product, Quilvax-M(TM) for controlling bovine mastitis has undergone
extensive testing in bovine immunogenicity and challenge trials. The
Company plans to initiate formal USDA licensing trials shortly. A third
potential product, to help control malaria infections incorporating the
antigen SPf66 and QS-21 is in Phase I clinical trials. The Company's
corporate partners are SmithKline Beecham p.l.c., Wyeth-Lederle Vaccines
and Pediatrics, a business group of Wyeth-Ayerst International, Inc., a
subsidiary of American Home Products Corporation, Pasteur Merieux
Connaught, Progenics Pharmaceuticals, Inc., VaxGen, Inc., Virbac S.A. and
NABI.
SCIENTIFIC BACKGROUND
The human immune system is made up of several different cell types
including antigen presenting cells ("APCs"), B cells and T cells. In
general, the role of APCs is to process protein antigens from pathogens
such as viruses, bacteria or parasites into smaller fragments and to
present the resulting peptides to T-cells. Antigens can be processed by
APC's through one of two pathways, the Class I or Class II pathway.
Peptide fragments from antigens processed through the Class I pathway are
displayed on the surface of the APC by an immune system protein called the
MHC Class I protein and typically result in a cellular immune response.
Those processed by the Class II pathway are displayed by MHC Class II
proteins and typically result in a humoral response. When a humoral
response is stimulated, B cells are activated by a specific type of T
cell, called a helper T cell, to produce antibodies which are specific for
the antigen encountered. Two populations of T-helper cells have been
identified, Th-1 and Th-2. T-helper cells secrete biologically active
molecules called cytokines, which mediate the effects of immune system
cells. Th-1 and Th-2 T-helper cells secrete different types of cytokines
and promote the synthesis of different classes of antibodies. The
antibodies produced by B cells will bind to and can neutralize the
pathogens - bacteria, parasites and viruses - which have invaded the body.
In the cellular response, a second type of T cell, called a cytotoxic T
lymphocyte (CTL) is activated. These cells recognize and kill cells
containing pathogens. T-helper cells and the cytokines they produce are
also important in generating a CTL response. The specific activation of
cytotoxic T cells, called a CTL response, is thought to be very important
in products designed to treat or prevent diseases such as herpes,
hepatitis, HIV and malaria. It is also thought to be critical for many
immunotherapeutic approaches to the treatment of cancer.
Traditional approaches for developing immune protection from infection in
humans involved the use of animal viruses, or the use of attenuated or
killed pathogens as vaccines. For example, the injection of cowpox virus
protects humans against smallpox infection. Vaccines to protect against
polio have been developed using either attenuated or killed polio viruses.
While these approaches are effective, there is a small but significant
risk of disease developing in people receiving these types of vaccines.
With the advent of recombinant technology, scientists realized that safer
products could be created, using specific components of an organism rather
than the whole organism. For example, the genes for the surface antigens
from a pathogen can be cloned using genetic engineering and used to make
recombinant proteins. The recombinant proteins are then used in a
vaccine, to make a so called sub-unit vaccine. Other specific components
have been used to stimulate disease specific responses, including proteins
isolated from the pathogen itself, synthetic peptides, carbohydrates and
lipoproteins.
When these newer technologies were first used, it was found that while a
pathogen specific immune response was stimulated, often this response was
not of the right quality or strong enough to provide protection from
infection or disease. As a result, immune modulation technologies have
been developed that are coupled with pathogen specific antigen approaches.
These methods for modulating the immune system include conjugation of the
antigen to a carrier protein, the use of viral or bacterial vectors to
carry specific genes, the use of cytokines or lymphokines to stimulate the
immune system and the use of adjuvants. Carrier proteins such as keyhole
limpet hemocyanin (KLH) or the toxoids from diphtheria, tetanus and
cholera have been used effectively. An example of this type of vaccine is
the Haemophilus influenzae type b conjugate vaccine, such as HibTITER(TM)
sold by Wyeth-Lederle Vaccines and Pediatrics, where the antigen is
conjugated to a diphtheria protein. Viral vectors such as vaccinia,
canary pox, or the bacteria BCG are under evaluation as carriers of
disease specific genes to determine whether they stimulate a protective
immune response. Adjuvants that have been used or which are in
development include aluminum hydroxide (Alum); MF59, a product of Chiron
Corporation and its affiliates ("Chiron"); monophosphoryl lipid A (MPL), a
product of Ribi ImmunoChem Research, Inc. ("Ribi"); LeIF, a product of
Corixa Corporation ("Corixa"); and saponins from Quillaja saponaria such
as QS-21. These adjuvant technologies are not all the same, affecting the
humoral and cell mediated pathways differently. Some approaches result in
general immune stimulation. Others are more specific. Aquila is
developing the Stimulon(TM) family of saponin adjuvants (QS-21, QS-7) as an
immune modulation technology. The Company uses biotechnology approaches
for the creation of specific antigens, and combines these with the
Company's proprietary Stimulon(TM) adjuvants to develop safe and effective
products.
With the advent of new technology, changes are occurring in the market for
immune modulating agents. Because development of these new products
involves a high rate of technological innovation, it is possible to
protect new products through patenting, which can result in increased
profit margins. While product liability costs are high for traditional
vaccines (because of the safety concerns), product liability costs for
products using the new technology are comparable to those for therapeutic
products. Manufacturing costs can be lower for new immune modulation
products than for other therapeutic products. In the manufacturing of
recombinant therapeutic enzymes it is often difficult to retain the
enzymatic activity, and this can limit the choice of manufacturing
methods. The limitations are not so stringent for products used to
modulate the immune system. Historically, vaccines were generally low
priced because the products were used to prevent disease in healthy people
(prophylaxis) and, due to the lack of product differentiation, companies
generally competed on price. However, in today's approaches to disease
management and with the new proprietary innovations, immune stimulation
products have been recognized as very effective contributors to
controlling the total medical costs of certain diseases. Therapeutic
products involving immune stimulation are in development for a number of
intractable diseases, as are products for populations beyond infancy -
young adults and the elderly.
The Use of Adjuvants: Technology to Enhance the Immune System
Adjuvants are agents which are added to a product to improve or adjust the
immune response. Alum is the only adjuvant currently used in human
vaccines licensed by the FDA. This adjuvant probably acts by a depot
effect, which means that the addition of alum to a vaccine causes the
antigen to remain at the site of injection for a longer period of time,
which seems to increase the humoral immune response. Another adjuvant
under development by Ribi is a mixture of lipopolysaccharides derived from
bacterial cell walls, and is called MPL. Its use can increase the level
of antibodies that are produced in response to an antigen, but additional
components are often required to stimulate a significant CTL response.
Chiron is developing an adjuvant called MF59 which is an emulsion of three
lipids and water. It is a general, broad immune stimulant which will
activate the immune system in the absence of an antigen. Oil/water
emulsions have been used in older vaccines and also act by a depot effect.
Corixa is developing LeIF, a protein produced by the parasite Leishmania,
which is believed to stimulate certain APCs. Aquila's Stimulon(TM) family of
adjuvants, QS-21 and QS-7, are purified, defined molecules, isolated from
natural sources. They stimulate antigen specific responses and have been
shown to promote both antibody and CTL immune responses in animals.
AQUILA'S CORE TECHNOLOGY
Aquila and its corporate partners are developing new products based on two
core technologies: (1) the Stimulon(TM) family of adjuvants that
specifically enhance antibody and CTL responses; and (2) proprietary
antigens that are specific for the target disease.
The Stimulon(TM) Family of Adjuvants
QS-21 is the lead Stimulon(TM) adjuvant. It is a natural product, purified
from the bark of a tree which grows in South America, called Quillaja
saponaria. Up to 10% of the bark from Quillaja saponaria is composed of
saponins of which QS-21 is typically one of the more prominent. The bulk
bark extract is available in the United States. The Company believes QS-
21 is well-suited to pharmaceutical development and formulation because it
has good stability as a dried powder (at least 3 years), is water soluble,
and, when rehydrated, is a clear liquid that mixes easily with other
vaccine components. QS-21 is compatible with Alum and microparticles
which are used in many experimental product formulations. QS-21 is well-
characterized with a known molecular structure - distinguishing it from
competing adjuvant candidates, which are typically emulsions or
biologicals. Because QS-21 is currently regulated by the FDA as a
"constituent material" used in drug preparation, the FDA does not require
licensure of facilities used for its manufacture. A second Stimulon(TM)
molecule, QS-7, which has a slightly different safety and activity
profile, is in development. Patents have issued to Aquila with
composition of matter claims covering QS-7 and QS-21, as well as two other
identified saponins, QS-17 and QS-18. The Company has also been issued a
patent for chemically modified saponins. All patents include the use of
all of these molecules as adjuvants. See "Patents and Proprietary Rights"
and "Risk Factors".
The use of Stimulon(TM) adjuvants improves the quality of the immune
response. Addition of QS-21 to antigens will generally broaden the type
of antibody produced and stimulate cell mediated responses. The quality
of these responses is important for the development of effective products.
QS-21 also produces a strong quantitative response; that is, higher
antibody levels are achieved. It is potent and active at microgram doses.
QS-21 increases the titer, or amount, of antibodies produced by the immune
system in response to vaccination with many types of antigens, including
recombinant proteins derived from viruses and bacteria and free
polysaccharide antigens from bacterial pathogens. An unusual property of
QS-21 not shared by other adjuvants is its ability both to increase
significantly the antibody response to free polysaccharide antigens and to
boost the titer further with a subsequent vaccination.
QS-21 broadens the antibody profile by promoting both Th-1 and Th-2
dependent immune responses. The type of protective immunity elicited by
an infection with a virus or bacterium typically includes antibodies of
several isotypes (also called classes and subclasses). Some of these
isotypes can be more important than others in mediating protection against
viral or bacterial pathogens. Vaccination with a recombinant antigen
typically stimulates only a few isotypes. Some adjuvants, such as Alum,
also only stimulate a narrow range of antibody isotypes. Hence, alum may
stimulate a high quantity, but a lower quality, antibody. In contrast, QS-
21 stimulates high quantities of a broad range of antibody isotypes,
enabling the antigen-induced antibody response to resemble natural
protective immune responses.
QS-21 also stimulates cell-mediated immune responses and induces the
production of cytotoxic T-lymphocytes. The CTL response is a critical
means of natural defense against viral infections and, is believed to
eliminate abnormal cells that might otherwise develop into cancer. Until
recently, it was generally thought that recombinant antigens could not be
used to elicit CTL responses. Alum and simple oil/water emulsions
typically fail to induce CTL responses. However, Company scientists
discovered that the simple addition of QS-21 to these antigens stimulates
the production of a CTL response to the recombinant antigens in animal
studies. Other investigators have also reported that CTL responses
induced by recombinant vaccines adjuvanted with QS-21 can mimic the
protective CTL responses induced by viral infection.
The Company believes that the performance of QS-21 will vary depending
upon the nature of the antigen and the target population. Initial human
studies conducted by the Company's licensees and collaborators have
focused on proving the safety of QS-21 and experimenting with different
formulations and dose levels. Aquila and its collaborators have completed
24 studies to date; an additional 24 studies are underway and over 1300
subjects have received QS-21 in various different formulations. These
studies have shown that the addition of QS-21 to product formulations
improves the immune response to certain antigens, as evidenced by
increased antibody titer. No serious adverse events attributed to QS-21
have occurred thus far in the clinical studies. Some local reactogenicity
which is thought to be due to the enhanced immune response and some pain
on injection have been seen in certain vaccine formulations. The Company
has recently completed initial human clinical trials of a new formulation
of QS-21 which it believes will reduce the pain on injection seen in these
particular vaccine formulations.
Disease Specific Antigens
Aquila's ability to develop and produce proprietary disease specific
antigens allows it to develop products targeted at specific applications
and populations. Company scientists have scientific expertise in: (1)
recombinant DNA cloning methods; (2) mammalian, insect and bacterial cell
expression; (3) extraction and purification of compounds from natural
sources and (4) carbohydrate and polysaccharide production. Furthermore,
Company scientists have demonstrated their expertise with a variety of
antigens from both viral and bacterial pathogens including those that
require high level biocontainment (i.e. BL-3). These antigens include the
envelope protein from feline leukemia virus, two outer surface proteins
from Borellia burgdorferi, fibronectin binding proteins from
Stapholococcal aureus, and a variety of cell surface proteins from
granulocytic Ehrlichia.
The typical development pathway for a disease specific antigen includes
antigen identification, preparation of research quantities of the antigen,
demonstration of a biological effect of a product containing the antigen
and development of commercial scale antigen production procedures. These
developmental efforts can include those primarily accomplished within the
Company or technology licensed by the Company from outside sources, or a
combination of both approaches. This pathway has been completed for the
feline leukemia virus and B. burgdorferi antigens, is nearing completion
for the Staphylococcus aureus ("S. aureus") antigen and is at an early
antigen identification stage for those from Ehrlichia. The Company has
research ongoing on the production of S. pneumonia polysaccharide antigens
by fermentation and purification.
The Company attempts to protect its antigen technology either through
maintenance of trade secrets or filing of patent applications. U.S.
patents have been issued covering the Company's FeLV(TM) and S. aureus
antigen technology as well as its baculovirus expression system. In
addition, patents have been filed which address antigens from B.
burgdorferi and Ehrlichia. However, there can be no assurance that
patents will issue from the patent applications or that if issued such
patents will not be challenged or that the rights granted under any issued
patents will provide adequate proprietary protection. In certain cases
the Company has licensed proprietary technology covering specific antigens
from third parties. See "Patents and Proprietary Information," and "Risk
Factors".
AQUILA'S STRATEGY
Aquila's objective is to create and commercialize products which modulate
the immune system to prevent, control or treat infectious diseases and
cancers. The Company's strategy is to exploit its expertise in adjuvant
and antigen research, to create products and develop them through FDA or
USDA licensure, to support its corporate partner's product development
programs, to develop its manufacturing capacity, and to in-license and
develop related technology.
Exploit Expertise in Adjuvant and Antigen Research
Aquila has developed unique expertise in understanding the role of
adjuvants in stimulating and tuning the immune response to specific
antigens to allow the development of safe and effective therapeutic and
prophylactic products. The Company intends to continue to integrate its
proprietary core technologies and to identify targeted applications of its
technology. In addition, the Company plans to broaden its expertise in
research and development involving different antigens including
recombinant proteins, peptides, polysaccharides and other classes of
antigenic molecules. Aquila's strategy is to acquire related products and
technologies to supplement its scientific expertise, its capabilities and
its product portfolio.
Create and Develop its Own Products
Aquila has established a large number of corporate partnerships and a
significant number of products are being developed through these
partnerships. However, Aquila believes that it can develop and retain
significant value through its own product development efforts. The
Company has three products in clinical development: (i) Quilimmune-P(TM) for
preventing pneumococcal infections in the elderly for which Phase I trials
have been completed and Phase II commenced; (ii) Quilvax-M(TM) to control
bovine mastitis for which immunogenicity and challenge trials have been
completed; and (iii) Quilimmune-M(TM) for controlling malaria, which is
in Phase I trials. Aquila has research ongoing with other potential
adjuvants and on the discovery and development of antigens for tick borne
diseases. The Company has completed the development and licensure of one
product, Quilvax-FeLV(TM) for preventing leukemia in cats.
See "Aquila's Product Development Programs".
Aquila has a large number of academic collaborations ongoing involving
other antigens. A number of these involve cancer vaccines. In certain
cases the Company has options to license related technology should it wish
to accelerate the development of these products. The Company intends to
develop human products primarily but will exploit unique, significant
product opportunities in animal health.
Support Corporate Partners Programs
Aquila has entered into collaboration agreements with SmithKline Beecham,
p.l.c., Pasteur Merieux Connaught, Wyeth-Lederle Vaccines and Pediatrics,
VaxGen, Inc. NABI and Progenics Pharmaceuticals, Inc. as well as a number
of other biotechnology companies. Aquila intends to leverage these
partnerships to speed discovery and development of certain products which
the Company does not have the resources or skills to develop. These
collaborations allow the Company to focus its own efforts on products
which have different markets than those of interest to large
pharmaceutical companies. The Company has a number of potential licensing
discussions underway and intends to continue to selectively license its
technology. See "Corporate Partner Programs".
Continue Developing Manufacturing Capacity
Aquila has retained rights to the manufacture of QS-21 on a worldwide
basis in all of its licensing agreements, and has been producing QS-21 for
clinical trials for all of its partners and its product programs. In
addition, the Company operates a small manufacturing facility to supply
FeLV antigens and vaccine to its corporate partner Virbac S.A. Aquila has
produced commercial scale quantities of its canine lyme product and has
the capacity to produce specific commercial requirements of its Quilvax-M(TM)
product for bovine mastitis. Aquila intends to continue to develop
manufacturing expertise and capacity to allow it to retain value from the
products which it develops.
In-license Related Technology
Aquila has been and will continue to be opportunistic in licensing in
products and technology related to immune modulation to supplement its
product pipeline. In addition to expanding the product portfolio, this
strategy will allow the Company to capitalize on newly developed
technologies which are synergistic with the Company's existing technology
base.
AQUILAS PRODUCT DEVELOPMENT PROGRAMS
Aquila's strategy is to develop products itself and in partnership with
other companies. The Company has the six products in development
or commercialized.
Quilimmune(TM) & Quilvax(TM) Product Development
Product Market Status Partner
Quilimmune-P(TM) Adults >=50 Phase I complete. Aquila,
Product to prevent years >70 Phase II trials worldwide
Pneumococcal infections 34 mil. people on-going. rights.
in U.S.
Quilvax-M(TM) 30 million Immunogenicity and Aquila, N.
Product to control milk cows in challenge. trials America.
bovine mastitis the U.S. & complete. Virbac S.A.
(S. aureus & E.coli) Europe Licensing trials Europe.
anticipated to
start in 1998.
Quilimmune-M(TM)(SPf66) 1-2 billion Phase I ongoing. Collaboration
Product to control persons at with World
malaria (Plasmodium risk Health
falciparum) Organization.
Quilvax-FeLV(TM) ~15 million On market, Leucogen(TM),
Product to prevent cats vacci- (Europe) Virbac S.A.
feline leukemia nated per year Genetivac(TM), (U.S.). Worldwide.
Quilimmune-T(TM) Persons at Pre-clinical Aquila
Product to prevent risk for tick research. worldwide
Lyme and Ehrlichiosis bites rights.
diseases.
Quilax-L(TM) 10 million Licensing efficacy Schering-
Product to prevent dogs at risk & safety trials Plough.
canine Lyme disease in endemic completed.
areas
Quilimmune-P(TM) for the Prevention of Pneumococcal Infections
Infections by Streptococcus pneumoniae cause serious disease in young
children and in the elderly. Healthy adults are not typically at risk for
developing disease following exposure to S. pneumoniae. There are over 80
recognized serotypes of pneumococci, each with varying geographic and age-
group prevalence. The resulting diseases and serotypes involved are
different between the young and the elderly, and as a consequence,
separate vaccine products for the young and the elderly are appropriate.
Quilimmune-P(TM) is intended to be used to prevent pneumococcal infections in
the elderly.
There are approximately 34 million people over the age of 65 in the United
States ("U.S."), and an additional 36 million adults with immune
compromising conditions who are at risk for developing disease caused by
S. pneumoniae. Various strains of Streptococcus pneumoniae are
responsible for most community-acquired cases of pneumonia (500,000 cases
per year) and are the second most common cause of bacteremia (50,000 cases
per year, with 25% mortality). It is estimated that S. pneumoniae causes
40,000 deaths in the elderly and immunocompromised adults each year.
The currently available vaccines, which were developed and approved in the
early 1980s, cover the 23 serotypes which cause about 90% of infections in
the United States and Europe. The two vaccines approved in the U.S. are
composed of purified capsular polysaccharides from each of the 23
serotypes. Vaccination rates in the U.S. elderly population are currently
running at about 30%. These vaccines are underutilized by the elderly for
a number of reasons. Reports in the medical literature indicate that the
current vaccines are effective in the elderly in only 50-60% of the
recipients. A number of side effects are caused by the current vaccines,
including pain on injection, a sore arm, fever, and a general feeling of
malaise for a few days. Because of these side effects, these traditional
vaccines have not been licensed for repeat use, resulting in a
misconception in the market that these vaccines give lifetime protection.
In addition, the antibody titers drop over a number of years. Typically
after 3 or more years, the effective levels of antibodies in vaccinees is
quite low. Furthermore, data has recently been presented suggesting that
the ability to elicit functional antibodies particularly decreases with
age. Another reason these vaccines are poorly utilized is because
physicians have an option of treating patients who develop pneumonia with
antibiotics. However strains of S. pneumonia that are resistant to several
classes of antibiotics have been isolated with increasing frequency over
the past few years. With increased antibiotic resistance, the option of
using antibiotics may not be as effective, and physicians are moving
towards prevention as a therapeutic choice. As a result there is an
urgent need for a more effective and safe pneumococcal vaccine for the
elderly.
S. pneumoniae also causes half of childhood otitis media, the most
frequent reason (one out of three) for visits to pediatricians. In some
developing countries, pneumococcal pneumonia kills approximately 10% of
the children under the age of five, making it the single leading cause of
death. Compared to the elderly, a smaller number of S. pneumonia serotypes
is responsible for most of the disease seen in children. Development
efforts are underway by several companies to improve the immune response
to S. pneumoniae capsular polysaccharides by conjugating the
polysaccharides to immunogenic carrier proteins. This approach was used
in developing the successful Hib (Hemophilus influenzae type b) vaccines.
The companies developing conjugate vaccines have chosen to focus on the
ten or eleven strains most prevalent in infants and young children.
A different approach is required for development or an improved S.
pneumoniae vaccine for the elderly. The pediatric conjugate vaccine, if
successfully developed, would likely not be appropriate for immunization
of adults and the elderly because it would address only the limited number
of strains that are problematic in children rather than the broader range
required in the elderly. It would also be difficult to include all 23 of
the strains in the currently available vaccine as conjugates because of
the overall manufacturing expense and cumulative mass of the conjugated
components. There is also some evidence that conjugation does not improve
the performance of polysaccharide vaccines in the elderly.
In animal studies Aquila scientists have shown that the use of Quilimmune-
P(TM), which contains 23 different capsular polysaccharides and QS-21,
improves the immune response over that seen with the current approved
vaccine. For instance, many polysaccharides to which mice do not
typically respond become immunogenic with Quilimmune-P(TM). In addition,
antibody titers to many strains increase. The effect may make the use of
a lower antigen dose feasible, which could make the product less expensive
and also reduce side effects. Finally, mice re-vaccinated with Quilimmune-
P(TM) experience a booster effect for many strains, a response not seen with
existing vaccines. This effect may allow the administration of periodic
booster shots to maintain immunity levels.
Aquila has completed a Phase I clinical trial in healthy young or middle
aged adult volunteers. The study was carried out in collaboration with
and supported by the National Institutes of Health (NIH). The primary end
point of the study was to evaluate safety; a secondary goal was to
evaluate immune responses. The study was designed as a dose response
study, evaluating several different dosage levels of the polysaccharide
antigens and adjuvant. The control group received the marketed vaccine.
Quilimmune-P(TM) was generally well tolerated after intramuscular injection.
Transient pain on injection was seen in some subjects but in most cases
the pain was mild or moderate. Otherwise, local and systemic
reactogenicity was infrequent and similar to the control licensed product.
No serious adverse events or clinically significant abnormal laboratory
values were encountered in any study subject.
Quilimmune-P(TM) was immunogenic in all subjects in a fashion similar to the
control recipients. This included subjects who received Quilimmune-P(TM)
formulated with lower than normal doses of antigen. Because healthy
adults, not elderly people, were used as subjects for the study, these
results were expected. The small number of subjects in each of the groups
limited the Company's ability to draw conclusions about the relative
immunogenicity of the different formulations. However, formulations of
Quilimmune-P(TM) containing a full dose of pneumococcal polysaccharides
induced a higher level of total IgG and nasal wash IgA for some but not
all polysaccharide types than the control vaccine.
In Phase II studies which began recently, Aquila is evaluating Quilimmune-
P(TM) formulations that were shown to be well tolerated in Phase I studies.
This study will be a prospective, randomized, double blind comparison of
Quilimmune-P(TM) to the currently licensed vaccine product in an elderly
population, the target population for the product. The study is expected
to involve about 400 subjects with clinical endpoints of safety, quality
and quantity of the immune response.
Quilvax-M(TM) for the Control of Bovine Mastitis
Bovine mastitis is an inflammation of a dairy cow's udder. Two pathogens cause
the vast majority of infections resulting in mastitis: S. aureus and
Escherichia coli ("E. coli"). Mastitis is the most costly disease
affecting the dairy industry. The economic impact in the United States of
bovine mastitis is estimated to be between $1-2 billion per year.
According to the National Mastitis Council, the value of the losses per
cow per year are $184 (there are about 9.5 million dairy cows in the
U.S.). The principal losses occur from reduced milk production, from milk
that is of poor quality and thus has a lower economic value, from milk
which has to be discarded, and from animal replacement costs. Many times
when an animal develops mastitis, it is simply culled from the herd. There
are also extra labor costs, treatment and veterinary services to cope with
this disease.
There are a number of bovine mastitis vaccines on the market, but these
are directed towards E. coli only. Aquila's Quilvax-M(TM) bovine mastitis
product is bivalent, containing antigens for both S. aureus and E. coli,
and is expected to provide broader control of mastitis.
The S. aureus component of Quilvax-M(TM) is based on a patented cell surface
protein from S. aureus called fibronectin binding protein. Fibronectin
binding protein is primarily responsible for attachment of S. aureus to
host tissue, in this case the epithelium of the bovine mammary gland. It
is believed that this attachment is a critical step in the disease process
and results in the inflammation and tissue destruction that characterizes
mastitis. In the Company's Quilvax-M(TM) program, fibronectin binding
protein is used as the target antigen for development of a beneficial
immune response. Antibodies directed against fibronectin binding protein
may block the attachment of S. aureus to mammary gland tissue or play a
role in antibody dependent opsonophagocytic activity.
The Company has been making use of the ability to experimentally cause S.
aureus mastitis by direct challenge of dairy cattle with bacteria
deposited in the mammary gland. In a typical challenge experiment, the
response of several groups of animals, both treated and non-treated
controls, to a S. aureus challenge are compared. Recent studies indicate
that Quilvax-M(TM) is safe and that it reduces the inflammatory response that
develops upon infection. Measurement of parameters that determine milk
quality and the price dairy producers would receive for their milk
indicates that milk from animals vaccinated with Quilvax-M(TM) would have a
higher value than that from non-treated controls.
