<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: JUNE 30, 1998 Commission File No. 0-19193
CAMBRIDGE NEUROSCIENCE, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3319074
------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
ONE KENDALL SQUARE, BUILDING 700
CAMBRIDGE, MA 02139
-------------------
(Address of principal executive offices including zip code)
617-225-0600
------------
(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
----- -----
At July 31, 1998, 18,021,341 shares of Common Stock, par value $.001 per share,
were issued and outstanding.
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CAMBRIDGE NEUROSCIENCE, INC.
INDEX
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<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION NUMBER
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<S> <C>
ITEM 1 - FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
at June 30, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Operations for the
three and six months ended June 30, 1998 and 1997 4 - 5
Condensed Consolidated Statements of Cash Flows
for the three and six months ended June 30, 1998 and 1997 6
Notes to Condensed Consolidated Financial Statements 7 - 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 - 13
PART II - OTHER INFORMATION
- ---------------------------
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 13
ITEM 5 - OTHER INFORMATION 13
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURES 15
</TABLE>
2
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<TABLE>
<CAPTION>
CAMBRIDGE NEUROSCIENCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
JUNE 30, DECEMBER 31,
1998 1997
----------- -----------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 10,502 $ 12,020
Marketable securities 5,018 26,561
Prepaid expenses and other current assets 1,064 1,575
--------- ---------
TOTAL CURRENT ASSETS 16,584 40,156
Equipment, Furniture and Fixtures, net 561 735
--------- ---------
$ 17,145 $ 40,891
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,378 $ 3,668
Research and development advances 2,650 2,900
--------- ---------
TOTAL CURRENT LIABILITIES 5,028 6,568
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01, 10,000
shares authorized; none issued -- --
Common stock, par value $.001, 30,000
shares authorized; 17,967 shares issued
and outstanding at June 30, 1998;
17,858 at December 31, 1997 18 18
Additional paid-in capital 120,021 137,787
Accumulated deficit (107,922) (103,482)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 12,117 34,323
--------- ---------
$ 17,145 $ 40,891
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
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<TABLE>
<CAPTION>
CAMBRIDGE NEUROSCIENCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
THREE MONTHS ENDED JUNE 30,
----------------------------
1998 1997
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<S> <C> <C>
Revenues
Research and development $ 250 $ 1,100
Operating expenses
Research and development 1,585 5,008
General and administrative 426 654
-------- --------
2,011 5,662
-------- --------
Loss from operations (1,761) (4,562)
Interest income 265 655
-------- --------
Net loss $ (1,496) $ (3,907)
======== ========
Basic and diluted net loss per common share $ (0.08) $ (0.22)
======== ========
Number of shares outstanding for purposes of
computing basic and diluted net loss per share 17,924 17,789
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE> 5
<TABLE>
<CAPTION>
CAMBRIDGE NEUROSCIENCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
SIX MONTHS ENDED JUNE 30,
-------------------------
1998 1997
--------- ----------
<S> <C> <C>
Revenues
Research and development $ 551 $ 2,194
Operating expenses
Research and development 3,917 9,547
General and administrative 939 1,388
Restructuring costs 921 --
------- -------
5,777 10,935
------- -------
Loss from operations (5,226) (8,741)
Interest income 786 1,184
------- -------
Net loss $(4,440) $(7,557)
======= =======
Basic and diluted net loss per common share $ (0.25) $ (0.44)
======= =======
Number of shares outstanding for purposes of
computing basic and diluted net loss per share 17,907 17,206
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
5
<PAGE> 6
<TABLE>
<CAPTION>
CAMBRIDGE NEUROSCIENCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
SIX MONTHS ENDED JUNE 30,
-------------------------
1998 1997
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (4,440) $ (7,557)
Expenses not requiring cash:
Depreciation and amortization 185 444
Common stock issued pursuant to an
employee benefit plan 103 121
-------- --------
(4,152) (6,992)
Changes in current assets and liabilities:
Prepaid expenses and other current assets 511 (123)
Accounts payable and accrued expenses (1,290) 160
Research and development advances (250) (1,943)
-------- --------
(1,029) (1,906)
-------- --------
Cash used for operating activities (5,181) (8,898)
INVESTING ACTIVITIES
Purchase of marketable securities (8,996) (11,575)
Sale of marketable securities 30,539 --
Purchase of equipment, furniture and
fixtures, net of disposals (11) (95)
-------- --------
Cash provided by (used for) investing activities 21,532 (11,670)
FINANCING ACTIVITIES
Sales of common stock, net of offering
costs and repurchases 38 28,236
Dividend (17,907) --
-------- --------
Cash (used for) provided by financing activities (17,869) 28,236
-------- --------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (1,518) 7,668
Cash and cash equivalents at beginning of period 12,020 26,664
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 10,502 $ 34,332
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
6
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CAMBRIDGE NEUROSCIENCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Cambridge NeuroScience, Inc. (the "Company") as of June 30, 1998 and for the
three and six month periods ended June 30, 1998 and 1997 have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the accompanying consolidated financial statements include all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of the financial condition, results of operations and cash flows
for the periods presented. The results of operations for the interim period
ended June 30, 1998 are not necessarily indicative of the results expected for
the full fiscal year.
The consolidated financial statements presented as of December 31, 1997 are
derived from the audited financial statements and footnotes included in the
Company's Annual Report on Form 10-K (file number 0-19193).
The Company is engaged in the development of proprietary pharmaceuticals to
prevent, reduce or reverse damage caused by severe disorders and injuries of the
nervous system.
2. BASIC AND DILUTED NET LOSS PER COMMON SHARE
Net loss per common share is based on the weighted-average number of common
shares outstanding during each of the periods. Common equivalent shares from
stock options are excluded as their effect is antidilutive.
3. RESEARCH AND DEVELOPMENT REVENUE
The Company recognizes research and development revenue as earned and such
revenue represents reimbursement of the Company's expenditures pursuant to the
terms of two collaboration agreements. In November 1996, the Company entered
into a collaboration agreement with Allergan, Inc. ("Allergan") for the
development of treatments for ophthalmic disorders, including glaucoma. Pursuant
to this agreement, Allergan provides $1.0 million in research funding per year
through November 1999. Revenue pursuant to this agreement is recognized as
payments are received, on a quarterly basis.
Pursuant to the Company's agreement with Boehringer Ingelheim
International, GmbH ("BI"), the Company is obligated to fund approximately 25%
of the development expenses for CERESTAT (aptiganel) in the United States and
Europe. Revenue earned pursuant to this agreement represents reimbursement by BI
of expenditures by the Company in excess of the 25% required under the
agreement. The Company accounts for research and development revenue from BI
using the percentage of completion method, based on the relationship between
estimated costs incurred to date compared with total estimated costs for the
year. Total estimated costs for the year are reviewed quarterly and revenue
earned in the current period is adjusted for the impact of revisions to the
estimated reimbursable costs.
7
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CAMBRIDGE NEUROSCIENCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
As a result, revenue earned by the Company may fluctuate on a quarterly basis.
Cash received in advance of research and development performed is designated as
research and development advances.
On July 13, 1998, the Company announced the termination of the
collaboration with BI. The companies are in the process of negotiating the terms
and conditions of the termination of the collaboration, including the financial
terms associated with the Company's future use of the data generated by the two
companies during the course of the collaboration and the repayment by the
Company of excess advances received. Pending the completion of the termination
agreement, the Company has not, and may not, recognize any revenue pursuant to
this collaboration in 1998.
4. RESTRUCTURING COSTS
On March 9, 1998, the Company announced the implementation of a cost
reduction plan which included a reduction in headcount from approximately 60 to
30 employees. Included in operating expenses in the six months ended June 30,
1998 is a one-time cost of $921,000 associated with this reduction in staff,
consisting primarily of severance and related benefits. Included in accounts
payable and accrued expenses at June 30, 1998 is an accrual for unpaid severance
and related benefits of $395,000.
5. ADOPTION OF NEW ACCOUNTING PRINCIPLE
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, Reporting Comprehensive Income ("FAS 130"), which establishes standards for
the reporting and display of comprehensive income and its components. On January
1, 1998, the Company adopted FAS 130. The adoption of FAS 130 had no impact on
the Company's financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
Revenues
Research and development revenues in the three months ended June 30, 1998
were $250,000, compared to $1.1 million in the same period in 1997. Revenues in
the second quarter of 1997 included $850,000 earned pursuant to the
collaboration agreement with BI for the development of aptiganel. Revenue
pursuant to the BI agreement represents reimbursement of the excess of the
Company's expenditures over its funding obligation under the agreement (see Note
3 to the Condensed Consolidated Financial Statements). In the second half of
1997, the Company and BI discontinued enrollment into the Phase III clinical
trials of aptiganel in both stroke and traumatic brain injury. Substantially all
of the remaining costs associated with the completion of these trials were
recognized in 1997. On July 13, 1998, the Company announced the termination of
the collaboration with BI and that the two parties are in the process of
negotiating the terms and conditions of the termination of the collaboration.
The Company
8
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CAMBRIDGE NEUROSCIENCE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
has not, and may not, recognize revenue pursuant to this collaboration in 1998.
Upon completion of the termination agreement, the Company may recognize an
adjustment which is expected to reduce the accrual for research and development
advances to be repaid to BI (see "-- Liquidity and Capital Resources"). At
this time, the Company is not able to reasonably estimate the amount of this
adjustment.
Revenue of $250,000 earned in the second quarter of 1998 pursuant to the
agreement with Allergan (see Note 3 to the Condensed Consolidated Financial
Statements) was comparable to that earned in the same period in 1997.
Operating Expenses
Total operating expenses for the quarter ended June 30, 1998 were $2.0
million, compared to $5.7 million in the same period in 1997, a decrease of $3.7
million, or 65%. Research and development expenses decreased by $3.4 million, or
68%, to $1.6 million in the three months ended June 30, 1998, compared to $5.0
million in the same period in 1997. This was due to the discontinuation of the
Phase III clinical trial of aptiganel in traumatic brain injury ("TBI") in the
second half of 1997, as well as the decrease in costs as a result of the
reduction in workforce in March 1998 (see Note 4 to the Condensed Consolidated
Financial Statements). General and administrative expenses decreased by
$228,000, or 35%, to $426,000 in the quarter ended June 30, 1998, compared to
$654,000 in the same period in 1997, reflecting the reduction in workforce which
occurred in March 1998.
