<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: MARCH 31, 2000 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 April 30, 2000, 18,135,964 shares of Common Stock, par value $.001 per share,
were issued and outstanding.
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CAMBRIDGE NEUROSCIENCE, INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1 - FINANCIAL STATEMENTS (unaudited)
Condensed Consolidated Balance Sheets
At March 31, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Operations for the
three months ended March 31, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6 - 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7 - 9
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 10
PART II - OTHER INFORMATION
- ---------------------------
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
EXHIBIT INDEX 13
</TABLE>
2
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CAMBRIDGE NEUROSCIENCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- ------------
ASSETS (Unaudited) (Note)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 3,690 $ 3,333
Marketable securities 5,522 6,489
Receivables from collaboration agreements 63 171
Prepaid expenses and other current assets 519 491
--------- ----------
Total Current Assets 9,794 10,484
Equipment, Furniture and Fixtures, net 254 285
--------- ----------
Total Assets $ 10,048 $ 10,769
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 771 $ 753
Research and development advances - -
--------- ----------
Total Current Liabilities 771 753
Stockholders' Equity
Preferred stock, par value $.01, 10,000
shares authorized; none issued - -
Common stock, par value $.001, 30,000
shares authorized; 18,136 shares issued
and outstanding at March 31, 2000
and at December 31, 1999 18 18
Additional paid-in capital 120,118 120,118
Accumulated deficit (110,859) (110,120)
--------- ---------
Total Stockholders' Equity 9,277 10,016
--------- ---------
Total Liabilities and Stockholders' Equity $ 10,048 $ 10,769
========= =========
</TABLE>
Note: The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date, but does not include all of the information
and footnotes required by generally accepted accounting principals for complete
financial statements.
The accompanying notes are an integral part of the condensed
consolidated financial statements.
3
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CAMBRIDGE NEUROSCIENCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------
2000 1999
--------- ----------
<S> <C> <C>
Revenues
Research and development $ 313 $ 382
Operating expenses
Research and development 899 1,239
General and administrative 292 319
--------- ---------
1,191 1,558
--------- ---------
Loss from operations (878) (1,176)
Interest income 139 170
--------- ---------
Net loss $ (739) $ (1,006)
========= =========
Basic and diluted net loss per share $ (0.04) $ (0.06)
========= =========
Shares used in computing basic and diluted net
loss per share 18,136 18,100
========= =========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
4
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CAMBRIDGE NEUROSCIENCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------
2000 1999
---------- ----------
<S> <C> <C>
Operating Activities
Net loss $ (739) $ (1,006)
Items not requiring cash:
Depreciation and amortization 39 48
--------- ---------
(700) (958)
Changes in current assets and liabilities:
Receivables from collaboration agreements 108 1,868
Prepaid expenses and other current assets (28) 375
Accounts payable and accrued expenses 18 (675)
Research and development advances -- (250)
--------- ---------
98 1,318
--------- ---------
Cash (used for) provided by operating activities (602) 360
Investing Activities
Purchases of marketable securities (990) (1,840)
Sales of marketable securities 1,957 1,613
Purchase of equipment, furniture and
fixtures, net of disposals (8) --
--------- ----------
Cash provided by (used for) investing activities 959 (227)
Financing Activities
Sale of common stock -- 8
--------- ----------
Cash provided by financing activities -- 8
Net increase in Cash and Cash Equivalents 357 141
Cash and Cash Equivalents at beginning of period 3,333 4,863
--------- ----------
Cash and Cash Equivalents at end of period $ 3,690 $ 5,004
========= ==========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
5
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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 as
of March 31, 2000 and for the three month periods ended March 31, 2000 and 1999
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 position, results of operations and
cash flows for the periods presented. The results of operations for the interim
period ended March 31, 2000 are not necessarily indicative of the results
expected for the full fiscal year.
This Form 10-Q should be read in conjunction with the Company's 1999 Annual
Report on Form 10-K (file number 0-19193). The condensed consolidated balance
sheet presented as of December 31, 1999 is derived from such Form 10-K.
Cambridge NeuroScience, Inc. (the "Company") is a biopharmaceutical company
engaged in the discovery and development of proprietary pharmaceuticals to
prevent or treat severe disorders of, or injuries to, the nervous system.
2. BASIC AND DILUTED NET LOSS PER SHARE
Net loss per share is based on the weighted-average number of common shares
outstanding during each of the periods presented. Common equivalent shares from
stock options are excluded as their effect is antidilutive.
3. RESEARCH AND DEVELOPMENT REVENUE
Research and development revenue represents reimbursements by third parties
of the Company's expenditures pursuant to collaboration and license agreements
and government grants. Monies received or receivable with respect to such
agreements are deemed recognizable as revenue and recorded as such when all of
the following have occurred: all obligations of the Company relating to the
revenue have been met; monies received or receivable are not refundable
irrespective of research results; and there are no future obligations or future
milestones to be met by the Company with respect to such monies. Revenue from
government grants is recorded based on the performance requirements of each
respective grant. Expenses relating to collaboration and license agreements and
to the performance of government grants are recorded as research and development
expenses.
Cash received in advance of research and development revenue pursuant to
the Company's research and development agreements is designated as research and
development advances and is included in current liabilities.
6
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CAMBRIDGE NEUROSCIENCE, INC.
4. NEW ACCOUNTING PRINCIPLE
In April 2000, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB No. 25." The Interpretation will be
applied prospectively to new awards, modifications to outstanding awards, and
changes in employee status on or after July 1, 2000, except in certain
circumstances. The Company believes the adoption of this new accounting standard
will not have a significant effect on its financial statements.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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 actual results or business
conditions will not differ materially from those projected or suggested in the
forward-looking statements as a result of various factors, including, but not
limited to, the following: uncertainties relating to the Company's product
candidates; uncertainties as to the Company's ability to continue operations and
achieve profitability; the early stage of development of all 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; the competitive environment of the biotechnology and
pharmaceutical industries, and the Company's ability to resolve potential year
2000 problems on a timely basis. 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.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Revenues
- --------
Research and development revenues in the three months ended March 31, 2000
decreased by $69,000 compared to the same period of 1999. Total revenue in the
first quarter of this year was solely comprised of research funding by Allergan,
Inc. (Allergan) under a collaboration in the area of eye disorders. Revenue
pursuant to this collaboration was $63,000 higher than in last year's first
quarter. This was the result of an increase in annual funding from $1.0 million
per year or $250,000 per quarter, for the twelve month period ended November
1999, to $1.25 million per year or $313,000 per quarter, which is the funding
rate for the twelve month period ending November 2000.
Revenue in the first quarter of last year was comprised of $250,000 in
research funding under the Allergan collaboration and $132,000 in research
funding from Bayer AG (Bayer), the Company's collaborator for Glial Growth
Factor 2 (GGF2). The Bayer revenue represented reimbursement of
7
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CAMBRIDGE NEUROSCIENCE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
the Company's costs under a research protocol covered by the agreement. Such
reimbursement totaled $1.0 million, and was received in full as of December 31,
1999. As of that date, the Company had completed its performance obligations
with respect to this collaboration (i.e. the research protocol), and will
therefore receive no further research funding from Bayer.
Operating Expenses
- ------------------
Total operating expenses in the three months ended March 31, 2000 decreased
by $367,000 compared to the same period in 1999, a decrease of 24%. This
decrease was primarily due to lower research and development costs, by $340,000,
primarily in the area of Alzheimer's disease. During 1999, the Company incurred
$1.25 million, or $313,000 per quarter in research costs associated with a
collaboration with the J. David Gladstone Institutes (Gladstone) for research in
Alzheimer's disease. At December 31, 1999, the Company had completed its funding
obligations with respect to such research, and opted to conclude its research
and collaboration in this program.
Interest Income
- ---------------
Interest income for the quarter ended March 31, 2000 decreased by $31,000
compared to the same period in 1999, as a result of lower cash, cash equivalents
and marketable securities available for investment, due to the use of cash for
operating purposes.
Net Loss Per Share
- ------------------
For the quarter ended March 31, 2000, the Company's net loss was lower by
$267,000 than that of the same period last year. This difference was primarily
the result of lower research and development expenses, as described above.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had cash, cash equivalents and marketable
securities of $9.2 million, compared to $9.8 million at December 31, 1999, a
decrease of $600,000. The decrease was primarily due to the use of cash for
operating activities.
In December 1998, the Company and Bayer entered into an agreement whereby
Bayer licensed the Company's rights to GGF2, initially for the treatment of
multiple sclerosis. In exchange, the Company received an upfront license fee of
$1.0 million, and during 1999 received $1.0 million for reimbursement of
research costs under a research protocol covered by the agreement.