The E. coli portion of Quilvax-M(TM) is modeled after the E. coli mastitis
products currently on the market. The marketed products make use of a
mutant strain of E. coli that has slightly altered surface carbohydrate
structure. Quilvax-M(TM) makes use of a similar E. coli mutant.
Immunogenicity studies in dairy cattle indicate that the amount of anti-E.
coli antibody generated by Quilvax-M(TM) is similar to the amount generated
by a marketed E. coli mastitis product.
In order to receive authorization from the USDA to market Quilvax-M(TM), the
Company must conduct formal efficacy trials for both the S. aureus and E.
coli components of the product. Following successful completion of these
studies, a formal safety study using the product on working dairy farms is
required. The Company believes it could add a streptococcal component in
a next generation product.
The research and development costs are 50% funded by Virbac. The Company
has retained exclusive marketing rights in North America. Virbac has
exclusive marketing rights in Europe. The parties share marketing rights
in the rest of the world.
Quilimmune-M(TM) for the Control of Malaria
According to estimates in published reports, over two billion people
reside in malaria-infected areas. The yearly incidence of malaria is
estimated by the World Health Organization at 300 to 500 million cases,
with a death toll of 1.5 to 3 million persons. While anti-malarial drugs
have been in use for decades, they are expensive and resistant malarial
strains are becoming increasingly common. The World Health Organization
has identified malaria as a priority vaccine target in developing
countries.
Aquila is involved in a number of development programs to develop products
to control malaria. One of the programs is a collaboration with
SmithKline Beecham p.l.c. (see "Corporate Partner Programs").
In addition to this program, Aquila has a collaboration with the World
Health Organization on another malaria product involving the antigen
SPf66. SPf66, a polymerized synthetic peptide developed by Dr. Manuel
Patarroyo of the Institute de Inmunologia in Columbia, contains sequences
from proteins expressed during several stages of the parasite's life
cycle. The antigen has been tested with an alum adjuvant in three large
clinical trials in humans. Protection was achieved from malaria in two of
the trials in about 30% of the adults and children. In the third trial
there was no protection. These mixed results are thought to be the result
of several factors: different manufacturing processes were used for the
SPf66; the design of the trials was different; the clinical definition of
malaria varied between studies; and the study populations were different.
Aquila has investigated the effectiveness of a Quilimmune-M(TM) product
containing QS-21 and SPf66. In a study in Aotus monkeys, 57% of the
animals were protected from malaria on challenge after vaccination with
SPf66 plus QS-21. In this study, a control vaccine of SPf66 alum (the
product that was used in the human studies) gave only 25% protection,
comparable to the results obtained previously in humans.
A human clinical trial of this malaria product containing SPf66 and QS-21
has been initiated. In this Phase I trial, approximately 90 volunteers
enrolled in five groups received the SPf66 product formulated with the QS-
21 adjuvant, alum or various doses of QS-21 adjuvant with alum. Treatment
with three sequential subcutaneous injections will be used to determine
the safety and immunogenicity of the potential product. The study is
expected to be completed in approximately twelve months.
Quilvax-FeLV(TM) for the Prevention of Feline Leukemia
Aquila has developed a recombinant subunit vaccine against the feline
leukemia virus. The product was approved in 1990 in the U.S. and 1991 in
Europe. It is marketed by Virbac S.A. in Europe, Australia and Japan
under the tradename Leucogen(TM) and was marketed by Mallinckrodt Veterinary,
Inc. ("MVI") prior to the sale of MVI to SP in the U.S. under the
tradename Genetivac(TM). Sales to Virbac amount to greater than ten
percent (10%) of the Company's total revenues. FeLV(TM) is a highly
contagious and commonly fatal disease of cats. Aquila's product was the
first recombinant vaccine ever developed against a tumor-causing virus in
mammals. A patent covering Quilvax-FeLV(TM) has been issued in the U.S.
and a number of other countries. Aquila manufactures bulk formulated product
for the United States and Australian markets, and supplies Virbac with bulk
antigen and adjuvant for further manufacture for the European and Japanese
markets. The product is the leading FeLV vaccine in Europe, and in a recent
independent study was found to be the most effective of three leading FeLV
products on the market.
Quilvax-L(TM) for the Prevention of Canine Lyme Disease
Aquila is developing a product for dogs pursuant to a 1991 agreement,
currently with Schering-Plough ("SP"), against Borellia burgdorferi, the
pathogen that causes Lyme disease. There are currently three Lyme disease
vaccine products on the market. During 1993-94, Aquila conducted efficacy
trials of its canine Lyme disease product using a protocol approved by the
USDA. SP has conducted field safety studies and the results are under review
at the USDA. Additional safety studies may be required. The Company is
unable to predict the timing of or whether this product will reach the
marketplace.
Quilimmune-T(TM) for the Prevention of Tick Borne Diseases
Ticks can transmit pathogens that cause a variety of diseases, including
Lyme disease, Rocky Mountain Spotted Fever and Babesiosis. In 1991
scientists reported the discovery of a new disease, human granulocytic
ehrlichiosis ("HGE"), caused by a microorganism in the genus Ehrlichia
transmitted by the bite of the same tick that carries Lyme disease. HGE's
flu-like symptoms include fever, headache and muscular aches, as well as
joint pain, nausea, vomiting and cough. HGE is believed to have caused
several deaths in immune-compromised patients. Aquila scientists were the
first to successfully cultivate the HGE organism in tissue culture. Patent
applications on infected cell lines, the methods of growing the organism,
potential vaccine antigens and their genes, and diagnostic reagents derived
from the pathogen have been filed. Aquila has been working with the Centers
for Disease Control and Prevention ("CDC") to develop a blood test to be used
in epidemiological surveys that will determine how widespread the disease may
be. In addition, Aquila Scientists have cloned and characterized genes for
the immunodominant protein and immunogenic surface proteins. Aquila's work
in HGE may also have applicability for animal health applications. The HGE
organism appears to cause illness in dogs.
CORPORATE PARTNER PROGRAMS
In addition to Aquila's own product development programs, the Company has
six corporate partners who have licensed the Stimulon(TM) adjuvants for a
variety of human diseases. The six corporate partners are SmithKline
Beecham p.l.c., Wyeth-Lederle Vaccines and Pediatrics, Pasteur Merieux
Connaught, Progenics Pharmaceuticals, Inc., VaxGen, Inc. and NABI. Three
of the world's four largest vaccine manufacturers are partners using
Aquila's adjuvants. In return for rights to use Stimulon(TM) adjuvants for
specific diseases, the corporate partners have agreed to pay Aquila
license fees, milestone payments, and royalties on product sales. Aquila
has retained worldwide manufacturing rights for QS-21. In addition to
corporate partners, the Company has developed a number of academic
collaborations to test potential vaccine formulations containing QS-21.
Partner/Collab. Clinical Development Status
Research Preclinical Phase I Phase II Phase III
Melanoma* (Th) -------------------------------------------------
HIV-1* (Pr) -------------------------------------------
Herpes II (Th) --------------------------------------
Hepatitis B (Th) --------------------------------------
Malaria* (Pr) --------------------------------------
Respiratory (Pr) --------------------------------
Virus
B Cell (Th) --------------------------
Lymphoma*
Colon Cancer* (Th) --------------------------
Pancreatic (Th) --------------------------
Cancer
Prostate (Th) --------------------------
Cancer*
Lung Cancer (Th) --------------------------
Breast Cancer (Th) --------------------------
HPV (Th) --------------------------
*multiple programs, most advanced program shown
Th = Therapeutic; Pr = Prophylactic
SmithKline Beecham, p.l.c. ("SB") has licensed QS-21 for a number of
different applications. The world's leading manufacturer of Hepatitis
B vaccine, SB is aggressively marketing its existing portfolio of
vaccines, while developing new and improved products. SB has completed
a number of Phase I clinical trials of potential products containing QS-
21 and is also investigating the use of combinations of different
adjuvants. Sales to SB of QS-21 amount to ten percent (10%) of total
revenues of the Company.
SB in collaboration with the Walter Reed Army Institute of Research
reported in the New England Journal of Medicine (Stoute et al., NEJM,
January 9, 1997, pp. 86-91) results of a Phase I human challenge study
involving the testing of a potential malaria product formulated with
different adjuvants. The three different product formulations all
contained a recombinant circumsporozoite malaria antigen fused to a
hepatitis B surface antigen as a carrier protein. The first
formulation also contained MPL and alum; the second an emulsion of oil
and water; and, the third was formulated with QS-21, MPL and the oil
and water emulsion. In the first formulation, with MPL and alum only,
there was an immunological response, but following challenge with the
malaria parasite after treatment, only one of the seven subjects in
this group was protected from malaria. In the second formulation, with
the oil and water emulsion, the immune response was much stronger, but
in the malaria challenge, only two of seven subjects were protected.
In the third product formulation, with the addition of QS-21, the
immune response was the highest. Most importantly, the quality of the
immune response was significantly different, as six of seven subjects
exposed to the challenge with malaria were protected. These results
demonstrate that the quality of the immune response is critical.
Aquila has been informed that SB is planning further clinical testing
of this potential product.
Pasteur Merieux Connaught ("PMC") has licensed QS-21 for use in its HIV
vaccine programs. PMC has ongoing pre-clinical work on two potential
HIV products and has started a Phase I clinical trial to evaluate a
third HIV vaccine candidate. PMC also licensed QS-21 for use in
influenza and completed two clinical trials. Recently PMC elected to
continue influenza trials with another company's product and not to
incur further development expenses with QS-21. Aquila has exercised
its option to cancel this agreement covering PMC's influenza license
with QS-21.
Wyeth-Lederle Vaccines and Pediatrics ("Wyeth-Lederle") licensed QS-21
in 1992 for use in five vaccines. Wyeth-Lederle, formed as a result of
the acquisition of American Cyanamid by American Home Products, is a
leader in pediatric vaccines. Wyeth-Lederle has completed a Phase I
clinical trial using QS-21 and continues pre-clinical development of
other candidate vaccines.
Progenics Pharmaceuticals, Inc. ("Progenics") licensed QS-21 in 1995
for use in certain therapeutic products for cancer. Progenics' most
advanced program involves the use of QS-21 with a ganglioside
preparation called GM2 to treat melanoma. Phase I/II clinical trials
of this product, which was initially developed by physicians at
Memorial Hospital for Cancer and Related Diseases, have been completed,
and two pivotal Phase III studies have been initiated. The first of
these is being conducted in the U.S. by cooperative cancer research
groups supported by the National Cancer Institute. Another trial
commenced in 1997 and is being conducted outside the U.S. A third
trial is expected to commence in 1998. A second cancer product, GD2,
is being developed for the treatment of various cancers. Phase I/II
clinical trials commenced in 1996. Aquila has licensed Progenics to
use QS-21 in exchange for a license fee, an equity interest in
Progenics, and royalties. Progenics recently entered into a
collaboration with Bristol-Myers Squibb Company to develop and
commercialize GM2 and GD2.
VaxGen, Inc. ("VaxGen") (an early stage company whose major corporate
shareholder is Genentech, Inc.) has licensed QS-21 for use in its HIV-1
vaccine program. VaxGen has conducted Phase I clinical trials in
healthy volunteers with a product formulated with QS-21, under the
auspices of the National Institutes of Health. This trial was expanded
in 1994 after improved neutralizing antibody responses were observed in
volunteers receiving products containing QS-21. Some volunteers in
this study reported pain on injection. Enrollment in a third trial
has just been completed. Volunteers received very low doses of gp 120
antigen combined with QS-21 and/or alum. These product formulations
were well tolerated and preliminary immunogenicity results are
promising. See "Risk Factors".
NABI has licensed QS-21 for use in production of immunoglobulin for
prevention and treatment of gram-negative and gram-positive bacterial
infections. NABI is currently evaluating its products in clinical
trials without using adjuvants. The Company is uncertain if or when
NABI will commence clinical trials using QS-21.
MANUFACTURING AND SCALE-UP
As part of each Stimulon(TM) adjuvant licensing agreement, the Company has
retained the right to be the exclusive supplier of Stimulon(TM) adjuvants.
The license agreements stipulate the supply prices, within certain ranges.
Pursuant to the license agreements, the Company will also receive
royalties on its licensees' product sales.
The Company currently manufactures QS-21 for commercial animal health use
and for use in human clinical trials. The Company produces QS-21 with an
average batch size sufficient for approximately 200,000 doses. The
Company has scaled the critical steps of the process to produce a batch
size suitable for large scale commercial production up to 2,000,000 doses.
QS-21 is currently classified by the FDA as a constituent material used in
vaccine preparation. As a result, the FDA does not require licensure of
facilities used for its manufacture. Aquila believes that classification
of QS-21 as a constituent material affords flexibility in the timing of
investment in commercial manufacturing facilities. After the safety and
effectiveness of QS-21 has been demonstrated, Aquila expects to be in a
position to reasonably project the plant capacity and the capital
investment required and can adjust the scale of manufacturing as
additional products reach the market.
The Company also currently manufactures Quilvax-FeLV(TM) antigen and vaccine,
which were licensed for sale in the U.S. by USDA in 1990 and for European
sales in the European Community ("E.C.") in 1991. The Company produces
commercial quantities at the 400 L fermentation scale in USDA and E.C.
approved facilities. Two additional animal vaccines are under development
and will also be manufactured in these facilities. Quilvax-M(TM) for the
control of bovine mastitis will begin licensing trials in 1998. Quilvax-
L(TM), for prevention of canine lyme disease, has completed licensing trials
and has been scaled to commercial quantities. See "Risk Factors".
PATENTS AND PROPRIETARY RIGHTS
Aquila has pursued a policy of obtaining patent protection both in the
United States and in selected foreign countries for patentable subject
matter in its proprietary technologies. The Company has filed or has
rights to a number of U.S. patents and patent applications and their
foreign counterparts. Aquila also relies on trade secrets, proprietary
know-how, and continuing technical innovation to develop and maintain its
competitive position.
Aquila's future success will depend, in part, upon its ability to develop
patentable products and technologies and obtain patent protection for its
products and technologies both in the United States and Europe. There can
be no assurance that patent applications owned or licensed by the Company
will issue as patents, that patent protection will be secured for any
particular technology, or that, if issued, such patents will be valid, or
that they will provide the Company with meaningful protection against
competitors with a competitive advantage. There can be no assurance that
the patents will not be challenged or designed around by others.
Proceedings brought against Aquila's patents could expose it to
significant expense and the risk of adverse determinations.
Aquila is not aware of any issued third party patents which would
interfere with development of any of its products, but there can be no
assurance that it will not infringe on existing or future patents owned by
others, that third parties will not bring suit against it for infringement
of such patents, that the Company could obtain necessary or desirable
licenses on acceptable terms, or that it could design around such patents.
Any litigation instituted by third party patent holders could expose
Aquila to significant expense and the risk of adverse determination.
QS-21 and other Adjuvants
Aquila received U.S. Patent No. 5,057,540 in 1991, covering purified QS-
21, QS-7 and the other principal fractions of Quillaja saponaria and
methods of their use in vaccines. The Company believes that the standard
of purity specified in the patent for the saponin fractions is necessary
to achieve a safety profile acceptable for human use. CSL International
ACN ("CSL") controls certain patents and patent applications covering
immune stimulating complexes ("ISCOMS") prepared from crude saponin
fractions, lipids and various antigens. The Company believes that its
products do not infringe CSL's U.S. patent due to process differences and
formulation techniques which avoid ISCOM formation. In Europe, CSL has a
corresponding pending application with published claims broader than those
that issued in the U.S. Although the Company believes that the claims may
be narrowed during the European examination, if claims do issue as
published they may dominate QS-21 in combination with lipid formulations.
In the event patents do issue to CSL or other parties which dominate QS-
21, there can be no assurance that Aquila will be able to obtain licenses
or obtain such licenses on favorable terms.
CSL and Seed Capital Inc., another company with an interest in ISCOM
technology, have filed an opposition with the European Patent Office
("EPO") on the issuance of the QS-21 patent in Europe. A hearing before
the EPO is scheduled for October of 1998. The Company has recently
received correspondence from CSL claiming that CSL will present
information to the EPO prior to the October hearing which will allow CSL
to prevail in the opposition and in addition that it intends to challenge
the Company's U.S. patent. The Company has carefully reviewed the prior
art with respect to both the European and U.S. patents and does not
believe that CSL's claims have merit or are likely to succeed. There can
be no assurance, however, that Aquila will prevail in any action taken to
attack the validity of its QS-21 patents.
Mastitis
Aquila exclusively licensed from Alfa Laval Agri AB ("Alfa Laval") certain
base technology used in the mastitis program. This technology includes
patents and patent applications on fibronectin binding proteins from S.
aureus, E. coli and S. dysgalactiae. The Alfa Laval license calls for
payment of an initial license fee, royalties, and additional license fees
as additional patents issue and when Aquila commercializes the vaccines.
As part of the joint development agreement with Virbac, Aquila arranged
for Alfa Laval to grant a direct license to Virbac in certain territories.
To date seven patents have been issued in the U.S. related to fibronectin
binding proteins, the genes that encode these proteins, related synthetic
peptides and the use of these materials for treating bovine mastitis.
These patents are U.S. Patent Numbers 5,175,096; 5,189,015; 5,320,951;
5,416,021; 5,440,014; 5,571,514 and 5,652,217.
Lyme Disease
Aquila has filed a patent application on its vaccine formulation of using
both the A and the B outer surface proteins and QS-21; animal data
indicates this formulation induces group-specific immune responses
(important for protection against multiple Borrelia strains) significantly
better than vaccines containing only one or two of these components.
There are several patents pending in the United States and in Europe
which, if issued in their current form, may dominate Aquila's Lyme
vaccine. Aquila believes that it is unlikely that any dominant claims
will issue because of the extensive prior art, but there can be no
assurance that the Company's position is correct and, if dominating
patents do issue, there can be no assurance that it will be able to obtain
the necessary licenses or obtain such licenses on favorable terms.
Human Granulocytic Ehrlichiosis
Aquila believes that it was the first to successfully cultivate the HGE
organism in tissue culture. The Company has filed patent applications on
infected cell lines, the methods of growing the organism, and potential
vaccine antigens and diagnostic reagents derived from the cell line.
Other researchers in the field of HGE have filed patent applications that
might conflict with Aquila's patent applications. There can be no
assurance that any of Aquila's patent applications will issue.
Other Patents
Aquila holds U.S. patents on its Quilvax-FeLV(TM) vaccine and on drug
delivery compounds. Patents on methods of expressing and purifying
proteins made in a baculovirus expression system have issued. Aquila also
has a fully paid-up royalty-free license to U.S. Patent No. 4,734,362 and
foreign counterparts (protein purification) in the vaccine, therapeutic
and related research fields; a fully paid-up royalty-free license to U.S.
Patent No. 4,753,873 in the veterinary diagnostic field; and a non-
exclusive sublicense to U.S. Patent No. 4,725,669 and U.S. Patent No.
5,068,174 (HIV-gp120-p27) in the vaccine, therapeutic and related research
fields.
COMPETITION
The biotechnology and pharmaceutical industries are subject to rapid and
significant technological change. Competitors of Aquila in the United
States and abroad are numerous. They include, among others, major
pharmaceutical and chemical companies, specialized biotechnology firms,
universities and other research institutions. There can be no assurance
that Aquila's competitors will not succeed in developing technologies and
products that are more effective than any which have been developed by the
Company or may be developed by the Company in the future or which would
render the Company's technology and products obsolete and noncompetitive.
Many of these competitors have substantially greater financial and
technical resources and production and marketing capabilities than Aquila.
In addition, some of Aquila's competitors have substantially greater
experience than the Company in preclinical testing and human clinical
trials of pharmaceutical products and in obtaining FDA and other
regulatory approvals of products for use in healthcare. Accordingly,
Aquila's competitors may succeed in obtaining FDA approval for products
more rapidly than could the Company. There can be no assurance that
Aquila's products under development will be able to compete successfully
with existing products or products under development by other companies,
universities and other institutions or that they will attain regulatory
approval in the United States or elsewhere. If Aquila commences
significant commercial sales of its products, it will also be competing
with respect to manufacturing efficiency and marketing capabilities, areas
in which it may have less experience. A significant amount of research in
the field is also being carried out at academic and government
institutions. These institutions are becoming increasingly aware of the
commercial value of their findings and are becoming more aggressive in
pursuing patent protection and negotiating licensing arrangements to
collect royalties for use of technology that they have developed. These
institutions may also market competitive commercial products on their own
or in collaboration with competitors and will compete with Aquila in
recruiting highly qualified scientific personnel.
Aquila is aware of certain programs and products under development by
others which may compete with its programs and products. Several
companies, including Ribi, Corixa, Virus Research Institute and Chiron
Corporation, are developing adjuvants.
Merck & Co. Inc., Wyeth-Lederle, SB, PMC and possibly others are in human
clinical trials with conjugate pneumococcal vaccines for the pediatric
market, and have existing non-adjuvanted products on the market. Several
companies market mastitis vaccines for infections caused by E. coli, but
these vaccines do not protect against staphylococcal or streptococcal
infections. The existence of products developed by these and other
competitors, or other products of which Aquila is not aware or which may
be developed in the future, may adversely affect the marketability of
products developed by Aquila.
At least two of Aquila's adjuvant licensees are also licensees of Ribi for
certain diseases. The USDA has licensed three canine Lyme disease
vaccines. PMC and SB have completed successful human trials with Lyme
disease vaccines.
GOVERNMENT REGULATION
The FDA, the USDA, the Environmental Protection Agency, and comparable
state and other agencies, including those in foreign countries, impose
requirements governing the development, manufacture and marketing of
certain of Aquila's products and products under development. The
regulatory process can take several years, involves lengthy and detailed
laboratory and clinical testing, and requires substantial expenditures.
User fee legislation has recently been approved by Congress and signed
into law, which is expected to reduce review times at FDA. Human
biologicals and pharmaceuticals, including vaccines, typically require
three stages of clinical trials: Phase I to determine the preliminary
safety of the product; Phase II, during which the efficacy of the product
is preliminarily assessed and treatment regimens refined; and Phase III
(sometimes referred to as "pivotal trials") during which final safety and
efficacy data are generated. Regulatory approval is required prior to
commencement of initial clinical trials. The clinical data, together with
comprehensive manufacturing and facility information, is filed with the
FDA in a Product License Application ("PLA") and an Establishment License
Application, or in certain cases as a Biologics License Application, on
which the regulatory agencies base their approval decisions. In some
instances, particularly in cases of life-threatening diseases for which
there is no effective treatment, the clinical trial phases may be
combined, or approval may be sought after completion of an expanded Phase
II trial.
Because QS-21 is currently classified by the FDA as a constituent material
used in drug preparation, the FDA does not require licensure of facilities
used in its manufacture. Aquila believes that this affords flexibility on
investment in commercial manufacturing facilities. Aquila has filed
Biologics Master Files for QS-21 with the FDA, which its licensees can
reference as part of their own PLAs as they seek FDA approval.
There can be no assurance that, at the end of the regulatory process,
approval will be obtained or that product developments by competitors in
the interim will not have made Aquila's products obsolete or economically
unfeasible. The extent of regulation which may arise from future
legislative or administrative action cannot be predicted, nor can the
potential impact of such future regulation, or changes in existing
regulation, be predicted with any certainty.
PRODUCT LIABILITY
Aquila has potential liability risks that are inherent in the testing,
manufacturing and marketing of medical products. The use of Aquila's
products or conduct of clinical trials may expose Aquila to product
liability claims and possible adverse publicity. These risks also exist
with respect to Aquila's products, if any, that receive regulatory
approval for commercial sale. The Company currently has limited product
liability coverage for the clinical research use of its products, which
management believes is customary for companies with products at this stage
of clinical development. There can be no assurance that Aquila will be
able to maintain its existing insurance coverage or obtain additional
insurance coverage at acceptable costs, if at all, or that a product
liability claim would not materially adversely affect the business or
financial condition of the Company.
If and when Aquila manufactures products that are recommended for routine
administration to children, it is possible that it will be required to
participate in the National Vaccine Injury Compensation Program. This
program compensates children having adverse reactions to certain routine
childhood immunizations with funds collected through an excise tax from
the manufacturers of these products.
HUMAN RESOURCES
As of February 10, 1998, Aquila employed 57 full-time employees. The
employees are not represented by any labor unions, and the Company
considers its relations with those employees to be good. Aquila's
scientific staff has expertise in many relevant areas and these internal
resources are augmented by consulting agreements with research scientists
located at various academic institutions and commercial organizations.
SCIENTIFIC ADVISORY BOARD
Aquila's Scientific Advisory Board consists of six individuals with
recognized expertise in immunology and oncology. The Scientific Advisory
Board meets from time to time to discuss matters relating to the Company's
current and long-term scientific planning and research and development,
and the individual members are available for consultation on an informal
basis. All members of the Scientific Advisory Board are employed by
academic institutions, and may have commitments or consulting or advisory
obligations to other entities that may limit their availability to Aquila.
These entities may be competitors of Aquila. In certain circumstances,
the academic institutions which employ the Scientific Advisory Board
members may assert ownership rights to inventions or other technology that
may result from advice provided to Aquila by such members. In such
circumstances, Aquila could seek to negotiate licenses to such inventions
or technology, but there can be no assurance that the Company would be
able to obtain such licenses on commercially reasonable terms. No members
of the Scientific Board are expected to devote more than a small portion
of their time to Aquila's business.
The following persons are the current members of the Scientific Advisory
Board:
Mary Lou Clements-Mann, M.D., M.P.H.
Professor
Department of International Health
Johns Hopkins University
Center for Immunization Research
John R. David, M.D.
Richard Pearson Strong Professor and Chairman of the Department of
Tropical Public Health
Professor of Medicine and Chief of the Division of Tropical Medicine
Harvard Medical School
Michael J. Hawkins, M.D.
Associate Professor of Medicine
Division of Medical Oncology
Vincent T. Lombardi Cancer Research Center
Georgetown University
College of Medicine
Arthur I. Hurwitz, D.V.M., Ph.D.
Independent Consultant
350 Westview Ave.
Leonia, NJ 07605
Takis S. Papas, Ph.D.
Director, Center for Molecular and Structural Biology and Professor
of Medicine
CMSB/Hollings Oncology Center
Medical University of South Carolina
Richard J. Whitley, M.D.
