UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- ----------------
Commission file number 000-23143
PROGENICS PHARMACEUTICALS, INC.
-------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3379479
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 Old Saw Mill River Road
Tarrytown, New York 10591
---------------------------
(Address of principal executive offices)
(Zip Code)
(914) 789-2800
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
As of June 30, 2000 there were 12,154,096 shares of common stock, par
value $.0013 per share, of the registrant outstanding.
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets............................... 3
Condensed Statements of Operations..................... 4
Condensed Statement of Stockholders' Equity............ 5
Condensed Statements of Cash Flows..................... 6
Notes to Condensed Financial Statements................ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 10
Item 3. Quantitative and Qualitative Disclosures
about Market Risk...................................... 13
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders....................................... 14
Item 6. Exhibits and Reports on Form 8-K................. 14
2
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS
AT JUNE 30, 2000 AND DECEMBER 31, 1999 (Unaudited)
June 30, December 31,
2000 1999
ASSETS: -------------- --------------
Current assets:
Cash and cash equivalents.................... $ 13,050,095 $ 24,212,448
Marketable securities - short term........... 39,526,326 29,655,101
Accounts receivable.......................... 1,476,696 1,146,740
Interest receivable ......................... 1,155,104 835,367
Other current assets......................... 304,190 189,092
------------- -------------
Total current assets..................... 55,512,411 56,038,748
Marketable securities.......................... 12,313,464 13,749,156
Fixed assets, at cost, net of accumulated
depreciation and amortization................ 1,252,486 1,396,917
Investment in joint venture.................... 53,074 73,044
Security deposits and other assets............. 3,039 3,039
------------- -------------
Total assets............................. $ 69,134,474 $ 71,260,904
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable and accrued liabilities..... $ 1,482,621 $ 2,453,564
Amount due to joint venture.................. 500,000 452,606
Capital lease obligations, current portion... 7,948 79,562
------------- -------------
Total current liabilities................. 1,990,569 2,985,732
Amount due to joint venture.................... 413,499 417,141
Capital lease obligations...................... 8,414 37,328
------------- -------------
Total liabilities......................... 2,412,482 3,440,201
------------- -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value, 14,320,174
authorized; none issued and outstanding
Common stock - $.0013 par value, 40,000,000
authorized; issued and outstanding -
12,154,096 in 2000 11,905,774 in 1999...... 15,800 15,478
Additional paid-in capital................... 87,915,685 86,329,599
Unearned compensation........................ (376,693) ( 591,142)
Accumulated deficit.......................... (20,570,235) (17,703,528)
Accumulated other comprehensive
(loss) income.............................. (262,565) (229,704)
------------- -------------
Total stockholders' equity................ 66,721,992 67,820,703
------------- -------------
Total liabilities and
stockholders' equity.................... $ 69,134,474 $ 71,260,904
============= =============
The accompanying notes are an integral part of these statements.
3
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Contract research and development... $ 2,015,035 $ 2,245,226 $ 4,131,743 $ 4,859,832
Research grants and product sales... 313,517 228,335 543,283 457,815
Interest income..................... 1,022,947 289,815 2,050,720 593,111
------------ ------------ ------------ ------------
Total revenues................... 3,351,499 2,763,376 6,725,746 5,910,758
------------ ------------ ------------ ------------
Expenses:
Research and development............ 3,103,655 2,960,354 6,561,436 5,320,634
General and administrative.......... 1,225,810 1,107,930 2,222,186 1,976,668
Loss in joint venture............... 221,856 1,796,934 409,769 1,796,934
Interest expense.................... 24,890 15,002 47,389 28,505
Depreciation and amortization....... 170,028 155,012 351,673 304,782
------------ ------------ ------------ ------------
Total expenses................... 4,746,239 6,035,232 9,592,453 9,427,523
------------ ------------ ------------ ------------
Net income (loss)................ $(1,394,740) $(3,271,856) $(2,866,707) $(3,516,765)
============ ============ ============ ============
Net income (loss) per share - basic.... $(0.11) $(0.35) $(0.24) $(0.37)
======= ======= ======= =======
Net income (loss) per share - diluted.. $(0.11) $(0.35) $(0.24) $(0.37)
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER TOTAL
------------------- PAID-IN UNEARNED ACCUMULATED COMPREHENSIVE STOCKHOLDERS' COMPREHENSIVE
Shares Amount CAPITAL COMPENSATION DEFICIT INCOME (LOSS) EQUITY LOSS
---------- -------- ----------- ------------ ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1999 11,905,774 15,478 $86,329,599 ($591,142) ($17,703,528) ($229,704) $67,820,703
Amortization of
unearned compensation 214,449 214,449
Issuance of compensatory 164,476 164,476
stock options
Sale of Common Stock
under employee stock
purchase plans and
exercise of stock
options and warrants 248,322 322 1,421,610 1,421,932
Net loss (2,866,707) (2,866,707) ($2,866,707)
Change in unrealized
gain on marketable
securities (32,861) (32,861) (32,861)
---------- ------- ----------- ------------ ------------- ---------- ------------ ------------
Balance at
June 30, 2000 12,154,096 $15,800 $87,915,685 ($376,693) ($20,570,235) ($262,565) $66,721,992 ($2,899,568)
========== ======= =========== ============ ============= ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
Six months ended June 30,
----------------------------
2000 1999
------------- -------------
Cash flows from operating activities:
Net(loss) income................................ $ (2,866,707) $ (3,516,765)
------------- -------------
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization................. 351,673 304,782
Amortization of discounts, net of
premiums, on marketable securities........... 195,716 61,733
Amortization of discount on amount due
to joint venture............................. 43,752 5,601
Loss in joint venture......................... 409,769 1,796,934
Noncash expenses incurred in
connection with issuance of common
stock, stock options and warrants............ 378,925 308,270
Changes in assets and liabilities:
Decrease (increase) in accounts
receivable.................................. (329,956) 194,861
Decrease (increase) in prepaid expenses and
other assets................................ (434,835) 38,041
Decrease in accounts payable and
accrued expenses............................ (1,006,799) (77,104)
Increase in investment in LLC............... (389,799) (600,000)
------------- -------------
Total adjustments..................... (781,554) 2,033,118
------------- -------------
Net cash (used in) provided by
operating activities........................ (3,648,261) (1,483,647)
------------- -------------
Cash flows from investing activities:
Capital expenditures............................ (171,386) (447,078)
Sale of marketable securities................... 14,895,000 6,955,000
Purchase of marketable securities............... (23,559,110) (6,307,537)
------------- -------------
Net cash provided by (used in)
investing activities. ...................... (8,835,496) 200,385
------------- -------------
Cash flows from financing activities:
Proceeds from the exercise of stock options and
other adjustments to stockholders' equity...... 1,421,932 280,028
Payment of capital lease obligations............ (100,528) (49,703)
------------- -------------
Net cash provided by financing
activities................................. 1,321,404 230,325
------------- -------------
Net decrease in cash and cash
equivalents................................ (11,162,353) (1,052,937)
------------- -------------
Cash and cash equivalents at beginning
of period....................................... 24,212,448 14,437,263
------------- -------------
Cash and cash equivalents at
end of period.............................. $ 13,050,095 $ 13,384,326
============= =============
Supplemental disclosure of noncash investing
and financing activities:
Fixed assets included in accounts payable and
accrued expenses............................... $ 35,856 $ 60,652
============= =============
The accompanying notes are an integral part of these statements.
6
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Interim Financial Statements
The interim Condensed Financial Statements of Progenics Pharmaceuticals, Inc.
(the "Company") have been prepared in accordance with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
information and disclosures necessary for a presentation of the Company's
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. In the opinion of management, these
financial statements reflect all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation of the Company's
financial position, results of operation and cash flows for such periods. The
results of operations for any interim periods are not necessarily indicative of
the results for the full year. These financial statements should be read in
conjunction with the financial statements and notes thereto contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999.
2. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses as of June 30, 2000 and December 31, 1999
consist of the following:
June 30, December 31,
2000 1999
------------ ------------
Accounts payable $ 529,292 $ 1,718,661
Accrued expense 585,000 101,250
Accrued payroll and related costs 21,976 379,903
Legal and accounting fees payable 346,353 253,750
------------ ------------
$ 1,482,621 $ 2,453,564
============ ============
3. Net Loss Per Share
The Company's basic net loss per share amounts have been computed by dividing
net loss by the weighted average number of common shares outstanding during the
respective periods. For the three and six months ended June 30, 2000 and June
30, 1999, the Company reported net losses and, therefore, no common stock
equivalents were included in the computation of diluted per share amounts since
such inclusion would have been antidilutive. The calculations of basic and
diluted net loss per share are as follows:
Net Loss Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------- -------
2000:
Three months-ended June 30, 2000:
Basic and Diluted: ($1,394,740) 12,139,008 ($0.11)
Six months-ended June 30, 2000:
Basic and Diluted: ($2,866,707) 12,084,039 ($0.24)
1999:
Three months-ended June 30, 1999:
Basic: ($3,271,856) 9,428,955 ($0.35)
Six months-ended June 30, 1999:
Basic: ($3,516,765) 9,400,728 ($0.37)
7
<PAGE>
Options and warrants which have been excluded from the diluted per
share amounts because their effect would have been antidilutive include the
following:
Three Months Ended June 30,
-------------------------------------------
2000 1999
--------------------- --------------------
Wtd. Avg. Wtd. Avg.