Under terms of the collaboration, Bayer pays the costs of research,
development and manufacturing for GGF2. In addition, Bayer performs all such
activities, with the exception of certain initial research studies, which were
conducted by the Company and were subject to reimbursement by Bayer. These
initial studies were completed by the Company as of December 31, 1999. As of
that date, the Company had received all potential reimbursements, totaling $1.0
million, for such studies, and had no further responsibility to conduct research
studies. As such, it will receive no further research reimbursement from Bayer.
8
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CAMBRIDGE NEUROSCIENCE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
The Company may receive up to $24.0 million in milestone payments, however,
there can be no assurance as to when or if any milestones will be achieved.
Bayer may terminate this agreement at any time upon 120 days written notice.
As discussed in the Company's 1999 Form 10-K filed on March 17, 2000, Bayer
and the Company are in the process of evaluating data from recent studies
performed by Bayer. Based on results of these studies, Bayer has indicated it is
undertaking a comprehensive review of all available options for further
development of GGF2 before finalizing a decision on further development. No
assurance can be given that there will not be a substantial delay in the
development of GGF2 or that Bayer will continue the development of GGF2.
Pursuant to a collaborative agreement with Allergan, the Company received a
total of $3.0 million in research funding, $1.0 million per year, through
November 1999. In December 1999, the research collaboration was renewed for a
one year period through November 2000. Funding for this additional twelve-month
period is at the rate of $1.25 million. Through March 31, 2000, the Company had
received $449,000 of this $1.25 million, and expects to receive the remaining
$801,000 during 2000. Under this agreement, Allergan is responsible for the
development of 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 this agreement upon six months prior written notice.
In December 1999, the Company completed its funding obligations with
respect to research in the area of Alzheimer's disease. Such research was being
conducted by Gladstone under a collaboration agreement signed in 1996. Pursuant
to this collaboration, Gladstone conducted a research program over a three-year
period for which the Company provided $1.25 million in funding per year. In
December 1999, the Company decided not to pursue further research in this area.
The Company is in the process of preparing for phase II clinical trials of
CNS 5161 for the treatment of chronic pain. The Company hopes to begin
enrollment of patients into a phase II study by the end of 2000. Prior to
enrolling patients, the Company must complete certain manufacturing, safety and
other drug-related studies. The Company anticipates expending approximately $1.0
million during 2000 undertaking this further development of CNS 5161.
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 or a merger with another company.
The Company believes that its cash, cash equivalents and marketable
securities, totaling $9.2 million as of March 31, 2000, will be sufficient to
maintain operations into 2001.
9
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The information required by Item 3 is not provided as the disclosure
requirements are not applicable to the Company pursuant to Item 305(e) of
Regulation S-K.
10
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CAMBRIDGE NEUROSCIENCE, INC.
PART II - OTHER INFORMATION
- ---------------------------
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule for the interim year-to-date period
ended March 31, 2000 (for electronic filing only)
10.29 Lease agreement between the Company and New Providence Realty
Trust dated April 11, 2000 (for electronic filing only).
(b) Reports on Form 8-K
None.
11
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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 May 12, 2000 /s/ Harry W. Wilcox, III
- --------------------------------- ------------------------
Harry W. Wilcox, III
President and Chief Executive Officer
(Principal Executive Officer; Acting
Principal Financial Officer)
Date May 12, 2000 /s/ Glenn A. Shane
- --------------------------------- -------------------------
Glenn A. Shane
(Principal Accounting Officer)
12
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CAMBRIDGE NEUROSCIENCE, INC.
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
27.1 Financial Data Schedule for the interim year-to-date period
ended March 31, 2000 (for electronic filing only)
10.29 Lease agreement between the Company and New Providence Realty
Trust dated April 11, 2000 (for electronic filing only).
13
<PAGE> 1
LEASE
CAMBRIDGE NEUROSCIENCE, INC.
333 PROVIDENCE HIGHWAY, NORWOOD, MASS.
REFERENCE DATA PAGES
As used in this Lease, the following terms shall have the respective meanings
set forth below:
Execution Date: April 11, 2000
Landlord: James H. Mitchell, not individually but as
Trustee of New Providence Realty Trust under
Declaration of Trust dated September 30, 1986
and recorded with the Norfolk County Registry of
Deeds in Book 7264, Page 115.
Landlord's Initial Address
for Payment of Rent: c/o Bobson Realty
29 Bowdoin Street
Boston, MA 02114
Tenant: Cambridge NeuroScience, Inc., a Delaware
corporation
Tenant's Present Address: One Kendall Square
Cambridge, MA 02139
Premises: That portion of the Building comprised of the
Premises Rentable Floor Area and as shown on
Exhibit A-2.
Building: 333 Providence Highway, North Building, Norwood,
Massachusetts
Property: The land and improvements now or hereafter
situated thereon owned by Landlord known as 333
Providence Highway, Norwood, Massachusetts.
Term Commencement Date: A. With respect to the lab space portion of the
Premises consisting of approximately and an
agreed upon eight thousand (8,000) rentable
square feet (the "Lab Space"), seven (7) days
after the execution of this Lease (the "Lab
Space Commencement Date"). Tenant acknowledges
that Tenant may not have exclusive possession of
the Lab Space on the Lab Space Commencement Date
and that Tenant and the present tenant of the
Lab Space, will enter into a separate agreement
regarding, among other things, the transfer of
exclusive possession of the Lab Space to Tenant.
A copy of that agreement is annexed as Exhibit D
to this lease.
B. With respect to the office space portion of
the Premises consisting of approximately and an
agreed upon two thousand one hundred
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(2,100) rentable square feet (the "Office
Space"), the earlier of: (i) July 1, 2000; or
(ii) the date on which Tenant opens for business
in the Office Space (the "Office Space
Commencement Date") subject to the qualification
that if Landlord is not able to deliver
possession of the Office Space to Tenant by
virtue of the tenant presently located in the
Office Space (the "Existing Office Space
Tenant"), having failed to so vacate the Office
Space, the Office Space Commencement Date shall
be extended to a date which is seven (7)
business days after Landlord gives Tenant notice
that the Office Space has been vacated by the
Existing Office Space Tenant and Landlord
delivers possession of the Office Space to
Tenant on or before such seventh (7th) business
day. Notwithstanding the foregoing, in the event
present tenant holds over in the Office Space
beyond July 1, 2000, Landlord shall use
commercially reasonable efforts to cause present
tenant to vacate the Office Space as soon as
possible after July 1, 2000. For the purpose of
calculating the Lease Term in Article II hereof,
the Term Commencement Date for the Premises
shall be the Lab Space Commencement Date.
Notwithstanding anything to the contrary
contained herein, after the Execution Date of
this Lease and prior to the Lab Space
Commencement Date and the Office Space
Commencement Date, Tenant shall be entitled to
enter the Lab Space and/or Office Space for the
purpose of performing Tenant's Work provided
that (i) the present tenant has vacated the
space that Tenant desires to enter, (ii) such
activities of Tenant do not materially interfere
with any construction work of Landlord, (iii)
Tenant, upon entering any portion of the
Premises prior to the Lab Space Commencement
Date and/or the Office Space Commencement Date,
shall observe all of the obligations under this
Lease except for the payment of Yearly Fixed
Rent and additional rent, but shall pay for its
utilities consumed.
Permitted Use: Medical research laboratory and office support
space only unless another use is approved in
advance by Landlord, which approval shall not be
unreasonably withheld or delayed.
Expiration Date: 5:00 o'clock P.M. on July 31, 2002.
Extension Term: Tenant shall have the right to extend this Lease
for one (1) two (2) year period. The Extension
Term shall be that two (2) year period
commencing immediately after the Expiration
Date. All terms and conditions of the Lease
shall remain in full force and effect during the
Extension Term. To exercise this option to
extend, Tenant must: (i) not be in default of
this Lease beyond any applicable notice and cure
period at the time it exercises the option and
when the Extension Term is to commence; and (ii)
give notice to Landlord that Tenant is
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exercising its option to extend at least one
hundred eighty (180) days before the original
Lease term ends.
Yearly Fixed Rent: $191,900.00 per year payable in equal monthly
installments of $15,991.67 (the "Monthly Rent
Payments" or "Monthly Payments"), in advance, on
the first (1st) day of each month commencing on
the Term Commencement Date. Notwithstanding the
foregoing, prior to the Office Space
Commencement Date, the Monthly Rent Payments
shall be $12,666.67.
Landlord's Work: As set forth on Exhibit B.
Tenant's Work: As set forth on Exhibit C.
Premises Rentable
Floor Area: Approximately and an agreed upon 10,100 rentable
square feet within the Building. Notwithstanding
the foregoing, prior to the Office Space
Commencement Date, the Premises Rentable Floor
Area shall be an agreed upon 8,000 rentable
square feet.
