GENZYME TRANSGENICS CORP
10-Q, 1999-08-18
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)
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<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                ----------------

                                    FORM 10-Q

  |X|       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
            SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended July 4, 1999

                                      OR

  |_|       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
            THE SECURITIES EXCHANGE ACT OF 1934

      For the transition period from ________________ to _________________

                         Commission file number 0-21794
                                                -------

                         GENZYME TRANSGENICS CORPORATION
             (Exact name of registrant as specified in its charter)

         Massachusetts                            04-3186494
- --------------------------------------------------------------------------------
(State or other jurisdiction of               (I.R.S. Employer
incorporation or organization)                Identification No.)

175 Crossing Blvd., Suite 410, Framingham, Massachusetts         01702
- --------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)

                                 (508) 620-9700
- --------------------------------------------------------------------------------

               Registrant's telephone number, including area code

Indicate by check 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        |_|.

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

            Class                   Outstanding at August 6, 1999
            -----                   -----------------------------
Common Stock, $0.01 par value                  20,064,014
<PAGE>

                         GENZYME TRANSGENICS CORPORATION
                                TABLE OF CONTENTS

                                                                          PAGE #
                                                                          ------

PART I.     FINANCIAL INFORMATION

      ITEM 1 - Unaudited Condensed Consolidated Financial Statements

      Condensed Consolidated Balance Sheets as of July 4, 1999
      and January 3, 1999....................................................3

      Condensed Consolidated Statements of Operations for the Three Months
      and Six Months Ended July 4, 1999 and June 28, 1998....................4

      Condensed Consolidated Statements of Cash Flows for
      the Six Months Ended July 4, 1999 and June 28, 1998....................5

      Notes to Unaudited Condensed Consolidated Financial Statements.........6

      ITEM 2
      Management's Discussion and Analysis of
      Financial Condition and Results of Operations..........................9

      ITEM 3
      Quantitative and Qualitative Disclosures
      About Market Risk ....................................................13

PART II. OTHER INFORMATION

      ITEM 2
      Changes in Securities.................................................14

      ITEM 4
      Submission of Matters to a Vote of Security Holders...................14

      ITEM 5
      Other Information.....................................................15

      ITEM 6
      Exhibits and Reports on Form 8-K......................................15

SIGNATURES..................................................................16

EXHIBIT INDEX...............................................................17


                                       2
<PAGE>

                         GENZYME TRANSGENICS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
           (Unaudited, dollars in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                                       July 4,   January 3,
                                                                        1999        1999
                                                                      --------    --------
                                ASSETS
<S>                                                                   <C>         <C>
Current assets:
   Cash and cash equivalents                                          $  8,437    $ 11,740
   Accounts receivable, net of allowance of $835 and $487               11,023      12,334
   Unbilled contract revenue                                             8,749       6,847
   Other current assets                                                  2,093       1,496
                                                                      --------    --------
         Total current assets                                           30,302      32,417
Net property, plant and equipment                                       32,331      30,486
Costs in excess of net assets acquired, net                             17,832      18,404
Other assets                                                             3,496       2,030
                                                                      --------    --------
                                                                      $ 83,961    $ 83,337
                                                                      ========    ========
                 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                   $  2,706    $  2,811
   Accounts payable - Genzyme Corporation                                1,097       1,487
   Due to ATIII LLC                                                      1,728       2,418
   Revolving line of credit                                             15,700      11,096
   Accrued expenses                                                      8,554       8,403
   Advance payments                                                      9,315       8,317
   Current portion of long-term debt                                     2,954       2,204
                                                                      --------    --------
         Total current liabilities                                      42,054      36,736
   Long-term debt, net of current portion                               12,229       9,561
   Deferred lease obligation                                               760         741
   Other liabilities                                                        32          95
                                                                      --------    --------
         Total liabilities                                              55,075      47,133
Stockholders' equity:
    Preferred stock, $.01 par value, 5,000,000 shares authorized;
       4,000,000 have been designated as Series A Convertible, of
       which 16,750 and 20,000 shares are issued and outstanding at
       July 4, 1999 and January 3, 1999, respectively (Note 4)
       (liquidation preference $16,750)                                     --          --
    Common stock, $.01 par value; 40,000,000 shares authorized;
       19,665,801 and 18,384,024 shares issued and outstanding
       at July 4, 1999 and January 3, 1999, respectively                   197         184
    Dividend on preferred stock                                         (1,156)     (1,156)
    Capital in excess of par value - preferred stock                    15,726      18,777
    Capital in excess of par value - common stock                       70,779      65,716
    Unearned compensation                                                 (345)       (437)
    Accumulated deficit                                                (56,259)    (46,864)
    Accumulated other comprehensive loss                                   (56)        (16)
                                                                      --------    --------
         Total stockholders' equity                                     28,886      36,204
                                                                      --------    --------
                                                                      $ 83,961    $ 83,337
                                                                      ========    ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       3
<PAGE>

                         GENZYME TRANSGENICS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (Unaudited, in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                          Three Months Ended       Six Months Ended
                                                         --------------------    --------------------
                                                          July 4,    June 28,     July 4,    June 28,
                                                           1999        1998        1999        1998
                                                         --------    --------    --------    --------
<S>                                                      <C>         <C>         <C>         <C>
Revenues
   Services                                              $ 14,314    $ 12,200    $ 27,390    $ 23,388
   Sponsored research and development                       4,288       2,213       5,981       4,776
                                                         --------    --------    --------    --------
                                                           18,602      14,413      33,371      28,164
Costs and operating expenses:
   Services                                                12,101      10,292      23,584      20,213
   Research and development
       Sponsored                                            2,211       2,291       4,788       4,132
       Proprietary                                            892       1,563       2,178       3,402
   Selling, general and administrative                      5,152       4,200       9,704       8,086
   Equity in loss of joint venture                            977         860       1,843       1,724
                                                         --------    --------    --------    --------
                                                           21,333      19,206      42,097      37,557
                                                         --------    --------    --------    --------

Loss from operations                                       (2,731)     (4,793)     (8,726)     (9,393)
Other income (expense):
   Interest income                                             13          98          20         110
   Interest expense                                          (504)       (299)     (1,014)       (756)
   Other income                                               484         100         484         100
                                                         --------    --------    --------    --------
Loss before income taxes                                   (2,738)     (4,894)     (9,236)     (9,939)

Provision (benefit) for income taxes                          108          --         159         (10)
                                                         --------    --------    --------    --------

Net loss                                                 $ (2,846)   $ (4,894)   $ (9,395)   $ (9,929)

Dividend to preferred shareholders                             --          --          --      (1,156)
                                                         --------    --------    --------    --------

Net loss available to common shareholders                $ (2,846)   $ (4,894)   $ (9,395)   $(11,085)
                                                         ========    ========    ========    ========

Net loss per common share (basic and diluted)            $  (0.15)   $  (0.27)   $  (0.50)   $  (0.63)
                                                         ========    ========    ========    ========

Weighted average number of shares
   outstanding (basic and diluted)                         19,268      17,844      18,959      17,655
                                                         ========    ========    ========    ========

Comprehensive loss:
   Net loss                                                (2,846)     (4,894)     (9,395)     (9,929)
   Other comprehensive income (loss):
       Unrealized holding losses on available for sale
         securities                                           (31)         --         (40)         --
                                                         --------    --------    --------    --------
   Total other comprehensive income (loss)                    (31)         --         (40)         --
                                                         --------    --------    --------    --------
Comprehensive loss                                       $ (2,877)   $ (4,894)   $ (9,435)   $ (9,929)
                                                         ========    ========    ========    ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       4
<PAGE>

                         GENZYME TRANSGENICS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
            (Unaudited, dollars in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                                                   Six Months Ended
                                                                                 --------------------
                                                                                  July 4,    June 28,
                                                                                   1999        1998
                                                                                 --------    --------
<S>                                                                              <C>         <C>
Cash flows for operating activities:
   Net loss                                                                      $ (9,395)   $ (9,929)
   Adjustments to reconcile net loss to net cash used by operating activities:
       Depreciation and amortization                                                2,770       2,399
       Amortization of unearned compensation                                           55          --
       Equity in loss of joint venture                                              1,843       1,724
    Changes in assets and liabilities:
       Accounts receivable and unbilled contract revenue                             (591)      1,647
       Inventory and other current assets                                            (637)        224
       Accounts payable                                                              (105)        131
       Accounts payable - Genzyme Corporation                                        (390)     (1,360)
       Other accrued expenses                                                         662        (646)
       Advance payments                                                               998         329
                                                                                 --------    --------
       Net cash used in operating activities                                       (4,790)     (5,481)
Cash flows for investing activities:
   Purchase of property, plant and equipment                                       (3,114)     (3,613)
   Investment in ATIII joint venture                                               (2,460)         --
   Other assets                                                                      (595)        (77)
                                                                                 --------    --------
       Net cash used in investing activities                                       (6,169)     (3,690)
Cash flows from financing activities:
   Net proceeds from issuance of common stock                                          --       6,423
   Net proceeds from employee stock purchase plan                                     517         700
   Net proceeds from the exercise of stock options                                     34         445
   Proceeds from preferred stock offering                                              --      19,000
   Proceeds from long-term debt                                                     3,802          --
   Repayment of long-term debt                                                     (1,257)     (1,038)
   Net borrowings (repayment) under revolving line of credit                        4,604      (6,000)
   Investment and advances by Genzyme Corporation                                      --      (6,000)
   Other long-term liabilities                                                        (44)        (51)
                                                                                 --------    --------
       Net cash provided by financing activities                                    7,656      13,479
                                                                                 --------    --------
Net increase (decrease) in cash and cash equivalents                               (3,303)      4,308
Cash and cash equivalents at beginning of the period                               11,740       6,383
                                                                                 --------    --------
Cash and cash equivalents at end of the period                                   $  8,437    $ 10,691
                                                                                 ========    ========

Noncash Investing and Financing Activities:
   Property acquired under capital leases                                        $    873    $    668
   Receipt of stock for Accounts Receivable and Advance Payment                        --         583
   Technology license acquired by issuance of stock                                 1,000          --
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       5
<PAGE>

                GENZYME TRANSGENICS CORPORATION AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.    Basis of Presentation:

      These unaudited condensed consolidated financial statements should be read
      in conjunction with the Company's Annual Report on Form 10-K for the
      fiscal year ended January 3, 1999 and the financial statements and
      footnotes included therein. Certain information and footnote disclosures
      normally included in financial statements prepared in accordance with
      generally accepted accounting principles have been condensed or omitted
      pursuant to Securities and Exchange Commission rules and regulations.

      The financial statements for the six months ended July 4, 1999 and June
      28, 1998 are unaudited but include, in the Company's opinion, all
      adjustments (consisting only of normally recurring accruals) necessary for
      a fair presentation of the results for the periods presented.

2.    Accounting Policies:

      The accounting policies underlying the quarterly financial statements are
      those set forth in Note 2 of the financial statements included in the
      Company's Annual Report on Form 10-K for the year ended January 3, 1999.

      Per share information is based upon weighted average number of shares of
      Common Stock outstanding during the period. Common stock equivalents
      consisting of warrants, stock options and convertible preferred stock,
      totaled 6.5 million and 4 million shares at July 4, 1999 and June 28,
      1998, respectively. Since the Company incurred a net loss for the period
      ending July 4, 1999 and June 28, 1998, these common stock equivalents were
      not used to compute diluted loss per share, as the effect was
      antidilutive.

      Included in the net loss is an equity in loss of joint venture of
      $1,843,000 which represents the Company's commitment to fund 30% of the
      losses and capital expenditures incurred in 1999 of the joint venture
      between the Company and Genzyme Corporation ("ATIII LLC"). Total net
      losses of the ATIII LLC in the first six months of 1999 were $5.8 million,
      and the ATIII LLC did not recognize any revenues.

3.    Income Taxes:

      Due to the profitability of some of its contract research laboratories in
      certain states, the Company has recorded a state provision for income
      taxes for the period ended July 4, 1999.


                                       6
<PAGE>

4.    Preferred Stock Conversion:

      On January 25, May 4 and May 19, 1999, an institutional investor converted
      1,500, 1,000 and 750 shares, respectively, of the Series A Convertible
      Preferred Stock ("Preferred Stock"), $.01 par value per share, into
      321,716, 299,626 and 211,638 shares, respectively, of the Company's common
      stock at a conversion price of $4.6625, $3.3375 and $3.5438 per share,
      respectively. The conversion prices represented the average of the five
      lowest bid prices of the prior 20 trading days before conversion. After
      these conversions, 16,750 shares of the Preferred Stock remained
      outstanding.

      Subsequent to the date of these financial statements on July 23 and July
      27, 1999, two institutional investors converted 1,000 and 750 shares of
      the Preferred Stock into 223,462 and 167,131 shares of the Company's
      common stock at a conversion price of $4.475 and $4.485 per share,
      respectively. After these conversions, 15,000 shares of the Preferred
      Stock remained outstanding.

5.    Segment Information:

      Below is the Company's segment information for its two reportable
      segments: Contract research organization ("Primedica") and research and
      development ("Transgenics"). During 1999, the Company began to allocate
      certain corporate expenses to the Primedica segment in its evaluation of
      the segments loss from operations. Certain reclassifications have been
      made to prior year's numbers to conform to 1999 classifications.

<TABLE>
<CAPTION>
                                            Three Months Ended       Six Months Ended
                                           --------------------    --------------------
                                            July 4,    June 28,     July 4,    June 28,
                                             1999        1998        1999        1998
                                           --------    --------    --------    --------
<S>                                        <C>         <C>         <C>         <C>
Revenues:
    Primedica - external customers         $ 14,314    $ 12,200    $ 27,390    $ 23,388
    Primedica - intersegment                    345         526         776         890
    Transgenics                               4,288       2,213       5,981       4,776
                                           --------    --------    --------    --------
                                             18,947      14,939      34,147      29,054
    Elimination of intersegment revenues       (345)       (526)       (776)       (890)
                                           --------    --------    --------    --------
                                           $ 18,602    $ 14,413    $ 33,371    $ 28,164
                                           ========    ========    ========    ========

Loss from operations:
    Primedica                              $   (384)   $   (230)   $ (1,277)   $ (1,132)
    Transgenics                                 (34)     (2,638)     (3,290)     (4,678)
    Unallocated amounts:
    Corporate expenses                       (1,336)     (1,065)     (2,316)     (1,859)
</TABLE>


                                       7
<PAGE>

<TABLE>
<S>                                        <C>         <C>         <C>         <C>
    Equity in loss of joint venture            (977)       (860)     (1,843)     (1,724)
                                           --------    --------    --------    --------
                                           $ (2,731)   $ (4,793)   $ (8,726)   $ (9,393)
                                           ========    ========    ========    ========
</TABLE>

6.    ACT License Agreement:

      In June 1999, the Company entered into an Exclusive License and
      Development Agreement ("the Agreement") with Advanced Cell Technology,
      Inc. ("ACT"). The Company paid $1,750,000 to ACT in consideration of the
      license granted to the Company from ACT of which $1.0 million was in the
      form of 216,798 shares of Company stock and $750,000 was in cash. The
      number of shares was based on a price of $4.6125 per share. The Company
      has capitalized the amount paid for the license fee to Other Assets and is
      amortizing it over ten years based on its estimated economic life.
      Additionally, the Company paid to ACT $250,000 in cash as an advance
      payment which shall be fully creditable against ACT services for which
      parties have separately contracted, milestone payments, royalties,
      sublicense revenues or other payments payable or to become payable to ACT
      from the Company under this Agreement or any other agreement between the
      parties.

7.    Facility Lease:

      On March 26, 1999, the Company entered into a seven year facility lease
      for 12,468 square feet located in Framingham, Massachusetts. The monthly
      payment for years one and two is $26,945, years three and four is $27,534
      and years five through seven is $28,573.


                                       8
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Three months ended July 4, 1999 and June 28, 1998

Total revenues for the three-month period ending July 4, 1999 were $18.6
million, compared with $14.4 million in the comparable period of 1998, an
increase of $4.2 million or 29%. Service revenues increased to $14.3 million in
the second quarter of 1999 from $12.2 million in the second quarter of 1998, an
increase of $2.1 million or 17% due to increased study activity. Research and
development revenue increased to $4.3 million in the second quarter of 1999 from
$2.2 million in the second quarter of 1998, an increase of $2.1 million or 95%.
The increase is a result of a $1.5 million milestone payment received in the
second quarter of 1999 from Bristol Meyers Squibb and a $500,000 milestone
earned in the second quarter of 1999 from BASF.

Cost of services for the second quarter of 1999 were $12.1 million compared to
$10.3 million in the comparable period of 1998, an increase of $1.8 million or
18% due to the increase in revenues. Sponsored research and development expenses
decreased to $2.2 million in the second quarter of 1999 from $2.3 million in the
second quarter of 1998, a decrease of 3% due to a decrease in subcontractor
costs. Proprietary research and development expenses decreased to $892,000 in
the second quarter of 1999 from $1.6 million in the second quarter of 1998, a
decrease of $700,000 or 43%. The decrease is due to decreased work on the cancer
vaccine program and a shifting of resources to sponsored research and
development.