Wtd. Avg. Exercise Wtd. Avg. Exercise
Number Price Number Price
---------- --------- --------- ---------
Options and warrants with
exercise prices below the
average fair market value
of the Company's common
stock for the respective
periods 3,245,105 $11.52 3,027,655 $6.64
Options and warrants with
exercise prices above the
average fair market value
of the Company's common
stock for the respective
periods 28,571 $71.58 139,527 $14.54
Six Months Ended June 30,
-------------------------------------------
2000 1999
--------------------- --------------------
Wtd. Avg. Wtd. Avg.
Wtd. Avg. Exercise Wtd. Avg. Exercise
Number Price Number Price
---------- --------- --------- ---------
Options and warrants with
exercise prices below the
average fair market value
of the Company's common
stock for the respective
periods 3,282,912 $11.32 3,045,487 $6.59
Options and warrants with
exercise prices above the
average fair market value
of the Company's common
stock for the respective
periods 14,846 $71.81 83,713 $14.88
4. PSMA Development Company LLC
The Company accounts for its investment in the PSMA Development Company LLC
("JV") in accordance with the equity method of accounting. Selected financial
statement data of the JV are as follows:
June 30, 2000 December 31,1999
------------- ----------------
Cash $ 200,000 $ 200,000
============= =============
Accounts Payable:
Cytogen ($500,000 due currently) 913,499 869,747
The Company 93,851 53,911
Capital Contributions:
Cytogen 100,000 100,000
The Company 2,510,253 2,120,454
Contribution receivable from the Company (913,499) (869,747)
Accumulated deficit: (2,504,104) (2,074,365)
------------- ------------
Total assets $ 200,000 $ 200,000
============= =============
8
<PAGE>
Statement of Operations Data:
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2000 1999 2000 1999
---------- ------------ ----------- ------------
Total revenue $21,876 $ 43,752
Total expenses 254,523 $1,796,934 473,491 $1,796,934
---------- ------------ ----------- ------------
Net Loss (1) ($232,647) ($1,796,934) ($429,739) ($1,796,934)
========== ============ =========== ============
(1) The terms of the joint venture agreement provide for the Company to fund
certain costs of the joint venture. The loss resulting from such costs have
therefore been allocated to the capital account of the Company and accordingly,
the Company's allocated share of the joint venture's loss is greater than its
ownership interest.
5. Recently Issued Accounting Standard
The Securities and Exchange Commission issued Staff Accounting Bulletin
No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101
provides additional guidance with regard to accounting for up front non-
refundable license fees and milestone payments. SAB 101 will be adopted by the
Company during the quarter ending December 31, 2000 and any adjustment to the
financial statement will be accounted for as a cumulative effect of a change in
accounting principle. The Company is assessing the impact that SAB 101 will
have on its financial statement and is currently unable to determine the full
effect; however, the impact of SAB 101 could have a material affect on the
Company's financial position and results of operations.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
This Quarterly Report on Form 10-Q contains forward-looking statements.
Any statements contained herein that are not statements of historical fact may
be forward-looking statements. When we use the words 'anticipates,' 'plans,'
'expects' and similar expressions, we are identifying forward-looking
statements. Such forward-looking statements involve risks and uncertainties
which may cause our actual results, performance or achievements to be
materially different from those expressed or implied by forward-looking
statements. Such factors include, among others, the uncertainties associated
with product development, the risk that clinical trials will not commence when
or proceed as planned, the risks and uncertainties associated with dependence
upon the actions our corporate, academic and other collaborators and of
government regulatory agencies, the risk that products that appeared promising
in early clinical trials do not demonstrate efficacy in larger-scale clinical
trials, the uncertainty of future profitability and other factors set forth
more fully in our Annual Report on Form 10-K for the fiscal year ended December
31, 1999 and other periodic filings with the Securities and Exchange
Commission. We do not have a policy of updating or revising forward-looking
statements, and thus it should not be assumed that our silence over time means
that actual events are bearing out as expressed or implied in such forward-
looking statements.
The following discussion should be read in conjunction with the Company's
Condensed Financial Statements and the related notes thereto.
General
Progenics is a biopharmaceutical company focusing on the development and
commercialization of innovative products for the treatment and prevention of
cancer and viral and other life-threatening diseases. The Company commenced
principal operations in late 1988 and since that time has been engaged
primarily in organizational efforts, including recruitment of scientific and
management personnel, research and development efforts, development of its
manufacturing capabilities, establishment of corporate collaborations and
raising capital. In order to commercialize the principal products that the
Company has under development, the Company will need to address a number of
technological challenges and comply with comprehensive regulatory requirements.
Accordingly, it is not possible to predict the amount of funds that will be
required or the length of time that will pass before the Company receives
revenues from sales of any of its products. To date, product sales have
consisted solely of limited revenues from the sale of research reagents. The
Company expects that sales of research reagents in the future will not
significantly increase over current levels. The Company's other sources of
revenues through June 30, 2000 have been payments received under its
collaboration agreements, research grants and contracts related to the
Company's cancer and HIV programs and interest income.
To date, a majority of the Company's expenditures have been for research
and development activities. The Company expects that its research and
development expenses will increase significantly as its programs progress. With
the exception of the years ended December 31, 1997 and 1998, the Company has had
recurring losses and had, at June 30, 2000, an accumulated deficit of
approximately $20,570,000. The Company will require additional funds to
complete the development of its products, to fund the cost of clinical trials,
and to fund operating losses that are expected to continue for the foreseeable
future. The Company does not expect its products under development to be
commercialized in the near future.
10
<PAGE>
Results of Operations
Three Months Ended June 30, 2000 and 1999
Contract research and development revenue decreased to approximately
$2,015,000 for the three months ended June 30, 2000 from approximately
$2,245,000 for the three months ended June 30, 1999. The Company received less
development funding pursuant to the Company's agreement with Bristol-Myers
Squibb Company ("BMS") in 2000 as reimbursable clinical development costs
decreased. Revenues from research grants and product sales increased to
approximately $314,000 for the three months ended June 30, 2000 from
approximately $228,000 for the three months ended June 30, 1999. The increase
resulted from the funding of a greater number of grants in the second quarter of
2000. Interest income increased to approximately $1,023,000 for the three
months ended June 30, 2000 from approximately $290,000 for the three months
ended June 30, 1999 due to the increase in cash available for investing as the
Company completed a public offering of common stock in November 1999.
Research and development expenses increased to approximately $3,104,000
for the three months ended June 30, 2000 from approximately $2,960,000 for the
three months ended June 30, 1999. The increase was principally due to
additional costs in 2000 in the Company's existing development programs
including the manufacture of PRO 542, additional costs related to new programs
such as PSMA and DHA and an increase in operating expenses such as rent due to
the expansion of the Company's research facilities. Additionally, the Company
paid license fees to a research collaborator in connection with its HIV and
other virology programs and incurred compensation expense for stock options
granted to a consultant.
General and administrative expenses increased to approximately $1,226,000
for the three months ended June 30, 2000 from approximately $1,108,000 for the
three months ended June 30, 1999. The increase was principally due to an
increase in operating expenses such as rent and insurance as the Company
expanded its administrative facilities. The Company recognized approximately
$222,000 as its share of loss for the period under in the Company's joint
venture with Cytogen Corporation ("Cytogen"), which commenced operations in
July 1999. Interest expenses increased to approximately $25,000 for the three
months ended June 30, 2000 from approximately $15,000 for the three months
ended June 30, 1999. The increase was principally due to the recognition of
interest expense as the Company discounted future capital contributions to the
joint venture offset by a reduction in the number of capital leases
outstanding. Depreciation and amortization expense increased to approximately
$170,000 for the three months ended June 30, 2000 from approximately $155,000
for the three months ended June 30, 1999. The increase was principally due to
the purchase of additional fixed assets and leasehold improvements.
The Company's net loss for the second quarter of fiscal 2000 was
approximately $1,395,000, or $0.11 per share (basic and diluted), compared to a
net loss of approximately $3,272,000, or $0.35 per share (basic and diluted),
for the second quarter of fiscal 1999.
Six Months Ended June 30, 2000 and 1999
Contract research and development revenue decreased to approximately
$4,132,000 for the six months ended June 30, 2000 from approximately $4,860,000
for the six months ended June 30, 1999 as the Company received less development
funding pursuant to the BMS agreement in 2000 as reimbursable clinical
development costs decreased. Revenues from research grants and product sales
increased to approximately $543,000 for the six months ended June 30, 2000 from
approximately $458,000 for the six months ended June 30, 1999. The increase
resulted due to the funding of a greater number of grants in the first half of
2000. Interest income increased to approximately $2,051,000 for the six months
ended June 30, 2000 from approximately $593,000 for the six months ended June
30, 1999 due to the increase in cash available for investing as the Company
completed a second public offering in November 1999.
Research and development expenses increased to approximately $6,561,000
for the six months ended June 30, 2000 from approximately $5,321,000 for the
six months ended June 30, 1999. The increase was principally due to the hiring
of new scientists and the related expenses as the Company expanded its research
and development programs in 2000 and an increase in operating expenses such as
rent due to the expansion of the Company's research facilities.