Pro Rata Share: The ratio of the Premises Rentable Floor Area
within the Building to the rentable floor area
of all of the buildings on the Property held out
for rental by Landlord, expressed as a
percentage, which percentage at the Term
Commencement Date is 12.78%. Notwithstanding the
foregoing, prior to the Office Space
Commencement Date, the Pro Rata Share shall be
10.13%.
Security Deposit Amount : $32,000.00
Broker: Kevin P. Sullivan, The Conrad Group
Exhibits: Exhibit A-1: Plan Depicting the Property
Exhibit A-2: Floor Plan Depicting the Premises
Exhibit B: Landlord's Work
Exhibit C: Tenant's Work
Exhibit D: Timeline for Transition from present
tenant to Tenant.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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This Lease, including attached Exhibit (s) and Rider (s), if any, is executed on
the Execution Date as an instrument under seal by Landlord and Tenant.
LANDLORD: TENANT:
New Providence Realty Trust Cambridge NeuroScience, Inc.
By: /s/ James H. Mitchell By: /s/ Harry W. Wilcox, III
Its Trustee and not individually Its President, duly authorized and
member of Board of Directors
By: /s/ Glenn A. Shane
Its Treasurer, duly authorized
Page 4
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LEASE TEXT
ARTICLE I - PARTIES AND PREMISES
Landlord hereby leases unto Tenant the Premises contained in the Building
located on the Property described on Exhibit A-1 attached hereto. The Premises
are shown on the floor plan attached hereto as Exhibit A-2 and made a part
hereof, provided, however, Landlord excepts and reserves from the Premises and
to Landlord all hallways, stairways and, if any, serving other parts of the
building together with the right to maintain, use, repair and replace pipes,
ducts, wires, meters and any other equipment, machinery, apparatus and fixtures
located in the Premises and serving other parts of the Building and/or Property.
For the purpose of this Lease, the Property shall be deemed to contain the
Premises Rentable Floor Area and all of the buildings on the Property shall be
deemed to contain a total of 79,000 square feet of rentable floor area (unless
subsequently altered by written notice to Tenant caused by change in the
rentable floor area of the Building or other buildings on the Property, in which
case the Pro Rata share shall be appropriately adjusted).The Premises shall be
used by Tenant and all parties claiming by, through, and under Tenant for the
Permitted Use, and for no other purpose or use. Subject to the following
limitations, Tenant shall be entitled to use throughout the Lease term
(including any extensions) twenty-five (25) parking spaces for the transient,
not overnight, parking of automobiles as follows: (a) Tenant shall have the
non-exclusive right of access, in common with other tenants at the Property and
their employees and patrons, to eighteen (18) parking spaces in the parking
areas at the Property, and (b) Tenant shall have the exclusive right to use
seven (7) parking spaces adjacent to the Premises in the location shown on the
plan annexed as Exhibit A-1 to this Lease. Landlord reserves the right to
designate separate employee and patron parking areas, uniformly applied to
similarly situated tenants at the Property. Landlord shall have the right at all
times and from time to time to designate or change the location, size or
configuration of the Building, including the common areas and facilities, for a
specific tenant's use or specific restriction and to modify, reduce or replace
the common areas and facilities and to permit expansion and new construction
anywhere upon the Property (which right shall be exercised in a manner designed
to reasonably minimize any interruption of Tenant's business). Landlord, at
Landlord's sole cost and expense, shall have the right from time to time to
expand, add to or reduce the size of the Property beyond its present boundaries
(which right shall be exercised in a manner designed to reasonably minimize any
interruption of Tenant's business).
Notwithstanding anything in the Lease to the contrary, as used in the Lease, the
term "Premises" shall mean: (i) prior to the Office Space Commencement Date, the
Lab Space; and (ii) from and after the Office Space Commencement Date, the Lab
Space plus the Office Space.
ARTICLE II - LEASE TERM
TO HAVE AND TO HOLD the Premises for the term commencing on the Term
Commencement Date and ending on the Expiration Date, unless sooner terminated as
herein provided (the "Term" and or "Lease Term"). If an Extension Term is
included in the Reference Data Pages hereof, the Term shall be extended by the
Extension Term (and by definition in this Lease shall include the Extension
Term) on the same terms and conditions as required during the Term; provided,
however, the Monthly Payments during the Extension Term shall be based upon the
Extension Term Yearly Fixed Rent set forth in the Reference Data Pages. Landlord
shall use commercially reasonable efforts to deliver the Premises to Tenant on
or before the Term Commencement Date; however, Landlord shall not be liable for
any delay in completing Landlord's Work, if any, described on Exhibit B, nor
shall the validity of this Lease or the
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obligations of tenant be otherwise affected thereby. The parties shall, at
Landlord's request, enter into a written stipulation as to the actual Term
Commencement Date and Expiration Date after the Premises are made available. The
Term Commencement Date shall be extended by such period of time equal to any
period of time that Landlord may be delayed due to delays caused by Tenant or
resulting from Acts of God, fire or other casualty, labor difficulties,
materials or equipment, construction delays, governmental controls or any other
causes beyond Landlord's reasonable control. Tenant acknowledges that Tenant's
delays hereunder shall constitute a default under the Lease.
ARTICLE III - RENT AND OTHER CHARGES
3.01 - Yearly Fixed Rent
Commencing on the Term Commencement Date, Tenant shall pay the Yearly Fixed Rent
for each twelve-month period of the Term in installments equal to the Monthly
Rent Payment amount set forth on the Reference Data Pages to this Lease in
advance on the first day of each month during the Term, with the first Monthly
Rent Payment and payment of the Security Deposit amount to be made upon
execution of this Lease. The Monthly Payment shall be prorated for portions of a
calendar month at the beginning or end of the Term. All rent and other payments
shall be made to Landlord or to such agent, at such place as Landlord shall from
time to time in writing designate, Landlord's Initial Address for Payment of
Rent being hereby so designated. Tenant shall pay all Yearly Fixed Rent and
additional rent without offset or deduction for any reason.
3.02 - Definition of Operating Costs
Landlord reasonably will determine as of the last day of each calendar year the
annual operating costs (the "Operating Costs") of the Property (including
therein all parking lots, passageways, sidewalks and other exterior areas and
facilities maintained by Landlord), including without limitation: (a) all
salaries, wages, fringe benefits, payroll taxes and workmen's compensation
insurance premiums related thereto of and for employees engaged (full time, or
if part time, appropriately pro rated) in the operation of the Building and the
Property; (b) all costs, excluding late charges, related to providing
electricity, gas, heat, steam and water (including sewer taxes and rentals) and
other utilities serving the Building and the Property; (c) all costs of any
appropriate insurance carried by Landlord relating to the Building and the
Property, including without limitation all fire, casualty, rent loss, flood and
liability insurance; (d) all costs of repair, replacement and other work
relating to the maintenance, repairs and improvements to the Building and the
Property including, without limitation, all work necessary to keep heating and
cooling and air handling equipment and other portions of the Building and the
Property and its facilities in good and serviceable condition; (e) costs of snow
plowing, snow removal, sanding and landscaping; (f) costs of all service
contracts, management fees (not to exceed 5% of the Building's income) and all
other expenses related to the Building and the Property incurred by Landlord;
and (g) the annual cost of capital repairs or replacements to the Building and
the Property amortized over their useful life, except for roof and structural
costs.
Operating Costs shall not include the following:
(i) salaries for executives above the grade of building manager;
(ii) depreciation;
(iii) interest on and amortization of debt;
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(iv) the cost of leasehold improvements, including redecorating work
for other tenants of the Building;
(v) fees and expenses (including, legal and brokerage fees) for
procuring new tenants for the Building or litigating and/or
settling disputes with other tenants of the Building;
(vi) costs incurred in financing or refinancing the Building;
(vii) the cost of any work or services exclusively performed for any
other tenant in the Building;
(viii) items which under generally accepted accounting principals and
practices are normally capitalized, except as noted in (g)
above;
(ix) any rent paid by Landlord under a ground lease of the Property;
(x) wages, salaries or other compensation paid for clerks or
attendants in concessions or newsstands operated by Landlord or
Landlord's affiliates at the Property;
(xi) the cost of services rendered to other tenants of the Property
which are directly chargeable to such tenants; and
(xii) any expenses for repairs or maintenance to the extent recovered
under warranties or service contracts less the costs incurred by
Landlord in recovering such amounts.
(xiii) costs to replace the building shell or roof of the Building.
3.03 - Tenant's Share of Operating Costs.