Gross profit, defined as revenues less service costs and research and
development costs, for the second quarter of 1999 amounted to a profit of $3.4
million versus a profit of $267,000 in the second quarter of 1998 due to the
increase in revenues and milestones in the second quarter of 1999. Gross profit
on services for the second quarter of 1999 was $2.2 million, a gross margin of
15%, versus $1.9 million, a gross margin of 16%, in the second quarter of 1998.

Selling, general and administrative ("SG&A") expenses increased to $5.2 million
in the second quarter of 1999 from $4.2 million in the second quarter of 1998,
an increase of $1.0 million or 23%. The increase is due to the increased
marketing activities including promotional materials and advertising and to the
addition of administrative personnel required to support the growth in
transgenic research and development programs as well as additional patent
expenditures.

Interest income decreased to $13,000 in the second quarter of 1999, from $98,000
in the second quarter of 1998, due to lower funds available for investment.
Interest expense increased to $504,000 in the second quarter of 1999 from
$299,000 in the second quarter of 1998 due to increased borrowings in 1999.
Other income increased to $484,000 in the second quarter of 1999, from $100,000
in the second quarter of 1998, due to the receipt of an insurance settlement in
1999.


                                       9
<PAGE>

The Company recognized $977,000 of Joint Venture losses incurred on the joint
venture ("ATIII LLC") between the Company and Genzyme Corporation ("Genzyme")
during the second quarter of 1999 as compared to $860,000 incurred during the
second quarter of 1998.

Six months ended July 4, 1999 and June 28, 1998

Total revenues for the six-month period ending July 4, 1999 were $33.4 million,
compared with $28.2 million in the comparable period of 1998, an increase of
$5.2 million or 18%. Service revenues increased to $27.4 million during the
first six months of 1999 from $23.4 million in the comparable period of 1998, an
increase of $4 million or 17% due to increased study activity. Research and
development revenue increased to $6 million during the first six months of 1999
from $4.8 million in the comparable period of 1998, an increase of $1.2 million
or 25%. The increase is a result of a $1.5 million milestone payment received in
the second quarter of 1999 from Bristol Meyers Squibb and a $500,000 milestone
earned in the second quarter of 1999 from BASF versus a $1.0 million milestone
payment received in the first quarter of 1998.

Cost of services during the first six months of 1999 were $23.6 million compared
to $20.2 million in the comparable period of 1998, an increase of $3.4 million
or 17% due to the increase in revenues. Sponsored research and development
expenses increased to $4.8 million in the first six months of 1999 from $4.1
million in the comparable period of 1998, an increase of $700,000 or 16%. The
increase in expense is due to an increase in activity on sponsored research.
Proprietary research and development expenses decreased to $2.2 million in the
first six months of 1999 from $3.4 in the comparable period of 1998, a decrease
of $1.2 million or 36%. The decrease is due to decreased work on the cancer
vaccine program and a shifting of resources to sponsored research and
development.

Gross profit for the first six months of 1999 amounted to a profit of $2.8
million versus a profit of $417,000 in the comparable period of 1998 due to the
increase in revenues. Gross profit on services for the first six months of 1999
was $3.8 million, a gross margin of 14%, versus $3.2 million, a gross margin of
14%, in the comparable period of 1998.

Selling, general and administrative ("SG&A") expenses increased to $9.7 million
in the first six months of 1999 from $8.1 million in the comparable period of
1998, an increase of $1.6 million or 20%. The increase is due to the increased
marketing activities including promotional materials and advertising and to the
addition of administrative personnel required to support the growth in
transgenic research and development programs as well as additional patent
expenditures.

Interest income decreased to $20,000 in the first six months of 1999, from
$110,000 in the comparable period of 1998, due to lower funds available for
investment. Interest expense increased to $1.0 million in the first six months
of 1999 from $756,000 in the comparable period of 1998 due to increased
borrowings in 1999. Other income increased to $484,000 in the first six months
of 1999, from $100,000 in the comparable period of 1998, due to the receipt of
an insurance settlement.


                                       10
<PAGE>

The Company recognized $1.8 million of Joint Venture losses incurred on the
joint venture ("ATIII LLC") between the Company and Genzyme Corporation
("Genzyme") during the first six months of 1999 as compared to $1.7 million
incurred during the comparable period of 1998.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash and cash equivalents of $8.4 million at July 4, 1999.
During the first six months of 1999, the Company had a $3.3 million net decrease
in cash: $7.3 million of cash used in operations (due primarily to the net loss
of $9.4 million offset by a decrease in non-cash working capital of $2.5 and
$4.6 million of non-cash charges), $3.1 million was invested in capital
equipment, further expansion of the transgenic production facility and the
expansion of the laboratory facilities and $1.3 million was used to pay down
long-term debt. Sources of funds during the period included $4.6 million in net
borrowings under a commercial bank revolving line of credit, $3.8 million of
proceeds from issuance of long-term debt and $551,000 of proceeds from the
issuance of common stock under various employee stock plans.

The Company had a working capital deficit of $11.8 million at July 4, 1999
compared to a deficit of $4.3 million at January 4, 1999. As of July 4, 1999,
the Company had approximately $6.4 million available under the Genzyme Credit
Line, $300,000 available under a line of credit with a commercial bank, $4.1
million was available under various capital lease lines and $1.5 million
available under a term loan for facility expansion. Under the Company's 1999
operating plan, existing cash balances along with funds available under the bank
and lease lines and the Genzyme Credit Line are expected to be sufficient to
fund the Company into the third quarter of 2000. In the second quarter of 1999,
the Company re-evaluated its clinical trial strategy with respect to ATIII, and
eliminated plans to engage in a clinical trial comparing rh ATIII with plasma
derived product, but is completing its two placebo-controlled trials evaluating
ATIII use in achieving adequate anti-coagulation in heparin-resistant patients
about to undergo cardiopulmonary bypass surgery. The Company is considering
various alternative financing strategies, such as collaborative arrangements,
public or private sales of its securities, including securities in certain
subsidiaries, additional mortgage or lease financing, asset sales and other
sources.

Management's current expectations regarding the sufficiency of the Company's
cash resources are forward-looking statements, and the Company's cash
requirements may vary materially from such expectations. Such forward-looking
statements are dependent on several factors, including the results of the
Company's testing services business, the ability of the Company to enter into
any transgenic research and development collaborations in the future and the
terms of such collaborations, the results of research and development and
preclinical and clinical testing, competitive and technological advances,
regulatory requirements and the Company's ability to complete the financing for
the Mason Laboratory expansion. If the Company experiences increased losses, the
Company may have to seek additional financing through collaborative arrangements
or from public or private sales of its securities, including equity securities.
There can be no assurance that additional funding will be available on terms
acceptable to the Company, if at all. If additional financing cannot be obtained
on acceptable terms, to continue its operations the Company could be forced to
delay, scale back or eliminate certain of its


                                       11
<PAGE>

research and development programs or to enter into license agreements with third
parties for the commercialization of technologies or products that the Company
would otherwise undertake itself.

Impact of the Year 2000

Certain companies may face problems if the computer processors and software upon
which they directly or indirectly rely are unable to process date values
correctly upon the turn of the millennium ("Year 2000"). Such a system failure
and corruption of data of the Company or its customers or suppliers could
disrupt the Company's operations, including, among other things a temporary
inability to process transactions or engage in other business activities or to
receive information or services from suppliers.

The Company has appointed a Year 2000 task force to address the issues and
assess the potential impact of the Year 2000 problem. The task force is
evaluating the Company's financial systems, computers, software and other
equipment to ensure that the programs and systems will be Year 2000 compliant.
The Company presently believes that its computer systems, software and other
equipment will be Year 2000 compliant by the end of the Summer of 1999. The
Company has spent approximately $250,000 and estimates that it will spend
approximately $300,000 to $400,000 in capital replacement of computers,
equipment and software upgrades. The Company will incur another $100,000 to
$200,000 for costs of implementation. The Company has initiated communications
with third party suppliers and is requesting that they represent that their
products and services are to be Year 2000 compliant and that they have a program
to test for compliance. Additionally, the Company is assessing those vendors
that are not Year 2000 compliant and is in the process of finding alternative
vendors that are compliant.

Because the Company currently anticipates that it will achieve Year 2000
compliance, it has not formulated a contingency plan. However, should the
Company determine there is significant risk that it may be unable to adhere to
its compliance timetable, it will assess reasonably likely scenarios resulting
from noncompliance and establish a contingency plan to address such scenarios.

The Company's ability to achieve Year 2000 compliance is subject to various
uncertainties including the Company's ability to successfully identify systems
and programs not Year 2000 compliant, the nature and amount of programming
required to correct or replace affected programs, the availability and magnitude
of labor and consulting costs and the success of the Company's business
partners, vendors and clients in addressing the Year 2000 issue. Therefore,
while the financial impact of implementing Year 2000 compliance remediation has
not been and is not anticipated to be material to the Company's business,
financial position or results of operations, the Company can make no assurances
with respect to the costs of remediation efforts not yet incurred. Additionally,
the Company cannot be certain that it will achieve adequate Year 2000 compliance
in a timely manner or that any impact of a failure to achieve such compliance
will not have a material adverse effect on the Company's business, financial
condition or results of operation.


                                       12
<PAGE>

           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company's market risk since January
3, 1999. The Company's market risk disclosures are discussed in the Genzyme
Transgenics Corporation Form 10-K under the heading Item 7A, Quantitative and
Qualitative Disclosures About Market Risk.


                                       13
<PAGE>

                                     PART II

ITEM 2:     Changes in Securities

            On May 4, 1999, May 19, 1999, July 23, 1999 and July 27, 1999,
      several institutional investors converted 1,000, 750, 1,000 and 750 shares
      of their Series A Convertible Preferred Stock, $.01 par value per share,
      of the Company (the "Preferred Stock"), into 299,626, 211,638, 223,462 and
      167,131 shares of the Company's Common Stock, $.01 par value per share
      (the "Common Stock"), at conversion prices of $3.3375, $3.5438, $4.475 and
      $4.485 per share of Preferred Stock, respectively. These conversions
      resulted in the issuance of an aggregate of 901,857 shares of the
      Company's Common Stock during the quarter ended July 4, 1999. The Company
      believes the issuance of its Common Stock upon conversion of the Preferred
      Stock qualified as a transaction by an issuer not involving a public
      offering within the meaning of Section 4(2) of the Securities Act of 1933,
      as amended, based on the number and nature of the holders.

ITEM 4:     Submission of Matters to a Vote of Security Holders

            At the Annual Meeting of Stockholders held on May 25, 1999, the
      Company's stockholders voted as follows:

      (a)   To reelect each of the following nominees to the Board of Directors
            for a three-year term:

            Nominee                   Total Vote "FOR"     Total Vote Withheld
            -------                   ----------------     -------------------

            Henry E. Blair                16,992,266              492,742

            Francis J. Bullock            16,992,266              492,742

            Alan W. Tuck                  16,992,266              492,742

            In addition, the terms in office of Sandra Nusinoff Lehrman, Robert
            W. Baldridge, James A. Geraghty, Alan E. Smith and Henri A. Termeer
            continued after the meeting.

      (b)   To amend the Company's 1993 Equity Incentive Plan to increase the
            number of shares of the Common Stock of the Company that may be
            subject to awards under the Plan from 3,015,000 shares to 3,390,000
            shares.

            Total Vote for the Proposal     16,612,962

            Total Vote Against the Proposal    799,802

            Abstentions                         72,244


                                       14
<PAGE>

ITEM 5:     Other Information

      The Board of Directors of the Company amended the Company's Bylaws on May
25, 1999 to clarify the date by which stockholders must give notice of a
stockholder proposal or director nomination in order for such proposal or
nomination to be timely for consideration at any special or annual meeting of
the stockholders. Under the Company's Bylaws, as amended, in order for a
stockholder to bring business before or propose director nominations at the
Company's 2000 Annual Meeting of Stockholders, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
corporation by the close of business on the March 13, 2000. This deadline
supercedes the deadline established under the Bylaws prior to the amendment
which deadline was disclosed in the Proxy Statement for the 1999 Annual Meeting
of Stockholders.

ITEM 6:     Exhibits and Reports on From 8-K

(a)   Exhibits

      See the Exhibit Index immediately following the signature page.

(b)   Reports on Form 8-K

      No reports were filed on Form 8-K during the quarter ended July 4,
      1999.


                                       15
<PAGE>

                 GENZYME TRANSGENICS CORPORATION AND SUBSIDIARY
                                    FORM 10-Q

                                  July 4, 1999

                                   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 hereunto duly authorized.

Date: August 18, 1999         GENZYME TRANSGENICS CORPORATION


                              By:  /s/ John B. Green
                                   ------------------------------------
                                       John B. Green
                                       Duly Authorized Officer,
                                       Vice President and
                                       Chief Financial Officer


                                       16
<PAGE>

                                  EXHIBIT INDEX

Exhibit                    Description
- -------                    -----------

3.1         By-laws of Genzyme Transgenics Corporation, as amended through May
            25, 1999. Filed herewith.

10.1        Lease dated March 26, 1999 between Genzyme Transgenics Corporation
            and NDNE 9/90 Corporate Center LLC. Filed herewith.

10.2        1993 Equity Incentive Plan, as amended through May 25, 1999. Filed
            herewith.

27          Financial Data Schedule. (EDGAR only.)


                                       17

<PAGE>

                                                                     Exhibit 3.1

                                     BY-LAWS
                                       of
                         GENZYME TRANSGENICS CORPORATION

                      As Amended by the Board of Directors
                                 on May 25, 1999

                                    ARTICLE I

                            Meetings of Stockholders

      Section 1. Place. Meetings of the stockholders shall be held at the
principal office of the corporation in Massachusetts or at such other place as
may be named in the notice.

      Section 2. Annual Meetings. The annual meeting of the stockholders shall
be held on the third Thursday of May or on such other date within six months
after the end of the fiscal year of the corporation and at such hour and place
as the directors or an officer designated by the directors shall determine. In
the event that the annual meeting has not been held on such date, a special
meeting in lieu of the annual meeting may be held with all of the force and
effect of an annual meeting.

      Section 3. Special Meetings. Special meetings of the stockholders may be
called only by the president or by the directors, and shall be called by the
clerk or, in case of the death, absence, incapacity or refusal of the clerk, by
any other officer, upon written application of one or more stockholders who hold
not less than 90% (or such lesser percentage as may be required by law) in
interest of the capital stock entitled to vote thereat.

      Section 4. Notice. A written notice of the date, place and hour of all
meetings of stockholders stating the purposes of the meeting shall be given by
the clerk or an assistant clerk (or by any other officer who is entitled to call
such a meeting) at least seven (7) days before the meeting to each stockholder
entitled to vote thereat and to each stockholder who is entitled to such notice,
by leaving such notice with him or at his residence or usual place of business,
or by mailing it, postage prepaid, and addressed to such stockholder at his
address as it appears in the records of the corporation. Notwithstanding the
foregoing, in the case of any special meeting called upon the written
application of stockholders, such meeting shall be called not less than sixty
(60) days nor more than ninety (90) days after such application is received by
the corporation and written notice thereof shall be given in accordance with the
preceding sentence at least twenty (20) days before the meeting. Whenever notice
of a meeting is required to be given a stockholder under applicable law, the
articles of organization or these by-laws, a written waiver thereof, executed
before or after the meeting by such stockholder or his attorney thereunto
authorized and filed with the records of the meeting, shall be deemed equivalent
to such notice.

      Section 5. Stockholder Nominations of Directors. Only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors at any annual or special meeting. Nominations of persons
for election as directors may be made by or at the direction of the directors,
or by any stockholder entitled to vote for the election of directors at the
meeting who complies with the notice procedures set forth in this section. Such
nominations, other than those made

<PAGE>

by or at the direction of the board, shall be made pursuant to timely notice in
writing to the chairman of the board, if any, the president, the treasurer or
the clerk. To be timely, a stockholder's notice shall be delivered to or mailed
and received at the principal executive offices of the corporation by the close
of business on the Advance Notice Date. For purposes of these Bylaws, the
"Advance Notice Date" shall be one of the following:

            (a)   in the case of an annual meeting only, the date 75 days before
                  the anniversary date of the prior year's meeting, if (i) there
                  was an annual meeting in the prior year and (ii) the date of
                  the current year's annual meeting is not more than 30 days
                  before or after the anniversary date of the prior year's
                  annual meeting; or

            (b)   if clause (a) does not apply, the date 45 days prior to the
                  date of the current year's annual meeting or a special meeting
                  if at least 60 days' notice or prior public disclosure of the
                  date of the current year's annual meeting or the special
                  meeting is given or made; or

            (c)   if neither clause (a) nor clause (b) applies, the date 15 days
                  after the day on which notice of the date of the current
                  year's annual meeting or the special meeting was mailed or
                  public disclosure was made.

Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (i)
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number of
shares of capital stock of the corporation which are beneficially owned by the
person and (iv) any other information relating to the person that is required to
be disclosed in solicitations for proxies for election of directors pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended; and (b) as
to the stockholder giving the notice (i) the name and record address of such
stockholder and (ii) the class and number of shares of capital stock of the
corporation which are beneficially owned by such stockholder. No person shall be
eligible for election as a director at any annual or special meeting of
stockholders unless nominated in accordance with the procedures set forth
herein.

      The chairman of the meeting shall, if the facts warrant, determine that a
nomination was not made in accordance with the foregoing procedure, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.

      Section 6. Advance Notice of Stockholder-Proposed Business at Annual
Meetings. At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be brought
properly before an annual meeting, business must be either (a) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the president or the directors, (b) otherwise properly brought before the
meeting by or at the direction of the board, or (c) otherwise properly brought
before the meeting by a stockholder. In addition to any other applicable
requirements, for business to be brought properly before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the chairman of the board, if any, the president, the clerk or the treasurer. To
be timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation by the close of business on
the Advance Notice Date, as defined in Section 5 of Article I hereof. A
stockholder's notice shall set forth as to each matter the stockholder proposes
to bring before the annual meeting (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for conducting
such business at the annual meeting, (ii) the name and record address of the
stockholder proposing such business, (iii) the

<PAGE>

class and number of shares of the corporation which are beneficially owned by
the stockholder, and (iv) any material interest of the stockholder in such
business.

      Notwithstanding anything in these by-laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this section, provided, however, that nothing in this
section shall be deemed to preclude discussion by any stockholder of any
business properly brought before the annual meeting in accordance with said
procedure.

      The chairman of an annual meeting shall, if the facts warrant, determine
that business was not properly brought before the meeting in accordance with the
provisions of this section, and if he should so determine, he shall so declare
to the meeting and any such business not properly brought before the meeting
shall not be transacted.

      Section 7. Quorum. A majority in interest of all stock issued, outstanding
and entitled to vote at a meeting shall constitute a quorum, but a smaller
number may adjourn from time to time without further notice until a quorum is
secured.

      Section 8. Action by Vote. When a quorum is present at any meeting, a
plurality of the votes properly cast for election to any office shall effect
such election and a majority of the votes properly cast upon any question other
than an election to an office shall decide the question, except when a larger
vote is required by law, the articles of organization or these by-laws or when
the directors requires a larger vote upon any election or question (to the
extent permitted by law). No ballot shall be required for any election unless
requested by a stockholder present or represented at the meeting and entitled to
vote in the election.

      Section 9. Voting. Stockholders entitled to vote shall have one vote for
each share of stock entitled to vote held by them of record according to the
records of the corporation, unless otherwise provided by the articles of
organization. The corporation shall not, directly or indirectly, vote any shares
of its own stock. Stockholders may vote in person or by proxy.

                                   ARTICLE II

                             Officers and Directors

      Section 1. Enumeration. The corporation shall have a board of not less
than three directors, except that whenever there shall be fewer than three
stockholders, the number of directors may be less than three but in no event
less than the number of stockholders. The number of directors shall be fixed by
the directors and may be enlarged at any time by vote of a majority of the
directors then in office. The officers of the corporation shall be a president,
a treasurer, a clerk and such other officers as the directors may from time to
time appoint.

      Section 2. Qualifications. Directors and officers need not be
stockholders. No officer need be a director. Two or more offices may be held by
the same person. The clerk shall be a resident of Massachusetts unless a
resident agent shall have been appointed pursuant to the Massachusetts Business
Corporation Law.

      Section 3. Election. The directors shall be elected in the manner provided
in the articles of organization, by such stockholders as have the right to vote
thereon. The directors at their annual meeting in each year shall elect a
president, a treasurer and a clerk, and may at any time elect such other
officers as they shall determine. Except as hereinafter provided, the president,
the treasurer and the clerk

<PAGE>

shall hold office until the next annual meeting of stockholders and until their
respective successors are elected and qualified. Other officers shall serve at
the pleasure of the directors.

      Section 4. Removal. Directors may be removed from office only as provided
in the articles of organization. Officers elected or appointed by the directors
may be removed from their respective offices with or without cause by vote of a
majority of the directors then in office. A director or officer may be removed
for cause only after a reasonable notice and opportunity to be heard before the
body proposing to remove him.

      Section 5. Resignation. Resignations by officers or directors shall be
given in writing to the president, treasurer, clerk or directors. Such
resignation shall be effective upon receipt unless specified to be effective at
some other time.

      Section 6. Vacancies. Continuing directors may act despite a vacancy or
vacancies in the board and shall for this purpose be deemed to constitute the
full board. Any vacancy in the board of directors, however occurring, including
a vacancy resulting from the enlargement of the board, may be filled by the
directors then in office, though less than a quorum. Vacancies in any other
office may be filled by the directors.

                                   ARTICLE III

                            Meeting of the Directors

      Section 1. Regular Meetings. Regular meetings of the directors may be held
without call or notice at such times and places within or without the
Commonwealth of Massachusetts as the directors may fix provided that reasonable
notice of the first regular meeting following any such determination shall be
given to absent directors. An annual meeting of the directors may be held in
each year without call or notice immediately after and at the place of the
meeting at which the board is elected.

      Section 2. Special Meetings. Special meetings of the directors may be held
at any time and at any place designated in the call of the meeting, when called
by the chairman of the board, if any, the president or by two or more directors,
reasonable notice thereof being given to each director by the clerk or by the
officer or one of the directors calling the meeting.

      Section 3. Notice. No notice need be given for a regular or annual meeting
of the directors. Forty-eight hours' notice by mail, telegraph, telephone or
word of mouth shall be given for a special meeting unless shorter notice is
adequate under the circumstances. A notice or waiver of notice need not specify
the purpose of any special meeting. Notice of a meeting need not be given to any
director, if a written waiver of notice, executed by him before or after the
meeting, is filed with the records of the meeting, or to any director who
attends the meeting without protesting prior thereto or at its commencement the
lack of notice to him.

      Section 4. Quorum. A majority of the directors then in office shall
constitute a quorum, but a smaller number may adjourn finally or from time to
time without further notice until a quorum is secured. If a quorum is present, a
majority of the directors present may take any action on behalf of the board
except to the extent that a larger number is required by law, the articles of
organization or these By-laws.

      Section 5. Action by Consent. Any action required or permitted to be taken
at any meeting of the directors may be taken without a meeting if all the
directors consent to the action in writing and the

<PAGE>

written consents are filed with the records of the meetings of directors. Such
consents shall be treated for all purposes as a vote at a meeting.

      Section 6. Committees. The directors may elect from their number an
executive committee or other committees and may by like vote delegate to
committees so elected some or all of their powers to the extent permitted by
law. Except as the directors may otherwise determine, any such committee may
make rules for the conduct of its business, but unless otherwise provided by the
directors or in such rules, its business shall be conducted as nearly as
possible in the same manner as is provided by these by-laws for the directors.
The directors shall have the power at any time to fill vacancies in any such
committee, to change its membership or to discharge the committee.

<PAGE>

                                   ARTICLE IV

                   Powers and Duties of Directors and Officers

      Section 1. Directors. The business of the corporation shall be managed by
the directors, who may exercise all such powers of the corporation as are not by
law, by the articles of organization or by these by-laws required to be
otherwise exercised. The directors may from time to time to the extent permitted
by law delegate any of their powers to committees, officers, attorneys or agents
of the corporation, subject to such limitations as the directors may impose.

      Section 2. Chairman and President. The directors may appoint a chairman of
the board who, unless otherwise determined by the directors, shall, when
present, preside at all meetings of the directors and shall have such other
powers and duties as customarily belong to the office of chairman of the board
or as may be designated from time to time by the directors. The president shall
be the chief executive officer of the corporation unless the directors designate
another officer, in which event he shall, unless the directors otherwise
determine, be the chief operating officer. The chief executive officer shall,
subject to the direction of the directors, have general supervision and control
of the business of the corporation. Except as provided above regarding the
Chairman and unless the directors specify otherwise, the chief executive officer
shall preside at all meetings of stockholders and of the directors at which he
is present. The president and chief executive officer shall perform such other
duties and shall have such other powers as the directors may designate from time
to time.

      Section 3. Vice Presidents. The vice presidents, if any, shall have such
powers and duties as may be designated from time to time by the directors or by
the president.

      Section 4. Treasurer. Except as the directors shall otherwise determine,
the treasurer shall be the chief financial and accounting officer of the
corporation and shall have such other powers and duties as customarily belong to
the office of treasurer or as may be designated from time to time by the
directors or by the president.

      Section 5. Clerk. The clerk shall record all proceedings of the
stockholders and directors in a book or books to be kept therefor and shall have
custody of the seal of the corporation.

                                    ARTICLE V

                              Employment Contracts

      The corporation may enter into employment contracts authorized by the
directors extending beyond the terms of the directors. An employment contract
shall be valid despite any inconsistent provision of these by-laws relating to
terms of officers and removal of officers with or without cause but shall not
affect the authority of the directors to remove officers. Any removal or failure
to reelect an officer shall be without prejudice to the officer's contract
rights, if any.

                                   ARTICLE VI

                    Indemnification of Directors and Officers

      The corporation shall, to the extent legally permissible, indemnify each
person who may serve or who has served at any time as a director or officer of
the corporation or of any of its subsidiaries, or who at the request of the
corporation may serve or at any time has served as a director, officer or
trustee of, or

<PAGE>

in a similar capacity with, another organization or an employee benefit plan,
against all expenses and liabilities (including counsel fees, judgments, fines,
excise taxes, penalties and amounts payable in settlements) reasonably incurred
by or imposed upon such person in connection with any threatened, pending or
completed action, suit or other proceeding, whether civil, criminal,
administrative or investigative, in which he may become involved by reason of
his serving or having served in such capacity (other than a proceeding
voluntarily initiated by such person unless he is successful on the merits, the
proceeding was authorized by the corporation or the proceeding seeks a
declaratory judgment regarding his own conduct); provided that no
indemnification shall be provided for any such person with respect to any matter
as to which he shall have been finally adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that his action was in the best
interests of the corporation or, to the extent such matter relates to service
with respect to any employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan; and provided,
further, that as to any matter disposed of by a compromise payment by such
person, pursuant to a consent decree or otherwise, the payment and
indemnification thereof have been approved by the corporation, which approval
shall not unreasonably be withheld, or by a court of competent jurisdiction.
Such indemnification shall include payment by the corporation of expenses
incurred in defending a civil or criminal action or proceeding in advance of the
final disposition of such action or proceeding, upon receipt of an undertaking
by the person indemnified to repay such payment if he shall be adjudicated to be
not entitled to indemnification under this article, which undertaking may be
accepted without regard to the financial ability of such person to make
repayment.

      A person entitled to indemnification hereunder whose duties include
service or responsibilities as a fiduciary with respect to a subsidiary or other
organization shall be deemed to have acted in good faith in the reasonable
belief that his action was in the best interests of the corporation if he acted
in good faith in the reasonable belief that his action was in the best interests
of such subsidiary or organization or of the participants or beneficiaries of,
or other persons with interests in, such subsidiary or organization to whom he
had a fiduciary duty.

      Where indemnification hereunder requires authorization or approval by the
corporation, such authorization or approval shall be conclusively deemed to have
been obtained, and in any case where a director of the corporation approves the
payment of indemnification, such director shall be wholly protected, if:

            (i) the payment has been approved or ratified (l) by a majority vote
of a quorum of the directors consisting of persons who are not at that time
parties to the proceeding, (2) by a majority vote of a committee of two or more
directors who are not at that time parties to the proceeding and are selected
for this purpose by the full board (in which selection directors who are parties
may participate), or (3) by a majority vote of a quorum of the outstanding
shares of stock of all classes entitled to vote for directors, voting as a
single class, which quorum shall consist of stockholders who are not at that
time parties to the proceeding; or

            (ii) the action is taken in reliance upon the opinion of independent
legal counsel (who may be counsel to the corporation) appointed for the purpose
by vote of the directors or in the manner specified in clauses (l), (2) or (3)
of subparagraph (i); or

            (iii) the payment is approved by a court of competent jurisdiction;
or

            (iv) the directors have otherwise acted in accordance with the
standard of conduct set forth in the Massachusetts Business Corporation Law.

<PAGE>

      Any indemnification or advance of expenses under this article shall be
paid promptly, and in any event within 30 days, after the receipt by the
corporation of a written request therefor from the person to be indemnified,
unless with respect to a claim for indemnification the corporation shall have
determined that the person is not entitled to indemnification. If the
corporation denies the request or if payment is not made within such 30 day
period, the person seeking to be indemnified may at any time thereafter seek to
enforce his rights hereunder in a court of competent jurisdiction and, if
successful in whole or in part, he shall be entitled also to indemnification for
the expenses of prosecuting such action. Unless otherwise provided by law, the
burden of proving that the person is not entitled to indemnification shall be on
the corporation.

      The right of indemnification under this article shall be a contract right
inuring to the benefit of the directors, officers and other persons entitled to
be indemnified hereunder and no amendment or repeal of this article shall
adversely affect any right of such director, officer or other person existing at
the time of such amendment or repeal.

      The indemnification provided hereunder shall inure to the benefit of the
heirs, executors and administrators of a director, officer or other person
entitled to indemnification hereunder. The indemnification provided hereunder
may, to the extent authorized by the corporation, apply to the directors,
officers and other persons associated with constituent corporations that have
been merged into or consolidated with the corporation who would have been
entitled to indemnification hereunder had they served in such capacity with or
at the request of the corporation.

      The right of indemnification under this article shall be in addition to
and not exclusive of all other rights to which such director or officer or other
persons may be entitled. Nothing contained in this article shall affect any
rights to indemnification to which corporation employees or agents other than
directors and officers and other persons entitled to indemnification hereunder
may be entitled by contract or otherwise under law.

                                   ARTICLE VII

                            Stock and Transfer Books

      The corporation shall keep in the Commonwealth of Massachusetts at its
principal office (or at an office of its transfer agent or of its clerk or of
its resident agent) stock and transfer records, which shall contain the names of
all stockholders and the record address and the amount of stock held by each.
The corporation for all purposes may conclusively presume that the registered
holder of a stock certificate is the absolute owner of the shares represented
thereby and that his record address is his proper address. The directors may fix
in advance a time, which shall not be more than sixty days before the date of
any meeting of stockholders or the date for the payment of any dividend or the
making of any distribution to stockholders or the last day on which the consent
or dissent of stockholders may be effectively expressed for any purpose, as the
record date for determining the stockholders having the right to notice of and
to vote at such meeting and any adjournment thereof or the right to receive such
dividend or distribution or the right to give such consent or dissent, and in
such case only stockholders of record on such record date shall have such right,
notwithstanding any transfer of stock on the books of the corporation after the
record date; or without fixing such record date the directors may for any of
such purposes close the transfer books for all or any part of such period.

      If no record date is fixed and the transfer books are not closed:

<PAGE>

                  (1) The record date for determining stockholders having the
            right to notice of or to vote at a meeting of stockholders shall be
            at the close of business on the day next preceding the day on which
            notice is given or, if notice is waived, the close of business on
            the next day preceding the day on which the meeting is held.

                  (2) The record date for determining stockholders for any other
            purpose shall be at the close of business on the day on which the
            board of directors acts with respect thereto.

      A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the directors may, to the extent permitted by law, fix a
new record date for the adjourned meeting.

                                  ARTICLE VIII

                                  Capital Stock

      Section 1. Issuance of Stock. Any unissued capital stock from time to time
authorized under the articles of organization may be issued by vote of the
directors.

      Section 2. Shares Represented by Certificates and Uncertificated Shares.
The directors may determine that some or all of any or all classes and series of
shares shall be uncertificated shares. Unless the directors have so determined,
a stockholder shall be entitled to a certificate stating the number and the
class and the designation of the series, if any, of the shares held by him, in
such form as shall, in conformity to law, be prescribed from time to time by the
directors. Such certificate shall be signed by the chairman of the board of
directors, the president or a vice president and by the treasurer or an
assistant treasurer. Such signatures may be facsimiles if the certificate is
signed by a transfer agent, or by a registrar, other than a director, officer or
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the time of its
issue.

      Section 3. Loss of Certificates. In the case of the alleged loss or
destruction or the mutilation of a certificate of stock, a duplicate certificate
may be issued in place thereof, upon such conditions as the directors may
prescribe.

                                   ARTICLE IX

                              Seal and Fiscal Year

      The seal shall be circular in form with the name of the corporation around
the periphery and words and figures "Incorporated 1993 Massachusetts" within.
The fiscal year shall be fixed from time to time by the directors.