Professor of Pediatrics
University of Alabama at Birmingham
Children's Hospital
MANAGEMENT
The following is a list of executive officers and directors of the
Company, their ages, positions, offices and business experience, as of
April 16, 1998:
Alison Taunton-Rigby, Ph.D., 53, has been President, Chief Executive
Officer and Director since March of 1996. Dr. Taunton-Rigby was
President and Chief Executive Officer and a member of the Board of
Directors of the Company's predecessor, Cambridge Biotech Corporation
("CBC") from April 1995 until October of 1996. From 1993 to 1994,
she was President and Chief Executive Officer of Mitotix, Inc., a
biopharmaceutical company. Prior to joining Mitotix, Dr. Taunton-
Rigby was Senior Vice President, Biotherapeutics, of Genzyme
Corporation, where she had overall responsibility for Genzyme's
biotherapeutics business. Dr. Taunton-Rigby is a member of the Board
of Directors of BIO, the national trade organization, where she is
also Chair of the Emerging Companies section. She is also a member
of the Board of Directors and a past President of the Massachusetts
Biotech Council, the trade organization representing Massachusetts
biotechnology companies. Dr. Taunton-Rigby received her doctorate in
Chemistry from the University of Bristol in England, and is a
graduate of the Advanced Management Program of the Harvard Business
School. She is a director of the CML Group, a specialty retailer,
and of Synaptic Pharmaceutical Corporation. She is also a member of
the Bentley College Ethics Board.
Gerald A. Beltz, Ph.D., 46, is Senior Vice President of Research and
Development of the Company. Dr. Beltz served as Vice President of
Research and Development of CBC from 1993 to 1996. For ten years
prior to assuming these positions, Dr. Beltz held various scientific
positions with CBC. Dr. Beltz was responsible for the initial
development of Aquila's FeLV feline leukemia vaccine and CBC's HIV-1
diagnostic assays, and is the lead inventor on the patents covering
these products. Dr. Beltz received his B.S. from Beloit College, his
M.A. and Ph.D. from Princeton University, and did his post-doctoral
work at Harvard University.
Deborah B. Grabbe, 46, is Vice President of Manufacturing Operations
of the Company. Ms. Grabbe served as Vice President of Manufacturing
Operations for CBC from 1995 until 1996. She was Vice President of
Regulatory Affairs and Product Quality for CBC from 1993 to 1994.
Prior to joining CBC in 1993, Ms. Grabbe was Director of Regulatory
and Clinical Affairs and Director of Product Support for Behring
Diagnostics, Inc. From 1987 to 1988 she was Vice President of
Operations at Biotechnica Diagnostics, Inc. Ms. Grabbe holds an A.B.
from Oberlin College and an M.S. from John A. Burns School of
Medicine, University of Hawaii.
Robert B. Kammer, M.D., 57, is Vice President of Medical Affairs for
the Company. Dr. Kammer served as Vice President of Medical Affairs
for CBC from 1993 until 1996. From 1988 to 1993, Dr. Kammer was
employed at Schering-Plough Corporation as Director, Anti-Infective
Clinical Research. Before joining Schering-Plough, Dr. Kammer worked
at Lilly Research Laboratories. Dr. Kammer received his B.A. and
M.D. degrees from the University of Iowa and did his internship,
residency and fellowship at the Medical College of Virginia.
Thomas H. Kelly, Jr., 46 is Vice President of Administration for the
Company. Mr. Kelly served as Director of Administration and Human
Resources from 1995 until 1997. He was manager of Human Resources
for CBC from 1991 until 1995. Prior to joining the Company, Mr.
Kelly held Human Resources positions with Fidelity Investments,
Serono Laboratories and Peat Marwick. Mr. Kelly holds an A.B. from
Boston College and an M.B.A. from Babson College.
James L. Warren, 52, joined the Company in January of 1998 as Vice
President of Finance, Chief Financial Officer and Treasurer. From
1991 to January 1998 Mr. Warren was Vice President and Corporate
Controller of Genzyme Corporation, a multinational biotechnology and
health care products company. From 1984 to 1991, Mr. Warren was Vice
President of Finance and Administration of Itek Graphics Corporation,
Composition Systems Division, a supplier of composition software
systems. Mr. Warren holds a B.S. from the University of Tennessee
and an M.B.A. from Boston University.
Elliott D. Hillback, Jr., 53, has been a Director of the Company
since March of 1996. Since July 1990 Mr. Hillback has served as
Senior Vice President of Genzyme Corporation and since October 1996
has held the position of Senior Vice President of Corporate Affairs.
As Senior Vice President of Genzyme, he was responsible for the
formation in October 1990 of Neozyme Corporation, a research and
development company established to accelerate product development for
Genzyme. From July 1991 to October 1996 he served as President and
CEO of its genetic diagnostics subsidiary, IG Laboratories, Inc.
Prior to joining Genzyme, Mr. Hillback held executive positions at
Baxter International and BOC Group, Inc. as well as the positions of
President and CEO of Cellcor Therapies, Inc., a start-up
biotechnology company. Mr. Hillback is a member of the Council of
Medical Genetics Organizations, is co-chair of the ethics committee
of the Biotechnology Industry Organization and serves as director of
Integramed America, Inc., a physician practice management company
specializing in women's health care with a focus on infertility and
assisted reproductive technology services. He earned his B.A. degree
at Cornell University and an M.B.A. from Harvard Business School. He
is chairman of the Audit Committee and a member of the Compensation
Committee.
John M. Nelson, 66, has been a Director of the Company since March of
1996. Mr. Nelson served as director of CBC from January 1987 to
October 1996. Mr. Nelson is Chairman of The TJX Companies, Inc., a
retailer of off-price fashion goods. Mr. Nelson retired as Chairman
of Wyman-Gordon Company in October of 1997 having held that position
since May of 1994. Previously, he had been Chairman and Chief
Executive Officer since May of 1991. From 1988 until 1990 Mr. Nelson
was Chairman, President and Chief Executive Officer of Norton
Company, a manufacturer of abrasives, ceramics, plastics, and
chemical process products. From 1979 to September 1990, he was a
director of Norton. Prior to becoming Chief Executive Officer of
Norton, Mr. Nelson was President and Chief Operating Officer of
Norton from 1986 to 1988, and, for more than five years, was
President and Chief Executive Officer of its subsidiary, Norton
Christianson, Inc. Mr. Nelson holds a B.A. degree from Wesleyan
University and an M.B.A. from Harvard Business School. He is a
director of Brown & Sharpe Manufacturing Company, Stocker & Yale,
Inc., The TJX Companies, Inc., Commerce Holdings, Inc. and Eaton
Vance Corp. Mr. Nelson serves as Chairman of the Company's
Compensation Committee and a member of the Nominating Committee.
Jeffrey T. Beaver, 60, has been a Director of the Company since March
of 1996, and currently serves as the Chairman of the Board. Mr.
Beaver served as a Director of CBC from January 1983 to October 1996,
and as Chairman of the Board of Directors from April 1995 to October,
1996. From May 1994 to April 1995, Mr. Beaver served as President
and Chief Executive Officer of CBC, and from May 1994 to March 1996,
Mr. Beaver served as CBC's Treasurer. Since October 1996, Mr. Beaver
has been Managing Director of CoView Capital, Inc. From January 1991
to May 1994, Mr. Beaver was an independent consultant in the
healthcare sector. From September 1986 to December 1990, Mr. Beaver
was Senior Vice President and Head of the Corporate Finance Group of
IBJ Schroder Bank and Trust Company. Prior to September 1986, Mr.
Beaver was a Managing Director of J. Henry Schroder Corporation (a
subsidiary of Schroder Venture Managers, Inc.) where he was engaged
in providing corporate financial advisory services. Mr. Beaver is a
member of the Institute of Chartered Financial Analysts. He received
his B.A. degree from Princeton University and his M.B.A. degree from
New York University. Mr. Beaver is a member of the Nominating
Committee of the Company.
Keith J. Dorrington, Ph.D., D.Sc., 58, has been a Director of the
Company since October 1996. Since 1991 Dr. Dorrington has been
associated with MDS Health Ventures Capital Corp., the leading
venture capital company for the healthcare sector in Canada, serving
as Senior Vice President, Science and Technology since 1993. In this
capacity Dr. Dorrington is responsible for the scientific evaluation
of all pharmaceutical/biotechnology proposals received by MDS and in-
depth technical review of selected proposals. Prior to this
appointment Dr. Dorrington was General Manager and Director of
Wellcome Biotechnology in the U.K. (January 1989 to June 1991);
Corporate Vice-President of Research and Development, Connaught
Laboratories Ltd in Toronto (January 1983 to December 1988) and
Professor and Chairman, Department of Biochemistry, University of
Toronto (July 1976 to December 1982). Dr. Dorrington earned his
B.Sc., Ph.D., and D.Sc., from the University of Sheffield, U.K. He
is a member of the Audit Committee and Chairman of the Nominating
Committee.
Robert J. Carpenter. Mr. Carpenter has been a Director of the
Company since April of 1998. Mr. Carpenter served as President
of VacTex, Inc. from November 1995 to April 1998 and currently
serves as a Director. Mr. Carpenter has served as Chairman of
the Board of GelTex Pharmaceuticals, Inc. since 1991. He is
President of Boston Medical Investors, Inc., an investment firm.
Mr. Carpenter served as President and Chief Executive Officer of
GelTex from 1991 to 1993. He served as an Executive Vice President
of Genzyme Corporation, a human health care company, from 1989 to
1991, and was Chief Executive Officer and Chairman of the Board of
IG Laboratories, Inc., a genetic testing service company, from 1989
to 1991. Prior to that, he was Chairman, President and Chief
Executive Officer of Integrated Genetics, Inc., a biotechnology
company, which he joined as President in 1981. He is a director
of Genzyme Corporation.
SELLING SHAREHOLDERS
The following table sets forth the name of each Selling Shareholder, the
number of shares of Common Stock beneficially owned by the Selling
Shareholder before the offering, the number of shares offered for the
Selling Shareholder's account, and the percentage ownership of each
Selling Shareholder upon completion of the offering, assuming the Selling
Shareholders offer and sell all 769,000 Shares of Common Stock. Since the
Selling Shareholders may sell all or some or none of their shares, no
estimate can be made of the aggregate number of shares that are to be
offered hereby or that will be owned by the Selling Shareholders upon
completion of the offering to which this Prospectus relates.
Amount Of Amount to be Percentage
Securities Offered for Of Class to
Owned Prior The Security Be Owned
Name To Offering Holders Account After The Offering
Caduceus 79,000 50,000 *
Capital L.P.
Caduceus 203,500 120,000 1.4%
Capital Ltd.
Finsbury 275,000 275,000 *
Worldwide
Pharmaceutical
Trust PLC
Four Partners, 144,000 108,000 *
L.P.
Investment 10, 15,000 15,000 *
L.L.C.
Biotechnology 176,384 58,000 2.1%
Value Fund,
L.P.
Palamundo, 10,000 10,000 *
L.D.C.
ZPG Securities, 8,000 8,000 *
L.L.C.
Biotechnology 125,000 125,000 *
Value Fund,
Ltd.
Peter Wirth 18,946 18,946 *
Gustav Christensen 18,946 18,946 *
Henry Blair 9,473 9,473 *
Barry Bloom 6,820 6,820 *
Patrick Brennan 6,820 6,820 *
Kara Brown 189 189 *
Elizabeth Carney 758 758 *
John A. Carpenter 379 379 *
Richard W. &
Susan Carpenter 379 379 *
Robert J. Carpener 112,158 112,158 *
David Castaldi 28,418 28,418 *
Stephen Chubb 18,946 18,946 *
Charles Cooney 41,976 19,703 *
Peter Feinstein 10,973 9,473 *
Jorge Godoy 379 379 *
Belinda Herrera 758 758 *
Michael Higgins 1,137 1,137 *
James Jensen 1,895 1,895 *
John Kao 37,891 37,891 *
Lawrence Kinet 9,473 9,473 *
Kenneth LeClair 5,684 5,684 *
Jim & Sara Lee 379 379 *
Sharon Lee 379 379 *
Robert Modlin 6,820 6,820 *
Thomas Maniatis 20,840 20,840 *
NEA Ventures 3,789 3,789 *
1996, L.P.
New Enterprise 374,176 374,176 *
Associates VI, L.P.
Procept, Inc. 113,679 113,674 *
Sandhya Punreddy 189 189 *
Hugh Reinhoff,M.D. 8,526 8,526 *
Mitchel Sayare 18,946 18,946 *
Stephen J. Shaubert 56,837 56,837 *
Gabriel Schmergel 37,891 37,891 *
Henry A. Termeer 47,364 47,364 *
The Brigham & 123,147 123,147 *
Women's Hospital,
Inc.
George Whitesides 28,418 28,418 *
*Less than 1%
PLAN OF DISTRIBUTION
The Shares may be sold or distributed from time to time by the Selling
Shareholders or by pledgees, donees or transferees of or successors in
interest to the Selling Shareholders, directly to one or more purchasers
(including pledgees) or through brokers, dealers or underwriters who may
act solely as agents or may acquire Shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices or at fixed prices, which may be
changed. The distribution of the Shares may be affected in one or more of
the following methods: (i) ordinary broker transactions, which may
include long or short sales, (ii) transactions involving cross or block
trades or otherwise on the NASDAQ National Market, (iii) purchases by
brokers, dealers or underwriters as principals and resale by such
purchasers for their own accounts pursuant to this Prospectus, (iv) "at
the market" to or through market makers or into an existing market for the
Common Stock, (v) in any ways not involving market makers or established
trading markets, including direct sales to purchasers or sales affected
through agents, (vi) through transactions in options, swaps or other
derivatives (whether exchange listed or otherwise), or (vii) any
combination of the foregoing, or by any other legally available means. In
addition, the Selling Shareholders or their successors in interest may
enter into hedging transactions with broker-dealers who may engage in
short sales of shares of Common Stock in the course of hedging the
positions they assume with the Selling Shareholders. Selling Shareholders
or their successors in interest may also enter into options or other
transactions with broker-dealers that require that delivery by such broker-
dealers of the Shares, which Shares may be resold thereafter pursuant to
this Prospectus.
Brokers, dealers, underwriters or agents participating in the
distribution of the Shares may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or
the purchasers of Shares for whom such broker-dealers may act as agents or
to whom they may sell as principal, or both (which compensation as to a
particular broker-dealer may be in excess of customary commissions). The
Selling Shareholders and any broker-dealers acting in connection with the
sale of the Shares hereunder may be deemed to be underwriters within the
meaning of Section 2(11) of the Securities Act, and any commissions
received by them and any profit realized by them on the resale of Shares
as principals may be deemed underwriting compensation under the Securities
Act. Neither the Company nor any Selling Shareholder can presently
estimate the amount of such compensation. The Company knows of no
existing arrangements between any Selling Shareholder and any other
shareholder, broker, dealer, underwriter or agent relating to the sale or
distribution of the Shares.
Each Selling Shareholder and any other persons participating in a
distribution of securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M, which may restrict certain activities of and
limit the timing of purchases and sales of securities by, Selling
Shareholders and other persons participating in a distribution of
securities. Furthermore, under Regulation M, persons engaged in a
distribution of securities are prohibited from simultaneously engaging in
market making and certain other activities with respect to such securities
for a specified period of time prior to the commencement of such
distributions subject to specified exceptions or exemptions. All of the
foregoing may affect the marketability of the securities offered hereby.
Any securities covered by the Prospectus that qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under that rule rather than
pursuant to this Prospectus.
There can be no assurance that the Selling Shareholders will sell any or
all of the Shares of Common Stock offered by them hereunder.
EXPERTS
The balance sheets of Aquila Biopharmaceuticals, Inc. as of December 31,
1997 and 1996 and related statements of operations, cash flows and
shareholder's equity for each of the three years in the period ended
December 31, 1997 incorporated by reference in this Prospectus have been
audited by Coopers & Lybrand L.L.P., independent accountants, as stated in
their report dated February 25, 1998. Such financial statements have been
incorporated herein in reliance upon the report of such firm given upon
the authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
The legality of the Shares to be sold by the Selling Shareholders will
be passed upon by Bowditch & Dewey, LLP, Worcester, Massachusetts.
MATERIAL CHANGE
The Company has obtained an extension of its lease for the Worcester
facilities until the earlier of twenty (20) days after receipt by the
Company of notice of the sale of the property or July 31, 1998. However,
there can be no assurance that the extension will be of long enough duration
to allow for the completion of the facilities which the Company plans to
occupy in Framingham, Massachusetts. The Company's lease for the Framingham
facilities is effective as of April __, 1998.
TABLE OF CONTENTS
Available Information 2
Information Incorporated By Reference 2
Prospectus Summary 3
Forward Looking Statements 5
Risk Factors 5
Use of Proceeds 10
Business 10
Management 13
Selling Shareholders 13
Plan of Distribution 13
Experts 14
Legal Matters 14
Material Change 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth an itemized statement of all expenses in
connection with the issuance and distribution of the securities being
registered, to be borne by the registrant:
Registration fee 2,934
NASD filing fee 30,760
Legal Fees and expenses* 15,000
Accounting fees and expenses* 10,000
Blue Sky expenses and counsel fees* 3,000
Printing Expenses*
Miscellaneous*
Total 61,694
_________
* Estimated
The Selling Shareholders will be responsible for any additional fees
incurred as a result of the distribution of these securities.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides that the
Company shall have the power to indemnify any director, officer, employee
or agent for expenses (including attorneys' fees) judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with any suit, action or proceeding if such person acted in
good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Company, and, with respect to any criminal
proceeding, had no reasonable cause to believe his conduct was unlawful.
In the event an action against such a person is by or in the right of the
Company and such person shall have been adjudged to be liable to the
Company, such indemnification is permitted only to the extent that the
Court of Chancery or the court in which such action is brought shall deem
proper.
Article THIRD of the Company's By-laws provides for indemnification of
its directors, officers, employees or agents to the fullest extent
provided by laws.
Article SIXTH of the Company's Restated Certificate of Incorporation
provides that a director of the Company shall not be personally liable to
the Company or its shareholders for monetary damages for breach of his or
her fiduciary duty as a director to the extent provided either (i) in the
order of the United States Bankruptcy Court for the District of
Massachusetts confirming the Reorganization Plan, but in any event, to no
greater extent that is permitted by Section 102(b)(7) or any successor
similar provision in the Delaware General Corporation Law, or (ii) by the
Delaware General Corporation Law.
The Company maintains an executive liability indemnification policy.
Subject to the policy conditions, the insurance provides coverage for an
amount payable by the Company to its directors and officers pursuant to
the Company's By-laws.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling
the registrant pursuant to the foregoing provisions, the registrant has
been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in
the Act and is therefore unenforceable.
Item 16. Exhibits.
5.1 Opinion of Bowditch & Dewey, LLP
10.1 Lease Agreement by and among Aquila Biopharmaceuticals, Inc.
and NDNE 9/90 Corporate Center LLC
23.1 Consent of Bowditch & Dewey, LLP (included in Exhibit 5.1)
23.2 Consent of Coopers & Lybrand L.L.P.
24.1 Power of Attorney (included on signature page)
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in the
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) If the registrant is a foreign private issuer, to file a post-
effective amendment to the registration statement to include any
financial statements required by Rule3-19 of this chapter at the
start of any delayed offering or throughout a continuous
offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Act need not be furnished,
provided, that the registrant includes in the prospectus, by
means of a post-effective amendment, financial statements
required pursuant to this paragraph (a)(4) and other information
necessary to ensure that all other information in the prospectus
is at least as current as the date of those financial
statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment
need not be filed to include financial statements and
information required by Section 10(a)(3) of the Act or Rule 3-19
of this chapter if such financial statements and information are
contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Form F-3.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's Annual Report pursuant to Section 13(a) or
15(d) of the Securities and Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's Annual Report
pursuant to Section 15(d) of the Securities and Exchange Act of 1934)
that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Amemdment No. 1 to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Worcester,
The Commonwealth of Massachusetts, on April 30, 1998.
AQUILA BIOPHARMACEUTICALS, INC.
/S/ Alison Taunton-Rigby
By___________________________________
Alison Taunton-Rigby
President and Chief Executive Officer
/s/ James L. Warren
By___________________________________
James L. Warren
Treasurer, Chief Financial Officer
and Chief Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Alison Taunton-Rigby, Director
Jeffrey T. Beaver, Director
Keith J. Dorrington, Director
Elliott D. Hillback, Jr., Director
John M. Nelson, Director
/s/ Alison Taunton-Rigby
By:___________________________ April 30, 1998
(Alison Taunton-Rigby as attorney-
in-fact for each of the persons
indicated pursuant to a power of
attorney previously filed with the
Securities and Exchange Commission)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following person in the
capacities and on the date indicated. The person whose signature appears
below does hereby make, constitute and appoint Alison Taunton-Rigby and
Jane V. Hawkes and each of them his true and lawful attorneys and agents
with full power and authority on his behalf to execute and file with the
Securities and Exchange Commission any amendment or amendments, including
post-effective amendments to this Registration Stement and any and all
instruments and documents which may be necessary or desirable in connection
with the registration of the shares of common stock pursuant to this
Registration Statement and he does ratify and confirm all said agents and
attorneys may do or cause to be done by virtue hereof.
/s/ Robert J. Carpenter May 1, 1998
_______________________
Robert J. Carpenter, Director
Exhibit Index
*5.1 Opinion of Bowditch & Dewey, LLP
o10.1 Lease Agreement by and between Aquila Biopharmaceuticals, Inc.
and NDNE 9/90 Corporate Center LLC.
*23.1 Consent of Bowditch & Dewey, LLP (included in Exhibit 5.1)
o23.2 Consent of Coopers & Lybrand L.L.P.
*24.1 Power of Attorney (included on signature page)
* Previously filed with this Registration Statement filed with The
Securities and Exchange Commission on February 19, 1998.
o Filed herewith.
EXHIBIT 10.1
LEASE
by and between
NDNE 9/90 Corporate Center LLC
or assignee
as Landlord and
AQUILA BIOPHARMACEUTICALS, INC.,
as Tenant
Dated as of September 19, 1997
with an effective date as of the
"Escrow Release Date"
(as said term is defined in the Lease)
TABLE OF CONTENTS
SECTION 1 - Reference Data
1
Section 1.1 Reference Information .................
Section 1.2 Exhibits ..............................
SECTION 2 - Premises and Term 7
Section 2.1 Premises ..............................
Section 2.2 Term ..................................
Section 2.3 Appurtenant Rights and Reservations....
SECTION 3 - Commencement Date; Improvements 8
Section 3.1 Commencement Date .....................
Section 3.2 Construction of Building ..............
Section 3.3 Tenant Improvements; Tenant Plans......
and Specifications.....................
Section 3.4 Tenant Work ...........................
Section 3.5 General Provisions Applicable to.......
Tenant Work and Landlord Work.........
Section 3.6 Performance of Tenant's Work...........
Section 3.7 Delays.................................
Section 3.8 General Provisions Applicable to ......
Construction..........................
Section 3.9 Construction Representations...........
Section 3.10 Changes in Building or Lot.............
SECTION 4 - Rent 16
Section 4.1 The Annual Rent .......................
SECTION 5 - Operating Cost Escalation 16
Section 5.1 Operating Cost Escalation .............
Section 5.2 Estimated Operating Cost...............
Escalation Payments ...................
SECTION 6 - Real Estate Tax Escalation 18
Section 6.1 Real Estate Tax Escalation ............
Section 6.2 Estimated Real Estate Tax Escalation...
Payments ..............................
Section 6.3 Assessment of Property ................
SECTION 7 - Insurance
19
Section 7.1 Tenant's Insurance ....................
Section 7.2 Requirements Applicable to Insurance...
Policies........................... ..
Section 7.3 Waiver of Subrogation .................
SECTION 8 - Landlord's Covenants
21
Section 8.1 Quiet Enjoyment .......................
Section 8.2 Maintenance and Repair ................
Section 8.3 Electricity, Water and Gas..............
Section 8.4 HVAC. ..................................
Section 8.5 Cleaning ...............................
Section 8.6 Interruptions ..........................
Section 8.7 Representations.........................
Section 8.8 Estoppel Certificates..................
SECTION 9 - Tenant's Covenants
24
Section 9.1 Use ...................................
Section 9.2 Repair and Maintenance ...............
Section 9.3 Compliance with Law and Insurance......
Requirements ..........................
Section 9.4 Tenant's Alterations...................
Section 9.5 Indemnity .............................
Section 9.6 Landlord's Right to Enter .............
Section 9.7 Personal Property at Tenant's Risk ....
Section 9.8 Yield Up ..............................
Section 9.9 Estoppel Certificate ..................
Section 9.10 Landlord's Expenses Re Consents .......
Section 9.11 Rules and Regulations .................
Section 9.12 Holding Over ..........................
Section 9.13 Assignment and Subletting .............
Section 9.14 Overloading and Nuisance ..............
SECTION 10 - Casualty or Taking
29
Section 10.1 Termination ...........................
Section 10.2 Restoration ...........................
Section 10.3 Award .................................
SECTION 11 - Default
30
Section 11.1 Events of Default .....................
Section 11.2 Remedies ..............................
Section 11.3 Remedies Cumulative ...................
Section 11.4 Landlord's Right to Cure Defaults .....
Section 11.5 Effect of Waivers of Default ..........
Section 11.6 No Accord and Satisfaction ............
Section 11.7 Interest on Overdue Sums ..............
Section 11.8 Costs and Expenses ...................
SECTION 12 - Mortgages 32
Section 12.1 Rights of Mortgage Holders ............
Section 12.2 Lease Subordinate......................
SECTION 13 - Miscellaneous Provisions 34
Section 13.1 Notices from One Party to the Other ...
Section 13.2 Lease Not to be Recorded;..............
Notice of Lease .......................
Section 13.3 Bind and Inure; Limitation of..........
Landlord's Liability ..................
Section 13.4 Acts of God ...........................
Section 13.5 Landlord's Default ....................
Section 13.6 Brokerage .............................
Section 13.7 Miscellaneous .........................
Section 13.8 Security Deposit ......................
Section 13.9 Park Common Expenses...................
Section 13.10 Leasehold Parking Area.................
Section 13.11 Hazardous Materials....................
Section 13.12 Landlord's Holdover Contribution.......
LEASE
SECTION 1
Reference Data
Section 1.1. Reference Information. Reference in this Lease to
any of the following shall have the meaning set forth below:
Date of this Lease: As of September 19, 1997 with an effective
date as of the "Escrow Release Date" (as said term is defined in
the Lease)
Premises: That portion (shown as outlined on Exhibit A
attached hereto) of the Building on the Lot known
as Lot 8A and to be numbered 175 Crossing
Boulevard in Framingham, Massachusetts, consisting
of approximately 35,000 rentable square feet on
the first, second and third floors of the
Building.