Interest Income
Interest income for the second quarter of 1998 was $265,000, compared to
$655,000 in the same period in 1997. This decrease was due to lower cash
balances available for investment in the second quarter of 1998, following the
payment of a dividend of $17.9 million in April 1998.
Net Loss Per Share
The net loss per share for the second quarter of 1998 was ($0.08), compared
to ($0.22) in the same period in 1997. This decrease in net loss per share,
compared to 1997, reflects the decrease in operating costs, offset in part by
the absence of revenue pursuant to the BI agreement.
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
Revenues
In the six months ended June 30, 1998, the Company had research and
development revenues of $551,000, compared to $2.2 million in the same period in
1997, a decrease of $1.6 million, or 75%. Revenues in the first half of 1998
consisted of $50,000 earned pursuant to a Small Business Innovation Research
grant which commenced in the third quarter of 1997 and $500,000 earned pursuant
to the collaboration agreement with Allergan. Revenues in the same period in
1997 included $500,000 earned pursuant to the Allergan collaboration and $1.7
million earned pursuant to the collaboration agreement
9
<PAGE> 10
CAMBRIDGE NEUROSCIENCE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
with BI. As noted above, on July 13, 1998, the Company announced the termination
of the collaboration with BI. The Company has not, and may not, recognize
revenue pursuant to this collaboration in 1998. Upon the completion of the
termination agreement, the Company may recognize an adjustment which is expected
to reduce the accrual for research and development advances to be repaid to BI
(see "-- Liquidity and Capital Resources"). At this time, the Company is not
able to reasonably estimate the amount of this adjustment.
Operating Expenses
In the first half of 1998, the Company had total operating expenses of $5.8
million, compared to $10.9 million in the first half of 1997, a decrease of $5.1
million, or 47%. Research and development expenses decreased by $5.6 million, or
59%, to $3.9 million in the first six months of 1998, compared to $9.5 million
in the same period in 1997, due primarily to the termination of the Phase III
clinical trial of aptiganel in TBI in the second half of 1997 as well as to the
reduction in workforce in March 1998.
General and administrative expenses decreased by $449,000, or 32%, to
$939,000 in the first half of 1998, compared to $1.4 million in the same period
in 1997. This decrease reflects the reduction in salaries and benefits and
related costs associated with the reduction in workforce in March 1998.
Operating expenses for the six months ended June 30, 1998 included Restructuring
costs of $921,000, consisting primarily of severance and related benefits
associated with this reduction in staff (see Note 4 to the Condensed
Consolidated Financial Statements).
Interest Income
Interest income decreased by $398,000, or 34%, to $786,000 in the first
half of 1998, compared to $1.2 million in the same period in 1997. This decrease
was a result of the decrease in cash available for investment in 1998 following
the payment of a dividend totaling $17.9 million in April 1998.
Net Loss Per Share
In the first half of 1998, the Company had a net loss per share of ($0.25),
compared to a net loss per share of ($0.44) in the same period in 1997. This
decrease in net loss per share is the result of the 47% decrease in operating
expenses, primarily as a result of the discontinuation of the Phase III trials
of aptiganel, offset in part by the absence of revenue earned pursuant to the BI
agreement in 1998 as well as a decrease in interest income.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company had cash and cash equivalents and marketable
securities of $15.5 million, compared to cash and cash equivalents and
marketable securities of $38.6 million at December 31, 1997. In the first six
months of 1998, the Company used $5.2 million for operating activities. On April
14, 1998, the Company paid a dividend in the amount of $1.00 per share, totaling
$17.9 million.
10
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CAMBRIDGE NEUROSCIENCE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
On March 9, 1998, the Company implemented a cost reduction plan which
included a reduction in headcount from approximately 60 to 30 employees. The
cost of $921,000 associated with this reduction in staff, consisting primarily
of severance and related benefits, was recognized as restructuring costs in the
first quarter of 1998. In an effort to reduce facilities-related costs, in June
1998 the Company entered into an agreement to sub-lease approximately half of
its office and laboratory facilities. The Company is continuing to evaluate
alternatives for maximizing shareholder value, which may include the sale of
some or all of the Company's technology and other assets. Effective May 6, 1998,
Harry W. Wilcox, III, the former Senior Vice President of Business Development
and Chief Financial Officer, was appointed President and Chief Executive Officer
of the Company. Mr. Wilcox also joined the Company's Board of Directors at that
time. Elkan R. Gamzu, the former President and Chief Executive Officer, is now
serving as a consultant to the Company in the areas of clinical trial data
analysis and strategy relating to the potential future development of aptiganel.
Pursuant to the collaboration agreement with BI for the development of
aptiganel, the Company has been obligated to pay 25% of the development costs
incurred in the United States and Europe. BI has been obligated to pay the
remaining 75% of such costs and all of the development costs in Japan. Any costs
incurred in excess of one party's contractual obligation will be reimbursed by
the other party. The cash reimbursement and revenue earned pursuant to this
agreement are therefore subject to each party's relative expenditures and may
fluctuate in each fiscal period. (See Note 3 to the Condensed Consolidated
Financial Statements). In the second half of 1997, the Company and BI
discontinued enrollment of patients into the clinical trials of aptiganel in
both stroke and TBI. Substantially all of the costs associated with the
completion of the trials and analysis of the data were recognized by the Company
in 1997. The Company has not, and may not, recognize revenue pursuant to this
collaboration in 1998. The agreement provided that BI would advance cash to the
Company in the event that the Company's expenditures were expected to exceed its
contractual obligation. On an annual basis, actual spending is reconciled with
the budget and may result in the Company's repayment to BI of any excess
advances. No advances were received from BI in 1997 or in the first six months
of 1998.
On July 13, 1998, the Company announced the termination of the
collaboration with BI for the development of aptiganel. Cambridge NeuroScience
and BI are in the process of negotiating the specific terms and conditions of
the termination of the collaboration, including the financial terms associated
with the Company's future use of the data generated by the two companies during
the course of the collaboration and the repayment by the Company of amounts due
BI. Included in Total Current Liabilities as of June 30, 1998 are research and
development advances relating to the BI collaboration of $2.7 million. Upon
completion of the termination agreement, the Company may recognize an adjustment
which is expected to reduce the accrual for research and development advances to
be repaid to BI. At this time, the Company cannot reasonably estimate the amount
of this adjustment.
Pursuant to the agreement signed in November 1996 with Allergan, the
Company may receive up to $3.0 million in research and development funding
through 1999. At June 30, 1998, the Company had received $1.7 million pursuant
to this funding arrangement, of which $500,000 was recognized as revenue in the
first half of 1998. Under this agreement, Allergan is responsible for the
development of
11
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CAMBRIDGE NEUROSCIENCE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
potential products and will bear all associated costs. The collaboration also
provides that the Company may receive up to an additional $18.5 million upon the
achievement of certain milestones. However, there can be no assurance as to when
or if these milestones will be achieved. Allergan may terminate the agreement at
any time upon six months prior written notice.
In December 1996, the Company formed a subsidiary, Cambridge NeuroScience
Partners, Inc. ("CNPI"), to pursue the development of treatments for Alzheimer's
disease and other neurological disorders. CNPI entered into a collaboration
agreement with the J. David Gladstone Institutes ("Gladstone"). Pursuant to this
collaboration, Gladstone is conducting a research program over a three year
period, for which CNPI is providing at least $1.25 million in funding per year.
The Company owns 80% of the outstanding stock of CNPI and has guaranteed CNPI's
obligations with respect to its collaboration with Gladstone.
The Company believes that cash and cash equivalents and investments in
marketable securities available at June 30, 1998 will be sufficient to maintain
operations through 1999. Based on its evaluation of the data from the clinical
trials, the Company may pursue development of aptiganel through a new
collaboration. There can be no assurance, however, that any such further
development will be undertaken or that the Company will be successful in
entering into a new collaboration for such further development. In addition, the
Company intends to focus resources on the Allergan/ion-channel blocker research
program and the advancement of the Glial Growth Factor 2 program. The reduction
in headcount that took place in March and the dividend payment in April will
result in fewer resources being devoted to the Company's other research and
development programs. Insufficient funds may require the Company to delay, scale
back or eliminate certain of its research and product development programs or to
license third parties to commercialize products or technologies that the Company
might otherwise undertake itself.
The Company does not believe that inflation has had a material impact on
its results of operations.
As of June 29, 1998, the closing bid price of the common stock of the
Company had remained below $1.00 per share for more than thirty consecutive
days. As a result, the Company received notice from the Nasdaq Stock Market,
Inc. ("Nasdaq") that the Company was not in compliance with the closing bid
price requirements for the continued listing of the Company's common stock on
Nasdaq and that such common stock would be delisted as of October 1, 1998 if the
closing bid price of this issue is not equal to or greater than $1.00 per share
for a period of ten consecutive trading days during the ninety-day period
between June 29, 1998 and September 29, 1998. As of August 6, 1998, the Company
had not satisfied this closing bid price requirement. In the event that the
Company is unable to achieve compliance, it intends to seek further procedural
remedies to delay or avoid the delisting of its common stock.
The discussion contained in this section as well as elsewhere in this
Quarterly Report on Form 10-Q may contain forward-looking statements based on
the current expectations of the Company's management. The Company cautions
readers that there can be no assurance that the actual results or business
conditions will not differ materially from those projected or suggested in the
forward-looking
12
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CAMBRIDGE NEUROSCIENCE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
statements as a result of various factors, including, but not limited to, the
following: uncertainties relating to the completion of clinical trials of the
Company's product candidates, particularly with respect to aptiganel;
uncertainties as to the Company's ability to continue operations and
achieve profitability; the early stage of development of many of the Company's
product candidates; the Company's reliance on current and prospective
collaborative partners to supply funds for research and development and to
commercialize its products; technical risks associated with the development of
new products; and the competitive environment of the biotechnology industry.