                                    ARTICLE X

                   Massachusetts Control Share Acquisition Act

      The provisions of Chapter 110D of the Massachusetts General Laws shall not
apply to the corporation.

<PAGE>

                                   ARTICLE XI

                             Execution of Documents

      Except as the directors may generally or in particular cases authorize the
execution thereof in some manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed by
the corporation shall be signed by the chairman of the board, if any, the
president, a vice president, or the treasurer.

                                   ARTICLE XII

                              Amendment of By-Laws

      These by-laws may be amended, altered or repealed in whole or in part, and
new by-laws may be adopted, by vote of the holders of a majority of the shares
of common stock outstanding and entitled to vote. The directors may also make,
amend or repeal these by-laws in whole or in part, except with respect to any
provision thereof which by law, the articles of organization or these by-laws
requires action by the stockholders. Not later than the time of giving notice of
the meeting of stockholders next following the making, amending or repealing by
the directors of any by-law, notice thereof stating the substance of such change
shall be given to all stockholders entitled to vote on amending the by-laws.


<PAGE>

                                                                    Exhibit 10.1

                                      LEASE

                                 by and between

                         NDNE 9/90 CORPORATE CENTER LLC,
                           its successors and assigns

                                 as Landlord and

                        GENZYME TRANSGENICS CORPORATION,

                                    as Tenant


      Dated as of:  March 26, 1999
<PAGE>

                                TABLE OF CONTENTS

SECTION 1 - Reference Data                                              1
      Section 1.1       Reference Information .................
      Section 1.2       Exhibits ..............................

SECTION 2 - Premises and Term                                           4
      Section 2.1       Premises ..............................
      Section 2.2       Term ..................................
      Section 2.3       Appurtenant Rights and Reservations....

SECTION 3 - Commencement Date; Improvements                             5
      Section 3.1       Commencement Date .....................
      Section 3.2       Construction of Building ..............
      Section 3.3       Tenant Improvements; Tenant Plans .....
      Section 3.4       Tenant Work ...........................
      Section 3.5       General Provisions Applicable to.......
                         Tenant Work...........................
      Section 3.6       Performance of Tenant's Work...........
      Section 3.7       Delays.................................
      Section 3.8       General Provisions Applicable to ......
                         Construction..........................
      Section 3.9       Construction Representations...........
      Section 3.10      Changes in Building or Lot.............

SECTION 4 - Rent                                                        11
      Section 4.1       The Annual Rent .......................

SECTION 5 - Operating Cost Escalation                                   11
      Section 5.1       Operating Cost Escalation .............
      Section 5.2       Estimated Operating Cost
                        Escalation Payments ...................
      Section 5.3       Park Expenses
      Section 5.4       Audit Right

SECTION 6 - Real Estate Tax Escalation                                  14
      Section 6.1       Real Estate Tax Escalation ............
      Section 6.2       Estimated Real Estate Tax Escalation
                        Payments ..............................
65
      Section 7.1       Tenant's Insurance ....................
      Section 7.2       Requirements Applicable to Insurance...
                         Policies..............................
      Section 7.3       Waiver of Subrogation .................
      Section 7.4       Landlord's Insurance

SECTION 8 - Landlord's Covenants                                        16
      Section 8.1       Quiet Enjoyment .......................
      Section 8.2       Maintenance and Repair ................
      Section 8.3       Electricity ...........................
      Section 8.4.      HVAC. .................................
      Section 8.5       Cleaning ..............................
      Section 8.6       Interruptions .........................

SECTION 9 - Tenant's Covenants                                          19
      Section 9.1       Use ...................................
      Section 9.2       Repair and Maintenance  ...............
      Section 9.3       Compliance with Law and Insurance
<PAGE>

                        Requirements ..........................
      Section 9.4       Tenant's Work .........................
      Section 9.5       Indemnity .............................
      Section 9.6       Landlord's Right to Enter .............
      Section 9.7       Personal Property at Tenant's Risk ....
      Section 9.8       Yield Up ..............................
      Section 9.9       Estoppel Certificate ..................
      Section 9.10      Landlord's Expenses Re Consents .......
      Section 9.11      Rules and Regulations .................
      Section 9.12      Holding Over ..........................
      Section 9.13      Assignment and Subletting .............
      Section 9.14      Overloading and Nuisance ..............

SECTION 10 - Casualty or Taking                                         25
      Section 10.1      Termination ...........................
      Section 10.2      Restoration ...........................
      Section 10.3      Award .................................

SECTION 11 - Default                                                    28
      Section 11.1      Events of Default .....................
      Section 11.2      Remedies ..............................
      Section 11.3      Remedies Cumulative ...................
      Section 11.4      Landlord's Right to Cure Defaults .....
      Section 11.5      Effect of Waivers of Default ..........
      Section 11.6      No Accord and Satisfaction ............
      Section 11.7      Interest on Overdue Sums ..............
      Section 11.8      Costs and Expenses ....................

SECTION 12 - Mortgages                                                  30
      Section 12.1      Rights of Mortgage Holders ............
      Section 12.2      Lease Subordinate......................
      Section 12.3      UNUM Mortgage

SECTION 13 - Miscellaneous Provisions                                   32
      Section 13.1      Notices from One Party to the Other ...
      Section 13.2      Lease Not to be Recorded;
                        Notice of Lease .......................
      Section 13.3      Bind and Inure; Limitation of
                        Landlord's Liability ..................
      Section 13.4      Acts of God ...........................
      Section 13.5      Landlord's Default ....................
      Section 13.6      Brokerage .............................
      Section 13.7      Miscellaneous .........................
      Section 13.8      Security Deposit/Letter of Credit......
      Section 13.9      Leasehold Lot..........................
      Section 13.10     Americans With Disabilities Act........
<PAGE>

                                      LEASE

                                    SECTION 1

                                 Reference Data

Section 1.1. Reference Information. Reference in this Lease to any of the
following shall have the meaning set forth below:

Date of this Lease:     As of March 26, 1999

Premises:         That portion (shown as outlined on Exhibit A) of the Building
                  on the Lot known as and numbered 175 Crossing Boulevard in
                  Framingham, Massachusetts, consisting of approximately 12,468
                  rentable square feet on the fourth (4th) floor of the
                  Building.

Landlord:                     NDNE 9/90 Corporate Center LLC

Address of Landlord:          2310 Washington Street
                              Newton Lower Falls, Massachusetts 02462

Tenant:                       Genzyme Transgenics Corporation

Original Address              Five Mountain Road
of Tenant:                    Framingham, MA 01701

Landlord's Construction Representative:         Mark L. Paris

Tenant's Construction Representative:           Jack Green

Anticipated Term Commencement Date:             June 1, 1999

Commencement Date: As defined in Section 3.1.

Original Term: Seven (7) years beginning on the Term Commencement Date;
provided, however, if the Term Commencement Date is other than the first day of
a calendar month the, the Original Term shall expire on the last day of the
calendar month in which the seventh (7th) anniversary of the Term Commencement
Date shall fall.

Premises Square Footage:  Approximately 12,468 rentable square feet as
determined in accordance with the Measurement Method.

Annual Fixed Rent:

      Lease Year               Annual Fixed Rent          Monthly Payment
      ----------               -----------------          ---------------
                                  (per annum)
                                  -----------

1 and 2, inclusive                $317,934.00               $26,494.50

3 and 4, inclusive                $330,402.00               $27,533.50

5, 6 and 7, inclusive             $342,870.00               $28,572.50
<PAGE>

Lease Year or lease year: Each consecutive 12 calendar month period immediately
following the Commencement Date, but if the Commencement Date shall fall on
other than the first day of a calendar month, then such term shall mean each
consecutive twelve calendar month period commencing with the first day of the
first full calendar month of the Initial Term. The first lease year shall
include any partial month between the Commencement Date and the first day of the
first full calendar month immediately following the Commencement Date.

Annual Base Operating Costs: An amount equal to the Landlord's Operating Costs
for the Property during the calendar year January 1, 1999 through December 31,
1999.

Annual Base Real Estate Taxes: An amount equal to the Real Estate Taxes for the
Property applicable to the fiscal tax year July 1, 1999 to June 30, 2000.

Permitted Uses: General Office.

Public Liability Insurance Limit:

Bodily Injury                 Combined single limit of $2,000,000, or such
and Property Damage           greater amount as reasonably required by Landlord
                              from time to time.

Tenant's Proportionate Share: Ten and 63/100ths (10.63%) Percent.

Broker: CB Whittier Partners and Fallon Hines & O'Connor.

Security Deposit: Letter of Credit in the amount of $249,360.00. See Section
13.8.

Lot or Lots: The Fee Lot and the Leasehold Lot, as the same may be configured
and constituted from time to time.

Fee Lot: the lot or parcel of land on which the Building is or will be located
and known as Lot 8A as more particularly set forth in Exhibit B.

Leasehold Lot: Parcel 7A as described in Exhibit B on which the Leasehold
Parking Area is located.

Building: The approximately 117,290 rentable square foot building erected on the
Fee Lot by Landlord and all alterations and additions thereto and replacements
thereof. In the event that the total number of rentable square feet contained in
the Building shall increase due to any addition to the Building, then Tenant's
Proportionate Share shall be adjusted to be the quotient obtained by dividing
the Premises Square Footage by the adjusted total number of rentable square feet
then contained in the Building.

Leasehold Parking Area: The areas designated as the Leasehold Parking Area on
Exhibit C attached hereto and any alteration or replacement thereof designated
by Landlord in writing to Tenant.

Measurement Method: The Modified New York BOMA Measurement Method, 1980,
Reaffirmed 1989 except as follows: (i) measurements will be


                                     - 2 -
<PAGE>

taken to the inside face of glass on exterior walls, even if the glass is not
the dominant portion of the exterior wall, (ii) measurements to common areas,
halls, etc. will be to the center line of the partition, (iii) common areas such
as the first floor lobby, elevator lobbies, cafeteria, locker room/shower
facilities, common corridors, etc. will be included in rentable area, and (iv)
any vertical penetrations dedicated solely to Tenant's use (i.e. in excess of
vertical penetrations required to service a standard office building) shall be
included in usable areas. Rentable Area to be determined utilizing the following
formulation: Usable Square Footage of Building / Efficiency Factor = Rentable
Square Footage.

Park: The term "Park" shall mean the land described in Exhibits A-1 and A-2 of
the Park Covenants together with other land hereafter added thereto under the
Park Covenants and together with the buildings, structures and other
improvements as may, from time to time, be constructed thereon, and all of which
are referred to in the Park Covenants as "9/90 Corporate Center".

Property: The Building and the Lot.

      Park Covenants: The Amended and Restated Declaration of Covenants,
Restrictions, Development Standards and Easements attached hereto as Exhibit H
together with any amendments thereto as are permitted thereunder.

Tenant Plan Delivery Date: March 26, 1999.

Term of this Lease: The Original Term and any proper extension period extending
the Original Term.

Business Day: All days except Sundays and legal holidays.

Business Hours: 8:00 a.m. to 6:00 p.m. on all Business Days except Saturdays and
Saturdays from 8:00 a.m. to 1:00 p.m.

Ground Lease: The Indenture of Lease dated as of August 15, 1980, between the
Inhabitants of The Town of Framingham ("Town") as landlord and The First
National Bank of Boston (Bank of Boston) notice of which is recorded with the
Middlesex South Registry of Deeds (The Registry) in Book 14306, Page 282 (the
"Original Ground Lease"). The interest of The Bank of Boston as tenant under the
Original Ground Lease was assigned to 9/90 Crossing Associates Limited
Partnership ("9/90") pursuant to that certain lease assignment dated as of July
29, 1987, and recorded with the Registry in Book 18428, Page 050. The interest
of "9/90" as tenant under the Original Ground Lease was further assigned by
"9/90" to Rose Holding, Inc. ("Rose") pursuant to that certain Lease Assignment
dated as of June 10, 1994, recorded with the Registry in Book 24620, Page 63.
The Original Ground Lease was amended by amendment to lease dated the August,
1996, by and between the Town and Rose. All references herein to the Original
Ground Lease shall mean the Original Ground Lease as so assigned and amended.
The interest of Rose as tenant under the Ground Lease under the Original Ground
Lease insofar as it relates to the Leasehold Lot was assigned to the Landlord
hereunder by Assignment and Assumption of Leasehold Interest dated January 21,
1998 from Rose to Landlord (the "Rose Partial Assignment"). All references in
this Lease to the Ground Lease shall mean the Original Ground Lease as assigned
to Landlord by the Rose Partial Assignment as it may be further assigned or
amended


                                     - 3 -
<PAGE>

from time to time and, for purposes hereof, the premises thereunder shall be
deemed to include only the Leasehold Lot and all obligations of Landlord as
tenant thereunder related solely to the Leasehold Lot.

Section 1.2. Exhibits. The following Exhibits are attached to and incorporated
in this Lease:

      Exhibit A:     Plan of Premises
      Exhibit A-1:   Site Plan of Building and Lot
                     (includes Leasehold lot)
      Exhibit B:     Lot
      Exhibit C:     Leasehold Parking Area
      Exhibit D:     Specifications of Leasehold Improvements
                      and Tenant Layout
      Exhibit E      Cleaning Specifications
      Exhibit F:     Rules and Regulations
      Exhibit G:     Option to Extend
      Exhibit H:     Park Covenants
      Exhibit I:     Intentionally Omitted
      Exhibit J:     Form of SNDA

                                    SECTION 2

                                Premises and Term

      Section 2.1. Premises. Landlord hereby leases and demises the Premises to
Tenant and Tenant hereby leases the Premises from Landlord, subject to any and
all existing encumbrances and other matters of record and subject to the terms
and provisions of this Lease.

      Section 2.2. Term. TO HAVE AND TO HOLD for the Original Term beginning on
the earlier of (a) the date the Landlord's TI Work shall be deemed to be
substantially complete pursuant to Section 3.3 and (b) the date on which Tenant
shall occupy all or any part of the Premises for the conduct of business
(whichever of said dates is appropriate being hereafter referred to as the "Term
Commencement Date"), and continuing through the last day of the Original Term,
unless sooner terminated as hereinafter provided. It is agreed and understood
that mere "Early Entry" (as hereafter defined) by Tenant and its contractors for
purposes of Tenant installing voice and data telecommunication lines and cabling
pursuant to Section 3.2(f) shall not be deemed to satisfy the condition in
clause (b) hereof.

      Section 2.3. Appurtenant Rights and Reservations.

      (a) Tenant shall have, as appurtenant to the Premises, the non-exclusive
right to use, and permit its invitees to use in common with others, public or
common lobbies, hallways, stairways, elevators and common walkways necessary for
access to the Building, the common toilets, corridors and elevator lobby of the
floor on which the Premises is located; but such rights shall always be subject
to reasonable rules and regulations from time to time established by Landlord
pursuant to this Lease and to the right of Landlord to designate and change from
time to time areas and facilities so to be used provided that (i) such changed
facilities are substantially equivalent or better and (ii) Landlord shall use
good faith efforts to avoid unreasonable interference with Tenant's access to
and use of the


                                     - 4 -
<PAGE>

Premises. Tenant and its employees shall also have the non-exclusive right to
use, in common with others entitled thereto, such other common areas and
facilities in or appurtenant to the Building as Landlord may from time to time
designate and provide. Tenant and its employees shall also have the
non-exclusive right to use, in common with others entitled thereto, the
Leasehold Parking Area for parking purposes only.

      (b) Excepted and excluded from the Premises are exterior faces of exterior
walls, the common stairways and stairwells, elevators and elevator shafts, fan
rooms, mechanical, electric and telephone closets, janitor closets, freight
elevator vestibules and pipes, ducts, conduits, wires and appurtenant fixtures
serving exclusively or in common other parts of the Building, but included in
the Premises are all entry doors to the Premises and all special installations
of Tenant, such as interior stairs, special flues and special air conditioning
facilities. Landlord reserves the right from time to time, without unreasonable
interference with Tenant's use: (a) to install, use, maintain, repair, replace
and relocate for service to the Premises and other parts of the Building, or
either, pipes, ducts, conduits, shafts, wires and appurtenant fixtures, wherever
located in the Premises or Building, and (b) to alter or relocate any other
common facility, provided that substitutions are substantially equivalent or
better. Landlord reserves the exclusive use of all fan rooms, electric and
telephone closets, janitor closets, freight elevator vestibules, pipes, ducts,
conduits, wires and appurtenant fixtures located within the Premises which serve
exclusively or in common other parts of the Building. In exercising its rights
pursuant to (a) and (b) above, Landlord shall use good faith efforts to avoid
unreasonable interference with Tenant's use of the Premises. Any installations
or relocations of pipes, shafts, wires, ducts, conduits and appurtenant fixtures
shall, to the extent reasonably possible be located above ceilings or between
walls.

                                    SECTION 3

                                  Improvements

      Section 3.1. Construction of Building. Intentionally Omitted.