Tenant shall pay as additional rent (i) 100% of any Operating Costs attributable
solely to the Premises, plus (ii) an amount which shall be equal to the sum of
that figure obtained by multiplying Operating Costs by the Pro Rata Share. The
procedure for payment of the foregoing additional rent shall be as follows:
A. Following the end of each calendar year during the Term of this
Lease, Landlord shall deliver to Tenant a statement of: (1) the amount of the
Operating Costs for such calendar year; and (2) Tenant's share thereof (the
"Operating Cost Statement").
B. Tenant shall pay to Landlord as additional rent within ten (10) days
after the date Landlord sends Tenant an invoice in an amount equal to Tenant's
respective shares of Operating Costs less any amounts previously paid by Tenant
as additional rent on account thereof. Such payment shall be prorated with
respect to any partial calendar year included in the Term.
C. Tenant shall, for a period of ninety (90) days after receipt by
Tenant of the Operating Cost Statement, and upon at least five (5) business days
advance notice to Landlord, have the right to commence (and thereafter
diligently prosecute to completion) an audit of the books and records of
Landlord at Landlord's offices during normal business hours to verify the
accuracy of the Operating Cost Statement. In the event that the Operating Cost
Statement was overstated, Landlord shall promptly reimburse Tenant the excess
amounts paid by Tenant.
3.04 - Real Estate Taxes
A. Tenant shall also pay to Landlord as additional rent hereunder
Tenant's share, for any tax year wholly or partially within the Term of this
Lease, of Real Estate Taxes, and Tenant shall be entitled to a pro rata
reduction, less costs, to the extent of any abatement received relating to any
period within the Term.
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B. "Real Estate Taxes" means all taxes and special assessments of every
kind and nature assessed by any governmental authority on the Property which the
Landlord shall become obligated to pay because of or in connection with the
ownership, leasing and operation of the Property, and reasonable expenses of any
proceedings for abatement of taxes of which Tenant would be required to pay a
portion pursuant hereto, and pro rated if the tax period only partially within
the term. The amount of special taxes or special assessments to be included
shall be limited to the amount of the installment (plus any interest, other than
penalty interest, payable thereon) of such special tax or special assessment
required to be paid during the year in respect of which such taxes are being
determined. There shall be excluded from such taxes all income, estate,
succession, inheritance and transfer taxes, provided, however, that if at any
time during the Term the present system of ad valorem taxation of real property
shall be changed so that in lieu of the whole or any part of the ad valorem tax
on real property, there shall be assessed to Landlord a capital levy or other
tax on the gross rents received with respect to the Property, or a federal,
state, county, municipal, or other local income, franchise, excise or similar
tax assessment, levy or charge (distinct from any now in effect in the
jurisdiction in which the Building is located) measured by or based in whole or
in part, upon any such gross rents, then any and all of such taxes, assessments,
levies, or charges, to the extent so measured or based, shall be deemed to be
included within the term "Real Estate Taxes" for the purpose of calculating
additional rent payable hereunder, but only to the extent that the same would be
payable if the Property were the only property of Landlord. "Real Estate Taxes"
shall not include the amount of any increase in taxes due solely to (1)
substantial improvements hereafter made to buildings other than the Building, or
(2) improvements or alterations hereafter made solely by or solely for the
benefit of any other tenant of the Property.
C. Tenant's share of Real Estate Taxes shall be the Pro Rata Share
assessed with respect to the Property for Real Estate Taxes, except that
Tenant's share shall be 100% of any Real Estate Taxes attributable to
alterations or improvements made by or solely for Tenant to the Premises, the
Building, or the Property. Payment of Tenant's share of Real Estate Taxes, less
any amounts previously paid by Tenant as additional rent on account thereof
shall be due and payable by Tenant within thirty (30) days after Landlord shall
have delivered to Tenant a statement setting forth the amount payable by Tenant,
to which statement there shall be attached a legible copy of the applicable tax
bill. Such payment shall be prorated with respect to any partial tax year
included in the Term.
3.05 - Payments on Account
Tenant shall, with each Monthly Payment, make such payments in advance as
Landlord shall reasonably determine to be sufficient to provide in the aggregate
a fund adequate to pay, when due, all additional rent required pursuant to
Sections 3.03 and 3.04. Any deficiency shall be payable within the time set
forth in said Sections, and any surplus shall be credited against outstanding
rent or other charges due from Tenant, if any, and any balance shall be either
refunded to Tenant or applied to additional rent next payable hereunder by
Tenant, as Landlord reasonably determines. The initial amounts of the Payments
on Account shall be $959.50 per month for Real Estate Taxes and $1,052.09 for
Tenant's Pro Rata Share of Operating Expenses.
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3.06 - Triple Net Lease
This is, and is intended to be, a so-called Triple Net Lease, and accordingly,
except as expressly otherwise provided for herein, all charges, assessments and
impositions made upon the Building or the Property and all costs, expenses and
other obligations paid or incurred by Landlord of any kind or nature whatsoever
in insuring, maintaining and/or repairing the Premises or the Building or the
Property shall be included in determining Property Operating Costs of which
Tenant is obligated to pay its Pro Rata Share or the entirety, as the case may
be, in accordance with the terms of this Lease.
3.07- Overdue Rental Payments
Any payments of Yearly Fixed Rent, additional rent and any other sums due under
this Lease not paid within ten (10) days of the date first due shall bear
interest at the rate of one and one-half percent (1 1/2%) per month or any
fraction thereof, or at the lesser maximum lawfully permissible rate, from the
date first due until paid. Landlord shall not be required to invoice after
notice thereof is first given to Tenant. The giving of invoices to Tenant on one
or more occasions shall not require Landlord to continue that practice.
ARTICLE IV - TENANT'S WORK
The Premises shall be delivered to Tenant by Landlord in their "as is" condition
except as required to be improved by and with the improvements listed on Exhibit
B. All other work necessary to prepare the Premises for use and occupancy by
Tenant, including, without limitation, all work, if any, described in Exhibit C
hereto, shall be performed by Tenant at its own expense. Plans and
specifications for all Tenant's Work must be approved by Landlord prior to
commencement of any such work. Landlord shall have seven (7) business days from
the date of submission to approve (which approval shall not be unreasonably
withheld) or disapprove the submitted plans and specifications. In the event of
disapproval, Landlord shall give written notice thereof to Tenant and Tenant
shall, as soon as possible thereafter, submit new plans and specifications for
Landlord's approval corrected so as to satisfy Landlord's reasonable objections.
Landlord agrees to cooperate reasonably with Tenant in the correction of
disapproved plans and specifications. In the event Tenant fails to satisfy
Landlord's objections to any of Tenant's plans and specifications within twenty
(20) days after Landlord notifies Tenant of the same, then such failure shall,
at the election of Landlord, upon notice to Tenant, be a default by Tenant and
Landlord may, in addition to all other available remedies, terminate this Lease.
Any additions or improvements required to the Premises, Building and/or Property
on account of Tenant's particular business or use or operating requirements
shall be provided, paid for and maintained by Tenant.
All of Tenant's Work shall be done in good and workmanlike manner and in
compliance with all laws at Tenant's sole risk and expense, using good and first
class, new materials. Landlord shall not be a party to nor incur any liability
as a result of any contract to perform any of Tenant's Work. All of Tenant's
Work shall be done by reputable and insured contractors, sub-contractors and
labor previously approved by Landlord, which approval shall not be unreasonably
withheld or delayed (Landlord acknowledges that the George S. Drummey Co., Inc.
is an approved contractor), and shall be done by such contractors, labor and
means so that, as far as may be possible, such work and any work by Landlord or
its contractors, subcontractors or labor in or about the Building shall be
without interruption on account of strikes, work stoppages or similar causes or
delay. No mechanics' or materialmen's liens shall be attached to the Premises,
the Building or the Property as a result of Tenant's Work, or if attached shall
be
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removed or bonded within twenty (20) days of notice thereof. Tenant shall
commence Tenant's Work no later than on the Term Commencement Date and shall as
promptly as possible perform all of Tenant's Work and open for business at the
Premises. On the Term Commencement Date and, as applicable, the date on which
Tenant first opens for business in the Premises, Tenant shall deliver to
Landlord copies of all permits, licenses and other governmental approvals, if
any, lawfully required for Tenant's use of the Premises. The preceding sentence
shall not be construed to obligate Tenant to obtain any permits, licenses or
approvals for work required by this Lease to be performed by Landlord. Tenant
shall obtain at Tenant's sole cost and expense, any permits, licenses or
approvals for work under this Lease to be performed by Tenant.