Readers are cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date hereof. The Company undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
occurring after the date hereof or to reflect the occurrence of unanticipated
events.
PART II - OTHER INFORMATION
- ---------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Company's Annual Meeting of stockholders held on Wednesday, June 24,
1998, the following individuals were elected directors of the Company:
<TABLE>
<CAPTION>
Votes
-----------------------------------------------------------------------
Nominees For Against Abstentions Broker Non-Votes
-------- --- ------- ----------- ----------------
<S> <C> <C> <C> <C>
Nancy S. Amer 15,167,462 96,993 0 2,046,173
Burkhard Blank 15,094,181 170,274 0 2,046,173
Ira A. Jackson 14,030,879 1,233,576 0 2,046,173
Joseph B. Martin 14,879,950 384,505 0 2,046,173
Paul C. O'Brien 14,871,166 393,289 0 2,046,173
Harry W. Wilcox, III 15,107,864 156,591 0 2,046,173
</TABLE>
ITEM 5. OTHER INFORMATION
If any stockholder of the Company intends to present a proposal at the 1999
annual meeting of stockholders and desires it to be considered for inclusion in
the Company's proxy statement and form of proxy for that meeting, such proposal
must be received by the Company at One Kendall Square, Building 700, Cambridge,
MA 02139, Attention: Harry W. Wilcox, III, no later than January 26, 1999.
Stockholders who do not wish to include their proposals in such proxy statement
and form of proxy, but who wish to present their proposals at the Company's 1999
annual meeting of stockholders must notify Mr. Wilcox in writing at the
aforementioned Company address no later than April 11, 1999 in order for their
proposals to be considered timely for purposes of Rule 14a-4 under the
Securities Exchange Act, as amended.
13
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CAMBRIDGE NEUROSCIENCE, INC.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.26 Letter agreement, dated May 26, 1998, between the Company and
Elkan R. Gamzu, Ph.D. Filed herewith.
10.27 Sub-Lease agreement, dated June 12, 1998, between the Company and
Millenium Pharmaceuticals, Inc. (the "Sub-Lease Agreement").
Filed herewith. The Sub-Lease Agreement relates to a certain
Lease agreement regarding property located at One Kendall Square,
Cambridge, Massachusetts, dated as of July 16, 1992, between the
Trustees of Old Kendall Realty Trust and the Company (previously
filed as Exhibit 10.13 to, and incorporated herein by reference
from, the Company's Annual Report on Form 10-K for the period
ended December 31, 1992, as filed with the Securities and
Exchange Commission (the "Commission") on March 28, 1993 (File
No.: 000-19193)), as amended by a First Amendment, dated
September 22, 1992 (previously filed as Exhibit 10.13 to, and
incorporated herein by reference from, the Company's Annual
Report on Form 10-K for the period ended December 31, 1992 as
filed with the Commission on March 28, 1993 (File No.:
000-19193)), as amended by a Second Amendment, dated September 22,
1993 (previously filed as Exhibit 10.13 to, and incorporated
herein by reference from, the Company's Annual Report on Form
10-K for the period ended December 31, 1993, as filed with the
Commission on February 14, 1994 (file No.: 000-19193)), as
amended by a Third Amendment, dated March 11, 1996 (previously
filed as Exhibit 10.13 to, and incorporated herein by reference
from, the Company's Annual Report on Form 10-K for the period
ended December 31, 1996, as filed with the Commission on March 24,
1997, (File No.: 000-10193)), as amended by a Fourth Amendment,
dated June 17, 1997 (previously filed as Exhibit 10.13 to, and
incorporated herein by reference from, the Company's Annual
Report on Form 10-K for the period ended December 31, 1997, as
filed with the Commission on March 30, 1998 (File No.: 000-19193)).
27.1 Financial Data Schedule for the interim year-to-date period ended
June 30, 1998 (for electronic filing only).
(b) Reports on Form 8-K
July 13, 1998: News release announcing that the collaboration between
the Company and Boehringer Ingelheim International, GmbH, for the
development of CERESTAT (aptiganel) will end.
14
<PAGE> 15
CAMBRIDGE NEUROSCIENCE, INC.
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.
CAMBRIDGE NEUROSCIENCE, INC.
Date August 6, 1998 /s/ Harry W. Wilcox, III
------------------------------- -------------------------------------
Harry W. Wilcox, III
President and Chief Executive Officer
(Principal Executive Officer;
Acting Principal Financial Officer)
Date August 6, 1998 /s/ Glenn A. Shane
------------------------------- -------------------------------------
Glenn A. Shane
(Principal Accounting Officer)
15
<PAGE> 16
CAMBRIDGE NEUROSCIENCE, INC.
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
10.26 Letter agreement, dated May 26, 1998, between the Company and
Elkan R. Gamzu, Ph.D. Filed herewith.
10.27 Sub-Lease agreement, dated June 12, 1998, between the Company and
Millenium Pharmaceuticals, Inc. (the "Sub-Lease Agreement").
Filed herewith. The Sub-Lease Agreement relates to a certain
Lease agreement regarding property located at One Kendall Square,
Cambridge, Massachusetts, dated as of July 16, 1992, between the
Trustees of Old Kendall Realty Trust and the Company (previously
filed as Exhibit 10.13 to, and incorporated herein by reference
from, the Company's Annual Report on Form 10-K for the period
ended December 31, 1992, as filed with the Securities and
Exchange Commission (the "Commission") on March 28, 1993 (File
No.: 000-19193)), as amended by a First Amendment, dated
September 22, 1992 (previously filed as Exhibit 10.13 to, and
incorporated herein by reference from, the Company's Annual
Report on Form 10-K for the period ended December 31, 1992 as
filed with the Commission on March 28, 1993 (File No.:
000-19193)), as amended by a Second Amendment, dated September
22, 1993 (previously filed as Exhibit 10.13 to, and incorporated
herein by reference from, the Company's Annual Report on Form
10-K for the period ended December 31, 1993, as filed with the
Commission on February 14, 1994 (file No.: 000-19193)), as
amended by a Third Amendment, dated March 11, 1996 (previously
filed as Exhibit 10.13 to, and incorporated herein by reference
from, the Company's Annual Report on Form 10-K for the period
ended December 31, 1996, as filed with the Commission on March
24, 1997, (File No.: 000-10193)), as amended by a Fourth
Amendment, dated June 17, 1997 (previously filed as Exhibit 10.13
to, and incorporated herein by reference from, the Company's
Annual Report on Form 10-K for the period ended December 31,
1997, as filed with the Commission on March 30, 1998 (File No.:
000-19193)).
27.1 Financial Data Schedule for the interim year-to-date period ended
June 30, 1998 (for electronic filing only).
16
<PAGE> 1
Exhibit 10.26
May 26, 1998
Dr. Elkan R. Gamzu
33 Nobscot Road
Newton, Massachusetts 02139
Dear Elkan:
The purpose of this Letter Agreement is to confirm the terms of your
separation from Cambridge NeuroScience, Inc. ("CNSI").(1) The severance pay and
benefits described below are contingent on your agreement to and compliance with
the terms of this Letter Agreement. Based upon your stated willingness to enter
into such an agreement, this Letter Agreement has been prepared setting forth
the specific understandings between you and CNSI.
1. SEPARATION OF EMPLOYMENT. You acknowledge that your employment with
CNSI, including your positions as Chief Executive Officer and President,
terminated effective May 6, 1998 (the "Separation Date"), and you agree to
execute all documents necessary to effect a sufficient resignation from such
positions and any position (whether as an employee, trustee, agent or otherwise
(but not as a stockholder)) with CNSI. Except as provided for below, you
acknowledge that from and after the Separation Date, you shall have no authority
and shall not represent yourself as an employee or agent of CNSI.
2. SEVERANCE PAY AND BENEFITS. (a) In exchange for the mutual covenants
set forth in this Letter Agreement, during the period commencing on the
Separation Date and terminating on the first anniversary of the Separation Date
(the "Severance Period"), CNSI agrees to provide you with the following
severance pay and benefits: (i) continuation of your base salary (equivalent to
a monthly salary of $21,875.00), less state and federal income and welfare taxes
and any other mandatory deductions under applicable laws, and (ii) upon
completion of the appropriate forms, continuation at CNSI's expense of your
participation in CNSI's medical, dental and 401(k) insurance plans to the same
extent (including your co-pay which shall be deducted from your salary
continuation) that such insurance is provided to persons employed by CNSI, to
the extent legally permissible. In the event that you do not become employed by
a third party or otherwise covered under alternative medical and dental
insurance plans during the Severance Period, you will have the right to continue
your medical and dental insurance at the expiration of the Severance Period
pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation
- ----------------
(1) For purposes of this Agreement, Cambridge NeuroScience, Inc. includes CNSI,
its divisions, affiliates (which means all persons and entities directly or
indirectly controlling, controlled by or under common control with CNSI),
subsidiaries and all related entities, and its and their directors, officers,
employees, trustees, agents, successors and assigns.
<PAGE> 2
Act of 1985 ("COBRA"); provided, however, that the benefit period under the
COBRA shall be deemed to have commenced on the Separation Date.
(b) You acknowledge and agree that the severance pay and benefits provided
herein are not intended to, and shall not, constitute a severance plan, and
shall confer no benefit on anyone other than the parties hereto. You further
acknowledge that except for the specific financial consideration set forth in
this letter, you have been paid and provided all wages, commissions, bonuses,
vacation pay, holiday pay and any other form of compensation or benefit that may
be due to you now or which would have become due in the future in connection
with your employment with or separation of employment from CNSI.