      Section 3.2. Tenant Improvements; Tenant's Plans; Pricing of Tenant's
Work; Landlord's T.I. Work.

      (a) Tenant agrees to deliver to Landlord not later than the Tenant Plan
Delivery Date a detailed floor plan layout together with working drawings and
written instructions (herein called "Tenant's Plans") in accordance with and
containing at least the information detailed in Exhibit D and reflecting the
partitions and improvements desired by Tenant in the Premises. Within fourteen
(14) days of the receipt of Tenant's Plans, Landlord shall furnish to Tenant in
writing a time schedule for the completion of the work shown on Tenant's Plans
and the Tenant Improvement Costs (as hereafter defined) for the cost of
construction work and material necessary to complete the work shown in Tenant's
Plans in accordance with Tenant's Plans. As used herein, the Term "Tenant
Improvement Costs" shall mean the aggregate of (a) the "Cost of the Work" (as
defined in AIA Document A111 (1978


                                     - 5 -
<PAGE>

Edition)) necessary to complete the work and improvements shown on Tenant's
Plans (b) all architectural and engineering fees necessary to prepare, develop,
revise and finalize Tenant's Plans and (c) Landlord's contractor's fee in the
total amount equal to 8% of the Cost of the Work. Tenant shall notify Landlord
in writing, within five (5) Business Days of receipt by Tenant of the estimate
of, and the time schedule for, the Tenant Improvement Costs, of either its
approval thereof and its authorization to Landlord to proceed with construction
in accordance with Tenant's Plans or any changes in Tenant's Plans. In the event
Tenant elects the latter alternative (namely, to change Tenant's Plans),
Landlord shall within five (5) Business Days of receipt of said changes in
Tenant's Plans quote to Tenant all estimated changes in Tenant Improvement Costs
(the "First Revised Tenant Improvement Costs") resulting from said plan
modifications. Tenant shall, on or before the third (3rd) Business Day (the
"Outside Authorization to Proceed Date") following the receipt by Tenant of the
First Revised Tenant Improvement Costs, give notice to Landlord of either (i)
its approval thereof and its authorization to Landlord to proceed with the
construction in accordance with Tenant's Plans as modified or (ii) of any
further changes in Tenant's Plans. If Tenant again elects the latter alternative
(namely to change Tenant's Plans), the foregoing procedures and time periods for
delivery of additional quotes to Tenant of all changes in Tenant Improvement
Costs and for Tenant's either giving authorization to proceed or to make further
changes on Tenant's Plans shall apply, except that the Outside Authorization to
Proceed Date shall not be further extended. Tenant agrees to use good faith
diligent efforts to finally approve all such changes in the Tenant Improvement
Costs and in Tenant's Plans and to give its authorization to proceed with
construction as aforesaid on or before the Outside Authorization to Proceed
Date. Tenant shall be charged with responsibility for all delays and increased
costs and expenses related to any failure of Tenant to give Landlord full
authorization to proceed with construction as shown on Tenant's Plans, as so
changed by Tenant, on or before the Outside Authorization to Proceed Date
(including loss of rent to the extent so provided in Section 3.3(c) hereof)
provided that, in the case of changes, Landlord identifies all such increased
costs due to such change at the time Landlord quotes the cost of such change to
Tenant.

      To the extent that the Tenant Improvement Costs exceed the amount of
$20.00 per rentable square foot contained in the Premises (the "TI Allowance"),
Tenant shall be responsible for such excess costs (the "OBS Costs") as
hereinafter set forth. Tenant shall reimburse Landlord for OBS Costs as follows:
during the performance of Landlord's TI Work, Landlord may, on or about the
first day of each month, deliver to Tenant a statement showing that proportion
of OBS Costs allocable to the previous month's work. Tenant shall pay to
Landlord the amount specified in each such statement within thirty days after
receipt of such statement. Any failure by Tenant to pay when due any amount
required in this paragraph shall entitle the Landlord to the same rights and
remedies as a failure to pay Annual Fixed Rent when due.

      (b) Time is of the essence in connection with delivery of Tenant's Plans
to Landlord, review of Tenant's Plans, approval of the Tenant Improvement Costs
and time schedule by Landlord and authorization to Landlord to proceed with
construction on or before the Outside Authorization to Proceed Date. Should
Tenant fail to deliver Tenant's Plans as scheduled, or fully authorize Landlord
to


                                     - 6 -
<PAGE>

proceed on or before the Outside Authorization to Proceed Date, or if Tenant
makes changes or alterations to the matters shown on Tenant's Plans as approved
by Landlord and Tenant, the Anticipated Term Commencement Date shall be deferred
one day for each day of delay caused by, or chargeable to, Tenant or Tenant's
architect.

      (c) Tenant hereby agrees that the work shown in Tenant's Plans (the
"Landlord's T.I. Work") to the Premises will be performed by Landlord's general
contractor. Tenant shall also pay the Landlord, within ten (10) days of billing
therefor, for any increases in the Tenant Improvement Costs resulting from
changes in the Tenant's Plans (which Tenant or its architect request or which
result from errors, omissions or incompleteness of such Tenant Plans or which
result from any failure of such Tenant Plans or the work shown thereon to comply
with applicable laws, ordinances, rules and regulations), as finally approved,
it being understood that such increased costs shall be equal to the aggregate of
(a) the Cost of the Work (as defined above) for such changes, plus architectural
and engineering fees (b) Landlord's contractor's fee in the total amount equal
to eight (8%) percent of the Cost of the Work for such changes and (c) all delay
costs and expenses (including, without limitation, loss of rent to the extent so
provided in Section 3.3(c) hereof) identified by Landlord in writing at the time
of agreeing to any change, to the extent actually incurred or suffered. Although
Landlord's general contractor will charge an eight (8%) percent fee as part of
the Tenant Improvement Costs, Landlord shall not, itself, charge any separate
construction administration fee. Landlord will not be required to solicit bids
for the general contract but shall solicit bids from subcontractors. Landlord
agrees to use due diligence to complete the work described in Tenant's Plans on
or before the Anticipated Term Commencement Date (as extended pursuant to this
Lease). Landlord shall not be required to install any improvements or approve
any aspect of Tenant's Plans which are not approved by Landlord's architect or
which do not comply with applicable law, ordinances or codes. Further, Landlord
will not be responsible for any failure of the design (including, without
limitation, errors, omissions and incompleteness of Tenant's Plans and
instructions from Tenant's architect) of Landlord's T.I. Work (including without
limitation, the plans, specifications, layouts or materials) to comply with
applicable laws, ordinances or codes. If Landlord determines that any portion of
the Landlord's T.I. Work should be performed by a subcontractor who is not the
lowest bidder for the applicable division of the Landlord's T.I. Work, then the
designation of the subcontractor who will be selected to perform such portion of
the Landlord's T.I. Work shall be subject to the mutual agreement of Landlord
and Tenant. In case of delays in the Landlord's T.I. Work due to governmental
regulation, unusual scarcity or inability to obtain labor or materials, labor
difficulties, casualty or other causes reasonably beyond Landlord's control, the
Anticipated Term Commencement Date shall be extended for the period of such
delays.

      (d) Tenant agrees that for any delay in performing work to prepare the
Premises for occupancy caused by it, or anyone employed by it (including without
limitation, Tenant's architect), the Anticipated Term Commencement Date will be
adjusted one day for each such day of delay.

      (e) If Landlord shall be unable to give possession of the Premises on the
Anticipated Term Commencement Date because the


                                     - 7 -
<PAGE>

Premises is not substantially completed (as provided in Section 3.3), then,
subject to the provisions of Section 3.3(c) hereof, Landlord shall not be
subject to any liability for failure to give possession on said date , nor shall
such failure affect the validity of this Lease.

      (f) To the extent that Landlord, in good faith, believes that Landlord's
TI Work shall not be adversely affected by such entry, Landlord shall use good
faith efforts to permit Tenant's agents and contractors to enter the Premises
approximately two (2) weeks prior to the date which Landlord projects will be
the Term Commencement Date (the "Early Entry") in order to commence installation
of Tenant's voice and data communication systems, wiring and cabling. With
respect to such Early Entry, Tenant shall be bound by all of the terms of this
Lease except the obligation to pay Annual Fixed Rent, Operating Cost Escalations
and Real Estate Tax Escalations. All of the Tenant's installation of furnishings
and equipment shall be coordinated with any work being performed by Landlord and
in such manner as to maintain harmonious labor relations and not damage the
Building or Lot or materially interfere with Landlord's T.I. Work. Landlord
agrees to use good faith efforts to cooperate with Tenant to maintain harmonious
labor relations with workers performing work on behalf of Tenant to prepare the
Premises for occupancy by Tenant. Except for installation of furnishings and
equipment and voice and data telecommunication equipment, any construction work
to be performed in the Premises shall be performed by Landlord's general
contractor and subcontractors selected by Landlord (as aforesaid).

      Section 3.3. Preparation of Premises for Occupancy.

      (a) Landlord agrees to use diligent efforts to substantially complete
construction of Landlord's T.I. Work as provided in this Section 3 on or before
the Anticipated Term Commencement Date as such date may be extended pursuant to
the terms of this Lease. Without limiting any other provision of this Section 3,
the time for completion of Landlord's TI Work provided herein shall also be
extended by the duration of any delay referred to in Section 13.4.

      (b) Landlord's TI Work shall be deemed "substantially complete" on the
date on which (i) construction of the same shall have been substantially
completed in accordance with Tenant's Plans (as finally approved) (with the
exception of minor items which can be completed without material interference to
Tenant's moving into or use of the Premises ie. "punch-list items") and (ii) a
certificate of occupancy (permanent or, provided it does not materially
interfere with moving into or use of the Premises by Tenant, a temporary
certificate of occupancy) shall have been issued by the Town of Framingham.

      (c) If the Landlord is unable to give possession of the Premises on the
Anticipated Term Commencement Date initially designated and specified in Section
1.1 of this Lease (without regard to any subsequent extensions of such date
pursuant to the provisions of this Lease) because the Premises are not
substantially complete or ready for occupancy due to delays caused by, or
chargeable to, Tenant or Tenant's architect or anyone employed by Tenant,
including without limitation, change orders, lack of timely action with respect
to plans or submission of information which Tenant is required to provide,
failure of Tenant to give Landlord authorization to proceed on or before the
Outside Authorization to Proceed Date, errors,


                                     - 8 -
<PAGE>

incompleteness or inaccuracy in Tenant's Plans or the failure of the design or
layout of the Landlord's T.I. Work to comply with all applicable laws,
ordinances, rules and regulations or any other actions or inactions by Tenant or
Tenant's architect or anyone employed by Tenant, which prevents or delays
Landlord in performing or completing any construction or work to be performed by
Landlord or its contractors, including without limitation Landlord's T.I. Work,
Tenant shall pay to Landlord for each day of such delay an amount equal to one
day's Annual Fixed Rent. Any payments due Landlord under this clause shall be
paid within five (5) days of the invoice from Landlord stating the charge and,
in all such cases, the Anticipated Term Commencement Date will be adjusted one
day for each day of such delay. Landlord shall provide Tenant with written
notice of any delays caused by or attributable to Tenant under this Section 3.

      If the Term Commencement Date has not occurred by the Anticipated Term
Commencement Date (as it may be extended pursuant to this Lease), Tenant shall
have the right to terminate this Lease by giving notice to Landlord, not later
than thirty (30) days after the Anticipated Term Commencement Date (as so
extended), of Tenant's desire so to do; and this Lease shall cease and come to
an end without further liability or obligation on the part of either party
ninety (90) days after the giving of such notice, unless, within such 90-day
period, Landlord substantially completes Landlord's TI Work to the extent
required by Section 3.3(b) above, which substantial completion shall void
Tenant's election to terminate; and such right of termination shall be Tenant's
sole and exclusive remedy at law or in equity for Landlord's failure so to
complete Landlord's TI Work within such time.

      (d) Landlord shall complete all incomplete items with due diligence and
will use good faith efforts to complete all punch-list items within thirty (30)
days after the Term Commencement Date except for items which, because of the
season or weather, or the nature of the item are not practical to complete
within such thirty (30) day period and Landlord will use due diligence to
complete such other items with due diligence when the season and weather permit
or when it becomes practical to complete the same.

      (e) Tenant has advised Landlord that Tenant would, if Landlord's TI Work
is then substantially complete, accept delivery of the Premises and the
occurrence of the Term Commencement Date sooner than June 1, 1999. Accordingly,
notwithstanding section 4.1 of the Lease to the contrary, Tenant hereby agrees
to pay Landlord 200% of the Annual Fixed Rent plus 100% of the Additional Rent
otherwise payable by Tenant under this Lease (on a per diem basis) for each day
prior to June 1, 1999 that the Term Commencement Date shall occur (For example,
if the Landlord's TI Work were substantially complete on May 25, 1999 then, the
Term Commencement Date would be May 25, 1999 and for and with respect to the
period May 25, 1999 through and including May 31, 1999, Tenant shall pay 200% of
the Annual Fixed Rent and 100% of the Additional Rent otherwise payable by
Tenant hereunder for each such day).

      It is agreed and understood that the increased rent provisions of this
Section 3.3(e) shall apply only in the event that the Term Commencement Date
shall occur on or before May 31, 1999.

      Section 3.4. General Provisions Applicable to Construction. All
construction work required or permitted by this Lease, whether by


                                     - 9 -
<PAGE>

Landlord or by Tenant, shall be done in a good and workmanlike manner and in
compliance with all applicable laws and all ordinances, regulations and orders
of governmental authority and insurers of the Building. Either party may inspect
the work of the other at reasonable times and shall give notice of observed
defects. All of Landlord's obligations under Section 3 shall be deemed to have
been performed when Landlord gives Tenant (i) a certificate of occupancy from
the Town of Framingham, Massachusetts, and (ii) a written certificate from
Landlord's architect stating that the Premises are substantially complete within
the meaning of Section 3.3(b), except for punch-list items which are then
incomplete or do not conform with the requirements of this Section 3 and as to
which Tenant shall in either case have given notice to Landlord prior to the
date Tenant takes occupancy of the Premises, and Landlord's obligations with
respect to the items included in such notice shall be deemed to have been
performed five business days after Landlord shall have notified Tenant in
writing that the same have been completed unless during such five day period
Tenant shall give written notice to Landlord to the contrary.

      In addition to the foregoing, so long as Tenant shall, on or before the
first (1st) anniversary of the Term Commencement Date, provide Landlord with
written notice of a defect in workmanship or materials in connection with
Landlord's TI Work, which defect was not reasonably discoverable at the time
Tenant delivered Landlord its punch list pursuant to the immediately preceding
paragraph of this Section 3.4, then Landlord shall repair such defect within
thirty (30) days after such notice (provided that such notice is given to
Landlord on or before the 1st anniversary of the Term Commencement Date.

      Section 3.5. Construction Representatives. Each party authorizes the other
to rely in connection with plans and construction upon approval and other
actions on the party's behalf by any Construction Representative of the party
named in Section 1.1 or any person hereafter designated in substitution or
addition by notice to the party relying thereon.

      Section 3.6. Certain Landlord Obligations. Intentionally Omitted.

      Section 3.7. Tenant's Plans. Tenant shall select and directly contract for
the architectural, space planning and engineering services related to the
Landlord's T.I. Work (the "Tenant's Space Planning Services") which services
shall include space planning, space layout, furniture selection and
installation, graphics, interior design signage as well as the design of those
parts of the electrical, mechanical, plumbing and HVAC systems, as are included
in the Landlord's T.I. Work. The cost of Tenant's Space Planning Services shall
be included in the Tenant Improvement Costs (as defined in Section 3.2(a)).
Tenant shall be solely responsible for any errors, incompleteness, defects and
deficiencies in the Tenant's Plans and for any failure of the Tenant's Plans or
the work shown thereon to comply with all applicable laws rules and regulations
applicable thereto.

      Section 3.8. Controlling Provisions. To the extent that there is any
inconsistency between the Exhibits to this Lease and the provisions of Section
3, the provisions of Section 3 shall govern any such inconsistency.


                                     - 10 -
<PAGE>

      Section 3.9. Changes In Building or Lot. Landlord reserves the right to
change its layout, design and plans for the Lot and Leasehold Parking Area and
for parking and roadways thereon at any time and to add to or reduce the size of
the Lot; provided that no reduction in the size of the Lot may adversely affect
the Building or the number of parking spaces made available to Tenant under this
Lease (namely 4 spaces per thousand square feet contained in the Premises Square
Footage)or access ways serving the Buildings.