ARTICLE V - UTILITIES
Tenant shall purchase the heat, natural gas, water and sewer and electrical
energy required by Tenant for operation of the lighting fixtures, equipment and
appliances used in the Premises directly from the public utility companies
serving the Building or, if not separately metered, shall reimburse Landlord as
provided in Articles 3.03 and 3.05. Landlord shall not be liable in any way to
Tenant for any failure or defect in the supply or character of the utilities
furnished to the Premises by reason of any requirement, act or omission of said
public utility companies. Tenant's use of electrical energy in the Premises
shall not at any time exceed the capacity of any of the electrical conductors
and equipment in or otherwise serving the Premises. In the event Tenant requires
additional utilities or equipment (including any additional communications
services) the installation and maintenance thereof shall be Tenant's sole
obligation, which installation shall be subject to Landlord's prior approval of
plans and specifications for such additional utilities or equipment, which
approval shall not be unreasonably withheld or delayed, and provided further the
same do not interfere with any other tenants' business or use and enjoyment of
their respective premises in the Building.
ARTICLE VI - SERVICES PROVIDED BY LANDLORD
During the Term of this Lease and provided Tenant shall not be in default
thereunder, Landlord shall do or cause to be done the following: (a) maintain
casualty and liability insurance with respect to the Property in such amounts
and against such perils as Landlord shall deem reasonable; and (b) make repairs
necessary to maintain the roof and structural portions of the Building and the
common areas and facilities serving the Premises in good and tenantable
condition, subject to damage by fire or casualty and to reasonable use and wear.
The removal of snow and ice from the sidewalks bordering upon the Premises and
from the parking areas at the Property shall be Landlord's responsibility except
for Town-owned sidewalks and ways and except for the immediate entry to the
Premises, which Tenant shall assist in cleaning. Landlord shall not be liable to
anyone for interruption in or cessation of any service rendered to the Premises,
the Building or the Property, or agreed to by the terms of this Lease, due to
any accident, the making of repairs, alterations or improvements, labor
difficulties, trouble in obtaining service or supplies from the sources from
which they are usually obtained, or any cause beyond the Landlord's control; nor
shall any such interruption or cessation constitute a whole or partial eviction
of Tenant or a disturbance of Tenant's use, enjoyment or possession of the
Premises, or entitle Tenant to any offset against or abatement of rent unless
such interruption or cessation is caused by Landlord's gross negligence or
willful misconduct and Landlord fails to restore such service within seventy-two
(72) hours after receipt of written notice from Tenant of such interruption of
service in which event Tenant's sole remedy shall be an abatement of rent during
the period of such interruption until such time as such service is restored.
Landlord shall use reasonable efforts to maintain continuous service including
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attempts to locate alternative sources, if necessary. In the event Tenant wishes
to provide outside services for the Premises over and above those services to be
provided by Landlord as set forth herein, Tenant shall first obtain the prior
approval of Landlord for the installation and/or utilization of such services,
which approval shall not be unreasonably withheld or delayed. "Outside Services"
shall include but shall not be limited to cleaning and moving services, trash or
garbage removal services, and the like. In the event Landlord approves the
installation and/or utilization of such services, which approval shall not be
unreasonably withheld or delayed, such installation and utilization shall be at
Tenant's sole cost, risk and expense.
ARTICLE VII - TENANT'S COVENANTS
Tenant acknowledges by entry thereupon that the Premises are in good and
satisfactory order, repair and condition, and covenants during the Term of this
Lease and such further time as the Tenant holds any part of the Premises: (a) to
pay, when due, all Yearly Fixed Rent, additional rent and other charges set
forth herein; (b) to keep the Premises and all equipment and fixtures therein,
including but not limited to all heating, ventilating, air conditioning,
plumbing and electrical equipment, lines, pipes, ducts, sprinklers and all
windows now or hereafter within and/or serving the Premises in as good order,
repair and condition as the same are in at the commencement of the Term, or may
be put in thereafter, damage by fire or unavoidable casualty and reasonable use
and wear excepted, and, at the termination of this Lease, peaceably to yield up
the Premises, equipment and fixtures and all additions and alterations thereto
in such good order, repair and condition, damage by fire or unavoidable casualty
and reasonable use and wear excepted, first removing all goods and effects not
attached to the Premises and any customary trade fixtures (unless Tenant is in
default hereunder and Landlord has not requested the removal of such trade
fixtures) and trash and otherwise leaving the Premises in a broom-clean
condition, restoring the Premises, equipment and fixtures to their former
condition or such better condition as the Premises may have thereafter been
placed, damage by fire or unavoidable casualty and reasonable use and wear
excepted, and repairing all other damage caused by such removal, and leaving the
Premises clean. In the event of Tenant's failure to remove any of Tenant's
property from the Premises, Landlord is hereby authorized, without liability to
Tenant for loss or damage thereto, and at the sole risk of Tenant, to (i) remove
and store any of Tenant's property at Tenant's expense, (ii) retain same under
Landlord's control without further accounting to Tenant, (iii) to sell a public
or private sale, without notice, any or all of Tenant's property not so removed
and to apply the net proceeds of such sale to the payment of any sum due from
Tenant hereunder, or (iv) destroy such property; (c) not to injure, deface or
overload the Premises, the Building, the Property or any of the systems serving
the Building and/or Property; not to permit on the Premises any auction sale,
nuisance, objectionable noises or odor; not to permit the use of the Premises
for any purpose other than the Permitted Use or any use thereof which is
improper, offensive or noisy to other tenants and their patrons, or contrary to
law or ordinance, or liable to invalidate or increase the premiums for any
insurance on the Building, the Property or on the contents of the Building or
liable to render necessary any alterations or additions to the Building or the
Property; (d) not to obstruct in any manner any portion of the Building or
Property not hereby demised or the sidewalks or approaches to the Building, the
loading ramp, parking areas or any inside or outside windows or doors; (e) not
to transfer, sublet, assign, hypothecate or otherwise alienate this Lease or
Tenant's interest in and to all or any part of the Premises, nor to grant any
person any license or permission to use the Premises, without Landlord's prior
written consent on each occasion, which consent shall not be unreasonably
withheld or delayed. If Tenant is a corporation or other entity, the transfer of
more than 49% of the stock or other ownership interests of Tenant or, if
applicable, any guarantor of this Lease, shall be deemed an assignment. Landlord
shall not unreasonably withhold such
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consent, however, Landlord shall have the right to withhold consent whenever
such consent may have a materially detrimental effect on the existing tenants of
the Property or upon the future rentability of space therein. In the event of
such consent, Tenant's liability to Landlord under this Lease shall remain
primary and Tenant agrees to secure and deliver to Landlord written agreement
from the assignee or sublessee agreeing with Landlord to perform all the terms,
covenants, and conditions of Tenant contained in this Lease. To the extent
Landlord consents to a subtenant or assignee for a use other than the Permitted
Use, then (i) the definition of permitted use shall be deemed amended to the new
use specifically in writing approved by Landlord with respect to the space
subleased or assigned, and (ii) Tenant shall pay as additional rent all sums
payable by the sublessee or assignee and received by Tenant for rent or
otherwise exceeding sums payable by Tenant to Landlord hereunder, which
additional rent shall be prorated on a square foot basis if less than the entire
Premises is sublet; (f) not to install any fixtures or otherwise make any
alterations or additions whatsoever to, within or about the Premises, nor to
permit the making of any holes in any part of the Building, nor to paint the
Premises or place on or about the Premises any air conditioners or other air
cooling equipment, fans, grills, louvers, screens, panels, signs, placards,
advertising materials or displays, awnings, aerials or flagpoles, or the like,
visible from outside of the Premises, without on each occasion obtaining the
prior written consent of the Landlord, which consent shall not be unreasonably
withheld or delayed; provided, however, Tenant may install two (2) wall signs at
the Premises which wall signs shall be the same size as and shall be placed in
the same locations at the Premises where existing signs are presently located
subject to applicable regulations governing signs including any contained in the
Town of Norwood building and/or zoning code. The style, design and final size
and location of such signs are subject to Landlord's reasonable approval, which
approval shall not be unreasonably withheld or delayed. Landlord shall not
unreasonably withhold its consent to nonstructural alterations or additions, but
may, in its absolute discretion, withhold its consent to proposed structural
alterations or additions. However, Tenant may perform minor alterations without
Landlord's consent, provided such alterations do not affect the structure,
egress, occupancy, load or Building systems; (g) not to move any safe, heavy
equipment, freight, bulky matters or heavy fixtures in or out of the Building
except at such times and in such manner as Landlord shall designate after
written request from Tenant, and to place and maintain business machines and
mechanical equipment in such settings as will most effectively reduce noise and
vibration; (h) to take whatever measures are necessary to insure that floor load
limitations applicable to the Premises are not exceeded; (i) to hold all
property of Tenant, including all fixtures, furniture, equipment and the like
installed by Tenant, at Tenant's own risk and to pay when due all municipal,
county and state taxes assessed during the Term against any leasehold interest
or personal property of any kind owned or placed in, upon or about the Premises
by Tenant; (j) to permit Landlord or its designees to examine the Premises at
reasonable times during business hours and upon reasonable notice, and, if
Landlord shall so elect, to make any repairs or additions Landlord may deem
necessary, provided the same do not materially interfere with Tenant's use and
enjoyment of the Premises, and at Tenant's expense to remove any alterations,
additions, signs, placards, advertising materials or displays, awnings, aerials
or flagpoles, or the like, not consented to in writing; and to permit the
Landlord to show the Premises to prospective purchasers, lenders and with
respect to tenants to permit Landlord to show the Premises during the last nine
(9) months of the lease, provided such showings occur during Tenant's normal
business hours without material interference with Tenant's business, and
provided Tenant receives reasonable advance notification; (k) to permit Landlord
at any time or times to decorate and to make, at its own expense, repairs,
alterations and additions, structural or otherwise, in or to the Building or
Property or any part thereof, and during such operations to take into and
through the Premises or any part of the Building all materials required and to
close or temporarily suspend operation of entrances, doors, corridors, elevators
or other facilities, Landlord agreeing, however, that it will endeavor to carry
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out such work in a manner which will cause Tenant minimum inconvenience, and
will not materially interfere with Tenant's use and enjoyment of the Premises;
(l) to pay Landlord's expenses, including reasonable attorneys' fees, incurred
in defending and/or enforcing any obligation of this Lease which has not been
complied with in the manner required by this Lease. (m) not to install any
vending machines in the Premises without first obtaining Landlord's written
approval; (n) to comply with all reasonable rules and regulations of general
application which Landlord may establish from time to time for the orderly and
efficient management and operation of the Building or the Property or any
portion thereof; (o) to remove all trash and waste from the Premises in a timely
fashion and deposit the same in a dumpster to be supplied and paid for by Tenant
and located in such areas as are designated by Landlord from time to time.