11
<PAGE>
General and administrative expenses increased to approximately $2,222,000
for the six months ended June 30, 2000 from approximately $1,977,000 for the
six months ended June 30, 1999. The increase was principally due to the hiring
of additional administrative staff and additional operating expenses such as
rent as the Company expanded its administrative facilities.
The Company recognized a loss in its joint venture with Cytogen which
decreased to approximately $410,000 for the six months ended June 30, 2000 from
approximately $1,797,000 for the six months ended June 30, 1999 as the joint
venture expensed license fees in 1999.
Interest expense increased to approximately $47,000 for the six months
ended June 30, 2000 from approximately $29,000 for the six months ended June
30, 1999. The increase was principally due to discounting future capital
contributions to the joint venture offset by a reduction in the number of
capital leases outstanding. Depreciation and amortization expense increased to
approximately $352,000 for the six months ended June 30, 2000 from approximately
$305,000 for the six months ended June 30, 1999. The increase was principally
due to the purchase of additional fixed assets and leasehold improvements.
The Company's net loss for the six months ended June 30, 2000 was
approximately $2,867,000, or $0.24 per share (basic and diluted), compared to a
net loss of approximately $3,517,000, or $0.37 per share (basic and diluted),
for the six months ended June 30, 1999.
Liquidity and Capital Resources
The Company has financed its operations primarily through the private sale
and issuance of equity securities, a line of credit that has since been repaid
and terminated, payments received under its collaboration with the Bristol-
Myers Squibb Company ("BMS") beginning in July 1997, payments received under
its collaboration with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche, Inc.
("Roche") beginning in January 1998, funding under research grants and
contracts, the proceeds from public offerings of common stock in November 1997
and November 1999 and the proceeds from the exercise of outstanding options and
warrants.
In November 1997, the Company sold 2,300,000 shares of common stock in an
initial public offering. After deducting underwriting discounts and
commissions and other expenses, the Company received net proceeds of
$16,015,000. In November 1999, the Company completed an additional public
offering of 2,300,000 shares of common stock and received net proceeds, after
underwriting discounts and commissions and other expenses, of $40,584,000. The
net proceeds from both offerings were invested in short-term, interest-bearing
investment grade securities pending further application.
At June 30, 2000, the Company had cash, cash equivalents and marketable
securities totaling approximately $64,890,000 compared with approximately
$67,600,000 at December 31, 1999. In June 2000, the Company extended its
facility lease to June 2005. In connection with the extended facility lease,
the Company expects that approximately $1,000,000 will be spent to expand its
administrative offices and enhance its manufacturing capabilities for clinical
trials during 2000 of which approximately $171,000 been expended through June
30, 2000.
We believe that our existing capital resources should be sufficient to
Fund operations at least through the end of 2001. However, this is a forward-
looking statement based on our current operating plan and the assumptions on
which it relies. There could be changes that would consume our assets before
such time. We will require substantial funds to conduct research and
development activities, preclinical studies, clinical trials and other
activities relating to the commercialization of any potential products. In
addition, our cash requirements may vary materially from those now planned
because of results of research and development and product testing,
relationships with in-licensors and collaborators, changes in the focus and
direction of our research and development programs, competitive and
technological advances, the cost of filing, prosecuting, defending and
enforcing patent claims, the regulatory approval process, manufacturing and
marketing and other costs associated with the commercialization of products
following receipt of regulatory approvals and other factors. We have no
committed external sources of capital and, as discussed above, expect no
significant product revenues for a number of years as it will take at least
that much time to bring our products to the commercial marketing stage. We may
seek additional financing, such as through future offerings of equity or debt
securities or agreements with corporate partners and collaborators with respect
to the development of our technology, to fund future operations. We cannot
assure you, however, that we will be able to obtain additional funds on
acceptable terms, if at all.
12
<PAGE>
Recently issued Accounting Standard
The Securities and Exchange Commission issued Staff Accounting Bulletin
No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101
provides additional guidance with regard to accounting for up front non-
refundable license fees and milestone payments. SAB 101 will be adopted by the
Company during the quarter ending December 31, 2000 and any adjustment to the
financial statement would be accounted for as a cumulative effect of a change
in accounting principle. The Company is assessing the impact that SAB 101 will
have on its financial statement and is currently unable to determine the full
effect; however, the impact of SAB 101 could have a material affect on the
Company's financial position and results of operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
At June 30, 2000, the Company did not hold any market risk sensitive
instruments.
13
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders was held on June 28, 2000.
The matters voted upon at the meeting were (i) the election of eight directors
of the Company, (ii) the approval and adoption of an amendment to the Company's
Amended 1996 Stock Incentive Plan (A) to increase the maximum number of shares
of the Company's Common Stock available thereunder for issuance from 2,000,000
to 4,000,000, (B) to provide for the delegation of authority to grant certain
stock options to a committee of directors who may also be officers of the
Company and (C) to set 750,000 as the maximum number of shares with respect to
which options may be granted to any participant during any two-year period and
(iii) the ratification of the Board of Directors' selection of
PricewaterhouseCoopers LLP to serve as the Company's independent auditors for
the fiscal year ending December 31, 2000. The number of votes cast for and
against or withheld with respect to each matter voted upon at the meeting and
the number of abstentions and broker non-votes are as follows:
Nominee: Votes For: Votes Withheld:
-------------------------------- ---------- ---------------
Paul J. Maddon, M.D., Ph.D. 9,955,479 48,235
Charles A. Baker 9,955,629 48,085
Kurt W. Briner 9,955,629 48,085
Mark F. Dalton 9,955,629 48,085
Stephen P. Goff, Ph.D. 8,733,303 1,270,411
Paul F. Jacobson 9,956,629 47,085
Ronald J. Prentki 9,954,489 49,225
David A. Scheinberg, M.D., Ph.D. 9,956,629 47,085
As to the approval of an amendment to the Company's Amended 1996 Stock
Incentive Plan, the matter was approved with 5,172,902 votes in favor,
1,952,047 votes against, 51,350 abstentions and 2,827,415 broker non-votes.
As to the ratification of the Board of Director's selection of
PricewaterhouseCoopers, LLP to serve as the Company's independent auditors for
the fiscal year ending December 31, 2000, the matter was approved with
9,999,574 votes in favor, 3,190 votes against, 950 abstentions and 0 broker
non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.22 - Amended and Restated Sublease Agreement dated as of June 6, 2000
by and between Crompton Corporation and the Registrant
27 - Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended June 30, 2000, the registrant filed a Current
Report on Form 8-K dated May 22, 2000 in which Item 5 Other Events were
reported and no financial statements were filed.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PROGENICS PHARMACEUTICALS, INC.
Date: August 14, 2000 by /s/ Robert A. McKinney
-------------------------------
Robert A. McKinney
Vice President
(Duly authorized officer
of the Registrant and
Principal Financial
and Accounting Officer)
15
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EXHIBIT INDEX
Exhibit Description
------- -----------------------------------------------------------------
10.22 Amended and Restated Sublease Agreement dated as of June 6, 2000
by and between Crompton Corporation and the Registrant
27 Financial Data Schedule
<PAGE>
EXHIBIT 10.22
AMENDED AND RESTATED SUBLEASE AGREEMENT
THIS AMENDED AND RESTATED SUBLEASE AGREEMENT ("Sublease"), made as of
June 6, 2000 by and between CROMPTON CORPORATION (f/k/a CK Witco Corporation),
a Delaware corporation, successor by merger to Witco Corporation
("Sublandlord") having an address at One American Lane, Greenwich, Connecticut
06831-2559, and PROGENICS PHARMACEUTICALS, INC., a Delaware corporation
("Subtenant") having an address at 777 Old Saw Mill River Road, Tarrytown, New
York 10591.
W I T N E S S E T H:
WHEREAS, Keren Limited Partnership, a Delaware limited partnership
("Keren"), and Witco Corporation ("Witco") entered into a Lease, dated as of
December 8, 1997 as amended by that certain First Amendment of Lease (the
"First Amendment") dated May 1, 1998 (the "Prime Lease"), covering certain
premises more fully described therein (collectively, the "Premises"), in,
among others, the buildings known as Building 769 or the Silicones Building
(the "Silicones Building"), the 771 Building (the "771 Building"), the
Autoclave Building (the "Autoclave Building"), and the Annex Building (the
"Annex Building"), each located along Old Saw Mill River, in that complex known
as The Landmark at Eastview (the "Complex"), partly in the Town of Greenburgh
and partly in the Town of Mount Pleasant, in the County of Westchester and
State of New York;
WHEREAS, Witco entered into a Sublease, dated as of January 27, 1998
(the "Initial Sublease") with Subtenant subleasing to Subtenant a portion (the
"Initial Sublease Premises") of the Premises leased by Witco under the Prime
Lease, and constituting a total of approximately 22,681 rentable square feet of
office and laboratory space, located on portions of the third and fourth floors
of the Silicones Building, plus a total of approximately 1,216 rentable square
feet of storage space located on the third floor of the Silicones Building (the
Initial Sublease Premises designated as "Progenics 1" and "Progenics 2" on each
of Exhibit A-1 and Exhibit A-2 attached hereto);
WHEREAS, Keren assigned its interest as landlord under the Prime
Lease to Landmark Holdings, LLC ("Landmark");
WHEREAS, Landmark assigned its interest as landlord under the Prime
Lease to Eastview Holdings, LLC ("Prime Landlord");
WHEREAS, Sublandlord is the successor by merger to Witco;
WHEREAS, Sublandlord desires to sublease to Subtenant and Subtenant
desires to sublease from Sublandlord an additional portion (the "Additional
Sublease Premises") of the Premises consisting of (i) approximately 2,348
square feet of laboratory space on the fourth floor south lab wing (designated
as "Progenics 3" on Exhibit A-1 attached hereto) and approximately 2,804 square
feet of office space on the third floor T wing, both of the Silicones Building
(designated as "Progenics 3 and 4" on Exhibit A-2 attached hereto)
(collectively, the "Crompton Space"), (ii) approximately 1,437 square feet of
office space on the fourth floor of the Silicones Building (designated as
"Progenics 4" on Exhibit A-1 attached hereto) (the "Union Carbide Space") and
(iii) approximately 1,126 square feet of storage space located in the Warehouse
Building (designated as "Warehouse Space" on Exhibit A-3 attached hereto) (the
"Warehouse Space") (the Additional Sublease Premises, together with the Initial
Sublease Premises, the "Sublease Premises").