Landlord: NDNE 9/90 Corporate Center LLC or assignee
Address of Landlord: c/o National Development of New England
2310 Washington Street
Newton Lower Falls, Massachusetts 02162
Tenant: Aquila Biopharmaceuticals, Inc.
Address of Tenant: 365 Plantation Street
Worcester, Massachusetts 01605
Landlord's Construction Representative: Mark L. Paris
Tenant's Construction Representative: Thomas H. Kelly
Additional Rent: Any sum or payment designated under this Lease
as constituting "Additional Rent" including, without limitation,
payments by Tenant on account of (i) Operating Cost Escalation
under Section 5, (ii) Real Estate Tax Escalation under Section 6
and (iii) Park Common Expenses under Section 13.9.
Affiliate: Any corporation or business entity controlled by,
controlling or under common control with Tenant. For this
purpose, "control" shall mean direct or indirect beneficial
ownership of 50% or more of the voting stock of, or a 50% or
greater interest in the income of such corporation or other
business entity or such other relationship as in fact constitutes
actual control.
Annual Base Operating Costs: $ 495,600.00 ($4.13 x Total Number
of Rentable Square Feet in the Building) (which excludes any
costs and expenses associated with cleaning services in the
Premises which shall be provided by Tenant at Tenant's sole cost
and expense).
Annual Base Real Estate Taxes: $ 300,000.00 ($2.50 x Total
Number of Rentable Square Feet in the Building)
Annual Fixed Rent (includes Annual Base Operating Costs and
Annual Base Real Estate Taxes):
Lease Years 1 - 4 inclusive: $748,300.00 per annum
Lease Years 5 - 8 inclusive: $800,800.00 per annum
Lease Years 9 - 12 inclusive: $853,300.00 per annum
As used above, the term "Year" or "Lease Year" shall mean the one
year period ending on the first anniversary of the Term
Commencement Date and each period of like duration thereafter.
Annual Rent: Annual Fixed Rent, Additional Rent and any other
charge payable in accordance with the terms and provisions of
this Lease.
Anticipated Term Commencement Date: July 1, 1998.
Base Building: The building erected or to be erected on the Lot
by Landlord in accordance with Exhibit D attached hereto at such
time as Landlord substantially completes "Landlord's Building
Construction Work", as defined in Section 3.2.
Broker: Fallon, Hines & O'Connor, Inc.
Building: The building erected or to be erected on the Lot by
Landlord and all alterations and additions thereto and
replacements thereof as described in Exhibit D.
Business Day: All days except Sundays and legal holidays.
Business Hours: 7:00 a.m. to 6:00 p.m. on all Business Days
except Saturdays and Sundays from 8:00 a.m. to 1:00 p.m.
Commencement Date: As defined in Section 3.1.
Enclosed Building: When the building has reached a state of
construction such that it is enclosed (sufficient to prevent
water damage from the weather) and has temporary electrical power
so as to provide Tenant with access to commence Tenant's Work on
Tenant's Access Date.
Escrow Agreement: That certain Escrow Agreement dated as of even
date herewith by and among Landlord, Tenant and Chicago Title
Insurance Company.
Escrow Release Date: That certain date on which all of the
"Release Conditions" (as said term is defined in the Escrow
Agreement) are completely satisfied and the Lease is released
from escrow in accordance with the Escrow Agreement.
Force Majeure: Collectively and individually, strike or other
labor trouble, fire or other casualty, governmental preemption of
priorities or other controls in connection with a national or
other public emergency or shortages of, or inability to obtain,
fuel, supplies or labor resulting therefrom, or acts of God, or
any other cause, whether similar or dissimilar, beyond Landlord's
reasonable control. Force Majeure does not include those things
that Landlord can cure by the payment of money.
Force Majeure Date: The last day of the period of time
commencing on the Outside Date and terminating at the end of the
Force Majeure Period.
Force Majeure Extension: The aggregate period of time not to
exceed sixty (60) days attributable to delays caused by Force
Majeure which shall only be applicable to Landlord's Holdover
Contribution in Section 13.12 of this Lease.
Force Majeure Period: The aggregate period of time attributable
to delays caused by Force Majeure, but in no event to exceed in
the aggregate six (6) months.
Ground Lease: The Indenture of Lease dated as of August 15,
1980, between the Inhabitants of The Town of Framingham (the
"Town"), as landlord, and The First National Bank of Boston ((the
"Bank of Boston"), as tenant, notice of which is recorded with
the Middlesex South District Registry of Deeds (the "Registry")
in Book 14036, Page 282 (the "Original Ground Lease"). The
interest of the Bank of Boston as tenant under the Original
Ground Lease was assigned to 9/90 Crossing Associates Limited
Partnership ("9/90") pursuant to that certain Lease Assignment
dated as of July 29, 1987, and recorded with the Registry in Book
18428, Page 050. The interest of "9/90" as tenant under the
Original Ground Lease was further assigned by "9/90" to Rose
Holding, Inc. ("Rose") pursuant to that certain Lease Assignment
dated as of June 10, 1994, recorded with the Registry in Book
24620, Page 48. The Original Ground Lease was amended by
Amendment to Lease dated the ______ day of August, 1996 by and
between the Town and Rose. All references herein to the Original
Ground Lease shall mean the Original Ground Lease as so assigned
and amended. The interest of Rose as tenant under the Ground
Lease and under the Original Ground Lease insofar as it relates
to Lot B-1 was assigned to NDNE 9/90 Crossing Limited Liability
Company (the "LLC")by Assignment and Assumption of Lease and
Collateral Agreement with respect to a Portion of the Leasehold
Premises dated September 30, 1996 from Rose to the LLC (the
"First Rose Assignment"). The interest of Rose as tenant under
the Ground Lease and under the Original Ground Lease insofar as
it relates to the Leasehold Parking Area will be assigned to the
Landlord hereunder by Assignment and Assumption of Leasehold
Interest with respect to a Portion of the Leasehold Premises from
Rose to Landlord (the "Second Rose Assignment"). The Original
Ground Lease was affected by that certain Consent to Assignment,
Estoppel Certificate and Agreement of Landlord Respecting Ground
Lease and Landfill Agreement dated October 7, 1996 and recorded
in the Registry in Book 26738, Page 303. All references in this
Lease to the Ground Lease shall mean the Original Ground Lease,
as amended from time to time, as assigned to the LLC by the First
Rose Assignment, as assigned to Landlord by the Second Rose
Assignment and any future amendments and any future assignments
and, for purposes hereof, the premises thereunder shall be deemed
to include only the Leasehold Parking Area.
Landfill Lot: The lot or parcel of land on which the Leasehold
Parking Area is located as more particularly set forth in Exhibit
I attached hereto.
Landlord's Holdover Contribution: The difference between the
monthly base rent Tenant will be paying under "Tenant's Existing
Lease" (as hereinafter defined) on the Anticipated Term
Commencement Date and (ii) the monthly rent that Tenant would be
paying under this Lease based on an annual base rent of $14.75
per square foot multiplied by the Premises' Square Footage;
provided, however, in no event shall the Landlord's Holdover
Contribution exceed $42,500.00 per month.
Leasehold Parking Area: The areas designated as the Leasehold
Parking Area on Exhibit C attached hereto and any alteration or
replacement (with any such replacement being in close proximity
to the Building) thereof designated by Landlord in writing to
Tenant.
Lot or Lots: The lot or parcel of land on which the Building is
or will be located as more particularly set forth in Exhibit B
attached hereto.
Lot's Allocable Share: As defined in Section 13.9.
Measurement Method: The Modified New York BOMA Measurement
Method 1980, Reaffirmed 1989.
Outside Date: The date which is twelve (12) months from the date
that the Town of Framingham issues a permit for construction of
the Building, including a foundation permit.
Park: The term "Park" shall mean the land described in Exhibits
A-1 and A-2 of the Park Covenants together with other land
hereafter added thereto under the Park Covenants and together
with the buildings, structures and other improvements as may,
from time to time, be constructed thereon, and all of which are
referred to in the Park Covenants as "9/90 Crossing".
Park Common Expenses: As defined in Section 13.9.
Park Common Property: As defined in Section 13.9.
Park Covenants: The Covenants, Restrictions, Development
Standards and Easements, attached hereto as Exhibit L together
with any amendments thereto as are permitted thereunder.
Permitted Uses: General Office, Research and Development and
Manufacturing.
Premises' Square Footage: Approximately 35,000 rentable square
feet (to be confirmed by Landlord and Tenant) as determined by
the Measurement Method, except as follows: (i) measurements will
be taken to the inside face of glass on exterior walls, even if
the glass is not the dominant portion of the exterior wall, (ii)
measurements to common areas, halls, etc. will be to the center
line of the partition, (iii) common areas such as the first floor
lobby, elevator lobbies, cafeteria, locker room/shower
facilities, common corridors, etc. will be included in rentable
area, and (iv) any vertical penetrations dedicated solely to
Tenant's use (i.e. in excess of vertical penetrations required to
service a standard office building) shall be included in usable
areas provided, however, any vertical penetrations located on the
upper two floors of the Building and related to the Premises
shall not be included in the calculation of rentable square
footage. After Tenant delivers to Landlord the Tenant's Plans
and Specifications, Landlord and Tenant shall remeasure the
Premises. If the Premises' Square Footage increases or decreases
based upon the measurement referred to in the preceding sentence,
then Landlord and Tenant shall enter into an amendment to this
Lease for the purpose of restating the rentable square feet of
the Premises, the Annual Fixed Rent, the Premises' Square
Footage, the Tenant's Proportionate Share and attaching Exhibit A
- - Plan of Premises and Exhibit J - Plan of First Offer Space.
Property: The Building (including the Premises), the Lot and the
Leasehold Parking Area.
Public Liability Insurance Limit:
Bodily Injury Combined single limit of
and Property Damage $2,000,000, or greater amount as
reasonably required by Landlord
from time to time.
Reciprocal Easement Agreement: As defined in Section 5.1.
Rentable Square Feet in the Building: Approximately 120,000
rentable square feet as determined by using the Measurement
Method, except as follows: (i) measurements will be taken to the
inside face of glass on exterior walls, even if the glass is not
the dominant portion of the exterior walls, (ii) measurements to
common areas, halls, etc. will be to the center line of the
partition and (iii) common areas such as the first floor lobby,
elevator lobbies, cafeteria, locker room/shower facilities,
common corridors, etc. will be included in rentable area.
Security Deposit: $750,000.00 (subject to the terms and
provisions of Section 13.8 hereof).
Tenant's Access Date: A date which is the later of (i) March 1,
1998 or (ii) the date on which Landlord allows Tenant to access
the Enclosed Building for purposes of commencing Tenant's Work.
Tenant's Existing Lease: A lease between Cambridge Bioscience
Corp. and Worcester Business Development Corporation dated
January 1, 1987, as amended.
Tenant's Chemicals: The list of chemicals more particularly
identified as Tenant's Chemicals in Exhibit O attached hereto, as
the same may be modified, amended and updated from time to time.
Tenant's Plan Delivery Date: A date which is the later of (a)
thirty (30) days after the date of this Lease or (b) the date on
which Tenant delivers to Landlord the Tenant's Plans and
Specifications.
Tenant's Proportionate Share: Twenty Nine and Seventeen
Hundredths (29.17%) Percent.
Tenant's Removable Property: All articles of personal property
and all business fixtures, machinery, equipment and furniture
owned or installed by Tenant and more particularly described as
Tenant's
Removable Property in Exhibit H attached hereto shall remain the
property of Tenant and may be removed by Tenant at any time prior
to the expiration of this Lease provided that Tenant, at its sole
cost and expense, shall repair any damage to the Building caused
by such removal.
Tenant's Subleasing Profit: The first $5.00 per square foot of
any rent, income or profit derived from any sublease of any
portion of the Premises subleased by Tenant in accordance with
the provisions of Section 9.13 of this Lease in excess of the
Annual Fixed Rent ("Tenant's Base Subleasing Profit") plus fifty
(50%) percent of any rent, income or profit derived from any such
sublease in excess of Tenant's Base Subleasing Profit.
Tenant's Work: As defined in Section 3.4.
Title Exceptions: The matters set forth on Exhibit M attached
hereto and any other rights, easements, encumbrances (excluding
any mortgage with the exception of any mortgage contemplated in
Section 12 of this Lease provided that Tenant receives a non-
disturbance agreement in accordance with Section 12.2 of this
Lease) and reservations which shall not materially interfere with
Tenant's rights under this Lease.
Yield Up Equipment: All of the equipment installed by Tenant and
more particularly described as Yield Up Equipment in Exhibit N
attached hereto shall remain the property of Landlord at the
expiration of the Term or earlier termination of this Lease.
Section 1.2. Exhibits. The following Exhibits are attached to and
incorporated in this Lease:
Exhibit A: Plan of Premises
Exhibit B: Lot
Exhibit C: Leasehold Parking Area
Exhibit D: Building Construction Work
Exhibit E: Tenant's Plans and Specifications
Exhibit F: Rules and Regulations
Exhibit G: Option to Extend, Right of First Offer
Exhibit H: Tenant's Removable Property
Exhibit I: Landfill Lot
Exhibit J: Plan of First Offer Space
Exhibit K: Cleaning Specifications
Exhibit L: Park Covenants (Reciprocal Easement Agreement)
Exhibit M: Title Exceptions
Exhibit N: Yield Up Equipment
Exhibit O: Tenant's Chemicals
SECTION 2
Premises and Term
Section 2.1. Premises. Landlord hereby leases and demises
the Premises to Tenant and Tenant hereby leases the Premises from
Landlord subject to the Title Exceptions and subject to the terms
and provisions of this Lease.
Section 2.2. Term. TO HAVE AND TO HOLD for a term beginning
on the Commencement Date and ending on the close of the day
immediately preceding the twelfth anniversary of the Commencement
Date (the "Term") unless sooner terminated as hereinafter
provided.
Section 2.3. Appurtenant Rights and Reservations.
(a) Tenant shall have, as appurtenant to the Premises, the
non-exclusive right to use, and permit its invitees to use in
common with others, public or common lobbies, hallways,
stairways, elevators and common walkways necessary for access to
the Building, the common toilets, corridors and elevator lobby of
such floor; but such rights shall always be subject to the rules
and regulations from time to time established by Landlord
pursuant to this Lease and to the right of Landlord to reasonably
designate and change from time to time areas and facilities so to
be used provided such changes do not materially affect Tenant's
access to or use of the Premises. Tenant and its employees shall
also have the non-exclusive right to use, in common with others
entitled thereto, such other common areas and facilities in or
appurtenant to the Building as Landlord may from time to time
designate and provide. Subject to the Title Exceptions and
subject to the terms and provisions of this Lease, Landlord shall
provide Tenant with the non-exclusive right to use, in common
with others entitled thereto, that certain number of parking
spaces on the Leasehold Parking Area equal to four (4) spaces per
each 1,000 square feet of the Premises' Square Footage.
(b) Excepted and excluded from the Premises are exterior
faces of exterior walls, the common stairways and stairwells,
elevators and elevator shafts, fan rooms, mechanical, freight
elevator vestibules and pipes, ducts, conduits, wires and
appurtenant fixtures serving exclusively or in common with other
parts of the Building, but included in the Premises are all entry
doors to the Premises and all special installations of Tenant,
such as interior stairs, special flues and special air
conditioning facilities. Landlord reserves the right from time
to time, without unreasonable interference with Tenant's use:
(a) to install, use, maintain, repair, replace and relocate for
service to the Premises and other parts of the Building, or
either, pipes, ducts, conduits, shafts, wires and appurtenant
fixtures, wherever located in the Premises or Building, and (b)
to alter or relocate any other common facility, provided that
substitutions are substantially equivalent or better and (c) to
maintain, repair, alter and replace (with any such replacement
being in close proximity to the Building) the Leasehold Parking
Area and the parking spaces located thereon. Landlord reserves
the exclusive use of all fan rooms, electric and telephone
closets, janitor closets, freight elevator vestibules, pipes,
ducts, conduits, wires and appurtenant fixtures located within
the Premises which serve exclusively or in common other parts of
the Building.
(c) Notwithstanding anything to the contrary contained in
this Lease, the Premises shall be measured using the Measurement
Method, except as follows: (i) measurements will be taken to the
inside face of glass on exterior walls, even if the glass is not
the dominant portion of the exterior wall, (ii) measurements to
common areas, halls, etc. will be to the center line of the
partition, (iii) common areas such as the first floor lobby,
elevator lobbies, cafeteria, locker room/shower facilities,
common corridors, etc. will be included in rentable area, and
(iv) any vertical penetrations dedicated solely to Tenant's use
(i.e. in excess of vertical penetrations required to service a
standard office building) shall be included in usable areas
provided, however, any vertical penetrations located on the upper
two floors of the Building and related to the Premises shall not
be included in the calculation of rentable square footage.
SECTION 3
Commencement Date; Improvements
Section 3.1 Commencement Date. The Commencement Date shall
be that date on which (a) the Base Building is substantially
complete provided that the Town of Framingham has issued a
Temporary Certificate of Occupancy for the Base Building and
Landlord has completed each item of Landlord's Building
Construction Work in accordance with Exhibit D (irrespective of
whether Tenant has completed Tenant's Work or the Town of
Framingham has issued a Certificate of Occupancy relating to the
Premises) and (b) one hundred twenty (120) days have elapsed
since Tenant's Access Date (unless Tenant commences occupancy of
any portion of the Premises for the Permitted Uses prior to the
expiration of said one hundred twenty (120) day period, then the
date that Tenant commences occupancy shall be the applicable date
under this clause (b)). If Tenant commences occupancy of any
portion of the Premises prior to the expiration of the one
hundred and twenty (120) day period referred to in the preceding
sentence, then Tenant shall commence paying Annual Rent for that
portion of the Premises in which Tenant takes occupancy;
provided, however, upon the expiration of said one hundred and
twenty (120) day period, Tenant shall commence paying Annual Rent
for the entire Premises. Each of the parties hereto agrees to,
upon demand of the other, execute a declaration expressing the
Commencement Date as soon as the Commencement Date has been
determined.
Section 3.2 Construction of Building.
(a) Landlord, at its expense, shall diligently construct
the Building substantially in accordance with Exhibit D (as the
same may be amended in connection with the permit approval
process for the Premises provided that no such amendment
affecting the Premises shall be made without the approval of
Tenant, which approval shall not be unreasonably withheld or
delayed) (the "Landlord's Building Construction Work") and all
laws, codes, ordinances and other applicable governmental
requirements. Landlord's Building Construction Work shall be
done in a good and workmanlike manner using first quality
materials and shall be accomplished in accordance with the plans
and specifications set forth in Exhibit D. Tenant shall respond
promptly to all communications from Landlord and shall cooperate
with Landlord throughout the construction process.
Notwithstanding anything contained in Exhibit D to the contrary,
in no event shall Landlord be obligated to perform (or pay for
the cost of) the moving or installation of any of Tenant's
equipment. Tenant shall pay to Landlord, within ten (10) days of
billing therefor, any costs of construction resulting from
changes in Exhibit D requested in writing by Tenant, it being
understood that such costs shall be equal to the aggregate of (a)
the "Cost of the Work", as defined in American Institute of
Architects Document A111 (1987 Edition), and (b) Landlord's
contractor's overhead and profit in the total amount equal to
eight percent (8%) of such cost.
(b) Landlord represents, but does not warrant, that on the
Commencement Date, the Building will be constructed in a good and
workmanlike manner free from material defects and in compliance
with all federal, state and local laws, ordinances, rules,
regulations, orders and permits, including zoning and subdivision
relating to the Building and the Premises and with any
restriction, covenant or agreement contained in the Title
Exceptions. To the best of Landlord's knowledge, no provision
contained in any Title Exception interferes with the existing or
contemplated use of the Premises.
(c) Landlord shall procure all necessary permits before
undertaking Landlord's Building Construction Work; do all of such
work in a good and workmanlike manner, employing materials of
first quality and complying with all governmental requirements.
Landlord shall cause contractors employed by Landlord to carry
Workmen's Compensation Insurance in accordance with statutory
requirements and Comprehensive Public Liability Insurance
covering such contractors on or about the Building.
Section 3.3 Tenant Improvements; Tenant's Plans and
Specifications.
(a) All work, construction and improvements to be performed
in or for the Premises in order to prepare same for use and
occupancy by Tenant set forth in Exhibit E attached hereto shall
be provided and installed by Tenant at Tenant's sole cost and
expense. Prior to commencement of any work by Tenant, Tenant
shall deliver to Landlord on the Tenant's Plan Delivery Date a
detailed floor plan layout together with construction drawings,
working drawings and written instructions and specifications
(herein called "Tenant's Plans and Specifications") in accordance
with and containing at least the information detailed in Exhibit
E and reflecting the alterations, work partitions and
improvements desired to be performed and installed by Tenant in
the Premises. Landlord agrees to cooperate with Tenant in the
production of those portions of Tenant's Plans and Specifications
constituting the working drawings and written instructions.
Landlord shall not be responsible for any cost in connection with
preparing Tenant's Plans and Specifications.
Section 3.4 Tenant's Work.
(a) Landlord's approval, which approval shall not be
unreasonably withheld or delayed, of Tenant's Plans and
Specifications shall, in no event, be deemed to create any
obligation on the part of Landlord to do any work or make any
installations in or about the Premises or to authorize Tenant to
make any further additions, improvements or alterations to the
Premises.
(b) Tenant shall perform, at its sole cost and expense, all
of the work (the "Tenant's Work") shown on Tenant's Plans and
Specifications substantially in accordance with Tenant's Plans
and Specifications. Any changes to Tenant's Plans and
Specifications (or any variations in Tenant's Work from the
Tenant's Plans and Specifications) shall be subject to the
approval of Landlord which approval will not be unreasonably
withheld or delayed. Any Tenant Plan provided to Landlord for
approval under the provisions of this Lease shall be deemed
approved unless Landlord shall, within ten (10) days of the
submission of said plan, notify Tenant of the disapproval of such
plan and the reason(s) for such disapproval. This Subsection (b)
and Section 9.4 shall apply before and during the Term of this
Lease. All of the Tenant's Work and all alterations, additions
and installation of furnishings shall be coordinated with any
work being performed by Landlord in the Building and in such
manner as to maintain harmonious labor relations and not damage
the Property or interfere with Building construction or operation
and shall be performed by Tenant's general contractor, which
contractor and all subcontractors shall be named on a written
list submitted to Landlord and shall be subject to the written
approval of Landlord, which approval shall not be unreasonably
withheld or delayed and any such approval shall be deemed given
unless Landlord shall within five (5) Business Days of Landlord's
receipt of Tenant's submission of the name of such contractor or
subcontractor notify Tenant of Landlord's disapproval of such
party and the reasons for such disapproval. Tenant shall have
the right to use any contractor or subcontractor appearing on the
list submitted to and approved by Landlord. Tenant acknowledges
and agrees that Cranshaw Construction shall have the right to bid
on all of Tenant's Work, including, without limitation, the
installation of the roof top HVAC system. Tenant hereby assumes
all responsibility in connection with Tenant's Work. Tenant
shall be responsible for any labor difficulties or delays in
Tenant's Work and the Commencement Date will not be delayed as a
result of delays in work. Tenant, before its work is started,
shall: secure all licenses, approvals and permits necessary
therefor and deliver copies thereof to Landlord; deliver to
Landlord a statement of the names of all its contractors and
subcontractors and the estimated cost of all labor and material
to be furnished by them; and cause each contractor and
subcontractor to carry workmen's compensation insurance in
statutory amounts covering all the contractor's and
subcontractor's employees and comprehensive public liability
insurance and property damage insurance with such limits as
Landlord may reasonably require but in no event less than a
$2,000,000.00 combined single limit (all such insurance to be
written in companies approved by Landlord, which approval will
not be unreasonably withheld or delayed, and insuring Landlord
and Tenant as well as the contractors), and to deliver to
Landlord certificates of all such insurance. Tenant agrees to
pay promptly when due the entire cost of any work done on the
Premises by Tenant, its agents, employees, or independent
contractors, and not to cause or permit any liens for labor or
materials performed or furnished in connection therewith to
attach to the Property and immediately to discharge any such
liens which may so attach and, at the request of Landlord to
deliver to Landlord security satisfactory to Landlord against
liens arising out of the furnishing of such labor and material,
including, without limitation, evidence of bonding over said
liens with performance, payment and lien bonds in favor of
Landlord and Tenant. Upon completion of any work done on the
Premises by Tenant, its agents, employees, or independent
contractors, Tenant shall promptly deliver to Landlord original
lien releases and waivers executed by each contractor,
subcontractor, supplier, materialmen, architect, engineer or
other party which furnished labor, materials or other services in
connection with such work and pursuant to which all liens, claims
and other rights of such party with respect to labor, material or
services furnished in connection with such work are
unconditionally released and waived.
(c) Prior to commencing occupancy, Tenant shall, at its
sole expense, procure a Certificate of Occupancy for its Premises
and any other permit or approval required by the Town of
Framingham or the Commonwealth of Massachusetts for its use and
occupancy of the Premises and shall deliver copies thereof to
Landlord. Entry by Tenant or its agents or contractors for the
purpose of performing Tenant's Work and/or decorations and/or for
installation of equipment and furnishings in the Premises shall
be permitted by Landlord during normal business hours on Business
Days. Commencing on Tenant's Access Date, Tenant shall have such
access as is reasonably necessary to allow Tenant to perform
Tenant's Work. Tenant, from and after the date of such entry,
shall be bound prior to the Commencement Date by the provisions
contained in this Lease (except the obligation to pay Annual
Rent, Operating Cost Escalations and Real Estate Tax Escalations)
notwithstanding that such entry and Tenant's Work will occur
prior to the Commencement Date of this Lease. In no event shall
the Commencement Date of this Lease be delayed by reason of
Tenant's failure to complete the work described in Tenant's Plans
and Specifications prior to the Commencement Date as it is
defined in Section 3.1 hereof unless such failure is the result
of Landlord's failure to fulfill its obligations hereunder. All
deliveries of equipment, furnishings, fixtures and construction
materials and equipment (collectively, "Work Materials") to (and
all removals of such Work Materials from) the Premises in
connection with Tenant's Work shall be performed in a manner so
as to minimize harm to the Building and interference with other
tenants of the Property. Tenant shall take such protective
measures as Landlord may require in order to protect the Building
or any part thereof from injury or damage due to, or in
connection with, Tenant's Work. Tenant shall not store any
materials or equipment on any sidewalks or streets adjacent to
the Building caused by Tenant's Work. Tenant shall remove all
debris, trash and construction rubbish from the Premises and the
Building. Tenant shall keep all areas of the Building and all
sidewalk and street areas adjacent to the Building free of trash
and debris from Tenant's Work and shall, upon completion of its
work, clean all areas of the Building, sidewalks and streets
affected thereby. Tenant shall not damage, deface or injure the
Building or any part thereof in connection with the Tenant's Work
and shall promptly reimburse Landlord for the cost of repairing
and/or replacing any damage, defacement or injury to the Building
caused by Tenant, its employees, workmen, contractors,
subcontractors, materialmen and all other parties who are
involved in performing all or any part of Tenant's Work. Tenant
shall comply with all laws, orders, rules, regulations and
demands of the Town of Framingham in loading and unloading and
delivering and removing materials relating to Tenant's Work and
Tenant's Removable Property to and from the Premises.