Tenant shall not store such waste, even temporarily, in or about any of the
hallways, sidewalks, loading ramps or docks, doorways or other common areas or
accesses to the Building, any trash, waste or perishable material that would
constitute an attraction to insects, pests or vermin to be stored in a safe,
clean and sanitary manner within the Premises so as to prevent insect or pest
infestation; (p) to indemnify and hold Landlord harmless from any damage to
property, personal injury, liability, cost or expense arising out of any use by
Tenant, Tenant's employees or invitees of the Premises, the Building or the
Property or any portion thereof in violation of any applicable law, ordinance or
regulation, or in violation of the terms of this Lease; (q) to repair (or
reimburse Landlord for the cost of repair of, as Landlord may in each case
elect) any damage to the Building, the Property, their respective systems or any
improvements thereon or therein caused by the act or neglect of Tenant or
Tenant's employees, invitees or contractors; (r) to keep the Premises adequately
heated for the protection of the plumbing therein, subject to the provision of
reasonable heat to be supplied by Landlord under this Lease; (s) to promptly
remove all snow and ice from walkways and stairs serving Tenant; and (t) to use
the Premises only for the Permitted Use, and no other use.
ARTICLE VIII - SUBORDINATION OF LEASE
Tenant agrees that this Lease is and shall be subject and subordinate to all
ground leases, mortgages, or any other encumbrances now placed or which may be
placed in the future upon the Building or real property on which the Building is
located, and Tenant further agrees that within ten (10) days after being
requested in writing to do so by Landlord, any Mortgagee or the lessor under any
ground lease, Tenant will execute, sign, acknowledge and deliver any documents
reasonably required to confirm such subordination. The foregoing subordination
is expressly conditioned upon Tenant being granted in such subordination
agreement the right to continued occupancy of the Premises in accordance with
the terms of this Lease for so long as Tenant is not in default hereunder,
notwithstanding any mortgage foreclosure or termination of ground lease. In
addition to and not in derogation of the subordination set forth above, in the
event of the termination of any ground lease or in the event of the institution
of any foreclosure proceedings, Tenant agrees, upon request of the ground
lessor, the mortgagee, or any purchaser at foreclosure sale, as the case may be,
(1) to attorn and pay rent, and (2) to execute a new lease with such ground
lessor, mortgagee, trustee or purchaser for the remainder of the Term upon the
same terms and conditions as set forth herein. In the event mortgagee, or ground
lessor shall elect to have this Lease prior to the lien of its mortgage or
ground lease and shall give written notice thereof to Tenant, this Lease shall
be deemed prior to such mortgage or ground lease. Tenant agrees that no entry
under any such ground lease, mortgage or sale for the purpose of foreclosing the
same shall (i) be regarded as an eviction of the Tenant, constructive or
otherwise, (ii) give Tenant any right to terminate this Lease, whether it
attorns or becomes tenant of the ground lessor, mortgagee, or purchaser or not,
or (iii) give Tenant any claim against such ground lessor, mortgagee or
purchaser for any breach hereunder by Landlord occurring prior to the action of
entry, foreclosure and/or sale, as applicable.
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ARTICLE IX - CASUALTY AND TAKING
In case the Premises or Building, or any substantial part thereof, shall be
taken by any exercise of the right of eminent domain or shall be destroyed or
materially damaged by fire or other casualty or by action of any public or other
authority, or shall suffer any material direct or consequential damage for which
Landlord and Tenant, or either of them, shall be entitled to compensation by
reason of anything done in pursuance of any public or other authority during
this Lease or any extension hereof, then this Lease shall terminate at the
election of Landlord, which election may be made notwithstanding that Landlord's
entire interest may have been divested; and if Landlord shall not so elect, then
Landlord shall, subject to the availability of insurance proceeds or
condemnation award, undertake with reasonable diligence to restore the Premises
(or in case of a partial taking what may remain thereof) to a condition similar
to that in which the Premises were originally delivered to Tenant for its work
prior to the Term Commencement Date; and if such taking, destruction or damage
shall have rendered a portion of the Premises unfit for use and occupation, a
just proportion of rent payable by Tenant hereunder according to the nature and
extent of the injury shall be abated until the Premises (or in the case of a
partial taking what may remain thereof) shall have been restored to such
condition for Tenant's Work. Tenant shall thereupon promptly perform such work
upon the Premises as shall be necessary to prepare them for its use, in the same
manner and subject to the same condition and to Landlord's approvals as if the
same were Tenant's original work performed pursuant to Article IV, and shall
reopen for business in the Premises as promptly as reasonably possible. Except
for any award for personal property or relocation award specifically allocated
or payable directly to Tenant, Landlord reserves and excepts all rights to
damages to the Premises and Building and the leasehold hereby created, now
accrued or hereafter accruing by reason of anything lawfully done in pursuance
of any public or other authority; and by way of confirmation, Tenant grants to
Landlord all Tenant's rights to such damages and covenants to execute and
deliver such further instruments of assignment thereof as Landlord may from time
to time reasonably request. Landlord shall give Tenant notice of its decision to
terminate this Lease or restore the Premises within thirty (30) days after any
occurrence giving rise to Landlord's right to so terminate or restore. In the
event Landlord elects to restore the Premises as aforesaid, Tenant may terminate
this Lease if Landlord does not restore the Premises (not requiring restoration
of Tenant's leasehold improvements, personal property and fixtures) within
ninety (90) days after Landlord's election to restore (plus not exceeding an
additional ninety (90) days on account of contractor or subcontractor delay,
strike or other cause beyond Landlord's reasonable control) to substantially the
same condition as prior to the occurrence entitling termination, which notice of
termination by Tenant must be within fifteen (15) days after the lapse of the
herein above designated restoration period.