(c) You agree that during the Severance Period you shall be available, upon
reasonable notice, either by telephone or, if CNSI believes necessary, in person
to assist CNSI in any matter relating to the services performed by you during
your employment with CNSI. You further agree that during the Severance Period
and thereafter that you shall cooperate fully with CNSI in the defense or
prosecution of any claims or actions now in existence or which may be brought or
threatened in the future against or on behalf of CNSI, including any claims or
action against its officers, directors and employees. Your cooperation in
connection with such claims or actions shall include, without limitation, your
being reasonably available (and, to the extent possible, outside of work
obligations you may have) to meet with CNSI in connection with any regulatory
matters, to prepare for any proceeding (including, without limitation,
depositions, consultation, discovery or trial), to provide affidavits, to assist
with any audit, inspection, proceeding or other inquiry, and to act as a witness
in connection with any litigation or other legal proceeding affecting CNSI. You
further agree that should you be contacted by a person who is or may be adverse
to CNSI, or any person or entity representing a person or entity that is or may
be adverse to CNSI, with respect to any matter relating to CNSI, you shall
promptly (within 48 hours) notify Harry W. Wilcox, unless such notification is
barred by law. CNSI agrees to reimburse you for all reasonable out-of-pocket
expenses incurred by you in assisting CNSI pursuant to this Section 2(c).
3. CONSULTING: Commencing May 7, 1998, you agree to provide consulting
services to CNSI with respect to the clinical and business development of
CERESTAT and GGF2 on a 50% of full-time basis through July 25, 1998, and on a
25% of a full-time basis thereafter, at such specific times and location as
shall be mutually agreed. You shall be compensated for such consulting services
on a pro-rate basis in an amount equal to your salary in effect as of the
Separation Date. This consulting fee is in addition to the severance pay to be
provided to you under Section 2 of this Letter Agreement. CNSI agrees to provide
you with an office, telephone, E-Mail, voicemail and other support services as
may be necessary for you to provide such consulting services. CNSI may terminate
the consulting agreement at any time upon ninety (90) days written notice, and
you may terminate the consulting agreement at any time upon ninety (90) days
written notice. You acknowledge and agree that during the time you are providing
consulting services, you shall not be deemed an employee of CNSI, and shall have
no right whatsoever to participate in any benefit of any kind (including,
without limitation, any pension or other retirement plan, stock option plan,
health and welfare plan, vacation, etc.). CNSI acknowledges that you may elect
to seek employment with, or provide consulting services to,
2.
<PAGE> 3
another firm or firms and you agree that such future employment or engagement
will not conflict with the terms and conditions of this letter agreement and the
agreements referred to herein. You agree to notify Harry W. Wilcox promptly of
any such potential conflicts and agree that any such conflicts will be resolved
by you and Mr. Wilcox on behalf of CNSI.
4. STOCK RIGHTS: To the extent applicable, all of the terms, rights and
conditions of the 1991 Equity Incentive Plan (collectively the "Plan"), and any
documents executed by you pursuant to the issuance of any stock options under
the Plan, are hereby incorporated by reference and shall survive the signing of
this Letter Agreement. You specifically acknowledge that as of the Separation
Date, of a total of 427,500 eligible options under the Plan, 182,907 of such
options expired as of the Separation Date, and that 244,530 of such options may
be exercised by you within 90 days of the Separation Date (i.e., on or before
August 4, 1998). You acknowledge and agree that following the Separation Date,
you shall not have any rights to vest in any additional stock options under any
CNSI stock or stock option plan (of whatever name or kind) that you may have
participated in or were eligible to participate in during your employment.
5. CONFIDENTIALITY AND RELATED COVENANTS: You hereby agree and
acknowledge the following:
(i) that, except as may otherwise be approved by Harry W. Wilcox in
connection with the consulting services to be provided by you pursuant to
Section 3 hereof, you have returned to CNSI all CNSI documents (and any
copies thereof), property (including, but not limited to, keys, files and
other proprietary storage materials, credit cards) and any Confidential
Information (which includes, but is not limited to, any information CNSI
receives, or has received from customers or others with whom it does
business, and any and all information of CNSI that is not generally known
by others with whom it competes or does business with, or with whom it
plans to compete or do business with), that you shall abide by the
provisions of the agreement entered into by you and CNSI dated October 4,
1989, which agreement is attached hereto as Exhibit A (the terms of which
are hereby incorporated by reference and shall survive the signing of this
Letter Agreement), and that you otherwise shall abide by any and all common
law and/or statutory obligations relating to protection and non-disclosure
of CNSI's trade secrets and/or confidential and proprietary documents and
information;
(ii) that all information relating in any way to the subject matter of this
Letter Agreement, including the terms and amounts, shall be held
confidential by you and shall not be publicized or disclosed to any person
(other than an immediate family member, legal counsel or financial advisor,
provided that any such individual to whom disclosure is made agrees to be
bound by these confidentiality obligations), business entity or government
agency (except as mandated by state or federal law);
(iii) that, during such time as you are receiving payments from, or
providing consulting services to, CNSI under the terms of this Agreement
and for a period of six months thereafter, you will not make any private or
public (including to the print or electronic media) statements that are
disparaging about CNSI (including its officers, directors and
3.
<PAGE> 4
employees) including, but not limited to, any statements that disparage any
person, product, service, finances, financial condition, capability or any
other aspect of the business of CNSI, or engage in any conduct which is
intended to harm the reputation of CNSI (including its officers, directors
and employees);
(iv) that you will not solicit or encourage any employee, customer or
potential customer of CNSI to terminate its relationship with CNSI, nor
will you solicit or encourage any employee, customer or potential customer
to conduct with you or any other person, organization or entity any
business or activity which such customer conducts with CNSI; and
(v) that the breach of any of the foregoing covenants by you shall
constitute a material breach of this Letter Agreement and result in
irreparable harm to CNSI, and shall relieve CNSI of any further obligations
hereunder and, in addition to any other legal or equitable remedy available
to CNSI, shall entitle CNSI to injunctive relief.
6. RELEASE OF CLAIMS: You hereby agree and acknowledge that by signing
this letter and accepting the severance pay and benefits discussed in Section 2
to be provided to you, and other good and valuable consideration provided for in
this letter, you are waiving your right to assert any form of legal claim
against CNSI (as defined in footnote 1 of this Letter Agreement ) of any kind
whatsoever from the beginning of time through the date you execute this Letter
Agreement. Your waiver and release herein is intended to bar any form of legal
claim, charge, complaint or any other form of action (jointly referred to as
"Claims") against CNSI seeking any form of relief including, without limitation,
equitable relief (whether declaratory, injunctive or otherwise), the recovery of
any damages or any other form of monetary recovery whatsoever (including,
without limitation, back pay, front pay, compensatory damages, emotional
distress damages, punitive damages, attorneys fees and any other costs) against
CNSI, up through the date you sign this Letter Agreement.
Without limiting the foregoing general waiver and release of claims, you
specifically waive and release CNSI from any Claim arising from or related to
your employment relationship with CNSI or the termination thereof, including,
without limitation:
** Claims under any state or federal discrimination, fair employment practices
or other employment related statute, regulation or executive order (as they
may have been amended through the execution date of this Letter Agreement)
prohibiting discrimination or harassment based upon any protected status
including, without limitation, race, national origin, age, gender, marital
status, disability, veteran status or sexual orientation. Without
limitation, specifically included in this paragraph are any Claims arising
under the federal Age Discrimination in Employment Act, the Older Workers
Benefit Protection Act, the Civil Rights Acts of 1866 and 1871, Title VII
of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal
Pay Act, the Americans With Disabilities Act and any similar Massachusetts
or other state statute.
4.
<PAGE> 5
** Claims under any other state or federal employment related statute,
regulation or executive order (as they may have been amended through the
execution date of this Letter Agreement) relating to wages, hours or any
other terms and conditions of employment. Without limitation, specifically
included in this paragraph are any Claims arising under the Fair Labor
Standards Act, the Family and Medical Leave Act of 1993, the National Labor
Relations Act, the Employee Retirement Income Security Act of 1974, the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and any
similar Massachusetts or other state statute.
** Claims under any state or federal common law theory including, without
limitation, wrongful discharge, breach of express or implied contract,
promissory estoppel, unjust enrichment, breach of a covenant of good faith
and fair dealing, violation of public policy, defamation, interference with
contractual relations, intentional or negligent infliction of emotional
distress, invasion of privacy, misrepresentation, deceit, fraud or
negligence.
** Any other Claim arising under state or federal law.
Notwithstanding the foregoing, this Section shall not release CNSI from any
obligation expressly set forth in this Letter Agreement. You acknowledge and
agree that, but for providing this release of claims, you would not be receiving
the Severance Pay and Benefits being provided to you under the terms of this
Letter Agreement.
Because you are over forty (40) years of age, you have specific rights
under the Older Workers Benefits Protection Act ("OWBPA"), which prohibits
discrimination on the basis of age. The releases set forth in this section are
intended to release any right that you may have to file a claim against CNSI
alleging discrimination on the basis of age. It is CNSI's desire and intent to
make certain that you fully understand the provisions and effects of this Letter
Agreement. To that end, you have been encouraged and given the opportunity to
consult with legal counsel for the purpose of reviewing the terms of this Letter
Agreement. Also, by executing this letter, you are acknowledging that you have
been afforded sufficient time to understand the terms and effects of this
letter, that your agreements and obligations hereunder are made voluntarily,
knowingly and without duress, and that neither CNSI nor its agents or
representatives have made any representations inconsistent with the provisions
of this letter.
Further, consistent with the provisions of OWBPA, CNSI is providing you
with twenty-one (21) days (until June 16, 1998) in which to consider and accept
the terms of this Letter Agreement by signing below and returning it to Harry W.
Wilcox, Chief Executive Officer, One Kendall Square, Building 700, Cambridge,
Massachusetts 02139. In addition, you may rescind your assent to this Letter
Agreement if, within seven (7) days after you sign this Letter Agreement, you
deliver a notice of recission to Harry Wilcox at CNSI. To be effective, such
recission must be hand delivered or postmarked within the seven (7) day period
and sent by certified mail, return receipt requested, to Harry Wilcox at the
above-referenced address.
CNSI (as defined in footnote 1 of this Letter Agreement) hereby waives its
right to assert any Claims against you arising from the beginning of time
through the date hereof (i) for acts and
5.