Section 3.5 General Provisions Applicable To Tenant Work
and Landlord Work.
All construction work required or permitted by this Lease to
be performed by either Landlord or Tenant shall be done in a good
and workmanlike manner and in compliance with all applicable
provisions of this Lease and all laws and lawful ordinances,
regulations and orders of governmental authority and insurers of
the Property, including, without limitation, the requirements of
the Americans with Disabilities Act of 1990, as amended.
Section 3.6 Performance Of Tenant's Work.
(a) Landlord shall not unreasonably withhold its consent to
the general contractor selected by Tenant and approved by
Landlord ("Tenant's G.C.") performing Tenant's Work solely as an
accommodation to Tenant. Tenant hereby acknowledges that
Landlord is extremely concerned that the Tenant's Work be
performed in a manner such as to minimize, to the maximum extent
possible, interference with ongoing work in the Building being
performed by Landlord, the use and enjoyment of other space in
the Building by other tenants and the continued and uninterrupted
operation of all structural, mechanical and electrical components
of the Building. Tenant further acknowledges that Landlord is
vitally interested in maintaining the high quality, character and
standards of the Building as a First Class Office/Research and
Development Building and that but for the Tenant's assurances
given below, Landlord would not enter this Lease nor permit
Tenant to perform Tenant's Work using Tenant's G.C. Accordingly,
in order to provide Landlord with the assurances it requires in
that regard and as a material inducement to the Landlord to enter
into this Lease, Tenant hereby covenants and agrees with Landlord
as follows:
In addition to and without limitation of any other term,
covenant, provision or condition contained in this Lease
regarding alterations and improvements to be performed by Tenant,
the Tenant, for itself and for Tenant's G.C. hereby covenants and
agrees with Landlord that Tenant, Tenant's G.C., and all of their
agents, servants and employees shall comply with all directions,
orders, instructions, rules, directives and regulations now or
hereafter implemented or made by Landlord's Construction
Representative, including, without limitation, compliance with
any request or order by Landlord's Construction Representative to
cease and desist from performing any part of Tenant's Work.
Landlord's Construction Representative shall not act in an
arbitrary or capricious manner in exercising its rights under
this clause.
Landlord shall provide Tenant with specific guidelines relating
to Tenant's Work and Tenant shall comply with such guidelines.
All of Tenant's Work shall be coordinated with any work being
performed by Landlord in the Building and in such a manner as to
maintain harmonious labor relations and not damage the Property
or interfere with the Building construction or operation or any
other tenant or occupants of the Building. Tenant shall comply
with the reasonable oral or written directions of the Landlord's
Construction Representative with respect to the covenants of
Tenant contained in the foregoing clause and if not corrected or
completed to the reasonable satisfaction of the Landlord's
Construction Representative within one hour after the giving of
such notice then, Landlord shall have the right, but not the
obligation, in addition to all other rights and remedies afforded
the Landlord pursuant to this Lease, to seek and obtain specific
performance of such covenants by way of injunctive relief or
other equitable remedy.
Tenant shall cause Tenant's G.C. to obtain and maintain (i) a
payment and performance bond and (ii) a lien bond for the benefit
of Landlord and Tenant in an amount which is equal to the costs
of completing Tenant's Work. Tenant shall provide Landlord's
Construction Representative with a copy of such bond and evidence
of its effectiveness before commencing Tenant's Work.
(b) Tenant's Indemnity with respect to Tenant's Work. To
the maximum extent this Agreement may be made effective according
to law, Tenant agrees to indemnify and save Landlord harmless
from and against any and all loss, cost, penalties, liabilities,
damages and claims arising from any act, omission or negligence
of Tenant or Tenant's G.C. (unless Tenant's G.C. is Cranshaw
Construction) or any contractors or workman employed by either of
them ("Tenant's Subs") or their contractors, licensees, agents,
servants or employees arising from the performance of Tenant's
Work caused to any person or to the property of any person, the
Building, or the Property. In addition, Tenant hereby agrees to
indemnify and hold Landlord harmless from and against any and all
loss, cost, or damages incurred by Landlord as a result of any
tenant or occupant of the building claiming that, as a result of
Tenant's Work, the conduct of Tenant's G.C.(unless Tenant's G.C.
is Cranshaw Construction), Tenant's Subs or Tenant's Construction
Representative, such tenant's use and quiet enjoyment of the
Building or its respective premises has been damaged or
destroyed. This indemnity shall, to the maximum extent this
agreement may be made effective according to law, also extend to
all loss, cost, penalties, liability, damage, claims of whatever
nature asserted against the Landlord arising out of the use or
occupancy or passage or travel over or upon, the Property by
Tenant or by any person claiming by, through or under Tenant
including, without limitation, Tenant's G.C. (unless Tenant's
G.C. is Cranshaw Construction) and Tenant's Subs and their
respective agents, employees, contractors and customers or
arising out of any delivery to or service applied to the Premises
or on account of or based on anything whatsoever done in the
Property unless caused by the negligence or willful misconduct of
Landlord or its servants or agents. The indemnity contained in
this Section 3.6(b) shall (i) include indemnity against all cost,
expenses and liabilities incurred in or in connection with any
such claim or proceeding brought thereon and the defense thereof
with counsel approved by the Landlord and (ii) survive expiration
or earlier termination of this Lease. In no event shall Landlord
be entitled to any indemnity for consequential damages.
Section 3.7 Delays.
(a) On November 1, 1997, Landlord intends to have satisfied
all the Release Conditions contained in the Escrow Agreement,
including, without limitation, the condition relating to the
"Permits", as said term is defined in the Escrow Agreement. If,
on December 15, 1997, all of the Release Conditions are not
completely satisfied or Landlord has not commenced construction
by placement of forms for the foundation of the Building on the
Lot, then, at Tenant's election, Tenant shall have the right (i)
to terminate this Lease by written notice to Landlord within
three (3) Business Days of December 15, 1997 or (ii) take thirty
(30) days to evaluate its situation and, on January 15, 1998,
Tenant shall have the right to terminate this Lease by written
notice to Landlord within three (3) Business Days of January 15,
1998. Any failure of Tenant to exercise its rights of
termination within three (3) Business Days of December 15, 1997
or January 15, 1998, as the case may be, shall constitute a
waiver of such rights of termination on such dates.
Notwithstanding anything to the contrary contained in this Lease,
once Landlord commences construction by placement of forms for
the foundation of the Building on the Lot and, subject to delays
caused by Force Majeure, diligently pursues completion of the
Base Building, then, except as otherwise expressly provided
herein, Tenant shall have no right to terminate this Lease for
delays associated with Landlord's completion of the Base Building
unless Landlord fails to deliver the Base Building on the Outside
Date or, if delays have been caused by Force Majeure, Landlord
fails to deliver the Base Building on the Force Majeure Date.
Landlord shall provide Tenant with written notice of any Force
Majeure event promptly after the occurrence of such event and
Landlord's best estimate of the delay caused by such event. If,
on the Outside Date, Landlord fails to deliver the Base Building
due to delays caused by reasons other than Force Majeure, then
Tenant shall have the right to terminate this Lease by written
notice to Landlord. Any failure of Tenant to exercise its right
of termination within three (3) Business Days of the Outside Date
shall constitute a waiver of such right of termination. If,
prior to the Outside Date, Landlord anticipates that it will fail
to deliver the Base Building on the Outside Date due to delays
caused by Force Majeure, then Landlord shall notify Tenant within
three (3) Business Days prior to the Outside Date of the
reason(s) for such failure and Landlord's best estimate of the
Force Majeure Date, and Landlord shall have an additional period
equal to the Force Majeure Period in order to deliver the Base
Building on the Force Majeure Date. If, on the Force Majeure
Date, Landlord fails to deliver the Base Building, then Tenant
shall have the right to terminate this Lease by written notice to
Landlord. Any failure of Tenant to exercise its right of
termination within three (3) Business Days of the Force Majeure
Date shall constitute a waiver of such right of termination.
(b) This Subsection (b) and Section 9.4 shall apply before
and during the Term. All of the Tenant's alterations, additions
and installation of furnishings shall be coordinated with any
work being performed by Landlord and in such manner as to
maintain harmonious labor relations and not damage the Property
or interfere with Building construction or operation and, except
for Tenant's Work and installation of furnishings, shall be
performed by Landlord's general contractor or, at Landlord's
election, by contractors or workmen first approved by Landlord.
Except for work by Landlord's general contractor, Tenant before
its work is started shall: secure all licenses and permits
necessary therefor; deliver to Landlord a statement of the names
of all its contractors and subcontractors and the estimated cost
of all labor and material to be furnished by them; and cause each
contractor to carry workmen's compensation insurance in statutory
amounts covering all the contractor's and subcontractor's
employees and comprehensive public liability insurance and
property damage insurance with such limits as Landlord may
reasonably require but in no event less than a combined single
limit of Two Million and No/100ths ($2,000,000.00) Dollars (all
such insurance to be written in companies approved by Landlord
and insuring Landlord and Tenant as well as the contractors), and
to deliver to Landlord certificates of all such insurance.
Tenant agrees to pay promptly when due the entire cost of any
work done on the Premises by Tenant, its agents, employees, or
independent contractors, and not to cause or permit any liens for
labor or materials performed or furnished in connection therewith
to attach to the Premises or the Property and immediately to
discharge any such liens which may so attach and, at the request
of Landlord to deliver to Landlord security satisfactory to
Landlord against liens arising out of the furnishing of such
labor and material. Upon completion of any work done on the
Premises by Tenant, its agents, employees, or independent
contractors, Tenant shall promptly deliver to Landlord original
lien releases and waivers executed by each contractor,
subcontractor, supplier, materialmen, architect, engineer or
other party which furnished labor, materials or other services in
connection with such work and pursuant to which all liens, claims
and other rights of such party with respect to labor, material or
services furnished in connection with such work are
unconditionally released and waived.
Section 3.8. General Provisions Applicable to Construction.
All construction work required or permitted by this Lease,
whether performed by Landlord or by Tenant, shall be done in a
good and workmanlike manner and in compliance with all applicable
laws, ordinances, regulations, codes and orders of any
governmental authority. Either party may inspect the work of the
other at reasonable times and shall give notice of observed
defects.
Section 3.9. Construction Representatives. Each party
authorizes the other to rely in connection with plans and
construction upon approval and other actions on the party's
behalf by any Construction Representative of the party named in
Section 1.1 or any person hereafter designated in substitution or
addition by notice to the party relying.
Section 3.10. Changes In Building or Lot. Landlord shall
have the right, prior to or during construction of the Building,
to redesign the Building and/or floors within the Building to the
extent made necessary by field conditions, by requirement of any
applicable law, by-law, ordinance or municipal authority or
otherwise; provided, however, that no such redesign shall relieve
Landlord of its obligation to deliver the Premises, or any
portion thereof, in accordance with the foregoing provisions of
this Section 3 of the Lease and further provided that no such
redesign shall be made without the approval of Tenant, which
approval shall not be unreasonably withheld or delayed. In the
event any such redesign shall be implemented, Landlord shall keep
Tenant fully advised as to the changes made to the floor plans
attached hereto as Exhibit A and the parties shall enter promptly
into an amendment to this Lease reflecting any increase or
decrease in the area of the Premises, change in the Annual Rent
and the like resulting from any such redesign. Landlord also
reserves the right to change its layout, design and plans for the
Lot and Leasehold Parking Area and for parking and roadways
thereon at any time and to add to or reduce the size of the Lot
and the Leasehold Parking Area; provided that no reduction in the
size of the Lot may adversely affect the Building or the number
of parking spaces made available to Tenant under this Lease or
access ways serving the Building.
SECTION 4
Annual Rent
Section 4.1. The Annual Rent. Except as otherwise provided
in Section 3.1 of this Lease, commencing on the Commencement
Date, Tenant shall pay the Annual Rent to Landlord at the Address
of Landlord or at such other place or to such other person or
entity as Landlord may by notice to Tenant from time to time
direct, at the Annual Fixed Rent set forth in Section 1, in equal
installments equal to 1/12th of the Annual Fixed Rent in advance
on the first day of each calendar month included in the Term, and
for any portion of a calendar month at the beginning or end of
the Term, at that pro-rated rate payable in advance for such
portion, and the Additional Rent in accordance with the terms and
provisions of this Lease. Tenant shall pay a late charge equal to
five (5%) percent of the amount of any Annual Rent payment or
other charge which is not paid when due.
SECTION 5
Operating Cost Escalation
Section 5.1. Operating Cost Escalation. Tenant shall pay to
Landlord, as Additional Rent, Operating Cost Escalation (as
defined below) on or before the 10th day following receipt by
Tenant of Landlord's Operating Cost Statement (as defined below).
As used herein, the term "Landlord's Operating Costs" shall
mean all of the following: premiums for insurance; compensation
and all fringe benefits, worker's compensation, insurance
premiums and payroll taxes paid by Landlord to, for or with
respect to all persons engaged in the managing, operating,
maintaining or cleaning of the Property; water and sewer use
charges for the Property; all common area utility charges not
billed directly to tenants by Landlord or the utility; payments
to contractors and management companies under service or
management contracts (or other costs incurred directly by
Landlord or its agents) for operating, managing, cleaning,
maintaining and repairing the Property, including, without
limitation, management fees, Building cleaning, window cleaning,
pest extermination, trash removal, landscaping, snow removal and
repair and maintenance to elevators, the common area HVAC,
electric and plumbing systems and the parking area (which
payments may be to affiliates of Landlord, provided the same are
at reasonable rates), and all other reasonable and necessary
expenses paid in connection with the cleaning, operating,
managing, maintaining and repairing of the Property, or any of
them, and properly chargeable against income; it being agreed
that if Landlord shall install a new or replacement capital item
for the purpose of complying with applicable laws or regulations
or intended to reduce Landlord's Operating Costs, the annual
amortization (reasonably determined by Landlord over the useful
life of the asset) of the cost thereof, with interest thereon at
an annual rate equal to two (2%) percent above the base rate
(prime rate) of BankBoston (or any other Bank having offices in
Boston, Massachusetts chosen by Landlord) from time to time,
shall be included in Landlord's Operating Costs; all costs and
expenses allocated to the Property under that certain
"Declaration of Covenants, Restrictions, Development Standards
and Easements" dated December 30, 1996 and recorded in the
Middlesex South District Registry of Deeds in Book 26738, Page
245, as the same may be amended, restated, modified, changed,
supplemented or substituted from time to time (the "Reciprocal
Easement Agreement"), including, without limitation, all costs
and expenses of operating, maintaining, lighting, plowing and
repairing the Leasehold Parking Area, shall be included in
Landlord's Operating Costs.
Within sixty (60) days of the end of each calendar year
during the Term and after Lease termination, Landlord shall
render a statement ("Landlord's Operating Cost Statement") in
reasonable detail and according to usual accounting practices,
certified by Landlord, and showing for the preceding calendar
year or fraction thereof, as the case may be, Landlord's
Operating Costs (as defined below), excluding the interest and
amortization on mortgages for the Building and Lot, the cost of
special services rendered to tenants (including Tenant) for which
a special charge is made, real estate taxes on the Building and
Lot (including installments and interest on assessments for
public betterments or public improvements and expenses of any
proceedings for abatement of taxes and assessments with respect
to any fiscal year or fraction of a fiscal year) and any costs
relating to remediation of any hazardous materials on the Lot and
the Leasehold Parking Area in connection with closure of the
landfill on the Landfill Lot.
If, during the Term of this Lease, Landlord shall incur
capital expenses in connection with repairs to the roof,
foundation or structure of the Building directly related to any
equipment installed and used by Tenant in the Building, there
shall be included in the amount of the annual amortization
(determined by Landlord) of the cost thereof, with interest
thereon, at an annual rate equal to two (2%) percent above the
base rate (prime rate) of BankBoston (or any other bank having
offices in Boston, Massachusetts chosen by Landlord) from time to
time in effect at the time of making such capital repairs (less
insurance proceeds or other proceeds, if any, collected by
Landlord by reason of damage to, or destruction of, any capital
items so repaired.
If Annual Base Operating Costs exceed Landlord's Operating
Costs for any Lease Year during the Term as evidenced by
Landlord's Operating Cost Statement, then Landlord shall credit
Tenant the amount equal to the product of: (i) Tenant's
Proportionate Share times (ii) the excess of the Annual Base
Operating Costs over the Landlord's Operating Costs for the
applicable Lease Year as evidenced by Landlord's Operating Cost
Statement for the applicable Lease Year, against the next
payment(s) of Annual Fixed Rent (or refund such overpayment if
the Term of this Lease has ended and Tenant has no further
obligation to Landlord).
"Operating Cost Escalation" shall be equal to Tenant's
Proportionate Share of the excess, if any, of:
(a) Landlord's Operating Costs for each calendar year as
indicated by Landlord's Operating Cost Statement; over
(b) The Annual Base Operating Costs.
Operating Cost Escalations shall be apportioned for any
calendar year in which the Lease Term commences or ends.
Notwithstanding any other provision of this Section 5.1, if the
Term expires or is terminated as of a date other than the last
day of a calendar year, then for such fraction of a calendar year
at the end of the Term, Tenant's last payment to Landlord under
this Section 5.1 shall be made on the basis of Landlord's best
estimate of the items otherwise includable in Landlord's
Operating Cost Statement and shall be made on or before the later
of (a) 10 days after Landlord delivers such estimate to Tenant,
or (b) the last day of the Term, with an appropriate payment or
refund to be made upon submission of Landlord's Operating Cost
Statement. Tenant shall have the right, at Tenant's expense to
audit Landlord's Operating Cost Statement within ninety (90) days
after Landlord provides Tenant with said statement provided,
however, that in no event shall Tenant have the right to conduct
more than one such audit in any calendar year.
Section 5.2. Estimated Operating Cost Escalation
Payments. If, with respect to any calendar year or fraction
thereof during the Term, Landlord reasonably estimates that
Tenant shall be obligated to pay Operating Cost Escalation, then
Tenant shall pay, as Additional Rent, on the first day of each
month of such calendar year and each ensuing calendar year
thereafter, estimated monthly escalation payments equal to 1/12th
of the estimated Operating Cost Escalation for the respective
calendar year, with an appropriate additional payment or refund
to be made within 30 days after Landlord's Operating Cost
Statement is delivered to Tenant. Landlord may adjust such
estimated monthly escalation payment from time to time and at any
time during a calendar year, and Tenant shall pay, as Additional
Rent, on the first day of each month following receipt of
Landlord's notice thereof (which notice shall be accompanied by
appropriate documentation supporting such adjustment), the
adjusted estimated monthly escalation payment.
SECTION 6
Real Estate Tax Escalation.
Section 6.1. Real Estate Tax Escalation. Tenant shall pay to
Landlord, as Additional Rent, Real Estate Tax Escalation (as
defined below) on or before the thirtieth (30th) day following
billing therefor by Landlord.
As used herein, the term "Real Estate Taxes" shall mean all
taxes, assessments (special, betterment or otherwise), levies,
fees, water and sewer rents and charges, and all other government
levies and charges, general and special, ordinary and
extraordinary, foreseen and unforeseen, which are allocable to
the Term hereof and imposed or levied upon or assessed against
the Property. Nothing herein shall, however, require Tenant to
pay any income taxes, excess profits taxes, excise taxes,
franchise taxes, estate, succession, inheritance or transfer
taxes, provided, however, that if at any time during the Term the
present system of ad valorem taxation of real property shall be
changed so that in lieu of the whole or any part of the ad
valorem tax on real property, or in lieu of increases therein,
there shall be assessed on Landlord a capital levy or other tax
on the gross rents received with respect to the Property or a
federal, state, county, municipal, or other local income,
franchise, excise or similar tax, assessment, levy or charge
(distinct from any now in effect) measured by or based, in whole
or in part, upon gross rents, then any and all of such taxes,
assessments, levies or charges, to the extent so measured or
based ("Substitute Taxes"), shall be included as real estate
taxes hereunder, provided, however, that Substitute Taxes shall
be limited to the amount thereof as computed at the rates that
would be payable if the Building and the Lot were the only
property of Landlord. The term "real estate taxes" shall also
mean all real estate taxes and assessments (or any substitute
therefor) which are allocated to the Property under the
Reciprocal Easement Agreement.
"Real Estate Tax Escalation" shall be equal to Tenant's
Proportionate Share of the excess, if any, of:
(a) Real Estate Taxes for the applicable tax fiscal year
occurring during the Term; over
(b) the Annual Base Real Estate Taxes.
Notwithstanding any other provision of this Section 6.1, if
the Term expires or is terminated as of a date other than the
last date of a tax fiscal year, then for such fraction of a tax
fiscal year at the end of the Term, Tenant's last payment to
Landlord under this Section 6.1 shall be made to reflect that
only a portion of such tax fiscal year falls within the Term of
this Lease and shall be made within 10 days after Landlord bills
Tenant therefor.
Section 6.2. Estimated Real Estate Escalation Payments. If,
with respect to any tax fiscal year or fraction thereof during
the Term, Landlord reasonably estimates that Tenant shall be
obligated to pay Real Estate Tax Escalation, Tenant shall pay, as
Additional Rent, on the first day of each month of such tax
fiscal year and each ensuing tax fiscal year thereafter,
estimated monthly escalation payments equal to 1/12th of the
estimated Real Estate Tax Escalation for the respective tax
fiscal year, with an appropriate additional payment or refund to
be made within 30 days after Landlord's delivery of the tax bills
for such period to Tenant. Landlord may adjust such estimated
monthly escalation payment from time to time and at any time
during a tax fiscal year, and Tenant shall pay, as Additional
Rent, on the first day of each month following receipt of
Landlord's notice thereof, the adjusted estimated monthly
escalation payment.
Section 6.3. Assessment of Property. If Annual Base Real
Estate Taxes exceed the Real Estate Taxes assessed against the
Property for any fiscal year (the "Actual Annual Taxes"), then
Landlord shall credit Tenant the amount equal to the product of:
(i) Tenant's Proportionate Share times (ii) the excess of the
Annual Base Real Estate Taxes over the Actual Annual Taxes for
the applicable fiscal year, against the next payment(s) of Annual
Fixed Rent (or refund such overpayment if the Term of this Lease
has ended and Tenant has no further obligation to Landlord).
SECTION 7
Insurance
Section 7.1. Tenant's Insurance. Tenant shall, as additional
rent, maintain throughout the Term the following insurance:
(a) Commercial general liability insurance for any
injury to person or property occurring on the Premises, naming as
insureds Tenant, Landlord and such persons, including, without
limitation, Landlord's managing agent, as Landlord shall
designate from time to time, in amounts which shall, at the
beginning of the Term, be at least equal to the limits set forth
in Section 1, and, from time to time during the Term, shall be
for such higher limits as are reasonably required by Landlord;
and
(b) Worker's compensation insurance with statutory
limits covering all of Tenant's employees working at the
Premises; and
(c) Environmental liability insurance for any release
or threat of release of "Hazardous Materials" (as said term is
defined in Section 13.11 hereof) occurring on the Property as a
result of Tenant's use and operation of the Premises, naming as
insureds, Tenant, Landlord and such persons, including, without
limitation, Landlord's managing agent and Landlord's mortgagee,
as Landlord shall designate from time to time, in such amounts as
are reasonably required by Landlord, but in no event less than
(1) $1,000,000 per claim for Pollution Legal Liability Select
Coverage and (ii) $2,000,000 in the aggregate for bodily injury,
property damage and clean up costs. Tenant acknowledges and
agrees that if Landlord is required to obtain any special
environmental insurance as a result of Tenant's use and occupancy
of the Property, then Tenant shall pay for any insurance premiums
related thereto which insurance premiums shall be included in
Landlord's Operating Costs.
Section 7.2. Requirements Applicable to Insurance
Policies. All policies for insurance required under the
provisions of Section 7.1 shall be obtained from responsible
companies qualified to do business in the Commonwealth of
Massachusetts and in good standing therein, which companies and
the amount of insurance allocated thereto shall be subject to
Landlord's approval, which approval shall not be unreasonably
withheld or delayed. Tenant agrees to furnish Landlord with
insurance company certificates of all such insurance and copies
of the policies therefor prior to the beginning of the Term
hereof and of each renewal policy at least thirty (30) days prior
to the expiration of the policy it renews. Each such policy shall
be noncancellable with respect to the interest of Landlord and
such mortgagees without at least thirty (30) days' prior written
notice thereto.
Section 7.3. Waiver of Subrogation. All insurance which is
carried by either party with respect to the Premises or to
furniture, furnishings, fixtures or equipment therein or
alterations or improvements thereto, whether or not required,
shall include provisions which either designate the other party
as one of the insureds or deny to the insurer acquisition by
subrogation of rights of recovery against the other party to the
extent such rights have been waived by the insured party prior to
occurrence of loss or injury, insofar as, and to the extent that
such provisions may be effective without making it impossible to
obtain insurance coverage from responsible companies qualified to
do business in the Commonwealth of Massachusetts (even though
extra premium may result therefrom) and without voiding the
insurance coverage in force between the insurer and the insured
party. On reasonable request, each party shall be entitled to
have duplicates or certificates of policies containing such
provisions. Each party hereby waives all rights of recovery
against the other for loss or injury against which the waiving
party is protected by insurance containing said provisions,
reserving, however, any rights with respect to any excess of loss
or injury over the amount recovered by such insurance.
SECTION 8
Landlord's Covenants
Section 8.1. Quiet Enjoyment. Tenant, on paying the rent and
performing its obligations hereunder, shall peacefully and
quietly have, hold and enjoy the Premises throughout the Term
without any manner of hindrance or molestation from Landlord or
anyone claiming under Landlord, subject, however, to all the
terms and provisions hereof.