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ARTICLE X - LANDLORD'S REMEDIES
If after written notice Tenant shall neglect or fail to make any payment of rent
or other charges within ten (10) days after notice thereof (however, Tenant
shall not be entitled to the ten (10) day cure period and to receive notice of
such non-payment more often than twice in any calendar year), or if Tenant shall
fail to cure a default in the performance of any other of Tenant's covenants
within thirty (30) days after the date of notice of such default given by
Landlord (however, there shall be no notice or grace period for any willful
defaults of Tenant or for the same default occurring more than once in each
calendar year), if the Premises shall be abandoned, or if the leasehold hereby
created shall be taken on execution, or by other process of law, or if any
assignment shall be made of Tenant's property for the benefit of creditors, or
if a receiver, guardian, conservator, trustee in bankruptcy or similar officer
shall be appointed by a court of competent jurisdiction to take charge of all or
any part of Tenant's property, or if a petition is filed by Tenant under any
bankruptcy or insolvency law, or if a petition is filed against Tenant under any
bankruptcy or insolvency law and the same shall not be dismissed within sixty
(60) days from the date upon which it is filed, then, and in any of said cases,
Landlord lawfully may immediately or at any time thereafter before cure of such
condition declare the Term of this Lease ended and enter upon the Premises and
repossess the same and expel Tenant and those claiming through or under Tenant
and remove their effects, without prejudice to any remedies which might
otherwise be used for arrears of rent or previous breach of covenant; and Tenant
covenants that in case of such termination, Tenant will forthwith pay to
Landlord as damages a sum equal to any arrearage of rent (together with interest
thereon at the rate of one and one-half (1 1/2%) percent for any month or
portion of a month calculated from the date originally due) plus the amount by
which the rent and other payments called for hereunder for the remainder of the
original Term and of any Extension Term thereof exceed the fair rental value of
the Premises for the remainder of the then current Term. Alternately, Tenant
will, during the remainder of the original Term and of any extension thereof,
pay to Landlord (i) on the last day of each calendar month the difference, if
any, between the rental which would have been due for such month had there been
no such termination hereof and the sum of the amount being received by Landlord
as rent from occupants of the Premises, if any and the applicable prorated
amount of the damages previously paid to Landlord, and (ii) upon demand from
Landlord, any costs incurred by Landlord in reletting the Premises including
legal and brokerage fees and costs of repair, restoration, improvement or
decoration to make the Premises suitable for reletting. Without thereby
affecting any other right or remedy hereunder, at its sole option Landlord may
cure for Tenant's account any default by Tenant hereunder which remains uncured
after thirty (30) days' notice of the default from Landlord to Tenant (however,
the foregoing thirty (30) day period and notice shall not be applicable to
willful Tenant defaults); and the cost to Landlord thereof plus interest at one
and one-half (1 1/2%) percent per month shall be deemed to be additional rent
and shall be added to the installment of rent next accruing or to any subsequent
installment of rent, at Landlord's election. Any and all rights and remedies
which Landlord may have under this Lease or by operation of law, either at law
or in equity, upon any breach, shall be distinct, separate, and cumulative and
shall not be deemed inconsistent with each other; and no one of them, whether or
not exercised by Landlord, shall be deemed to be in exclusion of any other; and
any two or more of all such rights and remedies may be exercised at the same
time.
In the event of a default by Tenant resulting in Landlord's termination of this
Lease, Tenant shall, at Landlord's option, pay to Landlord: (i) within seven (7)
days after being invoiced therefor, the total of all amounts then due from
Tenant under this Lease; and (ii) within twenty-one (21) days after being
invoiced therefor, the total of Yearly Fixed Rent and Landlord's estimate of
additional rent and other charges which may become due under this Lease through
the end of the Lease Term, plus interest
Page 15
<PAGE> 16
through the date of payment of these amounts and costs of collection thereof
present valued using an eight (8%) percent annual discount factor for sums paid
in advance. Provided Tenant timely otherwise pays and performs its obligations
under this Lease, including, without limitation under this paragraph, any rent,
if any, Landlord collects for the Premises after deducting any leasing costs,
brokerage commission and improvement costs incurred by Landlord for a
replacement lease shall be remitted to Tenant, if, as and when received by
Landlord.
ARTICLE XI - WAIVER OF SUBROGATION
Landlord and Tenant shall each endeavor to cause all policies of fire, extended
coverage, and other physical damage insurance covering the Premises, the
Building, the Property or any property therein to contain the insurers' waiver
of subrogation ad consent to pre-loss waiver of rights by the insured. Effective
only when permitted by the insurance policy, Landlord and Tenant respectively
waive all claims and rights to recover against the other in the event of insured
loss or damage to the extent of insurance proceeds collected by the damaged
party.
ARTICLE XII - TENANT ESTOPPEL
Promptly at Landlord's request from time to time Tenant shall furnish to
Landlord (or to such party as Landlord may direct) Tenant's written and duly
signed certification that, to the extent true, this Lease is in full force and
effect without amendment (or with such changes as may then be effective, which
shall be stated in the certificate), that Tenant has no defense, offset, or
counterclaim against its rent payment or other obligations hereunder, the dates
to which rent and other charges have been paid, that neither Landlord or Tenant
is in default under this lease (or specifying any default of either party in
detail in the certificate) and any other information requested by Landlord to
confirm the status of this Lease. Any prospective purchaser, ground lessor or
mortgagee may rely on such certifications.
ARTICLE XIII - HOLDOVER
If Tenant retains possession of the Premises or any part thereof after the
termination of this Lease (which, as used herein, shall mean termination by
lapse of time or otherwise) without Landlord's prior written consent, Tenant
shall pay Landlord the monthly fixed rent, at double the sum of the Monthly
Payment plus additional rent estimated by Landlord payable for the month
immediately preceding said holding over, computed on a per month basis, for each
month or part thereof (without reduction for any such partial month) that Tenant
remains in possession, and in addition thereto, Tenant shall pay Landlord all
damages, consequential as well as direct, sustained by reason of Tenant's
retention of possession. Tenant acknowledges that the foregoing determination of
holdover rent is not a penalty, but a fair estimation now available binding upon
Tenant of the rental value during the holdover period.
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ARTICLE XIV - INSURANCE, INDEMNIFICATION
A.Public Liability Insurance. Tenant shall throughout the Term procure,
keep in force and pay for Comprehensive Public Liability Insurance indemnifying
Landlord and Tenant, on an occurrence basis, against all claims and demands for
personal injury (including, without limitation, bodily injury, sickness,
disease, and death) or damage to property which may be claimed to have occurred
upon the Premises with limits as may be reasonably required by Landlord and as
are customarily carried by responsible office and research and development
tenants in the suburban Boston area. Pending notice by Landlord to the contrary,
the minimum liability coverage shall be $1,000,000 per person, $4,000,000 per
occurrence.
B. Certificates of Insurance. Such insurance shall be effected with
insurers reasonably approved by Landlord authorized to do business in the
Commonwealth of Massachusetts, under valid and enforceable policies, and such
policies shall name Landlord and Tenant as the insured, as their respective
interests appear. Such insurance shall provide that it shall not be canceled or
modified without at least thirty (30) days' prior written notice to each insured
name therein. Not less than fifteen (15) days prior to the expiration date of
each such policy, original copies of the policies provided for in subparagraph A
issued by the respective insurers, or certificates of such policies, together
with evidence reasonably satisfactory to Landlord of the payment of all premiums
for such policies, shall be delivered to Tenant to Landlord, and certificates as
aforesaid of such policies shall, upon request of Landlord, be delivered by
Tenant to the holder of any mortgage affecting the Premises.
C. Indemnification. Tenant will save Landlord harmless, and will
exonerate, defend and indemnify Landlord from and against any and all loss, cost
damage, expense and/or claims, liabilities or penalties asserted by or on behalf
of any person, firm, corporation or public authority: (1) On account of or based
upon any injury to persons, or loss of or damage to property, sustained or
occurring on the Premises on account of or based upon the act, omission, fault,
negligence or misconduct of any person other than Landlord, its agents,
employees and contractors; (2) On account of or based upon any injury to
persons, or loss of or damage to property, sustained or occurring elsewhere
(other than on the Premises) in or about the Building or Property arising out of
the use or occupancy of the Premises, the Building, or the Property by the
Tenant, or by any person claiming by, through or under Tenant, on account of or
based upon the act, omission, fault, negligence or misconduct of all persons
other than Landlord, its agents, employees and contractors; (3) On account of or
based upon (including monies due on account of) any work or thing whatsoever
done (other than by Landlord or its contractors, or agents or employees of
either) on the Premises during the term of this Lease; (4) On account of or
resulting from the failure of Tenant to perform and discharge any of its
covenants and obligations under this Lease; and in respect of any of the
foregoing, from and against all costs, expenses (including reasonable attorneys'
fees) and liabilities incurred in or in connection with any claim, or any action
or proceeding brought thereon; and (5) On account of or resulting from the
release or threat of release of any "hazardous materials" (as the same may be
defined from time to time under Mass. General Laws, Chapter 21E or any other
applicable federal, state or municipal statute or regulation) on the Premises
and/or Property, or any land adjoining the Property as a result of Tenant's use
of the Premises and/or Property. The provisions of this Article XIV.C shall
survive the termination of Lease.