<PAGE> 6
omissions to act which were within the scope of your authority as an employee of
CNSI and which were undertaken by you within the scope of that authority, or
(ii) relating to the termination of your employment with CNSI. Notwithstanding
the foregoing, this Section shall not release you from any obligation expressly
set forth in this Letter Agreement.
7. ENTIRE AGREEMENT/CHOICE OF LAW/FULL AGREEMENT. Except as expressly
provided for herein, this Letter Agreement supersedes any and all prior oral
and/or written agreements (including, without limitation, letters dated June 23,
1989, June 5, 1990 and October 15, 1997), and sets forth the entire agreement
between you and CNSI. No variations or modifications hereof shall be deemed
valid unless reduced to writing and signed by the parties hereto. This Letter
Agreement shall take effect as an instrument under seal and shall be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts.
The provisions of this Letter Agreement are severable, and if for any reason any
part hereof shall be found to be unenforceable, the remaining provisions shall
be enforced in full.
If the foregoing correctly sets forth our understanding, please sign, date
and return the enclosed copy of this letter to Harry W. Wilcox at CNSI within
the time frame discussed in the above paragraph.
Very truly yours,
Cambridge NeuroScience, Inc.
By: \s\ Harry W. Wilcox
--------------------------------
Harry W. Wilcox
President
Dated: May 26, 1998
Confirmed and Agreed:
/s/ Elkan R. Gamzu
- --------------------------------
Elkan R. Gamzu, Ph.D.
Dated: May 26, 1998
<PAGE> 1
Exhibit 10.27
SUBLEASE
This instrument is a Sublease (the "Sublease") dated as of June 12, 1998
between CAMBRIDGE NEUROSCIENCE, INC., a Delaware corporation ("Sublessor"), and
MILLENNIUM PHARMACEUTICALS, INC., Delaware corporation ("Sublessee").
The parties to this instrument hereby agree with each other as follows:
ARTICLE I
SUMMARY OF BASIC LEASE PROVISIONS
---------------------------------
1.1 BASIC DATA
ALL CAPITALIZED TERMS USED HEREIN SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN
THE PRIME LEASE (hereinafter defined) UNLESS OTHERWISE DEFINED HEREIN.
Commencement Date:
As to the First Floor Premises - June 12, 1998.
As to the Third Floor Premises - the date of
completion of the "decommissioning" (in the manner
and to the extent required by the regulations of
the U.S. Nuclear Regulatory Commission and or the
Massachusetts Department of Public Health's
Regulations for control of Radiation) of the Third
Floor Premises, as evidenced by a letter from
Sublessor's consultant confirming that the
required close-out radiation survey has been
completed and the Third Floor Premises qualify for
release under such applicable decommissioning
regulations.
Sublessor: Cambridge NeuroScience, Inc.
Present Mailing Address One Kendall Square, Building 700
of Sublessor: Cambridge, Massachusetts 02139
Sublessee: Millennium Pharmaceuticals, Inc.
Present Mailing Address 238 Main Street
of Sublessee: Cambridge, Massachusetts 02142
Attention: Janet Bush
Permitted Uses: For the purposes described in Section 7 of the
Prime Lease (as described below) and no other.
Premises: Approximately 6,000 rentable square feet of space
located on the first floor ("First Floor
Premises"), and approximately 15,000 rentable
square feet of space located on the third floor
("Third Floor Premises"), of
<PAGE> 2
the building known as Building 600/650/700 (the
"Building") located at One Kendall Square,
Cambridge, Massachusetts as approximately shown on
the attached Exhibit A. The actual rentable area
of the Premises shall be subject to verification
by measurement of the Premises by an architect
reasonably acceptable to both Sublessor and
Sublessee; in the event the final, agreed-upon
measurement of the Premises differs from the
approximations set forth above, the parties agree
to amend the definitions of the amount of Base
Rent and Sublessee's Share accordingly. The
Premises demised under this Sublease comprise a
portion of the premises leased (the "Leased
Premises") to Sublessor by Prime Lessor (as
defined below) under the Prime Lease (as defined
below).
Prime Lease: That certain lease, dated as of July 16, 1992,
between the Trustees of Old Kendall Realty Trust
(the "Initial Prime Landlord"), as lessor, and
Sublessor, as lessee, as amended by a First
Amendment dated September 22, 1992, a Second
Amendment dated September 22, 1993, a Third
Amendment dated March 11, 1996, and a Fourth
Amendment dated June 17, 1997.
Prime Lessor: Cambridge Athenaeum LLC, as successor to the
Initial Prime Landlord.
Base Rent As of the First Floor Premises Commencement Date,
$248,520.00 per annum ($41.42 per rentable
square feet), payable in monthly installments of
$20,710.00 each; from and after the Third Floor
Commencement Date, $869,820.00 per annum, payable
in monthly installments of $72,485.00 each.
Additional Rent: So that the Base Rent payable to Sublessor
hereunder shall be net to Sublessor (except for
Taxes and the other exclusions described below),
Sublessee shall pay as additional rent hereunder:
(a) Sublessee's Share of all amounts in the nature
of pass throughs of operating expenses, insurance
charges and charges for utility usage payable by
Sublessor as tenant under the Prime Lease to the
Prime Lessor in connection with operating
expenses, insurance charges and utility charges
attributable generally to the Building or the
Leased Premises under the Prime Lease, including
the Premises, specifically including, without
limitation, all amounts paid by Sublessor to Prime
Lessor as "Rent Adjustments" under Sections 5.1 -
5.3 of the Prime Lease (in that regard, Sublessor
shall deliver to Sublessee a copy of the annual
statement of operating
-2-
<PAGE> 3
expenses received by Sublessor from Prime Lessor
under Section 5.3 of the Prime Lease); (b) any
expenses, taxes, insurance charges, dumpster
charges, and utility charges that are (i) incurred
by Sublessor in connection with its providing of
those utilities, maintenance and repair services
required to be provided by Sublessor under the
terms of this Sublease and (ii) applicable
exclusively to the Premises; (c) any additional
costs incurred by Sublessor in connection with its
provision of those utilities, maintenance and
repairs which Sublessor is required under the
terms of this Sublease to provide to the Premises;
to the extent that such additional costs are
applicable to both the Premises subleased
hereunder and those portions of the Leased
Premises occupied by Sublessor or third parties,
Sublessee shall only be obligated to pay its fair
and equitable share thereof; and (d) the fair
market rental value for Sublessee's parking spaces
in the Old Kendall Square Garage (as such fair
market rent value is determined and adjusted from
time to time by Prime Lessor in accordance with
Section 4(ii) of the Prime Lease). Such Additional
Rent shall exclude however, the following: (a)
costs attributable solely to those portions of the
Leased Premises retained by Sublessor and not to
the Premises demised hereunder; (b) costs payable
by Sublessor as tenant under the Prime Lease in
the nature of late penalties or interest, damages
payable on account of tenant defaults, accelerated
rents or charges except to the extent any such
costs are incurred in connection with a default by
Sublessee under this Sublease; (c) any costs for
utilities or the like that are separately metered
to the Premises and that Sublessee pays directly
to the utility company or service provider; and
(d) all amounts paid by Sublessor to Prime Lessor
as "Rent Adjustments" for "Taxes" under Section
5.4 of the Prime Lease.
Security Deposit: $145,000.00.
Sublessee's Share: The rentable square footage of Premises divided by
the rentable square footage of the Leased
Premises, expressed as a percentage; as of the
First Floor Premises Commencement Date, based upon
the First Floor Premises containing 6,000 rentable
square feet, Sublessee's Share shall be 15.408%;
and as of the Third Floor Premises Commencement
Date, based upon the total Premises then
containing 21,000 rentable square feet,
Sublessee's Share shall be increased to 54.782%.
Sublease Term or Term: Beginning on the Commencement Date and expiring at
midnight on July 31, 2000.
-3-
<PAGE> 4
Broker: Gregory Lucas of Murphy, Lynch, Walsh and
Partners, and Robert Richards of Fallon, Hines &
O'Connor, Inc.
Sublessee's Parking Rights: The right to park twenty-one (21) passenger motor
vehicles in the One Kendall Parking Garage; these
parking rights constitute a portion of the
Sublessor's parking rights under the Prime Lease,
and Sublessee's Parking Rights are and shall
remain subject and subordinate to Prime Lessor's
reserved rights with respect thereto.
ARTICLE II
PREMISES
--------
2.1 SUBLEASE OF PREMISES
Sublessor hereby subleases to Sublessee, and Sublessee hereby accepts and
subleases from Sublessor, upon and subject to the terms and provisions of the
Prime Lease, all of Sublessor's right, title and interest in and to the
Premises, pursuant to the Prime Lease, as both are defined in Section 1.1.
Included as part of the Premises sublet hereunder are all of Sublessor's
appurtenant rights under the Lease to use the common areas and facilities of the
Building and the Lot (as defined in the Prime Lease), subject in all events to
the Prime Lessor's rights reserved and excepted in Section 2 of the Prime Lease.
2.2 PRIME LEASE
2.2.1 Sublessor hereby represents and warrants that: (i) Sublessor is the tenant
under the Prime Lease; (ii) the Prime Lease is in full force and effect; (iii)
Sublessor has not received from Prime Lessor any notice of any default on the
part of Sublessor as tenant under the Prime Lease which has not been cured, nor
has Sublessor given Prime Lessor notice of any default on the part of Prime
Lessor as landlord under the Prime Lease which has not been cured, nor does
Sublessor have any knowledge of any default by either party under the Prime
Lease; (iv) attached hereto as Exhibit C is a true and complete copy of the
Prime Lease; and (v) to the best of Sublessor's knowledge and belief, the
Premises and their electrical, mechanical, plumbing, heating, ventilating and
air-conditioning systems are in working order and repair and in a condition
adequate for the conduct in the Premises of Sublessee's business. Sublessee
warrants and acknowledges that it has reviewed the Prime Lease and is satisfied
with the arrangements therein reflected. Sublessee also warrants that it is
satisfied with the present condition of the Premises (which Sublessee takes "as
is" without any representation or warranty by Sublessor regarding the condition
of the Premises or the fitness of the Premises for any particular use) and with
Sublessee's ability to use the Premises on the terms herein set forth.