Section 8.2. Maintenance and Repair. Subject to the
provisions of Section 10, Landlord shall maintain the roof,
structural supports, foundation and exterior of the Building and
all standard plumbing, electrical, mechanical, heating,
ventilating and air conditioning systems installed by Landlord
(but excluding all special systems installed by Tenant or by
Landlord at Tenant's request) in good condition and shall
maintain and clean the common areas of the Building and the Lot,
the cost of which shall be included in Landlord's Operating
Costs.
Section 8.3. Electricity, Water and Gas. Electricity,
water and gas to the Premises shall be separately metered or
check metered and all utility charges for lights and plugs, water
and gas serving the Premises shall be billed directly to, and
paid by, Tenant. If in Landlord's reasonable judgment, Tenant's
use of electricity, water and gas in excess of normal office
usage shall result in an additional burden on the Building's
utility systems or additional cost on account thereof, as the
case may be, Tenant shall upon demand reimburse Landlord for all
additional costs related thereto. Landlord, at Tenant's expense,
shall replace and install all ballasts, lamps and bulbs
(including, but not limited to, incandescent and fluorescent)
used in the Premises. All such replacements shall be of a type,
color and size as shall be designated by Landlord. Landlord
shall not in any way be liable or responsible to Tenant for any
loss, damage or expense which Tenant may sustain or incur if the
quantity, character, or supply of electricity is changed or is no
longer available or suitable for Tenant's requirements.
Section 8.4. HVAC. All charges for any air conditioning,
heating and ventilation systems servicing the Premises shall be
billed directly to, and paid by Tenant, except for any portion of
the Premises occupied by Tenant where Landlord provides the air
conditioning, heating and ventilation services. Tenant shall pay
for any charges, costs and expenses associated with the use,
repair, maintenance and replacement of any air conditioning,
heating and ventilation system servicing the Premises. Landlord
shall, on Business Days and generally during Business Hours
furnish heating and cooling as normal seasonal changes may
require to provide reasonably comfortable space temperature and
ventilation for common areas of the Building, and Tenant shall
pay Tenant's Proportionate Share of any costs and expenses
associated with such services. In the event Tenant introduces
into the Premises personnel or equipment which overloads the
capacity of the Building system or in any other way interferes
with the system's ability to perform adequately its proper
functions, or which affects the temperature otherwise maintained
by the air-conditioning system, supplementary systems may, if and
as needed, at Landlord's option, be provided by Landlord, at
Tenant's expense.
Section 8.5. Cleaning. With respect to the common areas of
the Building, Landlord shall provide nightly cleaning services as
more particularly described in Exhibit K attached hereto for said
portions of the Building (Mondays through Fridays only)
commensurate with industry standards for office buildings
comparable to the Building located in Framingham, Massachusetts.
Section 8.6. Interruptions.
(a) Landlord shall not be liable to Tenant for any
compensation or reduction of rent by reason of inconvenience or
annoyance or for loss of business arising from power losses or
shortages or from the necessity of Landlord's entering the
Premises for any of the purposes authorized by this Lease or for
repairing the Premises or any portion of the Building or Lot or
Leasehold Parking Area. In case Landlord is prevented or delayed
from making any repairs, alterations or improvements, or
furnishing any service or performing any other obligation to be
performed on Landlord's part, by reason of any cause, Landlord
shall not be liable to Tenant therefor, nor shall Tenant be
entitled to any abatement or reduction of rent by reason thereof,
nor shall the same give rise to any claim by Tenant that such
failure constitutes actual or constructive, total or partial,
eviction from the Premises. Landlord reserves the right to stop
any service or utility system when necessary by reason of
accident or emergency or until necessary repairs have been
completed. Except in case of emergency repairs, Landlord will
give Tenant reasonable advance notice of any contemplated
stoppage and will use reasonable efforts to avoid unnecessary
inconvenience to Tenant by reason thereof. Landlord also reserves
the right to institute such policies, programs and measures as
may be necessary, required or expedient for the conservation or
preservation of energy or energy services or as may be necessary
or required to comply with applicable codes, rules, regulations
or standards. In so doing, Landlord shall make reasonable efforts
to avoid unnecessary inconvenience to Tenant by reason thereof.
(b) Notwithstanding anything contained in this Lease to the
contrary, if (i) an interruption or curtailment, suspension or
stoppage of an Essential Service (as said term is hereinafter
defined) shall occur (any such interruption of an Essential
Service being hereinafter referred to as a "Service
Interruption"), (ii) such Service Interruption occurs or
continues as a result of an involuntary interruption, stoppage or
suspension of Essential Services by Landlord or as the result of
any circumstance which is subject to the control of Landlord,
(iii) such Service Interruption continues for more than forty
five (45) consecutive calendar days after Landlord shall have
received notice thereof from Tenant, (which notice shall
specifically refer to the provisions of this paragraph) and (iv)
as a result of such Service Interruption, the conduct of Tenant's
normal operations in the Premises are materially and adversely
affected, then there shall be an abatement of one day's Annual
Fixed Rent for each day during which such Service Interruption
continues provided, further, that if any part of the Premises is
reasonably useable for Tenant's operations or if Tenant conducts
all or any part of its operations in the Premises notwithstanding
such Service Interruption, then the amount of each daily
abatement of Annual Fixed Rent shall only be proportionate to the
nature and extent of the interruption of Tenant's normal
operations. The rights granted under this paragraph shall be
personal to the original Tenant and shall terminate upon any
assignment of the Lease or any subletting of all or any portion
of the Premises outstanding at any one time. For purposes
hereof, the term "Essential Services" shall mean the following
services, to the extent that Landlord has agreed to provide any
of them to Tenant pursuant to this Lease: elevator service,
heating, air-conditioning, water and electricity. Any abatement
of Annual Fixed Rent under this paragraph shall apply only with
respect to Annual Fixed Rent allocable to the period after each
of the conditions set forth in subsections (i) through (iv)
hereof shall have been satisfied.
Section 8.7. Representations.
(a) To the best of Landlord's knowledge, Landlord
represents, but does not warrant, that: (i) it has good clear
record and marketable title to the Lot, free and clear of all
encumbrances or obligations affecting the Lot other than the
Title Exceptions and any other rights, easements, encumbrances
and reservations which shall not materially interfere with
Tenant's rights under the Lease. To the best of Landlord's
knowledge, there is no pending or threatened condemnation or
eminent domain proceeding with respect to the Lot. To the best
of Landlord's knowledge, the Lot is legally subdivided and
consists of a separate tax lot so that it will be assessed
separate and apart from any other property. To the best of
Landlord's knowledge, there are no suits, notices or proceedings
pending, or to the best of Landlord's knowledge, threatened by
any persons or government agencies before any court, governmental
agency or instrumentality administrative or otherwise which would
have an affect on Landlord's title to the Lot.
(b) Landlord is the assignee of Tenant's interest under the
Ground Lease, and, to the best of Landlord's knowledge,
Landlord's interest is free and clear of any liens or
encumbrances, except for the Title Exceptions and any other
rights, easements, encumbrances and reservations which shall not
materially interfere with Tenant's rights under the Lease. To
the best of Landlord's knowledge, true, correct and complete
copies of the Ground Lease and all amendments, modifications and
supplemental agreements thereto have previously been delivered to
Landlord. To the best of Landlord's knowledge, the Ground Lease
is in full force and affect and is binding and enforceable
against each of the parties thereto in accordance with its terms
and has not been modified or amended since the date of delivery
to Tenant. To the best of Landlord's knowledge, there has not
occurred any event which would constitute a breach of or default
in the performance of any material covenant, agreement or
condition contained in the Ground Lease, nor has there occurred
any events which with the passage of time, giving of notice or
both would constitute such a breach or material default.
Landlord shall perform and observe all of the terms, covenants
and conditions required to be performed by Landlord as tenant
under the Ground Lease.
Section 8.8. Estoppel Certificates. Landlord shall at any
time and from time to time upon not less than ten (10) days'
prior notice by Tenant to Landlord, execute, acknowledge and
deliver to Tenant a statement in writing certifying that this
Lease is unmodified and in full force and effect (or if there
have been modifications, that the same is in full force and
effect as modified and stating the modifications), and the dates
to which the rent and other charges have been paid in advance, if
any, and stating whether or not to the best of Landlord's
knowledge, Tenant is in default in performance of any covenant,
agreement, term, provision or condition contained in this Lease
and, if so specifying each such default of which the Landlord may
have knowledge.
SECTION 9
Tenant's Covenants
Section 9.1. Use. Tenant shall use the Premises only for the
Permitted Uses and shall from time to time procure all licenses
and permits necessary therefor at Tenant's sole expense.
Section 9.2. Repair and Maintenance. Except as otherwise
provided in Sections 8 and 10, Tenant shall keep the Premises,
including all plumbing, electrical, heating, air conditioning and
other systems therein, in good order, condition and repair and in
at least as good order, condition and repair as they are in on
the Commencement Date or may be put in during the Term,
reasonable use and wear only excepted. Tenant shall make all
repairs and replacements and do all other work necessary for the
foregoing purposes whether the same may be ordinary or
extraordinary, foreseen or unforeseen. Tenant shall keep in a
safe, secure and sanitary condition all trash and rubbish
temporarily stored at the Premises.
Section 9.3. Compliance with Law and Insurance Requirements.
Tenant shall comply with all laws, rules, regulations, codes and
ordinances including, without limitation, OSHA, NIH and FDA
regulations, in its use and occupancy of the Property. Tenant
shall make all repairs, alterations, additions or replacements to
the Premises required by any law or ordinance or any order or
regulation of any public authority arising from Tenant's use of
the Premises and shall keep the Premises equipped with all safety
appliances so required. Tenant shall not release, dump, flush, or
in any way introduce any "Hazardous Materials" (as said term is
defined in Section 13.11 hereof) into the septic, sewage or other
waste disposal system serving the Premises, or generate, store,
transfer or dispose of Hazardous Materials in or on the Premises
or dispose of Hazardous Materials from the Premises to any other
location except in compliance with "Environmental Laws" (as said
term is defined in Section 13.11 hereof). Tenant shall notify
Landlord of any incident which would require the filing of a
notice under the Environmental Laws.
Landlord may, if it so elects, make any of the repairs,
alterations, additions or replacements referred to in this
Section which affect the Building structure or the Building
systems, and Tenant shall reimburse Landlord for the cost thereof
on demand.
Tenant will provide Landlord, from time to time upon
Landlord's request, with all records and information regarding
any Hazardous Materials maintained on the Premises by Tenant.
Landlord shall have the right to make such inspections as
Landlord shall reasonably elect from time to time to determine if
Tenant is complying with this Section and if any of such
inspections reveals contamination by Hazardous Materials of the
Property as a result of Tenant's operations or actions or the
actions of Tenant's agents, contractors or employees, Tenant
shall reimburse Landlord for the cost of performing (or
contracting for) such inspections.
Tenant shall comply promptly with the recommendations of any
insurer, foreseen or unforeseen, ordinary as well as
extraordinary, which may be applicable to the Property, by reason
of Tenant's use thereof. In no event shall any activity be
conducted by Tenant on the Property which may give rise to any
cancellation of any insurance policy or make any insurance
unobtainable.
Section 9.4. Tenant's Alterations. Landlord and Tenant
agree that this Section 9.4 shall apply to any future
installations, alterations, additions or improvements in or to
the Premises occurring after the construction of Tenant's Work in
accordance with Section 3.4 hereof. Tenant shall not make any
installations, alterations, additions or improvements in or to
the Premises, including, without limitation, any apertures in the
walls, partitions, ceilings or floors, without on each occasion
obtaining the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed. Any such work so
consented to by Landlord shall be performed only in accordance
with plans and specifications therefor approved by Landlord which
approval shall not be unreasonably withheld or delayed. Tenant
shall procure at Tenant's sole expense all necessary permits and
licenses before undertaking any work on the Premises and shall
perform all such work in a good and workmanlike manner employing
materials of good quality and so as to conform with all
applicable zoning, building, fire, health and other codes,
regulations, ordinances and laws and with all applicable
insurance requirements. Tenant agrees to pay promptly when due
the entire cost of any work done on the Premises by Tenant, its
agents, employees or independent contractors, and not to cause or
permit any liens for labor or materials performed or furnished in
connection therewith to attach to the Property and to discharge
any such liens which may so attach within five (5) calendar days
and, at the request of Landlord, to deliver to Landlord security
satisfactory to Landlord against liens arising out of the
furnishing of such labor and material, including, without
limitation, evidence of bonding over said liens with performance,
payment and lien bonds in favor of Landlord and Tenant; Landlord
and Tenant agree that payment and performance bonds shall only be
necessary for any work for which the total contract sum exceeds
$100,000.00. Tenant shall employ for such work only contractors
approved by Landlord, which approval shall not be unreasonably
withheld or delayed, and shall require all contractors employed
by Tenant to carry worker's compensation insurance in accordance
with statutory requirements and comprehensive general liability
insurance covering such contractors, and naming Landlord and
Tenant as additional insureds, on or about the Premises in
amounts at least equal to the limits set forth in Section 1 and
to submit certificates evidencing such coverage to Landlord prior
to the commencement of such work. Tenant shall save Landlord
harmless and indemnified from all injury, loss, claims or damage
to any person or property occasioned by or growing out of such
work. Landlord may inspect the work of Tenant at reasonable times
and give notice of observed defects.
Section 9.5. Indemnity. Tenant shall defend, with counsel
reasonably approved by Landlord, all actions against Landlord,
any member, partner, trustee, stockholder, officer, director,
employee or beneficiary of Landlord, holders of mortgages secured
by the Building and any other party having an interest in the
Premises ("Indemnified Parties") with respect to, and shall pay,
protect, indemnify and save harmless, to the extent permitted by
law, all Indemnified Parties from and against, any and all
liabilities, losses, damages, costs, expenses (including
reasonable attorneys' fees and expenses), causes of action,
suits, claims, demands or judgments of any nature arising from
(a) injury to or death of any person, or damage to or loss of
property, occurring in the Premises unless caused by the
negligence or willful misconduct of Landlord or its servants or
agents, (b) violation of this Lease by Tenant, or (c) any
wrongful act or other misconduct of Tenant or its agents, general
contractor (unless Tenant's G.C. is Cranshaw Construction),
contractors, subcontractors, licensees, sublessees or invitees.
The indemnity contained in this Section 9.5 shall survive any
expiration or earlier termination of this Lease. In no event
shall Landlord be entitled to any indemnity for consequential
damages.
Section 9.6. Landlord's Right to Enter. Tenant shall permit
Landlord and its agents to enter into the Premises at reasonable
times and upon reasonable notice (except that in emergencies no
notice shall be required) to examine the Premises, make such
repairs and replacements as Landlord may elect, without however,
any obligation to do so, and show the Premises to prospective
purchasers and lenders, and, during the last nine (9) months of
the Term, to show the Premises to prospective tenants and to keep
affixed in suitable places notices of availability of the
Premises.
Section 9.7. Personal Property at Tenant's Risk. All
furnishings, fixtures, equipment, effects and property of every
kind of Tenant and of all persons claiming by, through or under
Tenant which may be on the Premises, shall be at the sole risk
and hazard of Tenant and if the whole or any part thereof shall
be destroyed or damaged by fire, water or otherwise, or by the
leakage or bursting of water pipes, steam pipes, or other pipes,
by theft or from any other cause, no part of said loss or damage
shall be charged to or to be borne by Landlord, except that
Landlord shall in no event be indemnified or held harmless or
exonerated from any liability to Tenant for any injury, loss,
damage or liability not covered by Tenant's insurance to the
extent prohibited by law. Tenant shall insure Tenant's personal
property.
Section 9.8. Yield Up. At the expiration of the Term or
earlier termination of this Lease, Tenant shall surrender all
keys to the Premises, remove all of Tenant's Removable Property
and repair all damage caused by such removal including, without
limitation, any repairs to the roof of the Building required as a
result of such removal and yield up (i) the Premises (broom-clean
and in the same good order and repair in which Tenant is obliged
to keep and maintain the Premises under this Lease) and (ii) the
Yield Up Equipment. Any of Tenant's Removable Property, not so
removed shall be deemed abandoned and may be removed and disposed
of by Landlord in such manner as Landlord shall determine, and
Tenant shall pay Landlord the entire cost and expense incurred by
it in effecting such removal and disposition and in making any
incidental repairs and replacements to the Premises and for use
and occupancy during the period after the expiration of the Term
and prior to Tenant's performance of its obligations under this
Section 9.8.
Section 9.9. Estoppel Certificate. Upon not less than five
(5) business days' prior notice by Landlord, Tenant shall
execute, acknowledge and deliver to Landlord a statement in
writing certifying that this Lease is unmodified and in full
force and effect and that, except as stated therein, Tenant has
no knowledge of any defenses, offsets or counterclaims against
its obligations to pay the Annual Rent and any other charges and
to perform its other covenants under this Lease (or, if there
have been any modifications that the same is in full force and
effect as modified and stating the modifications and, if there
are any defenses, offsets or counterclaims, setting them forth in
reasonable detail), the dates to which the Annual Rent and other
charges have been paid and a statement that Landlord is not in
default hereunder (or if in default, the nature of such default,
in reasonable detail). Any such statement delivered pursuant to
this Section 9.9 may be relied upon by any prospective purchaser
or mortgagee of the Building.
Section 9.10. Landlord's Expenses Re Consents.
Intentionally Omitted.
Section 9.11. Rules and Regulations. Tenant shall comply
with the Rules and Regulations attached hereto as Exhibit F
attached hereto and such additional reasonable rules and
regulations as may be adopted from time to time by Landlord to
provide for the beneficial operation of the Property.
Section 9.12. Holding Over. Tenant shall vacate the Premises
immediately upon the expiration or sooner termination of this
Lease. If Tenant retains possession of the Premises or any part
thereof after the termination of the Term without Landlord's
express consent, Tenant shall pay Landlord rent at double the
monthly rate specified in Section 1 for the time Tenant thus
remains in possession and, in addition thereto, shall pay
Landlord for all damages, excluding consequential damages,
sustained by reason of Tenant's retention of possession. The
provisions of this Section do not exclude Landlord's rights of re-
entry or any other right hereunder, including without limitation,
the right to remove Tenant through summary proceedings for
holding over beyond the expiration of the Term of this Lease.
Section 9.13. Assignment and Subletting.
(a) Tenant covenants and agrees that neither this Lease nor
the Term and estate hereby granted, nor any interest herein or
therein, will be assigned, mortgaged, pledged, encumbered or
otherwise transferred and that neither the Premises nor any part
thereof will be encumbered in any manner by reason of any act or
omission on the part of Tenant, or used or occupied or permitted
to be used or occupied, by anyone other than Tenant, or for any
use or purpose other than a Permitted Use, or be sublet (which
term, without limitation, shall include granting of concessions,
licenses and the like) in whole or in part without Landlord's
consent which will not be unreasonably withheld or delayed. The
foregoing restrictions shall not be applicable to an assignment
of this Lease or a subletting of the Premises by Tenant to any of
the following parties (collectively called the "Related
Occupants"): a subsidiary wholly-owned by Tenant or to a
controlling corporation, the stock of which is wholly-owned by
the stockholders of Tenant, to any Affiliate of Tenant, to any
purchaser of all or substantially all of Tenant's business or to
any successor of Tenant by merger or consolidation provided,
however, that any such Affiliate, purchaser or successor shall
have a net worth not less than that of Tenant immediately prior
to such merger, consolidation or purchase. It shall be a
condition of the validity of any assignment, whether with the
consent of Landlord or to a subsidiary or controlling
corporation, that the assignee agree directly with Landlord, by
written instrument in form satisfactory to Landlord, to be bound
by all the obligations of Tenant hereunder including, without
limitation, the covenant against further assignment and
subletting. No assignment or subletting shall relieve Tenant
from its obligations hereunder and Tenant shall remain fully and
primarily liable therefor. Notwithstanding anything to the
contrary contained herein, Landlord shall be entitled to collect
(i) one hundred (100%) percent of any profit related to any
assignment in connection with this Lease and (ii) fifty (50%)
percent of any rent, income or profit derived from any sublease
of any portion of the Premises in excess of Tenant's Base
Subleasing Profit.
(b) If this Lease be assigned, or if the Premises or any
part thereof be sublet or occupied by anyone other than Tenant,
Landlord may, whether or not it has consented to any such
assignment, subletting or occupancy, at any time and from time to
time collect rent and other charges from the assignee, subtenant
or occupant, and apply the net amount collected to the rent and
other charges herein reserved, but no such assignment,
subletting, occupancy or collection shall be deemed a waiver of
any breach of Section 8.1 (a), or the acceptance of the assignee,
subtenant or occupant as a tenant or a release of Tenant from the
further performance by Tenant of its obligations hereunder. The
consent by Landlord to an assignment or subletting shall in no
way be construed to relieve Tenant or any successor from
obtaining the express consent in writing of Landlord to any
further assignment or subletting nor shall any such consent
release, diminish or impair Tenant's continuing primary liability
for performance of this Lease. No assignment or subletting and
no use of the Premises by a subsidiary wholly-owned by Tenant or
controlling corporation of Tenant shall affect the Permitted
Uses.
(c) In connection with any request by Tenant for Landlord's
consent to a sublease as required under Section 9.13(a), Tenant
shall first submit to Landlord in writing: (i) the name of the
proposed subtenant, (ii) such information as to its financial
responsibility and standing as Landlord may reasonably require,
and (iii) all terms and provisions upon which the proposed
subletting is to be made. Upon receipt from Tenant of such
requested information if Tenant is proposing a sublease of the
entire Premises, Landlord shall have an option (the "Take Back
Option") to be exercised in writing within thirty (30) days after
its receipt from Tenant of such requested information, to cancel
or terminate this Lease, as of the date set forth in Landlord's
notice of exercise of the Take Back Option, which shall not be
less than sixty (60) days nor more than one hundred twenty (120)
days following the giving of such notice. In the event Landlord
shall exercise the Take Back Option, Tenant shall surrender
possession of the entire Premises, on the date set forth in such
notice in accordance with the provisions of this Lease relating
to the surrender of the Premises at the expiration of the Term.
If Landlord exercises the Take Back Option, Landlord shall pay to
Tenant the unamortized value of the tenant improvements located
within the Premises. Notwithstanding anything to the contrary
contained herein, Landlord's Take Back Option is applicable only
if Tenant's request for Landlord's consent to a sublease involves
a sublease of the entire Premises.
Section 9.14. Overloading and Nuisance. Tenant shall not
injure, overload, deface or otherwise harm the Premises, commit
any nuisance, permit the emission of any objectionable noise,
vibration or odor, make, allow or suffer any waste or make any
use of the Premises which is improper, offensive or contrary to
any law or ordinance or which will invalidate any of Landlord's
insurance.
SECTION 10
Casualty or Taking
Section 10.1. Termination. In the event that greater than
twenty-five (25) percent of the Building or the Lot shall be
taken by any public authority or for any public use or destroyed
by the action of any public authority (a "Taking") then this
Lease may be terminated by either Landlord or Tenant effective on
the effective date of the Taking. In the event that the Premises
shall be destroyed or damaged by fire or casualty (a "Casualty")
and if it will require in excess of 120 days from the date of the
Casualty to restore the Premises, this Lease may be terminated by
either Landlord or Tenant by notice to the other within thirty
days after the casualty. In the case of a Taking, such election,
which may be made notwithstanding the fact that Landlord's entire
interest may have been divested, shall be made by the giving of
notice by Landlord or Tenant to the other within thirty (30) days
after Landlord or Tenant, as the case may be, shall receive
notice of the Taking.
Section 10.2. Restoration. In the event of a Taking or a
Casualty, unless Landlord or Tenant shall exercise an election to
terminate provided in Section 10.1, this Lease shall continue in
force and a just proportion of the Annual Rent and other charges
hereunder, according to the nature and extent of the damages
sustained by the Premises, but not in excess of an equitable
portion of the net proceeds of any rental insurance recovered by
Landlord, shall be abated until the Premises, or what may remain
thereof, shall be put by Landlord in proper condition for use
subject to zoning and building laws or ordinances then in
existence, which, unless Landlord or Tenant has exercised its
option to terminate pursuant to Section 10.1, Landlord covenants
to do with reasonable diligence at Landlord's expense. Landlord's
obligations with respect to restoration shall not require
Landlord to expend more than the net proceeds of insurance
recovered or damages awarded for such Casualty or Taking and made
available for restoration by Landlord's mortgagees. "Net proceeds
of insurance recovered or damages awarded" refers to the gross
amount of such insurance or damages less the reasonable expenses
of Landlord in connection with the collection of the same,
including without limitation, fees and expenses for legal and
appraisal services.
Section 10.3. Award. Irrespective of the form in which
recovery may be had by law, all rights to damages or compensation
shall belong to Landlord except Tenant shall be entitled to claim
relocation costs and a claim for the value of its improvements to
the Premises provided that Tenant's claim does not diminish
Landlord's claim or award.
SECTION 11
Default
Section 11.1. Events of Default.
If: (a) Tenant shall default in the performance of any of
its obligations to pay the Annual Fixed Rent, Additional Rent or
any other sum payable hereunder and if such default shall
continue for ten (10) days after notice from Landlord designating
such default;
(b) if within thirty (30) days after notice from
Landlord to Tenant specifying any other default or defaults
Tenant has not commenced diligently to correct the default or
defaults so specified or has not thereafter diligently pursued
such' correction to completion;
(c) if any assignment for the benefit of creditors
shall be made by Tenant;
(d) if Tenant's leasehold interest shall be taken on
execution or other process of law in any action against Tenant;
(e) if a lien or other involuntary encumbrance is filed
against Tenant's leasehold interest, and is not discharged or
bonded over, as the case may be, within ten (10) days thereafter;
(f) if a petition is filed by Tenant for liquidation,
or for reorganization or an arrangement or any other relief under
any provision of the Bankruptcy Code as then in force and effect;
or
(g) if an involuntary petition under any of the
provisions of said Bankruptcy Code is filed against Tenant and
such involuntary petition is not dismissed within thirty (30)
days thereafter, then, and in any of such cases, Landlord and the
agents and servants of Landlord lawfully may, in addition to and
not in derogation of any remedies for any preceding breach of
covenant, immediately or at any time thereafter and without
demand or notice and with or without process of law (forcibly, if
necessary) enter into and upon the Premises or any part thereof
in the name of the whole, or mail a notice of termination
addressed to Tenant, and repossess the same as of Landlord's
former estate and expel Tenant and those claiming through or
under Tenant and remove its and their effects without being
deemed guilty of any manner of trespass and without prejudice to
any remedies which might otherwise be used for arrears of rent or
prior breach of covenant, and upon such entry or mailing as
aforesaid this Lease shall terminate. Landlord, without notice to
Tenant, may store Tenant's effects, and those of any person
claiming through or under Tenant at the expense and risk of
Tenant, and, if Landlord so elects, may, with notice to Tenant,
sell such effects at public auction or private sale and apply the
net proceeds to the payment of all sums due to Landlord from
Tenant, if any, and pay over the balance, if any, to Tenant.