                                    SECTION 4

                                   Annual Rent

      Section 4.1. The Annual Rent. Tenant shall pay all Annual Fixed Rent and
Additional Rent to Landlord at the Address of Landlord or at such other place or
to such other person or entity as Landlord may by notice to Tenant from time to
time direct in equal installments equal to 1/12th of the Annual Fixed Rent and
Additional Rent from time to time payable hereunder in advance on the first day
of each calendar month included in the Term of this Lease, and for any portion
of a calendar month at the beginning or end of the Term of this Lease, at that
rate payable in advance for such portion. Tenant shall pay an administrative fee
equal to five (5%) percent of the amount of any Annual Fixed Rent or Additional
Rent payment or other charge which is not paid within five (5) days after the
due date thereof. Notwithstanding the foregoing sentence to the contrary, the
five (5) day grace period shall only apply to the first two (2) late payments in
any calendar year. Upon the occurrence of the third late payment in any calendar
year and thereafter at any time during the Term of this Lease when Annual Fixed
Rent, Additional Rent or other charges are not paid when due, the 5%
administrative fee shall be payable without the benefit of the 5 day grace
period. The Annual Fixed Rent is subject to adjustment pursuant to Section
3.3(e) of this Lease in the event that the Term Commencement Date shall occur on
or before May 31, 1999.

                                    SECTION 5

                            Operating Cost Escalation

      Section 5.1. Operating Cost Escalation. Tenant shall pay to Landlord, as
Additional Rent, Operating Cost Escalation (as defined below) on or before the
30th day following receipt by Tenant of Landlord's Operating Cost Statement (as
defined below). After the end of each calendar year during the term and after
Lease termination, Landlord shall render a statement ("Landlord's Operating Cost
Statement") in reasonable detail and according to usual accounting practices,
certified by Landlord, and showing for the preceding calendar year or fraction
thereof, as the case may be, Landlord's Operating Costs (as defined below),
Landlord's Operating Costs shall include, without limitation, premiums for
insurance covered by Landlord with respect to the Property; compensation and all
fringe benefits, worker's compensation, insurance premiums and payroll taxes
paid by Landlord to, for or with respect to all persons engaged in the managing,
operating, maintaining or cleaning of the Property (If such persons are engaged
with respect to more than one property, such costs


                                     - 11 -
<PAGE>

shall be appropriately allocated among the Property and such other properties);
water and sewer use charges for the Property; all utility charges not billed
directly to tenants by Landlord or the utility; payments to contractors and
management companies under service or management contracts (or other costs
incurred directly by Landlord or its agents) for operating, managing, cleaning,
maintaining and repairing the Property, including, without limitation,
management fees, Building cleaning, window cleaning, pest extermination, trash
removal, landscaping, snow removal and repair and maintenance to elevators, the
HVAC, electric and plumbing systems and parking areas (which payments may be to
affiliates of Landlord, provided the same are at reasonable rates), and all
other reasonable and necessary expenses paid in connection with the cleaning,
operating, managing, maintaining, replacing or repairing of the Building or any
portion or component thereof and/or any portion of the Property including,
without limitation, the operation or maintenance of a cafeteria/food service
operation in the Building; it being agreed that if Landlord shall install a new
or replacement capital item, the annual amortization (determined by Landlord) of
the cost thereof, with interest thereon at an annual rate equal to two (2%)
percent above the base rate (prime rate) of BankBoston (or any other Bank having
offices in Boston, Massachusetts chosen by Landlord) from time to time, shall be
included in Landlord's Operating Costs. Without limiting the generality of the
foregoing, it is expressly understood and agreed that all costs and expenses
allocated to the Property under the Park Covenants, as the same may be amended,
restated, modified, changed, supplemented or substituted from time to time shall
not be included in Operating Costs but shall be payable as provided in Section
5.3 hereof. If, during the Term of this Lease, Landlord shall incur capital
expenses in connection with repairs or replacement of the roof, foundation or
structure of the Building, there shall be included in Landlord's Operating Costs
for that and in each succeeding calendar year, the amount of the annual
amortization (determined by Landlord) of the cost thereof, with interest
thereon, at an annual rate equal to two (2%) percent above the base rate (prime
rate) of BankBoston (or any other bank having offices in Boston, Massachusetts
chosen by Landlord) from time to time in effect at the time of making such
capital repairs or replacements (less insurance proceeds or other proceeds, if
any, collected by Landlord by reason of damage to, or destruction of, any
capital items so repaired). In replacing a capital item, Landlord shall replace
such capital item with a capital item of substantially similar quality and
utility to that being replaced so long as such a replacement is deemed
appropriate and prudent in light of ownership and management practices then
being employed in other first class office buildings. Landlord's Operating Costs
shall not include any cost or expense covered by a warranty to the extent of the
coverage afforded by said warranty and Landlord shall use good faith efforts to
realize coverage under applicable warranties.

      In determining Landlord's Operating Costs, if less than 95% of the
Building shall have been occupied by tenants and fully used by them, at any time
during the year, Landlord's Operating Costs shall be extrapolated to an amount
equal to the like operating expenses that would normally be expected to be
incurred had such occupancy been 95% and had such full utilization been made
during the entire period.

      "Operating Cost Escalation" shall be equal to Tenant's Proportionate Share
of the excess, if any, of:


                                     - 12 -
<PAGE>

      (a) Landlord's Operating Costs for each calendar year as indicated by
Landlord's Operating Cost Statement; over

      (b) The Annual Base Operating Costs.

      Notwithstanding the above calculation, in no event shall Operating Cost
Escalation be less than zero.

      Tenant acknowledges that Landlord's formula for sharing of Landlord's
Operating Costs stated in this Lease is based on the assumption that Landlord
will be providing substantially similar services to all tenants in the Property
from year to year. If this assumption is not, in fact, correct, that is, if
Landlord is not furnishing any particular work or service (the cost of which, if
performed by Landlord, would be included in Landlord's Operating Costs) to a
tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord, Operating Costs shall be deemed, for purposes
of this paragraph, to be increased by an amount equal to the additional
Operating Costs which would reasonably have been incurred during such period by
Landlord if it had, at its own expense, furnished such work or service to such
tenant.

      Operating Cost Escalations shall be apportioned for any calendar year in
which the Term of this Lease commences or ends. Notwithstanding any other
provision of this Section 5.1, if the term expires or is terminated as of a date
other than the last day of a calendar year, then for such fraction of a calendar
year at the end of the term, Tenant's last payment to Landlord under this
Section 5.1 shall be made on the basis of Landlord's best estimate of the items
otherwise includable in Landlord's Operating Cost Statement and shall be made on
or before the later of (a) thirty (30) days after Landlord delivers such
estimate to Tenant, or (b) the last day of the term, with an appropriate payment
or refund to be made within thirty (30) days submission of Landlord's Operating
Cost Statement.

      Section 5.2. Estimated Operating Cost Escalation Payments. If, with
respect to any calendar year or fraction thereof during the Term of this Lease,
Landlord reasonably estimates that Tenant shall be obligated to pay Operating
Cost Escalation, then Tenant shall pay, as Additional Rent, on the first day of
each month of such calendar year and each ensuing calendar year thereafter,
estimated monthly escalation payments equal to 1/12th of the estimated Operating
Cost Escalation for the respective calendar year, with an appropriate additional
payment or refund to be made within 30 days after Landlord's Operating Cost
Statement is delivered to Tenant. Landlord may adjust such estimated monthly
escalation payment from time to time (but not more than three times in any
calendar year) and at any time during a calendar year, and Tenant shall pay, as
Additional Rent, on the first day of each month following receipt of Landlord's
notice thereof (which notice shall be accompanied by appropriate documentation
supporting such adjustment), the adjusted estimated monthly escalation payment.

      Section 5.3. Park Expenses. As used herein, the term "Park Expenses" shall
mean any and all costs or expenses allocated and assessed to the Property under
the Park Covenants (as amended from time to time) for each calendar year or
portion thereof falling within the Term of this Lease. As Additional Rent under
this Lease, Tenant shall pay Landlord Tenant's Proportionate Share of Park
Expenses for


                                     - 13 -
<PAGE>

each calendar year or portion thereof falling within the Term of this Lease
(appropriately pro rated and adjusted for any partial calendar year). Such
payments shall be made within 30 days after written demand by Landlord. In
addition, Landlord shall be entitled to collect monthly estimated payments of
Tenant's Proportionate Share of Park Expenses in advance in the same manner as
Landlord bills Tenant for monthly estimated payments of the Operating Cost
Escalation pursuant to Section 5.2 with an annual reconciliation at the end of
each calendar year. Landlord shall have the same rights and remedies against
Tenant for failure to timely pay amounts payable by Tenant pursuant to this
Section 5.3 as Landlord has against Tenant for failure to pay Annual Fixed Rent
when due.

      Section 5.4. Audit Right. Provided that Tenant shall have first paid all
amounts due and payable by Tenant pursuant to this Section 5 and upon the
written request of Tenant (but not more than once with respect to any calendar
year), Tenant shall be permitted to inspect Landlord's books and records
pertaining to Operating Costs applicable to the Property for such calendar year.
Such inspection shall take place at a mutually agreeable time at the location
where such books and records are kept by the Landlord (or the Manager) in the
ordinary course. Tenant shall keep the results of any such inspection strictly
confidential and shall not be permitted to use any third party to perform such
audit or inspection, other than an independent firm of certified public
accountants (A) reasonably acceptable to Landlord, (B) which is not compensated
on a contingency fee basis or in any other manner which is dependent upon the
results of such audit or inspection (and Tenant shall deliver the fee agreement
or other similar evidence of such fee arrangement to Landlord upon request), and
(C) which agrees with Landlord in writing to maintain the results of such audit
or inspection confidential. Tenant may not conduct an inspection or have an
audit performed more than once during or with respect to any calendar year.
Provided Landlord's accounting for Operating Costs is consistent with the terms
of this Lease, Landlord's good faith judgment regarding the proper
interpretation of this Lease and the proper accounting for Operating Costs shall
be binding on Tenant in connection with any such audit or inspection. Failure of
Tenant to provide Landlord with a written request to review such books and
records within 90 days after receipt of a final statement pursuant to this
Section 5 with respect to each respective calendar year shall be deemed a waiver
of Tenant's rights hereunder with respect to such calendar year.

                                    SECTION 6

                           Real Estate Tax Escalation.

      Section 6.1. Real Estate Tax Escalation. Tenant shall pay to Landlord, as
Additional Rent, Real Estate Tax Escalation (as defined below) on or before the
thirtieth (30th) day following billing therefor by Landlord.

      As used herein, the term "Real Estate Taxes" shall mean all taxes,
assessments (special, betterment or otherwise), levies, fees, water and sewer
rents and charges, and all other government levies and charges, general and
special, ordinary and extraordinary, foreseen and unforeseen, which are
allocable to the term hereof and imposed or levied upon or assessed against the
Property or any rent or other sums


                                     - 14 -
<PAGE>

payable by any tenants or occupants thereof. Nothing herein shall, however,
require Tenant to pay any income taxes, excess profits taxes, excise taxes,
franchise taxes, estate, succession, inheritance or transfer taxes, provided,
however, that if at any time during the term the present system of ad valorem
taxation of real property shall be changed so that in lieu of the whole or any
part of the ad valorem tax on real property, or in lieu of increases therein,
there shall be assessed on Landlord a capital levy or other tax on the gross
rents received with respect to the Property or a federal, state, county,
municipal, or other local income, franchise, excise or similar tax, assessment,
levy or charge (distinct from any now in effect) measured by or based, in whole
or in part, upon gross rents, then any and all of such taxes, assessments,
levies or charges, to the extent so measured or based ("Substitute Taxes"),
shall be included as real estate taxes hereunder, provided, however, that
Substitute Taxes shall be limited to the amount thereof as computed at the rates
that would be payable if the Property were the only property of Landlord. The
term "real estate taxes" shall also mean all real estate taxes and assessments
(or any substitute therefor) which are allocated to the Property under the Park
Covenants.

      "Real Estate Tax Escalation" shall be equal to Tenant's Proportionate
Share of the excess, if any, of:

      (a) Real Estate Taxes for the applicable tax fiscal year occurring during
the term; over

      (b) the Annual Base Real Estate Taxes.

      Notwithstanding the above calculation, in no event shall Real Estate Tax
Escalation be less than zero.

      Notwithstanding any other provision of this Section 6.1, if the Term of
this Lease expires or is terminated as of a date other than the last date of a
tax fiscal year, then for such fraction of a tax fiscal year at the end of the
term, Tenant's last payment to Landlord under this Section 6.1 shall be made to
reflect that only a portion of such tax fiscal year falls within the term of
this Lease and shall be made within 10 days after Landlord bills Tenant
therefor.

      Section 6.2 Estimated Real Estate Escalation Payments. If, with respect to
any tax fiscal year or fraction thereof during the term, Landlord reasonably
estimates that Tenant shall be obligated to pay Real Estate Tax Escalation,
Tenant shall pay, as Additional Rent, on the first day of each month of such tax
fiscal year and each ensuing tax fiscal year thereafter, estimated monthly
escalation payments equal to 1/12th of the estimated Real Estate Tax Escalation
for the respective tax fiscal year, with an appropriate additional payment or
refund to be made within 30 days after Landlord's delivery of the tax bills for
such period to Tenant. Landlord may adjust such estimated monthly escalation
payment from time to time and at any time (but not more than three (3) times)
during a tax fiscal year, and Tenant shall pay, as Additional Rent, on the first
day of each month following receipt of Landlord's notice thereof, the adjusted
estimated monthly escalation payment.


                                     - 15 -
<PAGE>

                                    SECTION 7

                                    Insurance

      Section 7.1. Tenant's Insurance. Tenant shall, at Tenant's sole cost and
expense, maintain throughout the term the following insurance:

            (a) Commercial general liability insurance for any injury to person
or property occurring on the Property, naming as insureds Tenant, Landlord and
such persons, including, without limitation, Landlord's managing agent, as
Landlord shall designate from time to time, in amounts which shall, at the
beginning of the term, be at least equal to the limits set forth in Section 1,
and, from time to time during the term, shall be for such higher limits as are
reasonably required by Landlord (such policies may be written on a blanket basis
covering more than one location provided that the applicable coverages shall be
in place with respect to this location); and

            (b) Worker's compensation insurance with statutory limits covering
all of Tenant's employees working at the Premises; and

            (c) Tenant acknowledges and agrees that if Landlord is required to
obtain any special environmental insurance as a result of Tenant's particular
and unique use and occupancy of the Property (meaning a use which is different
from mere general and administrative offices), then Tenant shall pay for any
insurance premiums related thereto.

      Section 7.2. Requirements Applicable to Insurance Policies. All policies
for insurance required under the provisions of Section 7.1 shall be obtained
from responsible companies qualified to do business in the Commonwealth of
Massachusetts and in good standing therein, which companies and the amount of
insurance allocated thereto shall be subject to Landlord's approval. Tenant
agrees to furnish Landlord with insurance company certificates of all such
insurance and copies of the policies therefor prior to the beginning of the term
hereof and of each renewal policy at least thirty (30) days prior to the
expiration of the policy it renews. Each such policy shall be noncancellable
with respect to the interest of Landlord and such mortgagees without at least
thirty (30) days' prior written notice thereto.

      Section 7.3. Waiver of Subrogation. All insurance which is carried by
either party with respect to the Property or to furniture, furnishings, fixtures
or equipment therein or alterations or improvements thereto, whether or not
required, shall include provisions which either designate the other party as one
of the insureds or deny to the insurer acquisition by subrogation of rights of
recovery against the other party to the extent such rights have been waived by
the insured party prior to occurrence of loss or injury, insofar as, and to the
extent that such provisions may be effective without making it impossible to
obtain insurance coverage from responsible companies qualified to do business in
the Commonwealth of Massachusetts (even though extra premium may result
therefrom) and without voiding the insurance coverage in force between the
insurer and the insured party. On reasonable request, each party shall be
entitled to have duplicates or certificates of policies containing such
provisions. Each party hereby waives all rights of


                                     - 16 -
<PAGE>

recovery against the other for loss or injury against which the waiving party is
protected by insurance containing said provisions.

      Section 7.4. Landlord's Insurance. Landlord shall maintain and keep in
effect throughout the Term of this Lease (a) insurance against loss or damage to
the Building by fire or other casualty as may be included within either fire and
extended coverage insurance or "all-risk" insurance in an amount equal to the
full replacement cost of the Building (exclusive of foundations) and (b)
comprehensive general liability insurance in amounts determined by Landlord in
its sole and absolute discretion. Such coverage may be effected directly and/or
through the use of blanket insurance coverage covering more than one location
and may contain such deductibles as Landlord may, in its sole and absolute
discretion, elect.

                                    SECTION 8

                              Landlord's Covenants

      Section 8.1. Quiet Enjoyment. Tenant, on paying the Annual Fixed and
Additional Rent and performing its obligations hereunder, shall peacefully and
quietly have, hold and enjoy the Premises throughout the term without any manner
of hindrance or molestation from Landlord or anyone claiming under Landlord,
subject, however, to all the terms and provisions hereof.