2.2.2 The Prime Lease is by this reference incorporated into and made a part
hereof, except that
(i) all references in the Prime Lease to "Landlord", "Tenant", "Lease"
and "Premises", respectively, shall be deemed to refer to Sublessor,
Sublessee, this Sublease and the Premises subleased hereunder,
respectively, except that all references in the following sections and/or
provisions of the Prime Lease to "Landlord", "Tenant", "Lease", and
"Premises", respectively, shall be deemed to refer to "Prime Lessor",
"Sublessee", this "Sublease" and the "Premises
-4-
<PAGE> 5
subleased hereunder", respectively (i.e., it is the intention of the
parties that Prime Lessor shall retain all of its rights and obligations
under such sections and/or provisions; that Sublessor shall not be
entitled to exercise any of Prime Lessor's rights, nor shall be bound by
any of Prime Lessor's obligations, under such sections and/or provisions;
and that Sublessee shall be entitled to exercise all of Tenant's rights,
and shall be bound by all of Tenant's obligations, under such sections
and/or provisions):
(a) The second grammatical paragraph of Section 2 (Leased Premises),
relating to appurtenant rights to use common areas and facilities
of the Building and Lot and Prime Lessor's reserved rights.
(b) Section 6 (Utilities and Other Services), except that to the
extent utilities are not separately metered for the Premises,
Sublessee shall make payments on account of utilities to
Sublessor as Additional Rent under this Sublease and not to Prime
Lessor.
(c) The first grammatical paragraph of Section 9A (Insurance - Waiver
of Subrogation), except that the comprehensive general liability
insurance that Sublessee must procure thereunder shall also name
Sublessor as an additional insured and the indemnity provided in
such Section shall inure to the benefit of Sublessor.
(d) Section 10 (Maintenance of Leased Premises), except that
Sublessee shall be deemed to be obligated to maintain and operate
the Premises in the condition required thereunder not only for
the benefit of Prime Lessor, but also for the benefit of
Sublessor, who shall be entitled to enforce Sublessee's
maintenance obligations and other covenants thereunder.
(e) Section 13 (Subordination)
(f) Sections 17.1 - 17.3 (Fire, Casualty)
(g) Section 17A (Eminent Domain)
(h) Section 19 (Rules and Regulations)
(ii) the following sections and/or provisions of the Prime Lease are
expressly EXCLUDED from this Sublease (i.e., they shall NOT be deemed to be
incorporated in this Sublease) either because they are inapplicable or
because they are superseded by specific provisions hereof:
(a) Section 1 (Parties)
(b) Section 2 (Leased Premises)
(c) Section 3.1 (Term)
(d) Section 4 (Rent)
(e) Sections 5.1 through 5.4.4 (Rent Adjustments), except that these
provisions shall be included for the limited purpose of
determining the amount of Additional Rent payable by Sublessee on
account of Rent Adjustments payable by Sublessor under the Prime
Lease.
(f) Section 12 (Assignment - Subletting)
(g) Section 16A(c)(Further Lessee Covenants)
(h) Section 17.4 (Abatement of Rent)
(i) Section 20 (Broker)
(j) Section 22 (Notice)
(k) Section 24 (Option to Extend)
(l) Section 25 (f) (Miscellaneous Notice of Lease)
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(m) Fourth Amendment to Lease
(n) Standard Form Commercial Lease dated November 22, 1993, with
respect certain basement storage space.
2.2.3 This Sublease is and shall remain subject and subordinate in all respects
to the Prime Lease and to all renewals, modifications, consolidations,
replacements and extensions thereof. This Section 2.2.3 shall be self-operative
and no further instrument of subordination shall be required. In the event of
termination or cancellation of the Prime Lease for any reason whatsoever with
respect to all or any portion of the Premises, this Sublease shall automatically
terminate with respect to all or such portion of the Premises.
2.2.4 Notwithstanding anything contained in this Sublease to the contrary,
Sublessor shall have no obligation during the term of this Sublease to provide
any services of any nature whatsoever to Sublessee or to, in or for the benefit
of the Premises or to expend any money for the preservation or repair of the
Premises, or to observe or perform any obligations of Sublessor under this
Sublease in any case where such services, expenditures or obligations are
required under the Prime Lease to be provided, performed or observed by Prime
Lessor for the benefit of Sublessor with respect to the Premises, and Sublessee
agrees to look solely and directly to Prime Lessor for the furnishing of any
such services, expenditure of any such sums, or observance or performance of any
such obligations to which, or the benefit of which, Sublessee may be entitled
under this Sublease, but nothing in the foregoing shall be deemed to exculpate
or otherwise release Sublessor from, or prevent Sublessee from looking directly
to Sublessor for, any liability arising out of Sublessor's negligence or the
failure of Sublessor to perform its express obligations hereunder; nor shall the
foregoing relieve Sublessor of its express obligations set forth in this
Sublease. Sublessor shall, however, upon the request of Sublessee from time to
time (which request may be oral), use due diligence and reasonable efforts to
cause Prime Lessor to furnish such services, expend such sums, and observe and
perform such obligations. Sublessor's only obligations under the Prime Lease
with respect to the Premises are to use the aforesaid due diligence and
reasonable efforts and to make those payments of all rent and other charges due
to Prime Lessor thereunder, which payments Sublessor hereby agrees to make,
provided, however, that Sublessee makes timely payment to Sublessor of all rent
and other charges payable under this Sublease. Sublessor hereby agrees that, so
long as Sublessee makes timely payment to Sublessor of all rent and other
charges payable by Sublessee hereunder, Sublessor shall make timely payment of
all rent and other charges due to Prime Lessor as landlord under the Sublease.
It is the intention of the parties that Sublessee comply with all of Sublessor's
obligations as tenant under the Prime Lease (not excluded under Section 2.2.2
above) with respect to the Premises to the same extent and with the same force
and effect as if Sublessee were tenant thereunder, and Sublessee hereby agrees
to so comply with all of Sublessor's such obligations under the Prime Lease with
respect to the Premises. Sublessee shall have no claim against Sublessor for any
default by the Prime Lessor under Prime Lease. If as a result of any default by
Prime Lessor as landlord under the Prime Lease, Sublessor as tenant under the
Prime Lease is entitled to any offset or similar rights against Prime Lessor,
Sublessee shall be entitled to a fair and equitable share of such offset or
similar rights. So long as Sublessee is not in default under this Sublease
beyond any applicable notice, grace or cure period, Sublessee shall have the
right, subject to the prior written consent of Sublessor, which consent shall
not be unreasonably withheld and shall be given or withheld by Sublessor five
(5) business days after receipt of the request therefor, to maintain, in the
name of Sublessor but at Sublessee's sole cost and expense, an action or actions
to compel Prime Lessor to discharge the responsibilities of Prime Lessor under
the Prime Lease. Sublessor shall not unreasonably withhold its consent to the
bringing of any such action or actions by Sublessee, provided, in each instance,
that Sublessee shall not sue if Sublessor has itself commenced an action or
actions for the same purpose; and provided, further, that Sublessor may withhold
its consent if, in Sublessor's judgment, such action would
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<PAGE> 7
result in an increase in rent, additional rent, or any other sums whatsoever
payable by Sublessor to Prime Lessor under the Prime Lease. In any event,
Sublessee agrees to indemnify Sublessor and hold Sublessor harmless from and
against all loss, cost, damage, expense, or liability (including, without
limitation, attorney's fees and disbursements) which Sublessor may incur by
reason of any action brought by Sublessee against Prime Lessor. No default by
Prime Lessor under the Prime Lease shall excuse Sublessee from the performance
of any of its obligations to be performed under this Sublease or to any
reduction in or abatement of any of the rent provided for in this Sublease,
unless and only to the extent that Sublessor shall be excused from the
performance of a corresponding obligation as the "tenant" under the Prime Lease.
2.2.5 Sublessee shall neither do, nor permit to do nor permit to be done,
anything that would increase Sublessor's obligations to the Prime Lessor under
the Prime Lease (unless Sublessee shall indemnify Sublessor from such increased
obligation) or that would cause the Prime Lease to be terminated or forfeited.
Sublessor shall not amend or modify (nor agree to amend or modify) the Prime
Lease in any way that would increase Sublessee's obligations or diminish
Sublessee's rights under this Lease, nor shall Sublessor do, nor permit to do or
be done, anything that would cause the Prime Lease to be cancelled, terminated
or forfeited.
2.2.6 Sublessor shall promptly give Sublessee a copy of any notice of default,
termination or otherwise affecting the existence or validity of the Sublease or
relating to any casualty or taking, given by Sublessor or Prime Lessor to the
other.
2.3 RIGHT OF FIRST OFFER ON ADDITIONAL SPACE
Sublessor hereby agrees that if Sublessor determines that it no longer
needs all or any portion of the Leased Premises and intends to make such space
available for occupancy by third parties, Sublessor shall first offer to
sublease such space to Sublessee, on all of the terms and conditions of this
Sublease, prior to offering such space to any third party; Base Rent payable
with respect to any first floor space shall be calculated at the rate of $35.71
per rentable square foot, and with respect to any third floor space shall be
calculated at the rate of $46.50 per rentable square feet. Any such offer by
Sublessor shall be in writing and shall specify the date on which such space is
anticipated to be available for occupancy by Sublessee. To accept any such
offer, Sublessee must give Sublessor written notice, within ten (10) business
days after receipt of Sublessor's offer notice, stating that Sublessee has
elected to accept Sublessor's offer. If Sublessee accepts Sublessor's offer, the
parties shall enter into an amendment to this Sublease to add such space to the
Premises and to amend such other adjustments to the rent and the like as are
appropriate. If Sublessee fails to accept Sublessor's offer within such 10
business day period, Sublessor shall thereafter be free to offer the space
described in Sublessor's offer notice to any third party. Sublessor hereby
agrees that if Sublessor subleases such space to any third party, and if terms
of such sublease entitles the third party to have access through the Premises
subleased hereunder to the Building's freight elevator and/or other laboratory
space in the Building, Sublessor shall condition such third party's rights to
use such access to such reasonable rules and regulations as Sublessee may impose
from time to time.