Page 17
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ARTICLE XV - SECURITY DEPOSIT
As a security deposit for the full and prompt performance by the Tenant of its
obligations hereunder, Tenant has upon execution of this Lease paid to Landlord
the Security Deposit amount which sum may be applied by Landlord for the purpose
of paying any rent or paying other amounts due from Tenant hereunder which are
not paid when due or remedying any default or defaults of the Tenant hereunder,
or for the purpose of recovering any loss or damage suffered or incurred by
Landlord by reason of any default or defaults of the tenant hereunder. In the
event Landlord so applies all or part of said sum, Tenant shall fully restore
the Security Deposit amount within ten (10) days after written notice to do so
from the Landlord, Tenant agreeing that application of all or any of the
Security Deposit to pay sums due from Tenant and the subsequent restoration of
the Security Deposit Amount shall not be deemed a cure of Tenant's default which
entitled the withdrawal of all or part of the Security Deposit unless Landlord
in writing agrees thereto. If the Security Deposit amount, or the portion
thereof then held by Landlord, shall be paid to Tenant within thirty (30) days
after the termination of this Lease. If Tenant is in default at the termination
of this Lease, the Landlord may retain the Security Deposit amount until thirty
(30) days after Landlord has recovered all rents, losses, damages and other
amounts whatsoever due Landlord by reason of the Tenant's default, and may apply
the Security Deposit amount for payment thereof, notwithstanding the termination
of this Lease.
ARTICLE XVI - LEASE BROKER
If a Broker is named on the Reference Data Pages of this Lease, Tenant
represents that Tenant was not shown the Premises nor has Tenant entered this
Lease on account of the efforts of any party other than that Broker, and if any
party other than Broker claims a commission or fee based on a breach of the
foregoing representation, Tenant shall promptly pay same. If a Broker is
identified on the Reference Data Pages of this Lease, Landlord agrees to pay
that Broker upon the Term Commencement Date a fee for professional services in
accordance with a separate agreement between Landlord and Broker.
ARTICLE XVII - LANDLORD LIABILITY AND DEFAULT
Landlord shall not be liable to Tenant or any other party hereunder for so long
as Landlord acts in good faith and diligently commences and seeks to obtain
performance of the requirements of Landlord hereunder. Recourse against Landlord
hereunder shall be limited to the assets of Landlord entity including the
Property in which the Premises are located; in no event may Tenant or any other
party seek or obtain recourse to or from the assets of any trustee or
beneficiary, officer, director, shareholder, manager or member of Landlord or
any employee, agent or managing agent of Landlord, or their respective
successors and assigns. In no event shall Landlord ever be liable to Tenant for
indirect or consequential damages.
Landlord shall not be deemed in default hereunder unless and until Landlord
receives written notice of default and such default continues without cure for
fifteen (15) days or such additional time as is required to effect cure provided
Landlord has then commenced and thereafter reasonably diligently pursues such
cure.
Page 18
<PAGE> 19
ARTICLE XVIII - QUIET ENJOYMENT
Landlord covenants that so long as no default by Tenant shall exist and be
continuing, Tenant shall during the term quietly hold, occupy and enjoy the
Premises without hindrance, ejection or molestation by Landlord or any other
person claiming by, through or under Landlord, subject to the terms of this
Lease.
ARTICLE XIX - MISCELLANEOUS
A. No consent or waiver, express or implied, by either party, to or of
any breach of any covenant, condition or duty of the other, shall be construed
as a consent or waiver to or of any other breach of the same or of any other
covenant, condition or duty.
B. Any notice from Landlord to Tenant or from Tenant to Landlord shall
be deemed duly served if mailed by certified mail, return receipt requested,
addressed, if to Tenant, at the Premises after the Term of this Lease has
commenced and, prior to that time at Tenant's Present Address, or if to
Landlord, at the place from time to time established for the payment of rent.
Notices to Tenant shall also be deemed duly served if delivered in hand or by
nationally recognized overnight delivery service such as FedEx with a delivery
tracking service.
C. Intentionally deleted.
D. The covenants and agreements of Landlord and Tenant shall be binding
upon and inure to the benefit of them and their respective heirs, executors,
administrators, successors and assigns, but no covenant or agreement of Landlord
or Tenant, express or implied, shall be binding upon any person except for
defaults occurring during such person's period of ownership of Landlord's or
Tenant's leasehold estate, respectively, nor binding individually upon any
fiduciary, any shareholder, limited partner or any beneficiary under any trust.
E. If Tenant is more than one person or party, Tenant's obligation
shall be joint and several. Unless repugnant to the context, "Landlord" and
"Tenant" mean the person or persons, natural or corporate, named above as
Landlord and Tenant respectively, and their respective heirs, executors,
administrators, successors and assigns (subject to Landlord's consent where
required herein).
F. Landlord and Tenant agree that this Lease shall not be recorded. If
either party desires to enter into a Notice of Lease for recording purposes, the
other shall promptly execute such Notice of Lease in statutory form. Landlord
acknowledges that Tenant may disclose the terms of this Lease to the Securities
and Exchange Commission ("SEC") in connection with Tenant's next SEC filing.
G. The headings herein contained are for convenience and shall not be
construed a part of this Lease.
H. In each and every instance herein requiring Landlord's approval,
written or otherwise, such approval shall not be unreasonably withheld, except
where otherwise stated.
I. Neither Tenant, nor its employees or customers shall park in any
loading area, fire lane, or areas reserved for the exclusive use of other
tenants.
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<PAGE> 20
J. No other agreements or representations have been made by either
party except as expressly contained in this Lease.
K. Prior to the Office Space Commencement Date, all Tenant's Work
performed in the Lab Space shall be done in a manner that will not materially
interfere with the Existing Office Space Tenant's use of and access to the
Office Space and, during such period, Tenant's contractors may only access the
Lab Space through the rear loading door.
L. This Lease shall be construed under and be governed by the Laws of
the Commonwealth of Massachusetts. For all purposes, Tenant hereby agrees and
consents that jurisdiction for any litigation with respect to this Lease and/or
enforcement or compliance by or against any of the parties shall be exclusively
commenced and processed within the State Courts of the Commonwealth of
Massachusetts, and, for these purposes including only Courts within the Counties
of Suffolk and/or Norfolk. For all purposes, rules applicable to addresses for
service of process for Landlord and Tenant shall be as required under the notice
provisions of this Lease set forth in Subsection B of this Article above. The
foregoing is intended as a consent to Suffolk and/or Norfolk County
jurisdiction.
M. Tenant may, at its own cost and expense, install: (a) a sign on the
existing free standing pylon at the entrance of the Property; and (b) a sign at
each of the seven (7) exclusive use parking spaces reserved to Tenant pursuant
to Article I hereof. The size, location and design of the signs described in the
immediately preceding sentence shall be subject to applicable regulations
governing signs including any contained in the Town of Norwood building and/or
zoning code and shall be subject to Landlord's prior approval which approval
shall not be unreasonably withheld or delayed. Tenant acknowledges that Tenant
shall be responsible for maintaining such signs and that Tenant (and not
Landlord) shall be responsible for policing the use of and parking in the seven
(7) exclusive use parking spaces reserved to Tenant Tenant agrees that Tenant
shall exonerate, defend and hold Landlord harmless from and against any and all
loss, cost, damage, expense and/or claims for personal injury, death and/or
property damage arising out of or in any way related to Tenant's or Tenant's
employees' contractors' or agents' policing or enforcing Tenant's use of the
aforementioned seven (7) parking spaces.
Page 20
<PAGE> 21
EXHIBIT A-1
Plan Depicting Property
Page 21
<PAGE> 22
EXHIBIT A-2
Floor Plan Depicting the Premises
Page 22
<PAGE> 23
EXHIBIT B
Landlord's Work
Landlord and Tenant agree that Tenant is renting the Premises in its
"AS-IS" condition, with the exception of the following:
1. Landlord will install a new roof membrane over the Premises.
Notwithstanding anything contained in this Lease to the contrary, Landlord will
use commercially reasonable efforts to install such new roof membrane by July
31, 2000. Landlord agrees that it will coordinate the installation of such roof
membrane with Tenant's contractors so as to ensure that any Landlord approved
roof penetrations will not disturb or damage the new roof membrane.
Page 23
<PAGE> 24
EXHIBIT C
Tenant's Work
Except for Landlord's Work described on Exhibit B, Tenant shall, at its
sole cost and expense, perform all other work necessary to finish, fixture and
equip the interior of the Premises so as to enable Tenant to open and conduct
its business at the Premises.
Landlord acknowledges that it has reviewed the preliminary drawings
prepared by Tenant relating to the Premises and, subject to the submission and
approval requirements of Article IV of this Lease, generally approves of
Tenant's concept for the Premises set forth therein. Landlord agrees to
cooperate with Tenant in all reasonable respects with respect to Tenant's
obtaining a building permit for Tenant's Work to the Premises provided that
Landlord incurs no cost, expense or liability with respect to such cooperation.
Depicts Tenant's planned layout of Labs
based on planned changed to some of
the existing Internal doors and walls.
Page 24
<PAGE> 25
Exhibit D
Timeline for transition from present tenant to Tenant.
This page depicts the specific dates as to when present tenant will release
specific locations within the premises.
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