Sublandlord and Subtenant have agreed to amend and restate said
Initial Sublease in accordance with the terms and provisions hereof. This
Agreement supersedes and replaces the Initial Sublease in its entirety.
NOW, THEREFORE, in consideration of $10.00 and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Sublandlord and Subtenant agree as follows:
1. Demise. Subject to Subtenant's (i) obtaining a fully executed non-
disturbance, consent and attornment agreement from Prime Landlord, (ii)
obtaining a fully executed non-disturbance, subordination and attornment
agreement from Prime Landlord's mortgagee, CDC Mortgage Capital, Inc. (in the
forms attached hereto as Exhibit X and Exhibit Y, respectively) and (iii) the
satisfaction of the conditions set forth herein in regard to the Union Carbide
Space, Sublandlord hereby leases to Subtenant, and Subtenant hereby hires and
takes from Sublandlord, the Sublease Premises. In the event Subtenant has not
received both items (i) and (ii) above within twenty (20) days from the date
hereof, Subtenant shall have the option at any time thereafter to terminate
this Sublease and/or to reinstate the terms and conditions of the Initial
Sublease. In the event the conditions set forth in (iii) above have not been
satisfied within the time limits set forth below, Subtenant shall have all of
the remedies set forth herein.
2. Term: Extension Right; Cancellation Right.
2.1 The term ("Term") of this Sublease (i) shall commence (a) with
regard to the Initial Sublease Premises and the Warehouse Space on the date of
this Sublease, (b) with regard to the Crompton Space and the Union Carbide
Space (subject to the conditions set forth in Sections 2.5 and 4.1(b) below) on
July 1, 2000 (the "Commencement Date"), and (ii) shall expire at midnight on
the day immediately preceding the fifth anniversary following the Commencement
Date (the "Expiration Date"), unless Subtenant exercises its Cancellation
Option pursuant to Section 2.4 hereto or this Sublease is sooner terminated
pursuant to law, or unless otherwise extended pursuant to Section 2.2 hereto.
The Term shall include any Additional Term(s) (as hereinafter defined) to the
extent duly exercised by Subtenant.
2.2 Subtenant shall have the option to extend the Term for up to
two (2) additional periods (each individually, an "Additional Term"), the first
Additional Term for two (2) years and, if exercised, commencing on the fifth
anniversary following the Commencement Date, and the second Additional Term, if
exercised, commencing on the seventh anniversary following the Commencement
Date and ending on December 30, 2009, subject, however, to the following
conditions:
(i) Subtenant shall give notice ("Extension Notice") to Sublandlord
of its election to extend the Term at least one (1) year prior to the start of
the applicable Additional Term, with respect to which notification, time is of
the essence;
(ii) This Sublease shall be in full force and effect and Subtenant
shall not be in default of any of the terms, covenants and conditions of this
Sublease at the date of the Extension Notice or upon the commencement of the
applicable Additional Term; and;
2.3 In the event Subtenant shall have elected to extend for the
Additional Term in accordance with Section 2.2, all then applicable terms,
covenants and conditions of this Sublease shall apply to the Additional Term
except that Subtenant shall have no further option to extend the Term beyond
the two (2) successive Additional Terms specified above.
2
<PAGE>
2.4
(i) (i) Subtenant shall have the option to terminate this Sublease
at the end of the second year of the Term (the "Cancellation Option"), in which
case Subtenant shall give notice to Sublandlord of its exercising of the
Cancellation Option at least one (1) year prior to the expiration of the second
year of the Term.
(ii) In the event Subtenant exercises the Cancellation Option,
Subtenant shall be released from and shall have no further obligation to pay
any Fixed Rent payment (as defined in Section 4), Escalation Rent payment (as
defined in Section 5) or any other fee, expense or payment arising subsequent
to the effective date of such termination. The foregoing shall not release
Subtenant from any of the foregoing payments for periods prior to the effective
date of termination.
2.5 Sublandlord intends to deliver (by virtue of an agreement
between Union Carbide and Sublandlord) the Union Carbide Space to Subtenant in
vacant, broom clean condition on or prior to June 1, 2000. In the event
Sublandlord has not delivered the Union Carbide Space to Subtenant on or prior
to June 1, 2000, in vacant, broom clean condition, Subtenant shall be entitled
to the rent concessions described in Sections 4.1(a) and 4.1(b) below.
3. Asbestos Abatement.
3.1 Commencing on the date hereof, Subtenant and its agents and/or
appointees shall have access to the Crompton Space for the purpose of removing
asbestos therefrom (the "Asbestos Removal Phase I"), such removal or partial
removal to be conducted by Subtenant and its agents and/or appointees in its
sole discretion and in accordance with all applicable laws and regulations.
Subtenant has hired Andron Construction and/or another licensed contractor, at
its sole discretion (the "Asbestos Contractor") in order to complete the
Asbestos Removal Phase I and Subtenant shall be responsible for the payment of
the entire cost of the Asbestos Removal Phase I, as any such costs become due
and payable. The Asbestos Contractor shall carry the types and amounts of
insurance set forth on Schedule A attached hereto, and shall name Subtenant,
Sublandlord and Prime Landlord as additional insureds thereunder. Sublandlord
acknowledges the receipt of an insurance certificate in satisfaction of the
conditions set forth in the immediately preceding sentence. Sublandlord agrees
that Subtenant shall not be responsible for the payment of any Fixed Rent or
Additional Rent (as defined below), except for the Initial Sublease Premises
Rent (as defined in Section 4.1 below) and rent for the Warehouse Space (as set
forth in Section 4.1(b) below) during the Asbestos Removal Phase I.
3.2 Commencing on June 1, 2000, Subtenant and its agents and/or
appointees shall have access to the Union Carbide Space for the purpose of
removing asbestos therefrom (the "Asbestos Removal Phase II"), such removal or
partial removal to be conducted by Subtenant and its agents and/or appointees
in its sole discretion and in accordance with all applicable laws and
regulations and otherwise in accordance with the terms and conditions set forth
in Section 3.1 above.
4. Fixed Rent. Subtenant shall pay to Sublandlord for each year during the
Term annual fixed minimum rent as provided below ("Fixed Rent"):
3
<PAGE>
4.1 (a) Commencing on the Commencement Date and continuing
thereafter through December 31, 2002 Subtenant shall pay to Sublandlord Fixed
Rent at the rate of Sixteen Dollars and 50/100 ($16.50) per square foot for the
Initial Sublease Premises, the Crompton Space and the Union Carbide Space (or
$394,300.50 per year for the Initial Sublease Premises, $85,008.00 per year for
the Crompton Space and $23,710.50 per year for the Union Carbide Space). In
the event Sublandlord fails to deliver the Union Carbide Space to Subtenant in
accordance with Section 2.5 above, and Subtenant is unable to complete the
Asbestos Removal Phase II on or before the Commencement Date because of said
delay, the Commencement Date for the Union Carbide Space shall be deemed to
occur upon the completion of the Asbestos Removal Phase II. It is also
understood that in the event Sublandlord fails to deliver the Union Carbide
Space to Subtenant, in addition to the remedy set forth in Section 4.1(b)
below, Subtenant shall not be responsible for any payment of Fixed Rent or
Additional Rent for the Union Carbide Space prior to the date such space is
delivered. Notwithstanding the foregoing, prior to the Commencement Date,
Subtenant shall continue to pay monthly rental for the Initial Sublease
Premises at the rate set forth in the Initial Sublease (the "Initial Sublease
Premises Rent"), which payment and occupancy shall in no way limit any of
Subtenant's rights, remedies and obligations as set forth in this Sublease;
(b) Commencing on the date hereof, and continuing hereafter
through December 31, 2002, Subtenant shall pay to Sublandlord Fixed Rent at the
rate of Ten Dollars and 00/100 ($10.00) per square foot for Warehouse Space (or
$11,260.00 per year for the Warehouse Space). Notwithstanding the foregoing,
in the event Sublandlord fails to deliver the Union Carbide Space to Subtenant
in accordance with Section 2.5 above, Subtenant shall occupy the Warehouse
Space rent free from June 1, 2000 until the date Sublandlord has complied with
Section 2.5. Subtenant shall be entitled to deduct from Fixed Rent the amount
of free rent calculated in accordance with this Section 4.1(b).