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ARTICLE III
TERM OF SUBLEASE
----------------
3.1 TERM
The Sublease Term of this Sublease shall be for the period specified in
Section 1.1 as the Sublease Term, unless earlier terminated or extended as
provided below.
ARTICLE IV
CONDITION OF PREMISES
---------------------
4.1 CONDITION OF PREMISES
Sublessee agrees to accept the Premises "as is", generally in the same
order and condition as the Premises are in as of the date hereof, and agrees
that Sublessor is under no obligation to perform any work upon or alteration to
the Premises for Sublessee's use and occupancy, other than to deliver each
portion of the Premises to Sublessee on the Commencement Date free of
Sublessor's personal property (except for any furniture and movable laboratory
equipment, if any, rented by Sublessor to Sublessee pursuant to the separate
agreement contemplated by Section 7.2(b) below) and in broom clean condition.
4.2 SUBLESSEE'S WORK
Sublessor will permit Sublessee and its agents to enter the Premises prior
to the Commencement Date, in order to perform through Sublessee's own
contractors any work necessary to prepare the Premises for Sublessee's occupancy
("Sublessee's Work") as approximately described on the attached Exhibit B,
including without limitation construction of the demising walls necessary to
cause the Premises to constitute space that is separately demised from the
portions of the Leased Premises retained by Sublessor; all such work shall be
performed substantially in accordance with plans approved by Sublessor and Prime
Lessor. The foregoing license to enter prior to the Commencement Date is
conditioned upon Sublessee's workers and mechanics working in harmony and not
interfering with the labor employed by Sublessor, Sublessor's mechanics or
contractors or by Prime Lessor or any other tenant or their contractors. If at
any time such entry shall cause disharmony or interference, this license may be
immediately withdrawn by Sublessor.
Worker's compensation and public liability and property damage insurance,
all in amounts and with companies and on forms satisfactory to Sublessor, shall
be provided and at all times maintained by Sublessee or Sublessee's contractors
engaged in the performance of any work and, before proceeding with any work,
certificates of such insurance shall be furnished to Sublessor.
Any such entry shall be deemed to be under all of the terms, covenants,
provisions and conditions of the Sublease except the covenant to pay rent.
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ARTICLE V
USE
---
5.1 PERMITTED USE
Sublessee agrees that the Premises shall be used and occupied for the
Permitted Uses specified in Section 1.1 only. During the Sublease Term,
Sublessee shall assume and maintain exclusive control of the Premises.
5.2 ASSIGNMENT AND SUBLETTING
Sublessee shall not, by operation of law or otherwise, assign, mortgage,
pledge, encumber or in any manner transfer this Sublease, or any part thereof or
any interest of Sublessee hereunder, or sublet or permit the Premises or any
part thereof to be used or occupied by others, without the prior consent of
Sublessor, which consent shall not be unreasonably withheld or delayed.
Sublessee acknowledges, however, that any such assignment or sub-sublet will be
also be subject to the approval of the Prime Lessor. Notwithstanding the
foregoing, Sublessor hereby agrees that Sublessee may, without the consent of
Sublessor but upon prior notice to Sublessor, assign this Sublease or sub-sublet
all or any portion of the Premises to any "affiliate" of Sublessee, or to any
corporation or other business entity into which Sublessee may merge or to which
Sublessee may sell all or substantially all of its assets or capital stock. For
purposes of this Sublease, the term "affiliate" shall mean any corporation or
other business entity that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
Sublessee; as used in the preceding clause, the term "control" shall mean the
right to exercise, directly or indirectly, more than fifty percent (50%) of the
voting rights attributable to the shares or other evidence of ownership of the
controlled entity.
ARTICLE VI
RENT
----
6.1 BASE RENT; ADDITIONAL RENT
(a) The Base Rent and Additional Rent specified in Section 1.1 hereof
(collectively, the "Rent"), and any additional rent or other charges payable
pursuant to this Sublease shall be payable by Sublessee to Sublessor at
Sublessor's mailing address (or such other place as Sublessor may from time to
time designate by notice to Sublessee). Sublessee shall have no obligation to
pay Rent until the Rent Commencement Date specified in Section 1.1 occurs.
(b) Rent shall be payable, in advance, on or before the twenty-fifth (25th)
day of each and every calendar month during the term of this Sublease.
(c) Rent for any partial month shall be paid by Sublessee to Sublessor at
such rate on a pro rata basis. Other charges payable by Sublessee on a monthly
basis, as hereinafter provided, shall likewise be prorated.
All Rent and other amounts due under this Sublease shall be made without
demand, offset or deduction. Sublessee shall be entitled to a fair and equitable
share of all rent abatements set forth in the Prime Lease which Sublessor has
been granted with respect to the Premises, except that Sublessee shall
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not be entitled to any share of any rent abatement granted to Sublessor or
account of Taxes, since Sublessee has no obligation to make any payments
hereunder on account of Taxes.
Sublessee shall have the right to inspect Sublessor's books and records as
they relate to Additional Rent, but not more frequently than once each year.
Appropriate adjustments of estimated amounts shall be made between Sublessor and
Sublessee promptly after the close of each calendar year to account for actual
Additional Rent for such year. Sublessor shall credit any amount due from it to
Sublessee as a result of any such adjustments against any sums then due from
Sublessee to Sublessor under this Sublease. the balance of any amounts due shall
be paid within twenty (20) days after written notice thereof.
6.2 EXCESS UTILITY COSTS
If Sublessor, in its reasonable judgment, determines that Sublessee is
using excessive quantities of HVAC, electricity or water (for purposes of this
Sublease, "excessive quantities" shall mean quantities more than 10% higher than
the quantities being consumed by Sublessor [calculated on a per square foot
basis] in those portions of the Leased Premises used by Sublessor for purposes
comparable to Sublessee's use of the Premises), then in addition to paying
Sublessee's Share of utilities, Sublessee shall also, upon receipt of a written
invoice therefor, reimburse Sublessor for the cost of any such excess. In
determining whether "excessive quantities" are being used, Sublessor shall take
into consideration the relative utilization levels of the Leased Premises by
Sublessor and the Premises by Sublessee.
6.3 SECURITY DEPOSIT
Sublessee shall upon execution hereof deposit the amount specified in
Section 1.1 as the Security Deposit, with Lynch, Murphy, Walsh & Partners, Inc.
("Escrow Agent"), in escrow for the benefit of Sublessor which Security Deposit
shall be held by Escrow Agent for the benefit of Sublessor as security for
Sublessee's faithful performance of Sublessee's obligations hereunder. If
Sublessee fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Sublease, Sublessor may use,
apply or retain all or any portion of the Security Deposit for the payment of
any rent or other charge in default or for the payment of any other sum to which
Sublessor may become obligated by reason of Sublessee's default, or to
compensate Sublessor for any loss or damage which Sublessor may suffer thereby.
If Sublessor so uses or applies all or any portion of the Security Deposit,
Sublessee shall within twenty (20) days after written demand therefor deposit
cash with Escrow Agent in an amount sufficient to restore the Security Deposit
to the full amount specified in Section 1.1 and Sublessee's failure to do so
shall be a material breach to this Sublease. Escrow Agent shall hold the
Security Deposit in a separate, segregated and interest-bearing "money-market"
account. The Security Deposit, or so much thereof as has not theretofore been
applied by Sublessor, shall be returned, together with payment of all interest
earned on the Security Deposit, to Sublessee promptly following the expiration
of the term hereof.
ARTICLE VII
ALTERATIONS, FIXTURES AND EQUIPMENT
-----------------------------------
7.1 ALTERATIONS
Sublessor hereby consents to the interior non-structural alterations which
Sublessee intends to make to the Premises as approximately described on the
attached Exhibit B; Sublessee acknowledges, however, that Sublessee shall not be
permitted to make such interior non-structural alterations until such time as
Sublessee has also obtained the consent of Prime lessor thereto (Sublessor shall
not be
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responsible for the failure or refusal of Prime Lessor to consent to such
improvements). Sublessee may not make other alterations, installations, and
improvements to the Premises without first obtaining the prior consent of both
Sublessor and Prime Lessor. Sublessor hereby agrees that it shall not
unreasonably withhold its consent to any alterations, additions or improvements
approved by Prime Lessor. Any such approved alterations, additions or
improvements shall be done at Sublessee's sole expense in a good and workmanlike
manner and in compliance with all applicable laws and codes and the applicable
requirements of the Prime Lease.
7.2 FIXTURES AND EQUIPMENT
(a) Sublessee shall be entitled to use all built-in fixtures and equipment,
including fume hoods and laboratory benches physically located in the Premises
as of June 9, 1998. Sublessee shall, at its expense, maintain and repair such
fixtures and equipment in good order, repair and condition and shall surrender
all such fixtures and equipment to Sublessor in such condition at the end of the
term, reasonable wear and tear and damage by fire or other casualty excepted.
(b) The parties contemplate that, pursuant to a separate agreement between
Sublessor and Sublessee dated on or about the date of this Sublease, Sublessor
may rent to Sublessee certain furniture and movable laboratory equipment for use
in the Premises.
ARTICLE VIII
SUBLESSEE'S RISK
----------------
8.1 SUBLESSEE'S RISK
Sublessee agrees to use and occupy the Premises at Sublessee's own risk;
and to the fullest extent permitted by law, Sublessor shall have no
responsibility or liability for any loss of or damage to fixtures or other
personal property of Sublessee, or of those claiming by, through or under
Sublessee, including without limitation, any loss or damage from the breaking,
bursting, crossing, stopping or leaking of electric cables and wires, and water,
gas, sewer or steam pipes or like matters.