Section 11.2. Remedies. In the event that this Lease is
terminated under any of the provisions contained in Section 11.1,
Tenant shall pay forthwith to Landlord, as compensation, the
present value of the excess of the total rent reserved for the
residue of the Term over the fair market rental value (computed
using a discount rate of eight (8%) percent) of the Premises for
the residue of the Term. In calculating the rent reserved there
shall be included, in addition to the Annual Fixed Rent and
Additional Rent, the value of all other considerations agreed to
be paid or performed by Tenant during the residue. As additional
and cumulative obligations after any such termination, Tenant
shall also pay punctually to Landlord all the sums and shall
perform all the obligations which Tenant covenants in this Lease
to pay and to perform in the same manner and to the same extent
and at the same time as if this Lease had not been terminated. In
calculating the amounts to be paid by Tenant pursuant to the
preceding sentence, Tenant shall be credited with any amount paid
to Landlord pursuant to the first sentence of this Section 11.2
and also with the net proceeds of any rent obtained by Landlord
by reletting the Premises, after deducting all Landlord's
reasonable expenses in connection with such reletting, including,
without limitation, all repossession costs, brokerage
commissions, fees for legal services and expenses of preparing
the Premises for such reletting, it being agreed by Tenant that
Landlord may (i) relet the Premises or any part or parts thereof
for a term or terms which may at Landlord's option be equal to or
less than or exceed the period which would otherwise have
constituted the balance of the Term hereof and may grant such
concessions and free rent as Landlord in its reasonable judgment
considers advisable or necessary to relet the same and (ii) make
such alterations, repairs and decorations in the Premises as
Landlord in its reasonable judgment considers advisable or
necessary to relet the same, and no action of Landlord in
accordance with the foregoing or failure to relet or to collect
rent under reletting shall operate or be construed to release or
reduce Tenant's liability as aforesaid. Landlord acknowledges
and agrees to use reasonable efforts to relet the Premises
provided, however, that any failure of Landlord to relet the
Premises shall not constitute a default hereunder.
Section 11.3. Remedies Cumulative. Except as otherwise
expressly provided herein, any and all rights and remedies which
Landlord may have under this Lease and at law and equity shall be
cumulative and shall not be deemed inconsistent with each other,
and any two or more of all such rights and remedies may be
exercised at the same time to the greatest extent permitted by
law.
Section 11.4. Landlord's Right to Cure Defaults. At any time
following ten (10) days' prior notice to Tenant (except in cases
of emergency when no notice shall be required), Landlord may (but
shall not be obligated to) cure any default by Tenant under this
Lease, and whenever Landlord so elects, all costs and expenses
incurred by Landlord, including reasonable attorneys' fees, in
curing a default shall be paid by Tenant to Landlord as
Additional Rent on demand, together with interest thereon at the
rate provided in Section 11.7 from the date of payment by
Landlord to the date of payment by Tenant.
Section 11.5. Effect of Waivers of Default. Any consent or
permission by Landlord to any act or omission which otherwise
would be a breach of any covenant or condition herein, or any
waiver by Landlord of the breach of any covenant or condition
herein, shall not in any way be held or construed (unless
expressly so declared) to operate so as to impair the continuing
obligation of any covenant or condition herein, or otherwise
operate to permit the same or similar acts or omissions except as
to the specific instance. The failure of Landlord to seek redress
for violation of, or to insist upon the strict performance of,
any covenant or condition of this Lease shall not be deemed a
waiver of such violation nor prevent a subsequent act, which
would have originally constituted a violation, from having all
the force and effect of an original violation. The receipt by
Landlord of any Annual Rent hereunder with knowledge of the
breach of any covenant of this Lease shall not be deemed to have
been a waiver of such breach by Landlord or of any of Landlord's
remedies on account thereof, including its right of termination
for such default.
Section 11.6. No Accord and Satisfaction. No acceptance by
Landlord of a lesser sum than the Annual Fixed Rent, Additional
Rent or any other sum then due shall be deemed to be other than
on account of the earliest installment of such rent or charge
due, unless Landlord elects by notice to Tenant to credit such
sum against the most recent installment due. Any endorsement or
statement on any check or any letter accompanying any check or
payment as rent or other charge shall not be deemed an accord and
satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of
such installment or pursue any other remedy under this Lease or
otherwise.
Section 11.7. Interest on Overdue Sums. If Tenant fails to
pay Annual Fixed Rent, Additional Rent or other sums payable by
Tenant to Landlord within ten (10) days of the due date thereof
(i.e., the due date disregarding any requirement of notice from
Landlord), the amount so unpaid shall bear interest at a variable
rate (the "Delinquency Rate") equal to four percent (4%) in
excess of the base rate (prime rate) of BankBoston from time to
time in effect commencing with the eleventh (11th) day after the
due date and continuing through the day on which payment of such
delinquent payment with interest thereon is paid. If such rate is
in excess of any maximum interest rate permissible under
applicable law, the Delinquency Rate shall be the maximum
interest rate permissible under applicable law.
Section 11.8. Cost and Expenses: All costs and expenses
incurred by or on behalf of Landlord (including, without
limitation, attorneys' fees and expenses) in enforcing its rights
hereunder or occasioned by any default of Tenant shall be paid by
Tenant.
SECTION 12
Mortgages
Section 12.1. Rights of Mortgage Holders. No Annual Fixed
Rent, Additional Rent or any other charge which is paid more than
one month prior to the due date thereof and payments made in
violation of this provision shall (except to the extent that such
payments are actually received by a mortgagee in possession or in
the process of foreclosing its mortgage) be a nullity as against
such mortgagee and Tenant shall be liable for the amount of such
payments to such mortgagee, provided however, that the foregoing
clause shall not apply to the Security Deposit and any mortgagee
shall be governed by the terms and conditions of this Lease with
respect to same.
In the event of any act or omission by Landlord which would
give Tenant the right to terminate this Lease or to claim a
partial or total eviction, Tenant shall not exercise any such
right (a) until it shall have given notice, in the manner
provided in Section 13.1, of such act or omission to the holder
of any mortgage encumbering the Premises whose name and address
shall have been furnished to Tenant in writing, at the last
address so furnished, and (b) until a reasonable period of time
for remedying such act or omission shall have elapsed following
the giving of such notice, provided that following the giving of
such notice, Landlord or such holder shall, with reasonable
diligence, have commenced and continued to remedy such act or
omission or to cause the same to be rendered. Notwithstanding
the foregoing, such "reasonable period of time" shall not extend
beyond thirty (30) days unless Landlord or such holder has
commenced and diligently pursues to completion the remedy of such
act or omission within said thirty (30) day period. The
provisions contained in this paragraph shall not affect any of
Tenant's rights to terminate this Lease under Section 3.7 of this
Lease.
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 now or hereafter encumbering the Premises, Tenant shall
attorn to the purchaser upon such foreclosure or sale or upon any
grant of a deed in lieu of foreclosure and recognize such
purchaser as Landlord under this Lease.
Section 12.2. Lease Subordinate. At Landlord's election,
this Lease, and all rights of Tenant hereunder, shall be subject
and subordinate to all mortgages and/or ground leases which may
now or hereafter affect the Property whether or not such
mortgages or leases shall also cover other lands and/or
buildings, to each and every advance made or hereafter to be made
under such mortgages, and to all renewals, modifications,
replacements and extensions of such mortgages and leases and all
consolidations of such mortgages, provided that, with respect to
any such mortgage or lease hereafter placed on the Property,
Landlord shall deliver to Tenant an agreement, in form and
substance reasonably acceptable to such holder or lessor and
Tenant, by such holder or lessor to the effect that, subject to
qualifications of the type set forth in the second sentence of
paragraph (b) hereof, all of Tenant's rights hereunder shall be
recognized by such holder or lessor. Such subordination shall be
automatic and without need for any additional action or
documentation. Without derogating from the foregoing, in
confirmation of such subordination, and subject to the foregoing
condition, Tenant shall promptly execute, acknowledge and deliver
any instrument that Landlord, the holder of any such mortgage or
the lessor under any such lease or any of their respective
successors in interest may reasonably request to evidence such
subordination. Landlord agrees to request the holder of the
existing mortgage on the Property to deliver an agreement, in
form and substance acceptable to such holder, by such holder to
the effect that, subject to the qualifications of the type set
forth in the second sentence of paragraph (b) hereof, that such
holder recognizes all of Tenant's rights hereunder provided that
Tenant is not in default (beyond any applicable notice and grace
period) of any of the terms, provisions, covenants, agreements
and conditions to be observed, performed and complied with by
Tenant under this Lease. Any mortgage to which this Lease is, at
the time referred to, subject and subordinate, is herein called
"Superior Mortgage" and the holder of a Superior Mortgage is
herein called "Superior Mortgagee"; and any lease to which this
Lease is, at the time referred to, subject and subordinate is
herein called "Superior Lease" and the lessor of a Superior Lease
or its successor in interest, at the time referred to, is herein
called "Superior Lessor".
(b) If any Superior Mortgagee or Superior Lessor or
the nominee or designee of any Superior Mortgagee or Superior
Lessor shall succeed the rights of Landlord (for the purposes of
this paragraph (b), the "Preceding Landlord") under this Lease,
whether through possession or foreclosure action or delivery of a
new lease or deed, or otherwise, then Tenant shall attorn to and
recognize such party (herein called "Successor Landlord") so
succeeding to the Preceding Landlord's rights as Tenant's
landlord under this Lease and, upon such Successor Landlord's
request, Tenant shall promptly execute and deliver any instrument
that such Successor Landlord may reasonably request to evidence
such attornment provided that such Successor Landlord gives
Tenant a written agreement to accept Tenant's attornment and
recognizes Tenant's rights under this Lease (subject to the
qualifications) hereinafter set forth). Upon such attornment,
this Lease shall continue in full force and effect as a direct
lease between the Successor Landlord and Tenant upon all of the
terms, conditions and covenants as are set forth in this Lease,
except that the Successor Landlord (unless formerly the landlord
under this Lease or its nominee or designee) shall not be (a)
liable in any way to Tenant for any act or omission, neglect or
default on the part of the Preceding Landlord under this Lease,
(b) responsible for any monies owing by or on deposit with the
Preceding Landlord to the credit of Tenant (except for the
Security Deposit to the extent that such Security Deposit is
actually received by and is in possession of the Successor
Landlord, which shall include the delivery of the Letter under
the provisions of Section 13.8 of this Lease), (c) subject to any
counterclaim or bound by any modification of this Lease
subsequent to such Superior Mortgage or Lease which was not
approved in writing by the Superior Mortgagee or Superior Lessor,
or by any previous prepayment of Annual Fixed Rent or Additional
Rent for more than one (1) month which was not approved in
writing by the Superior Landlord's interest in the Property and
the rents, income, receipts, revenues, issues and profits issuing
from such Property, (f) responsible for the performance of any
work to be done by the Preceding Landlord under this Lease to
render the Premises ready for occupancy by the Tenant, (g)
required to remove any person occupying the Premises or any part
thereof, except if such person claims by through or under the
Successor Landlord.
SECTION 13
Miscellaneous Provisions
Section 13.1. Notices from One Party to the Other. Whenever,
by the terms of this Lease, notices, consents or approvals shall
or may by given either to Landlord or to Tenant, such notices,
consents or approvals shall be in writing and shall be delivered
in hand, sent by registered or certified mail, return receipt
requested, postage prepaid or sent by an overnight express
courier service which provides evidence of delivery or attempted
delivery;
If intended for Landlord, delivered or addressed to
Landlord at the Original Address of Landlord (or to such other
address as may from time to time hereafter be designated by
Landlord by like notice).
If intended for Tenant, delivered or addressed to
Tenant at the Original Address of Tenant until the Commencement
Date and thereafter to the Premises (or to such other address or
addresses as may from time to time hereafter be designated by
Tenant by like notice).
All such notices shall be effective when delivered or
tendered for delivery at the address to which the same were sent.
Section 13.2. Lease Not to be Recorded; Notice of
Lease. Tenant agrees that it will not record this Lease. If the
Term of this Lease, including options, exceeds seven years,
Landlord and Tenant agree that, on the request of either, they
will enter and record a notice of lease in form reasonably
acceptable to both parties.
Section 13.3. Bind and Inure; Limitation of Landlord's
Liability. The obligations of this Lease shall run with the land,
and this Lease shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
No owner of the Lot shall be liable under this Lease except for
breaches of Landlord's obligations occurring while owner of the
Lot. The obligations of Landlord shall be binding upon the assets
of Landlord which comprise the Lot but not upon other assets of
Landlord. No individual, member, partner, trustee, stockholder,
officer, director, employee or beneficiary of Landlord shall be
personally liable under this Lease and Tenant shall look solely
to Landlord's interest in the Lot in pursuit of its remedies upon
an event of default hereunder, and the general assets of Landlord
and its members, partners, trustees, stockholders, officers,
employees or beneficiaries of Landlord shall not be subject to
levy, execution or other enforcement procedure for the
satisfaction of the remedies of Tenant.
Section 13.4. Acts of God. In any case where either party
hereto is required to do any act, delays caused by or resulting
from acts of God, war, civil commotion, fire, flood or other
casualty, labor difficulties, shortages of labor, materials or
equipment, government regulations, unusually severe weather, or
other causes beyond such party's reasonable control shall not be
counted in determining the time during which work shall be
completed, whether such time be designated by a fixed date, a
fixed time or a "reasonable time", and such time shall be deemed
to be extended by the period of such delay.
Section 13.5. Landlord's Default. Landlord shall not be
deemed to be in default in the performance of any of its
obligations hereunder unless it shall fail to perform such
obligations and unless within thirty (30) days after notice from
Tenant to Landlord specifying such default Landlord has not
commenced diligently to correct the default so specified or has
not thereafter diligently pursued such correction to completion.
Tenant shall have no right, for any default by Landlord, to
offset or counterclaim against any rent due hereunder. The
provisions contained in this paragraph shall not affect any of
Tenant's rights to terminate this Lease under Section 3.7 of this
Lease.
Section 13.6. Brokerage. Landlord shall pay a brokerage
commission to Fallon, Hines & O'Connor, Inc. for the brokerage
services rendered in connection with this Lease. Tenant and
Landlord warrant and represent to the other that neither has had
any dealings with any broker or agent in connection with this
Lease other than Fallon, Hines & O'Connor, Inc. Tenant and
Landlord agree to defend with counsel reasonably approved by the
other, hold harmless and indemnify the other from and against any
and all cost, expense or liability for any compensation,
commissions and charges which may be asserted against the other
as a result of the other's breach of this warranty.
Section 13.7. Miscellaneous. This Lease shall be governed by
and construed in accordance with the laws of the Commonwealth of
Massachusetts. There are no prior oral or written agreements
between Landlord and Tenant affecting this Lease.
Section 13.8. Security Deposit. In order to provide
security against Tenant's default under Section 11.1(a) of the
Lease (a "Monetary Default"), Tenant shall furnish Landlord on
the Escrow Release Date with, and shall maintain in force and
effect throughout the Term of this Lease, an irrevocable "clean"
Letter of Credit which may provide for multiple draws, reductions
and reinstatement of the stated amounts (hereinafter together
with any renewal or substitution thereof in accordance with the
provisions hereof referred to as "Letter") or cash ("Cash") in an
amount equal to the "Applicable Amount" (as said term is
hereinafter defined) from time to time required hereunder in the
case of a Letter issued by Fleet Bank or a similar financial
institution ("Issuer") in the greater Boston, Massachusetts area
which is approved and accepted by Landlord (an "Approved
Issuer"). Landlord shall deliver the Security Deposit to the
holder of any first mortgage encumbering the Property and the
Security Deposit will be held by the holder of any mortgage
encumbering the Property for and during the Term and shall be
returned to Tenant, within thirty (30) days after the expiration
of the Term of this Lease provided there exists no Monetary
Default. As used herein, the term "Applicable Amount" shall mean
(i) $750,000.00 beginning on the Escrow Release Date through the
end of the 36th full calendar month immediately following the
Commencement Date, (ii) provided that the "4th Lease Year
Conditions" (as hereinafter defined are completely satisfied,
$375,000.00 during months 37 through 72 of the Term, (iii)
provided that the "7th Lease Year Conditions") (as hereinafter
defined) are completely satisfied, $187,500.00 for the remainder
of the Term of this Lease. As used herein, the term "4th Lease
year Conditions" shall mean that at the commencement of the
fourth (4th) lease year of the Term of this Lease, based on a
review of either Tenant's most recent 10Q or 10K statements filed
with the Security Exchange Commission, Tenant has $10,000,000.00
in unrestricted cash, cash equivalents and marketable securities
on hand and a "Current Assets" to "Current Liabilities", as said
terms are hereinafter defined, ratio of 2.0:1.0. The term "7th
Lease Year Conditions" shall mean that at the commencement of the
seventh (7th) lease year of the Term of this Lease, Tenant has
$10,000,000.00 in unrestricted cash, cash equivalents and
marketable securities on hand and a "Current Assets" to "Current
Liabilities", as said terms are hereinafter defined, ratio of
2.0:1.0. As used herein, the term "Current Assets" shall mean:
unrestricted cash, cash equivalents, marketable securities,
accounts receivable, inventories, prepaid expenses and other
current assets under generally accepted accounting practices.
"Current Liabilities" shall mean: accounts payable, accrued
royalties, accrued professional fees, accrued incentive
compensation, accrued restructuring costs, current portion of
deferred revenue, current maturities of long term debt and other
accrued expenses under generally accepted accounting practices.
Tenant shall have the right to call upon Landlord to apply
all or any part of the Security Deposit to cure any Monetary
Default. If all or any part of the Security Deposit is applied
to cure the Monetary Default, Tenant shall within ten (10) days
from any request by Landlord restore the Security Deposit to the
Applicable Amount, and notwithstanding the occurrence of a
Monetary Default, Tenant shall not be deemed in default hereunder
unless and until Tenant shall fail to restore the amount of the
Security Deposit.
The Security Deposit shall be delivered by Landlord to
Landlord's successor in interest under the Lease and upon any
such delivery and the acknowledgment of such successor that such
successor holds the Security Deposit under the terms and
conditions of the Lease, Tenant shall release Landlord herein
named of any and all liability with respect to the Security
Deposit, its application and return.
The Letter shall be addressed to and for the benefit of the
Landlord under this Lease from time to time and be in form and
substance satisfactory to Landlord in its reasonable discretion.
In the event of a Monetary Default by Tenant under this Lease,
Landlord may draw upon an amount necessary to cure the Monetary
Default upon certification by Landlord to the Issuer that
Landlord is entitled to apply all or any part of the proceeds of
the Letter to the extent required to cure the Monetary Default.
In the event of any Monetary Default by Tenant under this
Lease, Landlord shall provide Tenant with two (2) Business Days
written notice prior to drawing down on the Letter. In the event
of any Monetary Default by Tenant under this Lease, if Landlord
applies any part of the proceeds of the Letter or the Cash to
cure any default of Tenant, Tenant shall, upon demand, cause the
Letter or the Cash to be replenished and reinstated to the extent
of the amount so drawn upon and applied in order that Landlord
shall, at all times, have the full Applicable Amount of the
Letter or the Cash available for the purposes hereof during the
Term of this Lease. The Letter shall, in each instance, and for
each year of the Term of this Lease, be in effect and, at
Tenant's sole cost and expense, be renewed by Tenant and
decreased to the required Applicable Amount in no event later
than sixty (60) days prior to its date of expiration. Tenant's
failure to maintain the Letter in force and effect in the
Applicable Amounts during the periods of time required hereunder
shall, if such failure continues for more than ten (10) days
after notice thereof from Landlord, constitute a default under
this Lease. If, on or before the sixtieth (60th) day prior to
the expiration date of a Letter, Tenant shall have failed to
deliver to Landlord an original fully executed renewal or
extension of the Letter (or a substitute letter of credit from an
Approved Issuer), in each case, having a term of at least one
year and such failure shall continue for more than ten (10) days
after Landlord has given Tenant notice of such failure, Landlord,
at its option, may, but shall not be required to without further
notice to Tenant, draw down upon the Letter in its entirety in
which event Landlord may, in addition to all other rights and
remedies which it may have on account of such default, treat all
sums drawn under such Letter as a Cash Security Deposit governed
by and to be applied and/or retained by Landlord pursuant to the
provisions of this paragraph. All references herein to the
Letter shall also mean and include all renewals and replacements
thereof and all modifications and extensions thereof. Any
renewal, extension or substitution of a Letter shall be in form
and substance satisfactory to Landlord, in its reasonable
discretion, and shall be issued by an Approved Issuer. Landlord
will not unreasonably delay or withhold approval of the form of
any substitute Letter which is in the same form as that
previously approved by Landlord. If the Property is sold and if
the purchaser and seller together request in writing that Tenant
obtain a modification to a Letter designating the purchaser as
the "beneficiary" thereunder in substitution for the then named
beneficiary, Tenant agrees to promptly obtain and deliver such
amendment to such purchaser at purchaser's sole cost and expense.
Tenant hereby agrees that all costs and expenses involved in
obtaining and maintaining the Letters contemplated by this
paragraph shall be borne solely and exclusively by Tenant.
Notwithstanding anything to the contrary contained herein, if
Tenant fails to remove Tenant's Removable Property as required
hereunder at such time as Tenant surrenders and yields up its
right and interest in the Premises, then Landlord shall have the
right to draw down all or any portion of the Security Deposit
necessary to cover the costs and expenses associated with the
removal of Tenant's Removable Property.
Section 13.9. Park Common Expenses.
(a) Tenant shall pay to Landlord as Additional Rent monthly
with each payment of Annual Fixed Rent an amount equal to one
twelfth (1/12th) of the annual amount of the "Lot's Allocable
Share" (as defined in Section 13.9(b))of the "Park Common
Expenses" (as said term is hereinafter defined). As used herein,
the term "Park Common Expenses" shall mean "Common Expenses" as
said term is defined in the Park Covenants; provided, however,
the term "Park Common Expenses" shall not include any costs
relating to the remediation of any hazardous materials on the Lot
and the Leasehold Parking Area in connection with closure of the
landfill on the Landfill Lot. Landlord shall use diligent
efforts to cause the owner of the Park Common Property to
maintain and repair the Park Common Property insofar as it
services the Premises in good operating condition and repair. As
used herein, the term "Park Common Property" shall mean the
"Infrastructure Easement Areas" and the "Common Land", as such
terms are defined in the Park Covenants.
(b) As used in this Lease, the term "Lot's Allocable Share"
shall mean a percentage equal to that percentage which is
attributable to the Premises under the Park Covenants in
determining the Premises' share of Common Expenses under the Park
Covenants but in no event shall the Lot's Allocable Share ever
exceed ten (10%) percent.
(c) At the beginning of every calendar year and at the
commencement of the Term, Landlord shall deliver to Tenant its
good faith estimate of the expenses (i.e. the Park Common
Expenses) referenced in this Section 13.9 for such year, and
Tenant shall make monthly payments based on that amount. As soon
as practicable after the end of each calendar year, Landlord
shall render a statement (the "Park Common Expense Statement")
showing for the preceding calendar year or fraction thereof, as
the case may be, the actual annual expenses for such matters for
such year or fraction, and thereupon any balance owed by Tenant
or excess paid by Tenant under this Section shall be paid to
Landlord or credited to Tenant, as the case may be, on the next
rent payment date. Upon request of Tenant made within ninety
(90) days after delivery of the Park Common Expense Statement,
Tenant shall have the right to audit Landlord's books and records
with respect to such Park Common Expense Statement. If such
audit discloses an overstatement of Park Common Expenses of more
than five (5%) percent, Landlord shall reimburse Tenant for
Tenant's reasonable out-of-pocket expenses for such audit.
Landlord shall credit to Tenant the amount of any overpayment of
Park Common Expenses by Tenant against subsequent obligations of
Tenant with respect to Park Common Expenses (or refund such
overpayment if the Term of this Lease has ended and Tenant has no
further obligation to Landlord).
Section 13.10. Leasehold Parking Area. It is expressly
understood and agreed by and between Landlord and Tenant that
this Lease, as to the Leasehold Parking Area, is a sublease and
is subject and subordinate to the Ground Lease with respect to
the Leasehold Parking Area and that no right, power or privilege
granted to Tenant hereunder with respect to the Leasehold Parking
Area may be exercised or enjoyed by Tenant and no term, covenant
or condition of this Lease insofar as it relates to the Leasehold
Parking Area benefiting Tenant shall be operative if and to the
extent that such exercise, enjoyment or operation would not be
permitted by or would violate or be in conflict with any term,
covenant or condition of the Ground Lease. Without limiting the
generality of the foregoing, it is expressly understood and
agreed that all rights of Tenant in and to any eminent domain
awards in any way related to the Leasehold Parking Area shall be,
and is hereby expressly made, subject and subordinate to the
rights of the Landlord under the Ground Lease. Landlord
covenants and agrees that Landlord will not violate any of the
terms, covenants or conditions of the Ground Lease. The cost of
any and all insurance required to be carried by Landlord under
the Ground Lease or which Landlord carries in connection with the
Ground Lease shall be included in the costs payable by Tenant as
Additional Rent under this Lease. From and after the Term
Commencement Date and to the maximum extent, this agreement may
be made effective according to law, Tenant agrees to indemnify
and save harmless the Town of Framingham, as landlord under the
Ground Lease (the "Ground Lease Landlord") from and against all
claims of whatever nature arising from any act, omission or
negligence of Tenant, Tenant's contractors, licensees, agents,
servants, employees or customers, or anyone claiming by, through
or under Tenant so long as Tenant or any occupant claiming under
Tenant is in occupancy or is using any part of the entire
Leasehold Parking Area where such accident, injury or damage
results or is claimed to have resulted from any act, omission or
negligence on the part of Tenant or Tenant's contractors,
licensees, agents, servants, employees or customers or anyone
claming by, through or under Tenant. The foregoing indemnity and
hold harmless agreement shall include indemnity against all costs
and expenses and liabilities incurred in or in connection with
any claim or proceeding brought thereon and the defense thereof
with counsel acceptable to the Ground Lease Landlord. To the
maximum extent, this agreement may be made effective according to
law, Tenant agrees to use and occupy the Leasehold Parking Area
and any other part of the entire Leasehold Parking Area which the
Tenant is permitted to use hereunder at Tenant's own risk and the
Ground Lease Landlord shall have no responsibility or liable for
any loss or damage to fixtures or other personal property of
Tenant or any person claiming by, through or under Tenant.