      Section 8.2. Maintenance and Repair. Subject to the provisions of Section
10, Landlord shall maintain the roof, structural supports, foundation and
exterior of the Building and all standard plumbing, electrical, mechanical,
heating, ventilating and air conditioning systems installed by Landlord (but
excluding all special systems installed by Tenant or by Landlord at Tenant's
request or which serve the Premises exclusively) in good condition and shall
maintain and clean the common areas of the Building and the Lot in a condition
similar to other first-class office Buildings in the Metro West Real Estate
Market Area, the cost of which shall be included in Landlord's Operating Costs.
Except as otherwise expressly provided in this Lease, Tenant shall not be
required to make repairs or alterations with respect to the common areas and
facilities of the Building. To the extent required by final non-appealable
orders or judgments of governmental authorities, code enforcement officers or
courts of competent jurisdiction, Landlord shall make repairs and alterations in
the common areas and facilities of the Property necessary to bring the same into
compliance with applicable laws, codes, ordinances, statutes and by-laws
including, without limitation, the ADA. The cost of such compliance shall be
included in Landlord's Operating Costs under this Lease.

      Section 8.3. Electricity. Electricity to the Premises shall be separately
metered and all utility charges for lights, plugs and so-called heat pumps
serving the Premises shall be billed directly to, and paid by, Tenant. If in
Landlord's judgment, Tenant's use of electricity in excess of normal office
usage shall result in an additional burden on the Building's utility systems or
additional cost on account thereof, as the case may be, Tenant shall upon demand
reimburse Landlord for all additional costs related thereto. Landlord, at
Tenant's expense, shall replace and install all ballasts, lamps and bulbs
(including, but not limited to, incandescent and


                                     - 17 -
<PAGE>

fluorescent) used in the Premises. All such replacements shall be of a type,
color and size as shall be designated by Landlord. Landlord shall not in any way
be liable or responsible to Tenant for any loss, damage or expense which Tenant
may sustain or incur if the quantity, character, or supply of electricity is
changed or is no longer available or suitable for Tenant's requirements.

      Tenant shall pay directly to the proper authorities charged with the
collection thereof all charges for water, sewer, gas, electricity, fire
protection and other utilities used or consumed on the Premises by Tenant or any
party claiming by, through or under Tenant, whether called charge, tax,
assessment, fee or otherwise, all such charges to be paid as the same from time
to time become due. To the extent included in Landlord's T.I. Work, Landlord
shall install or arrange for the installation of utilities serving the Premises.
It is understood and agreed that Tenant shall make its own arrangements for
obtaining service from such utilities and that Landlord shall not be liable for
any interruption or failure in the supply of any such utilities to the Premises.
If Tenant is not charged directly by the respective utility for any of such
utilities or services, Tenant shall from time to time, within ten (10) days of
Landlord's invoice therefor, pay to Landlord such charges and services from the
utility company.

      Section 8.4. HVAC. Landlord shall, on Business Days and generally during
Business Hours furnish heating and cooling as normal seasonal changes may
require to provide reasonably comfortable space temperature and ventilation for
occupants of the Premises under normal business operation at an occupancy of not
more than one (1) person per 150 square feet of usable floor area. If Tenant
shall require air-conditioning, heating or ventilation outside the hours and
days above specified ("Special Service"), Landlord shall furnish such Special
Service and Tenant shall pay to Landlord therefor such charges as may from time
to time be in effect. In the event Tenant introduces into the Premises personnel
or equipment which overloads the capacity of the Building system or in any other
way interferes with the system's ability to perform adequately its proper
functions, or which affects the temperature otherwise maintained by the
air-conditioning system, supplementary systems may, if and as needed, at
Landlord's option, be provided by Landlord, at Tenant's expense. The premises
will contain a thermostat which will allow Tenant to call for HVAC Service. The
cost of providing HVAC Service (except Special Service or Supplementary HVAC
Systems installed exclusively for Tenant's benefit which shall be paid for
solely by Tenant), shall be included in Landlord's Operating Costs.

      Section 8.5. Cleaning. Landlord shall provide nightly cleaning services
for the Premises in accordance with Exhibit E.

      Section 8.6. Interruptions. Landlord shall not be liable to Tenant for any
compensation or reduction of Annual Fixed Rent or Additional Rent by reason of
inconvenience or annoyance or for loss of business arising from power losses or
shortages or from the necessity of Landlord's entering the Premises for any of
the purposes authorized by this Lease or for repairing the Premises or any
portion of the Building or Lot. In case Landlord is prevented or delayed from
making any repairs, alterations or improvements, or furnishing any service or
performing any other obligation to be performed on Landlord's part, by reason of
any cause, Landlord shall not be liable to Tenant therefor,


                                     - 18 -
<PAGE>

nor shall Tenant be entitled to any abatement or reduction of Annual Fixed Rent
or Additional Rent by reason thereof, nor shall the same give rise to any claim
by Tenant that such failure constitutes actual or constructive, total or
partial, eviction from the Premises. Landlord reserves the right to stop any
service or utility system when necessary by reason of accident or emergency or
until necessary repairs have been completed. Except in case of emergency
repairs, Landlord will give Tenant reasonable advance notice of any contemplated
stoppage and will use reasonable efforts to avoid unnecessary inconvenience to
Tenant by reason thereof. Landlord also reserves the right to institute such
policies, programs and measures as may be necessary, required or expedient for
the conservation or preservation of energy or energy services or as may be
necessary or required to comply with applicable codes, rules, regulations or
standards. In so doing, Landlord shall make reasonable efforts to avoid
unnecessary inconvenience to Tenant by reason thereof. To the extent within its
reasonable control, Landlord shall use good faith efforts to promptly restore
any service or utility suspended , curtailed or interrupted by Landlord or
Landlord's agents, servants or employees.

      Section 8.7. Building Standard Signage. Landlord  shall, at Landlord's
sole cost and expense, provide Tenant with Building Standard Signage on the
Lobby Directory and at the entrance of the Premises.

                                    SECTION 9

                               Tenant's Covenants

      Section 9.1. Use. Tenant shall use the Premises only for the Permitted
Uses and shall from time to time procure all licenses and permits necessary
therefor at Tenant's sole expense. Notwithstanding the foregoing, Landlord shall
obtain a Certificate of Occupancy for Tenant's use of the Premises for general
office purposes as contemplated by Section 3 of this Lease.

      Section 9.2. Repair and Maintenance. Except as otherwise provided in
Sections 8 and 10, Tenant shall keep the Premises, including all plumbing,
electrical, heating, air conditioning and other systems therein, in good order,
condition and repair and in at least as good order, condition and repair as they
are in on the Commencement Date or may be put in during the term, reasonable use
and wear and damage caused by Landlord or Landlord's agents, servants or
employees only excepted. Tenant shall make all repairs and replacements and do
all other work necessary for the foregoing purposes whether the same may be
ordinary or extraordinary, foreseen or unforeseen. Tenant shall keep in a safe,
secure and sanitary condition all trash and rubbish temporarily stored at the
Premises.

      Section 9.3. Compliance with Law and Insurance Requirements. Tenant shall
make all repairs, alterations, additions or replacements to the Premises
required by any law or ordinance or any order or regulation of any public
authority arising from Tenant's use of the Premises and shall keep the Premises
equipped with all safety appliances so required. Tenant shall not dump, flush,
or in any way introduce any hazardous substances or any other toxic substances
into the septic, sewage or other waste disposal system serving the


                                     - 19 -
<PAGE>

Premises, or generate, store or dispose of hazardous substances in or on the
Premises or dispose of hazardous substances from the Premises to any other
location without the prior written consent of Landlord and then only in
compliance with the Resource Conservation and Recovery Act of 1976, as amended,
42 U.S.C. 6901 et seq., the Massachusetts Hazardous Waste Management Act, M.G.L.
c.21C, as amended, the Massachusetts Oil and Hazardous Material Release
Prevention and Response Act, M.G.L. c.21E, as amended, and all other applicable
codes, regulations, ordinances and laws. Tenant shall notify Landlord of any
incident which would require the filing of a notice under Chapter 232 of the
Acts of 1982 and shall comply with the orders and regulations of all
governmental authorities with respect to zoning, building, fire, health and
other codes, regulations, ordinances or laws applicable to the Premises.
"Hazardous substances" as used in this Section shall mean "hazardous substances"
as defined in the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, 42 U.S.C. 9601 and regulations adopted
pursuant to said Act.

      Landlord may, if it so elects, make any of the repairs, alterations,
additions or replacements referred to in this Section which affect the Building
structure or the Building systems, and Tenant shall reimburse Landlord for the
reasonable cost thereof within 30 days after written demand.

      Tenant will provide Landlord, from time to time upon Landlord's request,
with all records and information regarding any hazardous substance maintained on
the Premises by Tenant.

      Landlord shall have the right to make such inspections as Landlord shall
reasonably elect from time to time to determine if Tenant is complying with this
Section and if any of such inspections reveals contamination by hazardous
substances of the Building, the Lot or the Premises as a result of Tenant's
operations or actions or the actions of Tenant's agents, contractors or
employees, Tenant shall reimburse Landlord for the cost of performing (or
contracting for) such inspections.

      Tenant shall comply promptly with the recommendations of any insurer,
foreseen or unforeseen, ordinary as well as extraordinary, which may be
applicable to the Premises, by reason of Tenant's use thereof. In no event shall
any activity be conducted by Tenant on the Premises which may give rise to any
cancellation of any insurance policy or make any insurance unobtainable.

      Section 9.4. Tenant's Work. Tenant shall not make any installations,
alterations, additions or improvements in or to the Premises, including, without
limitation, any apertures in the walls, partitions, ceilings or floors, without
on each occasion obtaining the prior written consent of Landlord. Landlord will
not unreasonably withhold or delay its consent to non-structural, non-mechanical
and non-electrical alterations or improvements to the Premises. Any such work so
consented to by Landlord shall be performed only in accordance with plans and
specifications therefor reasonably approved by Landlord. Tenant shall procure at
Tenant's sole expense all necessary permits and licenses before undertaking any
work on the Premises and shall perform all such work in a good and workmanlike
manner employing materials of good quality and so as to conform with all
applicable zoning, building, fire, health and other codes, regulations,


                                     - 20 -
<PAGE>

ordinances and laws and with all applicable insurance requirements. If requested
by Landlord, Tenant shall furnish to Landlord prior to the commencement of any
such work a bond or other security acceptable to Landlord assuring that any work
by Tenant will be completed in accordance with the approved plans and
specifications. Tenant shall keep the Premises at all times free of liens for
labor and materials. Tenant shall employ for such work only contractors approved
by Landlord and shall require all contractors employed by Tenant to carry
worker's compensation insurance in accordance with statutory requirements and
comprehensive general liability insurance covering such contractors, and naming
Landlord and Tenant as additional insureds, on or about the Premises in amounts
at least equal to the limits set forth in Section 1 and to submit certificates
evidencing such coverage to Landlord prior to the commencement of such work.
Tenant shall save Landlord harmless and indemnified from all injury, loss,
claims or damage to any person or property occasioned by or growing out of such
work. Landlord may inspect the work of Tenant at reasonable times and give
notice of observed defects.

      Section 9.5. Indemnity. Tenant shall defend, with counsel reasonably
approved by Landlord, all actions against Landlord, any member, partner,
trustee, stockholder, officer, director, employee or beneficiary of Landlord,
holders of mortgages secured by the Building and any other party having an
interest in the Premises ("Indemnified Parties") with respect to, and shall pay,
protect, indemnify and save harmless, to the extent permitted by law, all
Indemnified Parties from and against, any and all liabilities, losses, damages,
costs, expenses (including reasonable attorneys' fees and expenses), causes of
action, suits, claims, demands or judgments of any nature arising from (a)
injury to or death of any person, or damage to or loss of property, occurring in
the Premises unless caused by the negligence or willful misconduct of Landlord
or its servants or agents, (b) violation of this Lease by Tenant, or (c) any
wrongful act or other misconduct of Tenant or its agents, contractors,
licensees, sublessees or invitees. The indemnity contained in this Section 9.5
shall survive any expiration or earlier termination of this Lease. Tenant shall
not be required to indemnify the Indemnified Parties hereunder for loss or
damages to the extent such loss or damage is sustained by the Indemnified
Parties due to the negligence of the Indemnified Parties.

      Section 9.6. Landlord's Right to Enter. Tenant shall permit Landlord and
its agents to enter into the Premises at reasonable times and upon reasonable
notice (except that in emergencies no notice shall be required) to examine the
Premises, make such repairs and replacements as Landlord may be permitted to
make pursuant to the terms of this Lease, without however, any obligation to do
so, and show the Premises to prospective purchasers and lenders, and, during the
last year of the term, to show the Premises to prospective tenants and to keep
affixed in suitable places notices of availability of the Premises.

      Section 9.7. Personal Property at Tenant's Risk. All furnishings,
fixtures, equipment, effects and property of every kind of Tenant and of all
persons claiming by, through or under Tenant which may be on the Premises, shall
be at the sole risk and hazard of Tenant and if the whole or any part thereof
shall be destroyed or damaged by fire, water or otherwise, or by the leakage or
bursting of water pipes, steam pipes, or other pipes, by theft or from any other
cause, no part of said loss or damage shall be charged to or to be borne by
Landlord,


                                     - 21 -
<PAGE>

except that Landlord shall in no event be indemnified or held harmless or
exonerated from any liability to Tenant for any injury, loss, damage or
liability not covered by Tenant's insurance to the extent prohibited by law.
Tenant shall insure Tenant's personal property.

      Section 9.8. Yield Up. At the expiration or earlier termination of the
Term of this Lease, Tenant shall (i) surrender all keys to the Premises, (ii)
remove all of its trade fixtures and personal property in the Premises, (iii)
remove such installations, alterations and improvements made by Tenant as
Landlord may require at the time Landlord consented to the making or
installation thereof, repair all damage caused by such removal and yield up the
Premises (including all installations, alterations and improvements made by
Tenant which Landlord shall not require Tenant to remove as aforesaid)
broom-clean and in the same good order and repair in which Tenant is obliged to
keep and maintain the Premises under this Lease. Any property not so removed
shall be deemed abandoned and may be removed and disposed of by Landlord in such
manner as Landlord shall determine, and Tenant shall pay Landlord as Additional
Rent under this Lease the entire cost and expense incurred by it in effecting
such removal and disposition and in making any incidental repairs and
replacements to the Premises and for use and occupancy during the period after
the expiration of the term and prior to Tenant's performance of its obligations
under this Section 9.8 (which obligations shall survive expiration or earlier
termination of the Term of this Lease.

      Section 9.9. Estoppel Certificate. Upon not less than seven (7) Business
Days' prior notice by Landlord, Tenant shall execute, acknowledge and deliver to
Landlord a statement in writing certifying that this Lease is unmodified and in
full force and effect and that, except as stated therein, Tenant has no
knowledge of any defenses, offsets or counterclaims against its obligations to
pay the Annual Fixed Rent and Additional Rent and any other charges and to
perform its other covenants under this Lease (or, if there have been any
modifications that the same is in full force and effect as modified and stating
the modifications and, if there are any defenses, offsets or counterclaims,
setting them forth in reasonable detail), the dates to which the Annual Fixed
Rent and Additional Rent and other charges have been paid and a statement that
Landlord is not in default hereunder (or if in default, the nature of such
default, in reasonable detail). Any such statement delivered pursuant to this
Section 9.9 may be relied upon by any prospective purchaser or mortgagee of the
Building.

      Section 9.10. Landlord's Expenses Re Consents. Tenant shall reimburse
Landlord promptly on demand for all reasonable legal and other out-of-pocket
expenses incurred by Landlord in connection with all requests by Tenant for
consent or approval hereunder.

      Section 9.11. Rules and Regulations. Tenant shall comply with the Rules
and Regulations attached hereto as Exhibit F and such additional reasonable
rules and regulations as may be adopted from time to time by Landlord (and of
which Tenant shall be given written notice) to provide for the beneficial
operation of the Lot and Building.

      Section 9.12. Holding Over. Tenant shall vacate the Premises immediately
upon the expiration or sooner termination of the Term of this Lease. If Tenant
retains possession of the Premises or any part thereof or if property to be
removed by Tenant upon expiration or


                                     - 22 -
<PAGE>

termination of the Term of this Lease shall remain in the Premises after the
expiration or termination of the Term of this Lease without Landlord's express
written consent, Tenant shall thereafter be deemed a tenant-at-sufferance and
shall pay Landlord Annual Fixed Rent at 150% of the monthly rate applicable
during the calendar month in which such expiration or earlier termination shall
occur for the time Tenant thus remains in possession and, in addition thereto,
Tenant shall pay Landlord for all damages, consequential as well as direct,
sustained by reason of Tenant's retention of possession or failure to remove
such property. The provisions of this Section do not exclude Landlord's rights
of re-entry or any other right hereunder, including without limitation, the
right to remove Tenant through summary proceedings for holding over beyond the
expiration of the term of this Lease.