ARTICLE IX
SUBLESSOR'S ACCESS TO PREMISES
------------------------------
9.1 SUBLESSOR'S RIGHT OF ACCESS
If Sublessee fails to make any necessary repairs to the Premises within a
reasonable time after notice thereof from Sublessor, Sublessor shall have the
right to enter the Premises at all reasonable hours for the purpose of making
such repairs.
ARTICLE X
INSURANCE
---------
10.1 SUBLESSEE'S INSURANCE
Sublessee shall carry and maintain, throughout the term hereof, at its own
cost and expense, the insurance required under Section 9A of the Prime Lease;
such insurance shall name as additional insureds both Sublessor and Prime
Lessor.
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ARTICLE XI
CASUALTY
--------
11.1 CASUALTY AND RESTORATION; EMINENT DOMAIN
If the Premises, or any part thereof, shall be damaged or destroyed by fire
or other casualty or damage by eminent domain then Sublessee shall promptly
notify Prime Lessor and Sublessor. Under the Prime Lease the Prime Lessor is
obligated, as soon as possible thereafter, to repair or restore the Premises to
the extent and in the manner set forth in Sections 17 and 17A of the Prime
Lease, as the case may be. If Prime Lessor abates Sublessor's rent with respect
to the Premises as a result, then Rent and other charges hereunder shall be
similarly abated for so long as Sublessor is entitled to and receives an
abatement under the Prime Lease. If damage is of the type which entitles Prime
Lessor or Sublessor to terminate the Prime Lease and either such party so elects
to terminate the Prime Lease, then the Prime Lease shall cease and come to an
end and this Sublease shall similarly terminate. In addition, if damage is of
the type which would entitle Sublessor to terminate the Prime Lease, Sublessee
shall have the right to exercise Sublessor's right of termination by giving both
Sublessor and Prime Lessor written notice of such termination within the
applicable notice period set forth in Sections 17 and 17A of the Prime Lease, as
the case may be. Sublessee acknowledges that Sublessor shall, in no event, have
any obligation whatsoever to rebuild or restore any damage to the Premises.
ARTICLE XII
MISCELLANEOUS PROVISIONS
------------------------
12.1 WAIVER
Failure on the part of either party to complain of any action or non-action
on the part of the other, no matter how long the same may continue, shall never
be deemed to be a waiver by such party of any of its rights hereunder. Further,
it is agreed that no waiver of any of the provisions hereof by either party
shall be construed as a waiver of any of the other provisions hereof and that a
waiver at any time of any of the provisions hereof shall not be construed as a
waiver at any subsequent time of the same provisions. The consent to or approval
of any action by either party requiring such consent or approval shall not be
deemed to waive or render unnecessary such consent to or approval of any
subsequent similar act by such party.
12.2 COVENANT OF QUIET ENJOYMENT
Sublessee, subject to the terms and provisions of this Sublease, on payment
of the Rent and observing, keeping, and performing all of the terms and
provisions of this Sublease on Sublessee's part to be observed, kept, and
performed, shall lawfully, peaceably, and quietly have, hold, occupy, and enjoy
the Premises during the Sublease Term without hindrance or ejection by Sublessor
or by any person lawfully claiming under Sublessor, but subject to force
majeure; the foregoing covenant of quiet enjoyment is given in lieu of any other
covenant, whether express or implied.
12.3 INVALIDITY OF PARTICULAR PROVISIONS
If any term or provision of this Sublease, or the application thereof to
any person or circumstance, shall, to any extent, be invalid or unenforceable,
the remainder of this Sublease, or the
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application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Sublease shall be valid and be
enforced to the fullest extent permitted by law.
12.4 BROKERS
Each party represents and warrants to the other that it has not directly or
indirectly dealt, with respect to the Premises and this Sublease with any broker
other than the Brokers identified in Section 1.1 (the "Brokers"). Each party
shall save harmless and indemnify the other party against any claims by anyone
with whom it has so dealt or by whom its attention was called to the Premises,
other than the Brokers, for a commission arising out of the execution and
delivery of this Sublease or out of negotiations between Sublessor and Sublessee
with respect to space in the Building. Sublessor agrees to pay the Brokers the
commission with respect to this Sublease set forth in a separate agreement
between Sublessor and the Brokers.
12.5 PROVISIONS BINDING, ETC.
Except as herein otherwise expressly provided, the terms hereof shall be
binding upon and shall inure to the benefit of the heirs, legal representatives,
successors and assigns, respectively, of Sublessor and Sublessee. Each term and
each provision of this Sublease to be performed by either party shall be
construed to be both a covenant and a condition. The reference contained to the
successors and assigns of Sublessee is not intended to constitute a consent to
assignment by Sublessee, but has reference only to those instances in which
Sublessor shall have given its consent to a particular assignment if such
consent is required by the provisions of this Sublease. Each person executing
this Sublease on behalf of Sublessor warrants that Sublessor is a duly existing
and valid Delaware corporation qualified to do business in Massachusetts, that
Sublessor has duly executed and delivered this Sublease, that the execution and
delivery of, and the performance by Sublessor of its obligations under this
Sublease are within the powers of Sublessor and have been duly authorized by all
requisite corporate action, and that this Sublease is a valid and binding
obligation of Sublessor in accordance with its terms. Each of the persons
executing this instrument on behalf of the Sublessee hereby covenant and warrant
that the Sublessee is a duly existing and valid Delaware corporation qualified
to do business in Massachusetts, that Sublessee has duly executed and delivered
this Sublease, that the execution and delivery of, and the performance by
Sublessee of its obligations under this Sublease are within the powers of
Sublessee and have been duly authorized by all requisite corporate action, and
that the Sublease is a valid and binding obligation of Sublessee in accordance
with its terms.
12.6 NO RECORDING
Sublessee agrees not to record this Sublease or any notice thereof.
12.7 NOTICES
Whenever by the terms of this Sublease notice, demand or other
communication shall or may be given, either to Sublessor or to Sublessee, the
same shall be adequately given if in writing and delivered by hand or sent by
registered or certified mail, postage prepaid:
If intended for Sublessor, addressed to it prior to the Commencement Date
at the mailing address set forth in Section 1.1, with a courtesy copy to
Sublessor's real estate attorneys Palmer & Dodge LLP, One Beacon Street,
Boston, Massachusetts 02108, Attention: Thomas G. Schnorr, Esq. (or
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to such other address or addresses as may from time to time hereafter be
designated by Sublessor by like notice).
If intended for Sublessee, addressed to it the address set forth in Section
1.1, and after the Commencement Date addressed to it at the Premises, with
a courtesy copy to Sublessee's real estate attorneys Hale and Dorr LLP, 60
State Street, Boston, Massachusetts 02109 Attention: Keith Barnett (to such
other address or addresses as may from time to time hereafter be designated
by Sublessee by like notice).
All such notices shall be effective upon receipt or refusal to receive.
12.8 PRIME LESSOR CONSENT
This Sublease shall not be effective until and unless Prime Lessor has
given its consent hereto, which consent shall be in form and substance
reasonably satisfactory to Sublessee; Sublessor shall be responsible for paying
all costs and expenses payable to Prime Lessor under the Prime Lease in
connection with obtaining such consent. Sublessor shall use reasonable efforts
to obtain Prime Lessor's consent, but shall not be responsible for the failure
or refusal of Prime Lessor to consent to this Sublease. If Prime Lessor fails to
give such consent to this Sublease on or before July 15, 1998, then Sublessee
may elect to cancel this Sublease and all liability hereunder at any time
thereafter provided that Prime Lessor has not yet given such consent, by giving
written notice to Sublessor of such cancellation.
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<PAGE> 15
EXECUTED UNDER SEAL, in any number of counterpart copies, each of which
counterpart copies shall be an original for all purposes, as of the day and year
first above written.
Sublessor: CAMBRIDGE NEUROSCIENCE, INC.
By /s/ Harry W. Wilcox
-----------------------------------
Its President
hereunto duly authorized
Sublessee: MILLENNIUM PHARMACEUTICALS, INC.
By /s/ Janet Bush
-----------------------------------
Its Vice President, Finance
hereunto duly authorized
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EXHIBIT A
This exhibit consists of two pages (Exhibit A-1 and A-2), being the floor plans
of the premises on the first and third floors of Building 700 located at One
Kendall Square, Cambridge, Massachusetts, subject to the sub-lease agreement.
The premises on the first floor consists of approximately 6,000 rentable square
feet and the premises on the third floor consists of approximately 15,000
rentable square feet of space.
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EXHIBIT B
This exhibit consists of two pages (Exhibit B-1 and B-2), being floor plans for
the premises located on the first and third floors of Building 700 located at
One Kendall Square, Cambridge, Massachusetts, which are subject to this
sub-lease agreement. These plans document the planned non-structural interior
office and wall changes to be made to the premises by the Sublessee.
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EXHIBIT C
Lease agreement regarding property located at One Kendall Square, Cambridge,
Massachusetts, dated as of July 16, 1992, between the Trustees of Old Kendall
Realty Trust and the Company (previously filed as Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the period ended December 31, 1992),
as amended by a First Amendment, dated September 22, 1992 (previously filed as
Exhibit 10.13 to the Company's Annual Report on Form 10-K for the period ended
December 31, 1992), as amended by a Second Amendment, dated September 22, 1993
(previously filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K
for the period ended December 31, 1993), as amended by a Third Amendment, dated
March 11, 1996 (previously filed as Exhibit 10.13 to the Company's Annual
Report on Form 10-K for the period ended December 31, 1996), as amended by a
Fourth Amendment, dated June 17, 1997 (previously filed as Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the period ended December 31, 1997).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US$
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 10,502
<SECURITIES> 5,018
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,584
<PP&E> 7,314
<DEPRECIATION> (6,753)
<TOTAL-ASSETS> 17,145
<CURRENT-LIABILITIES> 5,028
<BONDS> 0
0
0
<COMMON> 18
<OTHER-SE> 12,099
<TOTAL-LIABILITY-AND-EQUITY> 17,145
<SALES> 0
<TOTAL-REVENUES> 551
<CGS> 0
<TOTAL-COSTS> 4,856
<OTHER-EXPENSES> 921
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,440)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,440)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,440)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