(c) In the event Subtenant has not exercised the Cancellation
Option, commencing January 1, 2003 and continuing thereafter through and
including December 31, 2007 (if Subtenant so elects to extend in accordance
with this Sublease), Subtenant shall pay to Sublandlord Fixed Rent at the rate
of Eighteen Dollars and 50/100 ($18.50) per square foot for the Initial
Sublease Premises, the Crompton Space, and the Union Carbide Space and Ten
Dollars and 00/100 ($10.00) per square foot for the Warehouse Space (or
$442,094.50 per year for the Initial Sublease Premises $95,312.00 per year for
the Crompton Space, $26,584.50 per year for the Union Carbide Space and $11,260
per year for the Warehouse Space).
(d) In the event Subtenant has exercised its option for the
second Additional Term, the Fixed Rent for the Sublease Premises during the
period from January 1, 2008 through December 30, 2009 shall be at an annual
rate determined in accordance with the First Amendment.
4.2 Fixed Rent shall be payable without demand, abatement, offset,
counterclaim or set off (except as set forth in Section 4.1(b), in equal
monthly installments on the first day of each and every calendar month during
the Term from and after the Commencement Date, except that Fixed Rent for the
month in which the Commencement Date occurs shall be pro-rated on a per diem
basis if the Commencement Date is not the first day of such month and Fixed
Rent for the last month of the Term shall be likewise pro-rated if the
Expiration Date is not the last day of a month.
4
<PAGE>
4.3 In addition to the Fixed Rent herein described, Subtenant shall
pay all Escalation Rent (as such term is defined in Article 5 hereof) under and
in accordance with the provisions of this Sublease, appropriately pro-rated if
any of the foregoing relates to a period subsequent to the Expiration Date or
prior to the Commencement Date.
5. Additional Rent. For each Operating Year (as hereinafter defined), or a
portion thereof, all or a portion of which occurs after the Commencement Date,
Subtenant shall pay, as Escalation Rent, within the applicable time periods set
forth for the relevant additional rent and escalation rent payments in the
Prime Lease, an amount equal to Subtenant's Proportionate Share (as hereinafter
defined) of all of the additional and escalation rents as are required to be
paid by Sublandlord, as Tenant, with respect to such Operating Year, under each
and every one of the provisions of the Prime Lease, including, without
limitation, Articles 4 and 5 of the Prime Lease (such amount(s) as Sublandlord
is required to pay to Prime Landlord under the Prime Lease being hereinafter
referred to as "Additional Rent(s)" and Subtenant's Proportionate Share of
Additional Rent(s), or any other charge(s) required to be paid by Subtenant
hereunder, being hereinafter referred to as "Escalation Rent(s)"), it being the
intention and agreement of the parties hereto that Sublandlord's payment
obligation with respect to the same shall pass to Subtenant, and Subtenant
shall be obligated to pay to Sublandlord so much of all of the Additional Rent
and charges required to be paid under the Prime Lease as is equivalent to
Subtenant's Proportionate Share thereof, except that Subtenant shall not be
obligated to pay any portion of any Additional Rent or charges arising out of
special services furnished by Prime Landlord directly to Sublandlord but not to
Subtenant or arising out of any default by Sublandlord under the Prime Lease
not caused by a default by Subtenant (or by any parties holding by or under
Subtenant) hereunder.
5.1 From and after August 1, 2000, Sublandlord shall furnish to
Subtenant, on a monthly basis or otherwise during each Operating Year, a
written statement, based upon a comparable statement received by Sublandlord
from Prime Landlord (together with a copy of such Prime Landlord's statement,
with any non-relevant items, which Sublandlord determines to be confidential,
redacted) setting forth Sublandlord's determination of the Escalation Rents for
that month (any one or more of such Sublandlord-issued statements being
hereinafter called the "Operating Statement(s)"), which Operating Statements
shall constitute a final determination as between Sublandlord and Subtenant of
Escalation Rent for the period represented thereby, except that if Sublandlord
receives a refund from Prime Landlord, or there shall be a deficiency in the
payment of Additional Rent pursuant to the provisions of the Prime Lease, in
the case of a refund, Sublandlord shall pay to Subtenant an amount equal to the
amount which represents Subtenant's Proportionate Share of such refund for any
period for which Subtenant has paid Escalation Rent (including any interest on
such sum received by Sublandlord pursuant to the Prime Lease), and in the case
of a deficiency, Subtenant shall pay to Sublandlord, on demand, an amount equal
to the amount which represents Subtenant's Proportionate Share of such
deficiency. Sublandlord agrees, upon the request of Subtenant, to furnish to
Subtenant a copy of the statement from Prime Landlord upon which any Operating
Statement was based, provided Sublandlord may delete therefrom any information
which is not relevant to the determination of the amount of Escalation Rents
payable hereunder.
5.2 Sublandlord's failure during the Term to prepare and/or deliver,
or any error made by Sublandlord in the preparation of, any Operating
Statements or bills, or Sublandlord's failure to make a demand, under this
Article 5 or any other provision of this Sublease, shall not in any way be
deemed to be a waiver of, or cause Sublandlord to forfeit or surrender, its
rights to collect any portion of Escalation Rent which may have become due.
Subtenant's liability for the amounts due under this Sublease shall survive the
expiration or sooner termination of this Sublease.
5
<PAGE>
5.3 In no event shall any adjustment of the payments made or to be
made on account of the Escalation Rent result in a decrease in Fixed Rent, it
being agreed that the payment of Escalation Rent pursuant to this Article is an
obligation supplemental to the obligation to pay Fixed Rent hereunder.
5.4 For the purposes of determining Escalation Rents, the following
terms shall have the definitions set forth below:
(i) "Operating Year" shall mean the portion of calendar year 2000
commencing on the Commencement Date and ending December 31, 2000, and each
calendar year or portion thereof following thereafter during the Term.
(ii) "Subtenant's Proportionate Share"
(a) Subtenant's Proportionate Share is based upon an agreed
aggregate rentable area of (i) 23,897 square feet for the Initial Sublease
Premises, (ii) 5,152 square feet for the Crompton Space, (iii) 1,437 square
feet for the Union Carbide Space and (iv) 1,126 square feet for the Warehouse
Space and an agreed rentable area (for purposes of Sublandlord's Tax payments
and Operating Expense payments under the Prime Lease) of 182,829 square feet
for the Premises.
(b) Subtenant's Proportionate Share shall mean 17.29% as of the
Commencement Date.
(c) Subtenant's Proportionate Share shall be subject to
equitable and proportional change to the extent Sublandlord's rentable area of
the Premises changes during the Term (due to, by way of example and not by way
of limitation, casualty or condemnation losses or expansions or relocations
pursuant to the terms of the Prime Lease).
5.5 Notwithstanding anything to the contrary contained in this
Article 5, Subtenant, on demand of Sublandlord, shall pay any out-of-pocket
costs or charges incurred by Sublandlord in connection with any special or
unusual requirements relating to Subtenant's occupancy of the Sublease Premises
and benefiting Subtenant only and/or the providing of services with respect
thereto and benefiting Subtenant only, whether same arise as a result of
Subtenant's fit-up or alterations, Subtenant's increased or unusual occupancy
requirements, Subtenant's negligence or misconduct or other cause, event or
circumstance brought about by the use, actions or omissions of Subtenant or
Subtenant's agents, employees, contractors, licensees or invitees.
5.6 Notwithstanding anything to the contrary set forth in this
Article 5, if any item of Additional Rent is payable under the Prime Lease in
fewer days after notice, demand or receipt of a bill therefor than the period
provided herein following Sublandlord's notice, then in such event the lesser
number of days of notice shall be deemed applicable hereto and controlling.
6. Alterations and Capital Improvements. Subject to the provisions of
Articles 15, 17 and 22 hereof, and subparagraphs (i) and (ii) below,
Sublandlord hereby confers upon Subtenant all of the rights, privileges,
obligations and restrictions of Sublandlord, as Tenant under the Prime Lease,
with respect to alterations, additions or improvements in or to the Sublease
Premises; provided that such alterations, additions and improvements shall be
subject to the prior written approval of Prime Landlord, if required by the
Prime Lease, in each instance.
6
<PAGE>
Sublandlord hereby consents to Subtenant's proposed alterations,
improvements and additions, all as set forth on Exhibit Z attached hereto (the
"Plans").
7. Rental. All of the amounts payable by Subtenant pursuant to this
Sublease, including, without limitation, Fixed Rent and Escalation Rent
(collectively, "Rental"), shall constitute rent under this Sublease and, in the
event of Subtenant's failure to pay any item of Rental when due, Sublandlord
shall have all of the rights and remedies provided for herein or by law in the
case of nonpayment of rent. Subtenant's obligation to pay Rental shall survive
the expiration or earlier termination of this Sublease.
8. Late Charges. Consistent with Section 1.08 of the Prime Lease, if
Subtenant shall fail to pay any installment of Fixed Rent, Escalation Rent or
any other Rental for more than five (5) days after the same is due and payable
hereunder, Subtenant shall pay to Sublandlord, in addition to the sum not
timely paid, a late charge equal to five percent (5%) of the amount of such
late payment and, in addition, interest on such late installment at the "Lease
Interest Rate" (as such term is defined in Section 1.08 of the Prime Lease).
Such payment shall be made without prejudice to any of Sublandlord's rights and
remedies hereunder or at law or in equity for nonpayment or late payment of
Rental, and shall be in addition thereto.