Section 13.11. Hazardous Materials. Tenant shall not
(either with or without negligence) cause or permit the escape,
disposal, release or threat of release of any biologically or
chemically active or other Hazardous Materials (as said term is
hereafter defined) on, in, upon or under the Property or the
Premises except in compliance with all laws, rules, regulations,
ordinances and codes, including, without limitation, the
Environmental Laws. Tenant shall not allow the generation,
storage, use, disposal or transfer of such Hazardous Materials in
any manner not sanctioned by law or by the highest standards
prevailing in the industry for the generation, storage, use,
disposal and transfer of such Hazardous Materials, nor allow to
be brought into the Property any such Hazardous Materials except
for those certain chemicals used in the ordinary course of
Tenant's business and more particularly identified on Exhibit O
attached hereto. Tenant shall update the list of Tenant's
Chemicals on an annual basis and/or as Landlord reasonably
requests. If any lender or governmental agency shall ever
require testing to ascertain whether or not there has been any
release of Hazardous Materials, then the reasonable costs thereof
shall be reimbursed by Tenant to Landlord upon demand as
additional charges but only if such requirement applies to the
Premises or may be the result of the acts or omissions of Tenant.
In addition, Tenant shall execute affidavits, representations and
the like, from time to time, at Landlord's request concerning
Tenant's best knowledge and belief regarding the presence of
Hazardous Materials on the Premises.
The Tenant shall, at its own expense, remove, clean up,
remedy and dispose of (in compliance with all applicable laws,
rules and regulations) all Hazardous Materials generated or
released by the Tenant or its officers, directors, employees,
contractors, servants, invitees, agents or any other person
acting under Tenant during the Term of this Lease (or during such
term as the Tenant is in occupancy or possession of any part of
the Premises, the Building or the Property) at or from the
Premises, the Building or the Property in compliance with all
Environmental Laws (as said term is hereafter defined) and
further, shall remove, clean up, remedy and dispose of all
Hazardous Materials located at, upon, under, within or in the
Premises, the Building or the Property generated by or resulting
from its operations, activities or processes during the term of
this Lease (or such other periods of time as the Tenant may be in
occupancy or in possession of the Premises or any portion of the
Property or Building), in compliance with all Environmental Laws.
In performing its obligations hereunder, the Tenant shall use
best efforts to avoid interference with the use and enjoyment of
the Building and the Property by other tenants and occupants
thereof. The provisions hereof shall survive expiration or
termination of this Lease.
The Tenant shall indemnify, defend and save harmless the
Landlord and its members, officers, directors, shareholders,
employees, contractors, servants, invitees, representatives and
agents from and against all loss, costs, damages, claims,
proceedings, demands, liabilities, penalties, fines and
expenses, including without limitation, reasonable fees and
costs for attorneys' fees, consultants' fees, litigation costs
and clean-up costs asserted
against or incurred by the Landlord, its members, officers,
directors, shareholders, employees, contractors, servants,
invitees representatives or agents at any time by reason of or
arising out of (i) any release or threat of release of any
Hazardous Materials at, in, upon, under or from the Premises,
the Building or the Property where such release or threat of
release is the result of or alleged to result from the acts or
omissions of the Tenant or its agents, servants, employees,
contractors or invitees, or (ii) any violation or alleged
violation of any Environmental Laws governing Hazardous
Materials where such violation or alleged violation is the
result of or alleged to result from the acts or omissions of the
Tenant or its agents, servants, employees, contractors,
invitees, or any other person acting under Tenant. The
indemnities set forth in this Section shall survive expiration
or termination of this Lease.
In addition to the requirements set forth above, the Tenant
shall, within ten (10) days of receipt, provide to the Landlord
copies of any inspection or other reports, correspondence,
documentation, orders, citations, notices, directives, or suits
from or by any governmental authority or insurer regarding non-
compliance with or potential or actual violation of
Environmental Laws. The Landlord hereby expressly reserves the
right to enter the Premises and all other portions of the
Building and the Property in order to perform inspections and
testing of the air, soil and groundwater for the presence or
existence of Hazardous Materials.
As used herein, the term "Hazardous Materials" shall mean
and include, without limitation, any material or substance which
is (i) petroleum, (ii) asbestos, (iii) designated as a
"hazardous substance" pursuant to Section 311 of the Federal
Water Pollution Control Act, 33 U.S.C. SS 1251 et seq. (33
U.S.C. SS 1321) or listed in SS 307 of the Federal Water
Pollution Control Act (33 U.S.C. SS 1317), (iv) defined as a
"hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. SS 6901 et seq. (42
U.S.C. SS 6903), (v) defined as a "hazardous substance" pursuant
to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. SS 9601 et seq. (42
U.S.C. SS 9601), as amended and regulations promulgated
thereunder, or (vi) defined as "oil" or a "hazardous waste", a
"hazardous substance", a "hazardous material" or a "toxic
material" under any other law, rule or regulation applicable to
the Property, including, without limitation, Chapter 21E of the
Massachusetts General Laws, as amended and the regulations
promulgated thereunder. As used herein, the term "Environmental
Laws" shall mean, without limitation, each and every law, rule,
order, statute or regulation described above in this Section,
together with (i) any amendments thereto, or regulations
promulgated thereunder and (ii) any other laws pertaining to the
protection of the environment or governing the use, release,
storage, generation or disposal of Hazardous Materials, whether
now existing or hereafter enacted or promulgated.
Section 13.12. Landlord's Holdover Contribution. If the
Commencement Date should fail to occur on or before the
Anticipated Term Commencement Date as such date may be extended
by the Force Majeure Extension, then Landlord shall pay
Landlord's Holdover Contribution to Tenant on the first day of
each month in arrears commencing on the first day of the month
next succeeding the Anticipated Term Commencement Date, as
extended; provided, however, in no event shall Landlord have any
obligation to pay any payment of Landlord's Holdover Contribution
unless no default of Tenant shall have occurred and be continuing
under this Lease. Landlord's obligation to continue to pay
Landlord's Holdover Contribution to Tenant shall cease upon the
earlier to occur of the Commencement Date or the date of any
termination of this Lease.
WITNESS the execution hereof under seal as of the day and
year first above written.
Landlord: NDNE 9/90 CORPORATE CENTER LLC
By: ________________________
Its: ________________________
Tenant: AQUILA BIOPHARMACEUTICALS, INC.
By: ________________________
Its: ________________________
NDNE0023/15
September 26, 1997
{A:\1STAMEN&.;1}- -
FIRST AMENDMENT TO LEASE
THIS AGREEMENT made as of this _____ day of _________________, 1997,
by and between NDNE 9/90 CORPORATE CENTER LLC, a Massachusetts limited
liability company, having an address c/o National Development of New
England, 2310 Washington Street, Newton Lower Falls, Massachusetts 02162
(the "Landlord") and AQUILA BIOPHARMACEUTICALS, INC., a Delaware
corporation, having an address at 365 Plantation Street, Worcester,
Massachusetts 01605 (the "Tenant").
W I T N E S S E T H:
WHEREAS, the Landlord and the Tenant entered into that certain Lease
(the "Lease") dated as of September 19, 1997 with an effective date as of
the "Escrow Release Date" (as said term is defined in the Lease), which
relates to space in the Building (as said term is defined in the Lease);
and
WHEREAS, the Landlord and the Tenant now wish to amend the Lease, all
as more particularly hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the sum
of Ten ($10.00) Dollars and other good and valuable consideration, the
receipt and sufficiency whereof are hereby acknowledged, the Landlord and
the Tenant do hereby covenant and agree as follows:
1. Any capitalized terms used herein, and not otherwise defined
herein, shall have the meanings ascribed to said terms in the Lease.
2. The definition of "Business Hours" appearing on Page 2 of the
Lease is hereby amended by deleting the word "Sundays" therefrom and, in
replacement thereof, adding the words "on Saturdays" to the Lease.
3. The following sentences appearing in Section 3.7(a) on Pages
13 and 14 of the Lease are hereby deleted in their entirety:
"If, on December 15, 1997, all of the Release Conditions are not
completely satisfied or Landlord has not commenced construction by
placement of forms for the foundation of the Building on the Lot,
then, at Tenant's election, Tenant shall have the right (i) to
terminate this Lease by written notice to Landlord within three (3)
Business Days of December 15, 1997 or (ii) take thirty (30) days to
evaluate its situation and, on January 15, 1998, Tenant shall have
the right to terminate this Lease by written notice to Landlord
within three (3) Business Days of January 15, 1998. Any failure of
Tenant to exercise its rights of termination within three (3)
Business Days of December 15, 1997 or January 15, 1998, as the case
may be, shall constitute a waiver of such rights of termination on
such dates."
In replacement thereof, the following sentences are hereby added
to the Lease:
"If, on January 15, 1998, all of the Release Conditions are not
completely satisfied or Landlord has not commenced construction by
placement of forms for the foundation of the Building on the Lot,
then, at Tenant's election, Tenant shall have the right to terminate
this Lease by written notice to Landlord within three (3) Business
Days of January 15, 1998. Any failure of Tenant to exercise its
right of termination within three (3) Business Days of January 15,
1998 shall constitute a waiver of such right of termination."
4. The following rule and regulation is hereby added to Exhibit F -
Rules and Regulations attached to and made a part of the Lease:
"33. Each tenant, at its sole cost and expense, shall submit an
application for membership in the MetroWest Transportation Management
Association and shall become a member of said Association; provided,
however, Tenant's obligation is subject to Tenant's approval of (i)
all costs and expenses associated with said application and
membership and (ii) the organizational goals of said Association."
5. Except as amended by this First Amendment to Lease, all the
terms, provisions, covenants, agreements, conditions, representations and
warranties contained in the Lease are hereby affirmed and ratified.
6. This First Amendment to Lease shall be binding upon and shall
inure to the benefit of the Landlord and the Tenant and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to Lease to be duly executed as of the day and year first above
written.
Landlord: NDNE 9/90 CORPORATE CENTER LLC
By: NDNE Properties, Inc.
Its: Manager
By: _______________________________________
Its: _______________________________________
Tenant: AQUILA BIOPHARMACEUTICALS, INC.
By: _______________________________________
Its: _______________________________________
NDNE 23
{A:\2NDAMEN&.;1}- -
SECOND AMENDMENT TO LEASE
THIS AGREEMENT made as of this 14th day of January, 1998, by and
between NDNE 9/90 CORPORATE CENTER LLC, a Massachusetts limited liability
company, having an address c/o National Development of New England, 2310
Washington Street, Newton Lower Falls, Massachusetts 02162 (the "Landlord")
and AQUILA BIOPHARMACEUTICALS, INC., a Delaware corporation, having an
address at 365 Plantation Street, Worcester, Massachusetts 01605 (the
"Tenant").
W I T N E S S E T H:
WHEREAS, the Landlord and the Tenant entered into that certain Lease
dated as of September 19, 1997 with an effective date as of the "Escrow
Release Date" (as said term is defined in the "Lease", as hereinafter
defined), as amended by that certain First Amendment to Lease dated as of
December 17, 1997 by and between the Landlord and the Tenant (the Lease as
so amended is hereinafter called the "Lease"), which relates to space in
the Building (as said term is defined in the Lease); and
WHEREAS, the Landlord and the Tenant now wish to amend the Lease, all
as more particularly hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the sum
of Ten ($10.00) Dollars and other good and valuable consideration, the
receipt and sufficiency whereof are hereby acknowledged, the Landlord and
the Tenant do hereby covenant and agree as follows:
1. Any capitalized terms used herein, and not otherwise defined
herein, shall have the meanings ascribed to said terms in the Lease.
2. The following sentences appearing in Section 3.7(a) on Pages 13
and 14 of the Lease are hereby deleted in their entirety:
"If, on January 15, 1998, all of the Release Conditions are not
completely satisfied or Landlord has not commenced construction by
placement of forms for the foundation of the Building on the Lot,
then, at Tenant's election, Tenant shall have the right to terminate
this Lease by written notice to Landlord within three (3) Business
Days of January 15, 1998. Any failure of Tenant to exercise its
right of termination within three (3) Business Days of January 15,
1998 shall constitute a waiver of such right of termination."
In replacement thereof, the following sentences are hereby added
to the Lease:
"If, on January 30, 1998, all of the Release Conditions are not
completely satisfied or Landlord has not commenced construction by
placement of forms for the foundation of the Building on the Lot,
then, at Tenant's election, Tenant shall have the right to terminate
this Lease by written notice to Landlord within three (3) Business
Days of January 30, 1998. Any failure of Tenant to exercise its
right of termination within three (3) Business Days of January 30,
1998 shall constitute a waiver of such right of termination."
3. Except as amended by this Second Amendment to Lease, all the
terms, provisions, covenants, agreements, conditions, representations and
warranties contained in the Lease are hereby affirmed and ratified.
4. This Second Amendment to Lease shall be binding upon and shall
inure to the benefit of the Landlord and the Tenant and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to Lease to be duly executed as of the day and year first above
written.
Landlord: NDNE 9/90 CORPORATE CENTER LLC
By: NDNE Properties, Inc.
Its: Manager
By: _______________________________________
Its: _______________________________________
Tenant: AQUILA BIOPHARMACEUTICALS, INC.
By: _______________________________________
Its: _______________________________________
NDNE 23
{A:\3RDAMEN&.;1}- -
THIRD AMENDMENT TO LEASE
THIS AGREEMENT made as of this 3rd day of February, 1998, by and
between NDNE 9/90 CORPORATE CENTER LLC, a Massachusetts limited liability
company, having an address c/o National Development of New England, 2310
Washington Street, Newton Lower Falls, Massachusetts 02162 (the "Landlord")
and AQUILA BIOPHARMACEUTICALS, INC., a Delaware corporation, having an
address at 365 Plantation Street, Worcester, Massachusetts 01605 (the
"Tenant").
W I T N E S S E T H:
WHEREAS, the Landlord and the Tenant entered into that certain Lease
dated as of September 19, 1997 with an effective date as of the "Escrow
Release Date" (as said term is defined in the Lease), as amended by that
certain First Amendment to Lease dated December 17, 1997 by and between the
Landlord and the Tenant, and as further amended by that certain Second
Agreement to Lease dated as of January 14, 1998 by and between the Landlord
and the Tenant (the Lease as so amended is hereinafter called the "Lease")
which relates to space in the Building (as said term is defined in the
Lease); and
WHEREAS, the Landlord and the Tenant now wish to amend the Lease, all
as more particularly hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the sum
of Ten ($10.00) Dollars and other good and valuable consideration, the
receipt and sufficiency whereof are hereby acknowledged, the Landlord and
the Tenant do hereby covenant and agree as follows:
1. Any capitalized terms used herein, and not otherwise defined herein,
shall have the meanings ascribed to said terms in the Lease.
2. The following sentences appearing in Section 3.7(a) on Pages 13 and
14 of the Lease are hereby deleted in their entirety:
"If, on January 30, 1998, all of the Release Conditions are not
completely satisfied or Landlord has not commenced construction by
placement of forms for the foundation of the Building on the Lot,
then, at Tenant's election, Tenant shall have the right to terminate
this Lease by written notice to Landlord within three (3) Business
Days of January 30, 1998. Any failure of Tenant to exercise its
right of termination within three (3) Business Days of January 30,
1998 shall constitute a waiver of such right of termination."
In replacement thereof, the following sentences are hereby added
to the Lease:
"If, on February 27, 1998, all of the Release Conditions are not
completely satisfied or Landlord has not commenced construction by
placement of forms for the foundation of the Building on the Lot,
then, at Tenant's election, Tenant shall have the right to terminate
this Lease by written notice to Landlord within three (3) Business
Days of February 27, 1998. Any failure of Tenant to exercise its
right of termination within three (3) Business Days of February 27,
1998 shall constitute a waiver of such right of termination."
3. Except as amended by this Third Amendment to Lease, all the terms,
provisions, covenants, agreements, conditions, representations and
warranties contained in the Lease are hereby affirmed and ratified.
4. This Third Amendment to Lease shall be binding upon and shall inure to
the benefit of the Landlord and the Tenant and their respective successors
and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to Lease to be duly executed as of the day and year first above
written.
Landlord: NDNE 9/90 CORPORATE CENTER LLC
By: NDNE Properties, Inc.
Its: Manager
By: _______________________________________
Its: _______________________________________
Tenant: AQUILA BIOPHARMACEUTICALS, INC.
By: _______________________________________
Its: _______________________________________
NDNE 23
{A:\4THAMEN&.;1}- -
FOURTH AMENDMENT TO LEASE
THIS AGREEMENT made as of this ____ day of February, 1998, by and
between NDNE 9/90 CORPORATE CENTER LLC, a Massachusetts limited liability
company, having an address c/o National Development of New England, 2310
Washington Street, Newton Lower Falls, Massachusetts 02162 (the "Landlord")
and AQUILA BIOPHARMACEUTICALS, INC., a Delaware corporation, having an
address at 365 Plantation Street, Worcester, Massachusetts 01605 (the
"Tenant").
W I T N E S S E T H:
WHEREAS, the Landlord and the Tenant entered into that certain Lease
dated as of September 19, 1997 with an effective date as of the "Escrow
Release Date" (as said term is defined in the Lease), as amended by that
certain First Amendment to Lease dated December 17, 1997 by and between the
Landlord and the Tenant, as further amended by that certain Second
Amendment to Lease dated as of January 14, 1998 by and between the Landlord
and the Tenant, and as further amended by that certain Third Amendment to
Lease dated as of February 3, 1998 by and between the Landlord and the
Tenant (the Lease as so amended is hereinafter called the "Lease") which
relates to space in the Building (as said term is defined in the Lease);
and
WHEREAS, the Landlord and the Tenant now wish to amend the Lease, all
as more particularly hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the sum
of Ten ($10.00) Dollars and other good and valuable consideration, the
receipt and sufficiency whereof are hereby acknowledged, the Landlord and
the Tenant do hereby covenant and agree as follows:
1. Any capitalized terms used herein, and not otherwise defined herein,
shall have the meanings ascribed to said terms in the Lease.
2. The definition of "Premises" appearing on Page 1 of the Lease is
hereby amended by deleting the number "35,000" appearing in the fourth
line of said definition and, in replacement thereof, adding the number
"41,020" to the Lease.
3. The definition of "Annual Fixed Rent" appearing on Page 2 of the
Lease is hereby deleted in its entirety and, in replacement thereof, the
following definition is hereby added to the Lease:
"Annual Fixed Rent (includes Annual Base Operating Costs and Annual Base
Real Estate Taxes):
Lease Years 1 - 4 inclusive: $877,007.60 per annum
Lease Years 5 - 8 inclusive: $938,537.60 per annum
Lease Years 9 - 12 inclusive: $1,000,067.60 per annum"
4. The definition of "Premises' Square Footage" appearing on Page 4 of
the Lease is hereby amended by deleting the number "35,000" appearing in
the first line of said definition and, in replacement thereof, adding the
number "41,020" to the Lease.
5. The definition of "Premises' Square Footage" appearing on Page 5 of
the Lease is hereby amended by deleting in their entirety, the following
sentences appearing as the last two sentences of said definition:
"After Tenant delivers to Landlord the Tenant's Plans and
Specifications, Landlord and Tenant shall remeasure the Premises. If the
Premises' Square Footage increases or decreases based upon the measurement
referred to in the preceding sentence, then Landlord and Tenant shall
enter into an amendment to this Lease for the purpose of restating the
rentable square feet of the Premises, the Annual Fixed Rent, the Premises'
Square Footage, the Tenant's Proportionate Share and attaching Exhibit A -
Plan of Premises and Exhibit J - Plan of First Offer Space."
6. The definition of "Rentable Square Feet in the Building" is hereby
amended by deleting the number "120,000" appearing in the first line of
said definition and, in replacement thereof, adding the number "116,452"
to the Lease.
7. The definition of "Tenant's Proportionate Share" appearing on Page 5
of the Lease is hereby amended by deleting the words and figures "Twenty
Nine and Seventeen Hundredths (29.17%) Percent" from said definition and,
in replacement thereof, adding the words and figures "Thirty Five and
Twenty Two Hundredths (35.22%) Percent" to the Lease.
8. The following sentences appearing in Section 3.7(a) on Pages 13 and
14 of the Lease are hereby deleted in their entirety:
"If, on February 27, 1998, all of the Release Conditions are not
completely satisfied or Landlord has not commenced construction by
placement of forms for the foundation of the Building on the Lot,
then, at Tenant's election, Tenant shall have the right to terminate
this Lease by written notice to Landlord within three (3) Business
Days of February 27, 1998. Any failure of Tenant to exercise its
right of termination within three (3) Business Days of February 27,
1998 shall constitute a waiver of such right of termination."
In replacement thereof, the following sentences are hereby added
to the Lease:
"If, on March 15, 1998, all of the Release Conditions are not
completely satisfied or Landlord has not commenced construction by
placement of forms for the foundation of the Building on the Lot, then, at
Tenant's election, Tenant shall have the right to terminate this Lease by
written notice to Landlord within three (3) Business Days of March 15,
1998. Any failure of Tenant to exercise its right of termination within
three (3) Business Days of March 15, 1998 shall constitute a waiver of
such right of termination."
9. The following exhibits attached to this Fourth Amendment to Lease are
hereby added to the Lease as if originally attached to the Lease at the
time of the execution and delivery thereof:
Exhibit A - Plan of Premises
Exhibit J - Plan of First Offer Space
10. Tenant acknowledges and agrees that, as of the date hereof, Landlord
has yet to approve Exhibit E - Tenant's Plans and Specifications and
following Landlord's approval of said exhibit, Landlord shall attach said
exhibit to the Lease.
11. Except as amended by this Fourth Amendment to Lease, all the terms,
provisions, covenants, agreements, conditions, representations and
warranties contained in the Lease are hereby affirmed and ratified.
12. This Fourth Amendment to Lease shall be binding upon and shall inure
to the benefit of the Landlord and the Tenant and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to Lease to be duly executed as of the day and year first above
written.
Landlord: NDNE 9/90 CORPORATE CENTER LLC
By: NDNE Properties, Inc.
Its: Manager
By: _______________________________________
Its: _______________________________________
Tenant: AQUILA BIOPHARMACEUTICALS, INC.
By: _______________________________________
Its: _______________________________________
NDNE 234A
{A:\5THAMEN&.;1}- -
FIFTH AMENDMENT TO LEASE
THIS AGREEMENT made as of this 13th day of March, 1998, by and between
NDNE 9/90 CORPORATE CENTER LLC, a Massachusetts limited liability company,
having an address c/o National Development of New England, 2310 Washington
Street, Newton Lower Falls, Massachusetts 02162 (the "Landlord") and AQUILA
BIOPHARMACEUTICALS, INC., a Delaware corporation, having an address at 365
Plantation Street, Worcester, Massachusetts 01605 (the "Tenant").
W I T N E S S E T H:
WHEREAS, the Landlord and the Tenant entered into that certain Lease
dated as of September 19, 1997 with an effective date as of the "Escrow
Release Date" (as said term is defined in the Lease), as amended by that
certain First Amendment to Lease dated December 17, 1997 by and between the
Landlord and the Tenant, as further amended by that certain Second
Amendment to Lease dated as of January 14, 1998 by and between the Landlord
and the Tenant, as further amended by that certain Third Amendment to Lease
dated as of February 3, 1998 by and between the Landlord and the Tenant and
as further amended by that certain Fourth Amendment to Lease dated as of
February 27, 1998 by and between the Landlord and the Tenant (the Lease as
so amended is hereinafter called the "Lease") which relates to space in the
Building (as said term is defined in the Lease); and
WHEREAS, the Landlord and the Tenant now wish to amend the Lease, all
as more particularly hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the sum
of Ten ($10.00) Dollars and other good and valuable consideration, the
receipt and sufficiency whereof are hereby acknowledged, the Landlord and
the Tenant do hereby covenant and agree as follows:
1. The following sentences appearing in Section 3.7(a) on Pages 13 and
14 of the Lease are hereby deleted in their entirety:
"If, on March 15, 1998, all of the Release Conditions are not
completely satisfied or Landlord has not commenced construction by
placement of forms for the foundation of the Building on the Lot,
then, at Tenant's election, Tenant shall have the right to terminate
this Lease by written notice to Landlord within three (3) Business
Days of March 15, 1998. Any failure of Tenant to exercise its right
of termination within three (3) Business Days of March 15, 1998 shall
constitute a waiver of such right of termination."
In replacement thereof, the following sentences are hereby added
to the Lease:
"If, on March 31, 1998, all of the Release Conditions are not
completely satisfied or Landlord has not commenced construction by
placement of forms for the foundation of the Building on the Lot, then, at
Tenant's election, Tenant shall have the right to terminate this Lease by
written notice to Landlord within three (3) Business Days of March 31,
1998. Any failure of Tenant to exercise its right of termination within
three (3) Business Days of March 31, 1998 shall constitute a waiver of such
right of termination."
2. Except as amended by this Fifth Amendment to Lease, all the terms,
provisions, covenants, agreements, conditions, representations and
warranties contained in the Lease are hereby affirmed and ratified.
3. This Fifth Amendment to Lease shall be binding upon and shall inure to
the benefit of the Landlord and the Tenant and their respective successors
and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth
Amendment to Lease to be duly executed as of the day and year first above
written.
Landlord: NDNE 9/90 CORPORATE CENTER LLC
By: NDNE 9/90, Inc.
Its: Manager
By: _______________________________________
Its: _______________________________________
Tenant: AQUILA BIOPHARMACEUTICALS, INC.
By: _______________________________________
Its: _______________________________________
NDNE 23
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement of Aquila Biopharmaceuticals, Inc. (the "Company") on Form S-3
to register 1,919,000 shares of common stock, par value $.01 per share of
our report, dated February 25, 1998, on our audits of the financial
statements of Aquila Biopharmaceuticals, Inc. as of December 31, 1997 and
1996, and for each of the three years in the period ended December 31,
1997, which report is included in the Company's 1997 Annual Report on Form
10-K. We also consent to the reference to our firm under the caption
"Experts."
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
May 5, 1998