9. Incorporation of, and Subordination to Terms of Prime Lease.
9.1 All of the terms, provisions, covenants, stipulations,
conditions, rights, obligations, remedies and agreements contained in the Prime
Lease are incorporated herein by reference, and shall, as between Sublandlord
and Subtenant (as if they were the Landlord and Tenant, respectively, under the
Prime Lease and as if the Sublease Premises being sublet hereby were the
"Premises", as such term is defined in the Prime Lease and as if the Escalation
Rent payable hereunder were the Additional Rent payable under the Prime Lease),
constitute the terms of this Sublease except to the extent they do not relate
to the Sublease Premises or are inapplicable or inappropriate or inconsistent
with, or modified by Article 15 hereof or any other provision of this Sublease.
9.2 This Sublease is in all respects subject and subordinate to the
terms and conditions of the Prime Lease. Sublandlord represents that a true
and complete copy of the Prime Lease has previously been furnished by
Sublandlord to Subtenant, after deletion of certain financial terms, and
Subtenant acknowledges that it has received and reviewed the same. Subtenant
agrees that in the event of a termination, re-entry or dispossess by Prime
Landlord under the terms of the Prime Lease, Prime Landlord, at its option, may
take over all of the right, title and interest of Sublandlord as Sublandlord
hereunder and, in such event, Subtenant shall attorn to Prime Landlord pursuant
to the then executory provisions of this Sublease, except that Prime Landlord
shall not (i) be liable for any previous act, omission or negligence of
Sublandlord, (ii) be subject to any counterclaim defense or offset which
theretofore accrued to Subtenant against Sublandlord, (iii) be bound by any
previous modification or amendment of this Sublease or by any previous
prepayment of more than one month's Fixed Rent, Escalation Rent or any other
Rental unless such modification or prepayment shall have been approved in
writing by Prime Landlord, or (iv) be obligated to perform any work in the
Sublease Premises or the Building or to prepare them for occupancy beyond Prime
Landlord's obligations under the Prime Lease. Notwithstanding the foregoing,
nothing herein shall be deemed to relieve Prime Landlord from performing its
obligations as landlord under the Sublease from and after the date Prime
Landlord succeeds to the position of Sublandlord under the Prime Lease.
Subtenant agrees to promptly execute and deliver to Prime Landlord any
instruments Prime Landlord may reasonably request to evidence and confirm such
attornment.
7
<PAGE>
9.3 Notwithstanding anything to the contrary contained in the Prime
Lease, this Sublease is in all respects subject and subordinate to all of the
provisions of the Prime Lease and to all matters to which the Prime Lease is or
shall be subject and subordinate (hereinafter collectively referred to as
"Superior Mortgages"). This Article shall be self-operative and no further
instrument of subordinations shall be required by any party. In confirmation
of such subordination, Subtenant shall execute promptly any certificate that
Sublandlord or Prime Landlord may reasonably request. Provided Subtenant is
not in breach of its obligations under this Sublease, Sublandlord agrees to
request a non-disturbance agreement protecting Subtenant's subtenancy hereunder
from the holder of any Superior Mortgage granting to Sublandlord a non-
disturbance agreement, but Sublandlord shall in no way be liable (nor shall
Subtenant's obligations herein be affected) by any refusal or failure by such
holder to grant Subtenant any such non-disturbance agreement.
10. Subtenant's Obligations. Except as otherwise specifically provided
herein, all acts and obligations to be performed and all of the terms,
provisions, covenants, stipulations, rights, obligations, remedies, agreements
and conditions to be observed by, and inuring to the benefit of, Sublandlord as
Tenant under the Prime Lease with respect to the Premises shall be performed
and observed by, and shall inure to the benefit of, Subtenant but solely to the
extent each of same relates to Subtenant's occupancy or its use and enjoyment
of the Sublease Premises, and Subtenant's obligations shall run to Sublandlord
or Prime Landlord, as Sublandlord may reasonably determine to be appropriate or
required by the respective interests of Sublandlord and Prime Landlord.
Subtenant hereby agrees to indemnify, defend and hold Sublandlord harmless from
and against, all claims, damages, costs, expenses and liabilities (including,
but not limited to, reasonable attorneys' fees and disbursements) relating to
the Sublease Premises, pursuant to (and in accordance with the terms of)
Sublandlord's indemnity of Prime Landlord contained in Section 20.03 of the
Prime Lease, said Section 20.03 being incorporated herein by reference and
being applicable from Subtenant to (and for the benefit of) Sublandlord. In
furtherance of the foregoing, Subtenant shall not (i) do or permit to be done
anything prohibited under the Prime Lease or the Superior Mortgages, (ii) take
any action or do or permit to be done anything which would result in any
additional cost or expense or other liability being incurred by Sublandlord
under the provisions of the Prime Lease, or (iii) do or permit to be done by
Subtenant's contractors, agents, employees, invitees, guests or licensees or
any other person or entity, anything which would cause Sublandlord, as Tenant
under the Prime Lease, to be in default thereunder. Subtenant's obligations
under this Article shall survive the expiration or earlier termination of this
Sublease. In the event that any term or condition of this Sublease confers any
rights which, if exercised hereunder, would constitute a default under or
breach of the Prime Lease or any Superior Mortgages, this Sublease shall be
deemed amended to comply or be consistent with the Prime Lease or any such
Superior Mortgages, or both. Subtenant shall not take or suffer any action in
connection with its use and enjoyment of the Sublease Premises which would
constitute a default under, or be a violation of, the Prime Lease or any
Superior Mortgages, or both.
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11. Sublandlord's Obligations. Subtenant agrees that, notwithstanding
anything to the contrary contained in this Sublease or in the Prime Lease,
Sublandlord is not hereby assuming any responsibility or obligation in
connection with, or for any of the representations made by, Prime Landlord
under the Prime Lease, nor shall Sublandlord be required to provide any of the
services or make any of the alterations, installations, repairs or restorations
or take any other actions that Prime Landlord has agreed to provide, to make,
to take or to cause to be provided or made or taken under the provisions of the
Prime Lease, and Subtenant shall rely upon, and look solely to Prime Landlord
for the provision or making thereof. If Prime Landlord shall default in the
performance of any of its obligations under the Prime Lease, Subtenant shall
not have the right to proceed in Sublandlord's name to enforce Prime Landlord's
obligations; provided, however, that, if Prime Landlord shall have defaulted in
the performance of any obligation under the Prime Lease, which default
materially adversely affects the Sublease Premises, Subtenant's use thereof, or
the services required to be provided to the Sublease Premises under this
Sublease, then, provided Subtenant is in compliance with its obligations
hereunder, Sublandlord agrees, upon the reasonable request of Subtenant and at
Subtenant's sole cost and expense, to make, demand or institute any proceeding
or action appropriate under the Prime Lease for the enforcement or performance
of said obligation. If requested by Sublandlord, and as a condition to
Sublandlord making, demanding, instituting or continuing any proceeding or
action contemplated by the prior sentence, Subtenant shall provide a cash
deposit or other assurances reasonably satisfactory to Sublandlord for the
payment of the costs and expenses anticipated by Sublandlord in connection with
such dispute, including, without limitation, reasonable attorneys' fees. If
such proceeding or action shall also seek enforcement or performance of
obligations for the benefit of portions of the Premises other than the Sublease
Premises, Sublandlord shall pay Sublandlord's equitable share of the cost and
expense of such proceeding or action, including, without limitation, reasonable
attorney's fees.
12. Default by Subtenant. If Subtenant shall be in default of any covenant,
term or condition of this Sublease which causes a default under any of the
provisions of the Prime Lease (any of the foregoing being a "Default"),
Sublandlord, on giving the notice required under the Prime Lease and subject to
the right, if any, of Subtenant to cure any such default as may be provided to
Sublandlord in the Prime Lease and as incorporated herein by reference, shall
have available to it all of the rights and/or remedies available to Prime
Landlord under the Prime Lease as if Sublandlord had caused the corresponding
default or failure to occur under the Prime Lease (collectively, the "Basic
Remedies"). In the event there occurs any other default under this Sublease
which does not cause a Default, and if (i) with respect to a non-monetary
default, Subtenant fails to cure such default within twenty (20) days after
Sublandlord's notice to Subtenant (or if such default is remediable but not
reasonably capable of being remedied within such twenty (20) day period,
Subtenant has failed to commence remedy within such twenty (20) day period, or,
if so commenced, has failed to diligently prosecute such remedy to completion
within a reasonable period, or (ii) Subtenant fails to cure such default within
five (5) days after Sublandlord's notice to Subtenant with respect to the
failure to make payment of any item of Rental, Sublandlord may pursue any of
the Basic Remedies. The Basic Remedies shall be in addition to all other
rights and/or remedies available to Sublandlord at law or in equity.
13. Quiet Enjoyment. As long as Subtenant is not in default under any of the
terms of this Sublease beyond any applicable grace period and performs and
observes all of the obligations, terms and conditions herein contained and
contained in the Prime Lease as herein incorporated, Subtenant shall peaceably
and quietly have, hold and enjoy the Sublease Premises, subject to the terms
and conditions of this Sublease and the Prime Lease.
14. Destruction, Fire and Other Casualty; Condemnation. Notwithstanding
anything to the contrary contained in this Sublease or the provisions of the
Prime Lease incorporated herein by reference:
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14.1 If the Sublease Premises shall be damaged or destroyed in whole
or in part as a result of any fire or other casualty, Subtenant shall have no
right to terminate or otherwise cause the Term to expire or be forfeited except
to the extent Sublandlord has an express right to terminate the Prime Lease;
14.2 If the whole or a part of the Sublease Premises shall be
condemned or taken in any manner for any public or quasi-public use, Subtenant
shall have no right to terminate this Sublease or otherwise cause the Term to
expire or be forfeited, except to the extent Sublandlord has an express right
to terminate the Prime Lease;
14.3 If Sublandlord shall receive an abatement of Fixed Rent and/or
Additional Rent pursuant to the provisions of the Prime Lease as a result of
damage or destruction to the Sublease Premises, or a condemnation of the
Sublease Premises, or with respect to services to be furnished to the Sublease
Premises, Subtenant shall be entitled to receive a corresponding abatement of
Fixed Rent and/or Escalation Rent, as the case may be (provided Subtenant is in
compliance with its obligations under this Sublease); and
14.4 Sublandlord shall have no obligation to make repairs or restore
the Sublease Premises and Subtenant shall be entitled only to such repairs or
restoration of the Sublease Premises as may be provided by Prime Landlord under
the Prime Lease.
15. Modification of the Prime Lease. For the purposes of this Sublease, the
terms of the Prime Lease which are incorporated by reference are incorporated
subject to the following modifications:
15.1 In all provisions of the Prime Lease requiring the approval or
consent of the "Landlord," (other than with respect to Alterations and Asbestos
Removal, where only the consent of Prime Landlord shall be required) Subtenant
shall be required to obtain the approval or consent of Sublandlord and Prime
Landlord. In all provisions of the Prime Lease requiring that notice be given
to the "Landlord," Subtenant shall be required to give notice to Prime Landlord
and Sublandlord;
15.2 The following provisions of the Prime Lease do not apply, are
deemed to be deleted from the Prime Lease and shall be of no force and effect
with respect to this Sublease: Section 3.04 (Allowance); Section 3.05
(Elevator Work and Allowance); Section 3.06; Section 3.07 (Benches and Hoods);
Section 3.08 (Arbitration; Fit-Up); Section 5.05 (Audit and Arbitration);
Section 8.07; Section 8.08; First two lines of Section 8.10; Section
9.02 (Compliance Contests); Sections 12.05(a) and 12.05(b); Section
18.12 (Restricting Access); Section 20.04 (Indemnity); Article 30 (Brokerage);
Article 31 (Notices); Article 35 (Parking); Sections 36.02 and 36.03; Second
Sentence of Section 37.01 (Exterior Signage); Section 37.02 (Tenant's
Directory); Section 41.01(b) (Representations); Article 42 (Options); Article
43 (Communications Dish); and Article 44 (Cabling).
15.3 Any reference to the term "Landlord" in Article 10 of the Prime
Lease in connection with insurance coverage is hereby modified to mean
Sublandlord and Prime Landlord.
16. Termination of Prime Lease.
16.1 If for any reason whatsoever other than due to Sublandlord's
default under the Prime Lease (excluding any such default caused by Subtenant),
the term of the Prime Lease is terminated prior to the Expiration Date, then
this Sublease shall thereupon automatically be terminated, as if the Expiration
Date were one day prior to the date of termination under the Prime Lease, and
Sublandlord shall not be liable to Subtenant by reason thereof. Upon such
termination of this Sublease, Sublandlord shall return to Subtenant that
portion of the Fixed Rent and Escalation Rent which has been paid in advance by
Subtenant hereunder, if any, prorated as of the date of such termination.
Sublandlord reserves the right to transfer and assign its interest in and to
this Sublease.
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16.2 Subtenant shall look only to Sublandlord's estate and interest
in the Sublease Premises for the satisfaction of Subtenant's remedies for the
collection of any judgment (or other judicial process) requiring the payment of
money by Sublandlord in the event of any default by Sublandlord under this
Sublease, and no other property or other assets of Sublandlord shall be subject
to levy, execution or other enforcement procedure for the satisfaction of
Subtenant's remedies under or with respect to this Sublease, the relationship
of Sublandlord and Subtenant hereunder or Subtenant's use and occupancy of the
Sublease Premises. However, nothing contained in this Article shall be
construed to permit Subtenant to offset against Rental due hereunder unless
otherwise specifically provided for in this Sublease.
17. Condition of the Sublease Premises. Subject to Sections 3.1 and 3.2
hereof, Subtenant acknowledges that it has examined and inspected the Sublease
Premises and is fully familiar with the physical condition thereof, and agrees
to accept and to take possession of the Sublease Premises in vacant, broom-
clean condition and otherwise "as is." Subtenant further acknowledges that, as
an occupant of the Complex, it is generally familiar with the condition of the
Complex, including, without limitation, the conditions listed as Exhibit N of
the Prime Lease. Sublandlord does not make any representation or warranty as
to the physical condition of the Sublease Premises or Complex, the use to which
the Sublease Premises or Complex may be put or any other matter or thing
affecting or relating to the Sublease Premises except as specifically set forth
in this Sublease. Notwithstanding the immediately preceding sentence,
Sublandlord and Subtenant each represents to the other that, to the best of
their respective knowledge, Prime Landlord's representations made in Article 41
and Section 36.03(a) of the Prime Lease are true and accurate as of the date
hereof. Sublandlord shall have no obligation whatsoever to alter, improve,
decorate or otherwise prepare the Sublease Premises for Subtenant's occupancy.
Subtenant acknowledges that it presently occupies, and has been in occupancy
of, portions of the Sublease Premises.
18. Consents. If, as required by the terms of this Sublease, Subtenant seeks
Sublandlord's consent or approval, Sublandlord's refusal to grant such consent
or approval shall be deemed reasonable if Sublandlord is required under the
Prime Lease to obtain such consent or approval of Prime Landlord and Prime
Landlord has refused or failed to grant such consent or approval. Sublandlord
agrees to forward any such good faith, reasonable request for Prime Landlord's
consent or approval to Prime Landlord promptly after receipt therefor from
Subtenant. The provisions of this Article shall not be construed to limit the
grounds on which Sublandlord may refuse to grant consent or approval in any
instance.
19. Cleaning/Maintenance and Security. Subject to and in accordance with the
terms of the Prime Lease, Subtenant shall receive Prime Landlord's cleaning,
maintenance and security services to the Sublease Premises.
20. Assignment and Subletting.
20.1 Subtenant shall have the right, subject to prior written consent
of Sublandlord, in each instance, which consent shall not be unreasonably
withheld, and the prior written consent of Prime Landlord, in each instance, to
assign this Sublease or sublet a portion of the Sublease Premises in accordance
with Article 8 of the Prime Lease (with the exclusion of Sections 8.07, 8.08,
and the first two lines of Section 8.10) . It is expressly understood that
profit sharing pursuant to Section 8.16 of the Prime Lease, if applicable,
would occur between Subtenant and Prime Landlord and that Sublandlord shall
have no interest in any profits derived from a subletting or assignment.
21. Brokerage. Sublandlord and Subtenant represent and warrant to each other
that they have dealt with no brokers in connection with this Sublease.
Sublandlord and Subtenant each agrees to indemnify and hold harmless the other
from and against all loss, cost, liability and expense (including, but not
limited to, attorneys' fees and disbursements) arising out of the breach of the
representation and warranty made by such party in this Article. In the event
any claim shall be made by any such other broker with whom Sublandlord has not
dealt who shall claim to have negotiated this Sublease on behalf of Subtenant
or to have introduced Subtenant to Sublandlord, Subtenant shall defend any such
action by counsel selected by Subtenant and approved by Sublandlord.
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22. Surrender.
22.1 On the Expiration Date, subject to any renewals exercised by
Subtenant, or upon the sooner termination of this Sublease, Subtenant shall, at
its sole cost and expense, quit, surrender, vacate and deliver the Sublease
Premises to Sublandlord "broom clean" and in good order, condition and repair
except for ordinary wear and tear and damage by fire or other casualty.
Subject to the terms of the Prime Lease, Subtenant shall retain title to,
including the right to remove from the Sublease Premises at any time during the
Term hereof, any movable trade fixtures or equipment (including, but not
limited to, a generator (the "Generator") to be installed by Subtenant pursuant
to the Plans) paid for and installed by Subtenant (without contribution by
either Sublandlord or Prime Landlord) used in Subtenant's business which are
not necessary for the structural integrity of the Silicones Building or the
operation of any building, mechanical or utility systems or equipment. Upon
the expiration or sooner termination of this Sublease, Subtenant shall, at its
sole cost and expense, remove all personal property and any movable trade
fixtures or equipment (including the Generator and the pad upon which the
Generator is installed) belonging to Subtenant which it is permitted to move
pursuant to this Section; provided, however, that, in each instance, Subtenant
repairs any damage to the Sublease Premises, the Silicones Building and/or the
Warehouse Building due to the installation or removal of such property. Any
trade fixtures, equipment or other property of Subtenant remaining at the
Sublease Premises after the expiration or termination of this Sublease shall be
deemed abandoned and may be removed or otherwise disposed of by Sublandlord
without any notice, liability or obligation to Subtenant, but Subtenant shall
remain liable to reimburse Sublandlord for the cost of performing any such
work, said reimbursement to be made within ten (10) days after Sublandlord
submits bills therefor. Subtenant agrees to indemnify, defend and save
Sublandlord harmless from and against any and all loss, cost, expense or
liability resulting from the failure of, or the delay by, Subtenant in so
surrendering the Sublease Premises, including, without limitation, any claims
made by Prime Landlord or any succeeding Subtenant founded on such failure or
delay. Notwithstanding the foregoing to the contrary, Subtenant shall not be
required to remove the wiring installed in connection with the use of the
Generator.
23. Notices. Notices and other communications desired or required to be given
hereunder shall be in writing and shall be given or made by personal delivery
on a business day or by certified or registered mail, return receipt requested
(or by reputable, overnight express courier, such as Federal Express or UPS),
addressed, in the case of Sublandlord, to the address set forth on the first
page of this Sublease, to the attention of General Counsel, and, in the case of
Subtenant, to the Sublease Premises to the attention of Robert A. McKinney,
with a copy to Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New
York, 10019, Attention: Stephen Schweiger, or to any other party(ies)) or
addresses(es) which either party may hereafter designate respectively for such
purpose by a written notice. Copies of any notices to Sublandlord shall
likewise be sent to: One American Lane, Greenwich, CT 06831, Attention:
General Counsel.
24. No Waivers. Failure by Sublandlord or Subtenant in any instance to insist
upon the strict performance of any one or more of the obligations of the other
party under this Sublease, or to exercise any election herein contained, shall
in no manner be or be deemed to be a waiver by Sublandlord or Subtenant, as the
case nay be, of any of the other party's defaults or breaches hereunder or of
any of its rights and remedies by reason of such defaults or breaches, or a
waiver or relinquishment for the future of the requirement of strict
performance of any and all of the other party's obligations hereunder.
Further, no payment by Subtenant or receipt by Sublandlord of a lesser amount
than the correct amount or manner of payment of Fixed Rent and Escalation Rent
due hereunder shall be deemed to be other than a payment on account, nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment be deemed to effect or evidence an accord and satisfaction, and
Sublandlord may accept any checks or payments as made without prejudice to
Sublandlord's right to recover the balance or pursue any other remedy in this
Sublease or otherwise provided at law or equity.
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25. Miscellaneous.
25.1 The terms of this Sublease may not be changed or otherwise
modified except by an instrument in writing signed by each of the parties
hereto.
25.2 This Sublease is conditioned upon receipt of any consent
required under a Superior Mortgage, to the extent not already given under or
pursuant to or in connection with the Prime Lease.
25.3 It is understood and agreed that all understandings and
agreements heretofore had between the parties hereto with respect to the
subject matter of this Sublease are merged in this Sublease (including the
Exhibits attached hereto and made a part hereof), which alone fully and
completely expresses their agreement, and that the same is entered into after
full investigation, neither party relying upon any statement, representation or
warranty made by the other not embodied in this Sublease. This Sublease shall
not be binding on Sublandlord unless and until Sublandlord shall have executed
and delivered a fully executed counterpart of this Sublease to Subtenant.
25.4 As of the date hereof, Sublandlord represents that (a) the Prime
Lease has been executed and delivered; (b) Sublandlord has not received a
notice of default under the Prime Lease and (c) to the best of its knowledge,
Sublandlord is not in default under the Prime Lease.
25.5 Sublandlord and Subtenant each represents that it has full right
and power to execute and perform this Sublease, subject to the terms of the
Prime Lease and consents of Prime Landlord (and any required Superior
Mortgagee), if applicable.
25.6 This Sublease shall inure to the benefit of and shall be binding
upon the parties hereto and their respective successors and assigns, as same
are permitted hereunder.
25.7 The paragraph headings appearing herein are for purposes of
convenience only and are not deemed to be a part of this Sublease.
25.8 This Sublease shall be governed by and construed in accordance
with the laws of the State of New York.
25.9 Miscellaneous Services. Provided Subtenant is not in breach or
default of its obligations under this Sublease, Sublandlord shall provide
certain services to Subtenant and to various portions of the Sublease Premises
on a periodic basis (but solely to the extent Sublandlord provides such
services generally to the Premises) specified as follows: standard reception
services to the lobby of the Silicones Building; standard air balancing
services; standard fire extinguisher inspection and maintenance; standard
safety shower and eyewash station maintenance; periodic, standard painting
maintenance; standard plumbing and electrical maintenance; standard, initial
changing of certain lock mechanisms; and making available, on a non-exclusive
basis, a certain receiving area in the Silicones Building or Building 771 (or,
alternatively, at Sublandlord's option, pursuant to separate agreement with
Subtenant, certain standard shipping and receiving services); provided,
however, that Sublandlord shall have no obligation to provide any of the
aforesaid services above and beyond the levels to which Sublandlord has
historically provided such services to its own business operations; and
provided, further, that Subtenant pays Sublandlord's standard charges for
providing such services as and when billed as Additional Rent, said charges to
be based on Sublandlord's actual cost, without profit or markup.
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25.10 Parking. Subject to and in accordance with the terms of the
Prime Lease, Sublandlord shall provide Subtenant with one hundred (100)
unreserved, outside parking spaces, plus an additional seven (7) reserved,
outside parking spaces, out of Sublandlord's parking space allowance under the
Prime Lease.
25.11 Counterparts. This Sublease may be executed in any number of
counterparts, all of which, together, shall constitute but one and the same
instrument.
26. Right of First Refusal.
26.01 Provided that this Sublease shall then be in full force and
effect without default on the part of the Subtenant hereunder, after notice and
the expiration of any applicable grace or cure period provided herein,
Subtenant shall have the right of first refusal (the "Refusal Right") with
respect to the subleasing of any space in the Silicones Building (the
"Expansion Space"), when and if the same becomes available for subleasing by
Sublandlord. The Refusal Right shall be exercisable in accordance with, and
shall be subject to and governed by, the terms, covenants and conditions
contained in the balance of this Article 26.
26.02 If any Expansion Space shall become available for subleasing,
Sublandlord shall send written notice (an "Availability Notice") to Subtenant
by certified mail, return receipt requested, if and when Sublandlord shall
learn that the Expansion Space shall become available for subleasing by
Sublandlord, which Availability Notice shall specify: (i) the date of expected
availability (the "Expected Availability Date") of the Expansion Space which
shall be not less than thirty (30) days nor more than one year from the date of
the Availability Notice, and (ii) the terms ("Sublandlord's Terms") upon which
Sublandlord is willing to rent the Expansion Space. If Subtenant shall desire
to exercise the Refusal Right with respect to the Expansion Space, Subtenant
shall send Sublandlord written notice thereof (an "Acceptance Notice") on or
before the thirtieth (30th) day next succeeding the day upon which Sublandlord
shall have sent the Availability Notice to Subtenant, except in the case where
the Expected Availability Date is more than ninety (90) days from the date of
the Availability Notice, in which case Subtenant may exercise its Refusal Right
by sending the Acceptance Notice to Sublandlord no later than one hundred
twenty (120) days prior to the Expected Availability Date.
26.03 If Subtenant shall send an Acceptance Notice to Sublandlord in
the form and manner, and within the time periods referred to in Section 26.02
hereof, the parties hereto shall promptly enter into a new lease (the "New
Lease") with regard to the Expansion Space, which New Lease shall contain all
of the same terms, covenants and conditions contained in this Sublease, except
that:
(i) (a) In the event Subtenant chooses to remove asbestos from the
Expansion Space, the term of the New Lease shall commence thirty (30) days
after Sublandlord delivers the Expansion Space to Subtenant in vacant, broom
clean condition.
(b) In the event Subtenant chooses not to remove asbestos from
the Expansion Space, the term of the New Lease shall commence upon the date
upon which Sublandlord delivers the Expansion Space to Subtenant in vacant,
broom clean condition.
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(c) The term of the New Lease shall expire upon the day upon
which the term of this Sublease (as the same may be renewed pursuant to the
terms herein) shall expire.
(ii) the annual fixed rent and escalation provisions contained in the
New Lease shall be those specified in Sublandlord's Terms or the Revised
Sublandlord's Terms (as herein defined).
26.04 In the event that Subtenant shall fail to send an Acceptance
Notice to Sublandlord in the form and manner, and within the period provided
herein, referred to in Section 26.02 hereof, such failure shall constitute a
waiver of the Refusal Right. Sublandlord may thereafter lease the Expansion
Space to other parties upon terms not materially more favorable to the other
parties than Sublandlord's Terms. If Sublandlord intends to revise the
Sublandlord's Terms to make them more favorable to other parties, Sublandlord
shall notify Subtenant of the revisions which are more favorable ("Revised
Sublandlord's Terms"), and Subtenant shall have an additional period of ten
(10) days after receipt of the Revised Sublandlord's Terms within which to send
an Acceptance Notice.
IN WITNESS WHEREOF, this Sublease has been duly executed as of the
day and year first above set forth.
PROGENICS PHARMACEUTICALS, INC,
Subtenant
By: /s/ ROBERT A. MCKINNEY
-----------------------------
Name: Robert A. McKinney
Title: Vice President
CROMPTON CORPORATION
(f/k/a CK Witco Corporation),
Sublandlord
By: /s/ WALTER K. RUCK
-----------------------------
Name: Walter K. Ruck
Title: Sr. V.P. Operations
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