      Section 9.13. Assignment and Subletting.

      (a) Tenant covenants and agrees that neither this Lease nor the term and
estate hereby granted, nor any interest herein or therein, will be assigned,
mortgaged, pledged, encumbered or otherwise transferred and that neither the
Premises nor any part thereof will be encumbered in any manner by reason of any
act or omission on the part of Tenant, or used or occupied or permitted to be
used or occupied, by anyone other than Tenant, or for any use or purpose other
than a Permitted Use, or be sublet (which term, without limitation, shall
include granting of concessions, licenses and the like) in whole or in part.
Unless Tenant is a publicly traded company registered on a national stock
exchange, a transfer or assignment of 51% (computed on a cumulative, aggregate
basis) or more of the stock, equity or other indicia of ownership of Tenant
shall be deemed to constitute an assignment in breach of this Section 8.1.
Provided that Tenant shall first give Landlord written notice of such a transfer
together with reasonable documentation establishing the applicable relationship,
the foregoing restrictions shall not be applicable to an assignment of this
Lease or a subletting of the Premises by Tenant to an entity (an "Affiliate")
which is a subsidiary wholly-owned by Tenant or to a controlling corporation,
the stock of which is wholly-owned by the stockholders of Tenant or to a
corporation which owns all of, or a controlling interest in, the stock of
Tenant. It shall be a condition of the validity of any assignment, whether with
the consent of Landlord or to a subsidiary or controlling corporation, that the
assignee agree directly with Landlord, by written instrument in form
satisfactory to Landlord, to be bound by all the obligations of Tenant hereunder
including, without limitation, the covenant against further assignment and
subletting. No assignment or subletting shall relieve Tenant from its
obligations hereunder and Tenant shall remain fully and primarily liable
therefor.

      (b) If this Lease be assigned, or if the Premises or any part thereof be
sublet or occupied by anyone other than Tenant, Landlord may, whether or not it
has consented to any such assignment, subletting or occupancy, at any time and
from time to time collect rent and other charges from the assignee, subtenant or
occupant, and apply the net amount collected to the rent and other charges
herein reserved, but no such assignment, subletting, occupancy or collection
shall be deemed a waiver of any breach of Section 8.1 (a), or the acceptance of
the assignee, subtenant or occupant as a tenant or a release of Tenant from the
further performance by Tenant of its obligations hereunder. The consent by
Landlord to an assignment or


                                     - 23 -
<PAGE>

subletting shall in no way be construed to relieve Tenant or any successor from
obtaining the express consent in writing of Landlord to any further assignment
or subletting nor shall any such consent release, diminish or impair Tenant's
continuing primary liability for performance of this Lease. No assignment or
subletting to any party (including, without limitation, any use or occupancy of
the Premises by an Affiliate of Tenant) shall affect the Permitted Uses.

      (c) In connection with any request by Tenant for consent to assignment or
subletting to a person or entity which is not an "Affiliate", Tenant shall first
submit to Landlord in writing: (i) the name of the proposed assignee or
subtenant, (ii) such information as to its financial responsibility and standing
as Landlord may reasonably require, and (iii) all terms and provisions upon
which the proposed assignment or subletting is to be made. Upon receipt from
Tenant of such request and information, the Landlord shall have an option
(sometimes hereinafter referred to as the "option" or "Take Back Option") to be
exercised in writing within thirty (30) days after its receipt from Tenant of
such request and information, if the request is to assign the Lease or to sublet
all of the Premises, to cancel or terminate this Lease, or, if the request is to
sublet a portion, of the Premises only, to cancel and terminate this Lease with
respect to such portion, in each case, as of the date set forth in Landlord's
notice of exercise of such option, which shall be not less than sixty (60) nor
more than one hundred twenty (120) days following the giving of such notice; in
the event Landlord shall exercise such option, Tenant shall surrender possession
of the entire Premises, or the portion which is the subject of the option, as
the case may be, on the date set forth in such notice in accordance with the
provisions of this Lease relating to surrender of Premises at the expiration of
the Term. If this Lease shall be cancelled as to a portion of the Premises only,
Annual Fixed Rent and Additional Rent shall thereafter be abated proportionately
according to the ratio the number of square feet of the portion of the space
surrendered bears to the size of the Premises. As Additional Rent, Tenant shall
reimburse Landlord promptly for reasonable legal and other expenses incurred by
Landlord in connection with any request by Tenant for consent to assignment or
subletting.

      If Landlord shall not exercise its option pursuant to the foregoing
provisions, Landlord will not unreasonably delay or withhold its consent to the
assignment or subletting to the party referred to upon all the terms and
provisions set forth in Tenant's notice to Landlord, provided that the terms and
provisions of such assignment or subletting shall specifically make applicable
to the assignee or sublessee all of the provisions of this Section 9.13 of the
Lease so that Landlord shall have against the assignee or sublessee all rights
with respect to any further assignment or subletting which are set forth in
Section 9.13 of this Lease as amended hereby except that no such assignee or
sublessee shall have any right to further assign or sublet the Premises. In any
case where Landlord consents to an assignment of this Lease, Landlord shall be
entitled to receive 100% of all amounts received by Tenant in connection with
such assignment. Further, in any case where Landlord consents to an assignment
or a subletting, Landlord shall be entitled to receive 50% of all Subleasing
Overages (as said term is hereinafter defined). As used herein, the term
"Subleasing Overages" shall mean, for each period in question, all net amounts
received by Tenant in excess of Annual Fixed Rent and Additional Rent reserved
under this Lease attributable to the


                                     - 24 -
<PAGE>

space sublet (including, without limitation, all lump sum payments made in
connection therewith) after deducting (i) all leasing commissions payable to
third party brokers in connection with such transaction (ii) tenant improvement
costs necessary to prepare the Premises for use by such successor occupant and
(iii) all then unamortized OBS Costs paid by Tenant in connection with
Landlord's TI Work.

      Any such assignment or subletting shall nevertheless be subject to all the
terms and provisions of this Section 9.13 and no assignment shall be binding
upon Landlord or any of Landlord's mortgagees, unless Tenant shall deliver to
Landlord an instrument in recordable form which contains a covenant of
assumption by the assignee running to Landlord and all persons claiming by,
through or under Landlord. The failure or refusal of the assignee to execute
such instrument of assumption shall not release or discharge the assignee from
its liability as Tenant hereunder. In addition, Tenant shall furnish to Landlord
a conformed copy of any sublease effected under terms of this Section 9.13. In
no event shall the Tenant hereunder be released from its liability under this
Lease.

      Landlord shall not be deemed unreasonable in refusing to approve a
sublease wherein the rent is, in the reasonable judgment of Landlord, at rates
which are more than 10% below market for the Premises or Building or where such
proposed subtenant is a tenant of any building in the Park.

      Section 9.14. Overloading and Nuisance. Tenant shall not injure, overload,
deface or otherwise harm the Premises, commit any nuisance, permit the emission
of any objectionable noise, vibration or odor, make, allow or suffer any waste
or make any use of the Premises which is improper, offensive or contrary to any
law or ordinance or which will invalidate any of Landlord's insurance.

                                   SECTION 10

                               Casualty or Taking

Section 10.1 Abatement of Rent. If the Premises or access thereto shall be
damaged or denied by fire or casualty or by action of public or other authority
in consequence thereof or if as a result of such fire, casualty or action of
public or other authority, Landlord is not able to provide Tenant with the
number of parking spaces to which Tenant is entitled under this Lease, Annual
Fixed Rent and Additional Rent payable by Tenant shall abate proportionately for
the period in which, by reason of such damage, there is substantial interference
with Tenant's use of the Premises, having regard to the extent to which Tenant
may be required to discontinue Tenant's use of all or a portion of the Premises,
but such abatement or reduction shall end if and when Landlord shall have
substantially restored the Premises to the condition in which they were prior to
such damage. If the Premises shall be affected by any exercise of the power of
eminent domain, Annual Fixed Rent and Additional Rent payable by Tenant shall be
justly and equitably abated and reduced according to the nature and extent of
the loss of use thereof suffered by Tenant.

      Section 10.2 Landlord's Right Of Termination. (a) If (a) the Premises or
the Building are substantially damaged by fire or other


                                     - 25 -
<PAGE>

casualty or by action of public or other authority in consequence thereof (the
term "substantially damaged" meaning damage of such a character that the same
cannot, in ordinary course, reasonably be expected to be repaired within sixty
(60) days from the time that repair work would commence), or (b) any mortgagee
then holding a mortgage on the Property, or on any interest of Landlord therein,
should require that insurance proceeds payable as a result of a casualty be
applied to the payment of the mortgage debt or (c) a material uninsured fire or
other casualty or loss to the Building should occur or (d) if any part of the
Building is taken by any exercise of the right of eminent domain or should be
sold in lieu thereof or Landlord receives compensable damage by reason of
anything lawfully done in pursuance of public or other authority, then Landlord
shall have the right to terminate this Lease (even if Landlord's entire interest
in the Premises may have been divested) by giving notice of Landlord's election
so to do within 90 days after the occurrence of such casualty or the effective
date of such taking, whereupon this Lease shall terminate 30 days after the date
of such notice with the same force and effect as if such date were the date
originally established as the expiration date hereof.

      (b) In the event Landlord's mortgagee shall advise Landlord that such
Mortgagee will not allow insurance proceeds to be used for restoration and in
the event that Landlord is unwilling to provide any additional funds necessary
to effect a complete restoration of the Premises, then Landlord shall give
Tenant notice of the same and Tenant shall have the right to terminate this
Lease within 5 days after the date of such notice, such termination to be
effective upon the giving of such notice as if the date of such notice were the
date of expiration of the Term of this Lease.

      Section 10.3 Restoration. If this Lease shall not be terminated pursuant
to Section 10.2, Landlord shall thereafter use due diligence to restore the
Premises to substantially the same condition the Premises were in prior to the
damage (exclusive of (a) alterations or improvements made by or on behalf of the
Tenant after the Term Commencement Date and (b) fixtures or property removable
by Tenant upon expiration or earlier termination of the Term of this Lease, all
of which shall be the responsibility of Tenant), provided that Landlord's
obligation shall be limited to the amount of insurance proceeds or condemnation
awards made available to Landlord therefor. If, for any reason, such restoration
shall not be substantially completed within six months after the expiration of
the ninety (90) day period referred to in Section 10.2 (which six-month period
may be extended for such periods of time as Landlord is prevented from
proceeding with or completing such restoration for any cause described in
Section 13.5 or beyond Landlord's reasonable control), Tenant shall have the
right to terminate this Lease by giving notice to Landlord thereof within thirty
(30) days after the expiration of such period (as so extended). Upon the giving
of such notice, this Lease shall cease and come to an end without further
liability or obligation on the part of either party unless, within such thirty
(30) day period, Landlord substantially completes such restoration. Such right
of termination shall be Tenant's sole and exclusive remedy at law or in equity
for Landlord's failure to complete such restoration.

      Landlord shall not be liable for any inconvenience or annoyance to Tenant
or injury to the business of Tenant resulting in any way from damage from fire
or other casualty or the repair thereof. Tenant


                                     - 26 -
<PAGE>

understands that Landlord will not carry insurance of any kind on Tenant's
improvements, alterations, furniture or furnishings or on any fixtures or
equipment removable or to be removed by Tenant under the provisions of this
Lease, and that Landlord shall not be obligated to repair any damage thereto or
replace the same. If Tenant desires any other or additional repairs for
restoration and if Landlord consents thereto, the same shall be done at Tenant's
expense. Tenant acknowledges that Landlord shall be entitled to the full
proceeds of any insurance coverage, whether carried by Landlord or Tenant, for
damage to alterations, additions, improvements or decorations provided by
Landlord either directly or through an allowance to Tenant.

      Section 10.4 Award. Landlord shall have and hereby reserves and excepts,
and Tenant hereby grants and assigns to Landlord, all rights to recover for
damages to the Property and the leasehold interest hereby created, and to
compensation accrued or hereafter to accrue by reason of any taking by exercise
of the power of eminent domain or any sale in lieu thereof or by reason of
anything done in pursuance of public or other authority, and by way of
confirming the foregoing, Tenant hereby grants and assigns, and covenants with
Landlord to grant and assign to Landlord, all rights to such damages or
compensation. Nothing contained herein shall be construed to prevent Tenant from
prosecuting in any separate condemnation proceedings a claim for the value of
any of Tenant's Removable Property installed in the Premises by Tenant at
Tenant's expense and for relocation expenses; provided, that such action shall
not affect the amount of compensation otherwise recoverable by Landlord from the
taking authority and shall be prosecuted in a proceeding separate and apart from
Landlord.

      Section 10.5 Temporary Taking. In the event of taking of the Premises or
Property or any part thereof for temporary use by the exercise of any
governmental power, (i) this Lease shall be and remain unaffected thereby and
rent shall not abate, and (ii) Tenant shall be entitled to receive for itself
such portion or portions of any award made for such use with respect to the
period of the taking which is within the Term, provided that if such taking
shall remain in force at the expiration or earlier termination of this Lease,
Tenant shall then pay to Landlord a sum equal to the reasonable cost of
performing Tenant's obligations under this Lease with respect to surrender of
the Premises and upon such payment shall be excused from such obligations.

      Section 10.6 No Liability On Account Of Injury To Business, Etc. Landlord
shall not be liable for any inconvenience or annoyance to Tenant or injury to
the business of Tenant or resulting in any way from damage from fire or other
casualty or the repair thereof and Tenant understands and agrees that Landlord
shall in no event be responsible for the repair or replacement of any furniture
or furnishings or any fixtures or equipment removable by Tenant under the
provisions of this Lease. If Tenant desires any other or additional repairs or
restoration and if Landlord consents thereto, the same shall be done at Tenant's
expense. Tenant acknowledges that Landlord shall be entitled to the full
proceeds of any insurance coverage whether carried by Landlord or Tenant, for
damage to the Premises and any alterations or improvements thereto. Upon any
expiration or earlier termination of this Lease, any insurance proceeds not
theretofore applied to the cost of restoration shall be paid to Landlord. Tenant
acknowledges that the fire and extended coverage insurance carried by Landlord
shall not extend to Tenant's personal


                                     - 27 -
<PAGE>

property, including inventory, trade fixtures, floor coverings, furniture and
other property removable by Tenant and that Tenant shall be responsible for
carrying all risk insurance on all such personal property, trade fixtures, floor
coverings, furniture and other property removable by it.

                                   SECTION 11

                                     Default

      Section 11.1. Events of Default.

      If any of the following ("Event of Default") shall occur: (a) Tenant shall
default in the performance of any of its obligations to pay the Annual Fixed
Rent, Additional Rent or any other sum payable hereunder and if such default
shall continue for ten (10) days after notice from Landlord designating such
default;

            (b) if within thirty (30) days after notice from Landlord to Tenant
specifying any other default or defaults Tenant has not commenced diligently to
correct the default or defaults so specified or has not thereafter diligently
pursued such' correction to completion;

            (c) if any assignment for the benefit of creditors shall be made by
Tenant;

            (d) if Tenant's leasehold interest shall be taken on execution or
other process of law in any action against Tenant;

            (e) if a lien or other involuntary encumbrance is filed against
Tenant's leasehold interest, and is not discharged within ten (10) days
thereafter;

            (f) if a petition is filed by Tenant for liquidation, or for
reorganization or an arrangement or any other relief under any provision of the
Bankruptcy Code as then in force and effect; or

            (g) if an involuntary petition under any of the provisions of said
Bankruptcy Code is filed against Tenant and such involuntary petition is not
dismissed within thirty (30) days thereafter,

then, and in any of such cases, Landlord and the agents and servants of Landlord
lawfully may, in addition to and not in derogation of any remedies for any
preceding breach of covenant, immediately or at any time thereafter and without
demand or notice and with or without process of law (forcibly, if necessary)
enter into and upon the Premises or any part thereof in the name of the whole,
or mail a notice of termination addressed to Tenant, and repossess the same as
of Landlord's former estate and expel Tenant and those claiming through or under
Tenant and remove its and their effects without being deemed guilty of any
manner of trespass and without prejudice to any remedies which might otherwise
be used for arrears of rent or prior breach of covenant, and upon such entry or
mailing as aforesaid this Lease shall terminate, Tenant hereby waiving all
statutory rights (including, without limitation, rights of redemption, if any)
to the extent such rights may be lawfully waived. Landlord, without notice to


                                     - 28 -
<PAGE>

Tenant, may store Tenant's effects, and those of any person claiming through or
under Tenant at the expense and risk of Tenant, and, if Landlord so elects, may
sell such effects at public auction or private sale and apply the net proceeds
to the payment of all sums due to Landlord from Tenant, if any, and pay over the
balance, if any, to Tenant.

      Section 11.2. Remedies. In the event that this Lease is terminated under
any of the provisions contained in Section 11.1, Tenant shall pay forthwith to
Landlord, as compensation, the excess of the total rent reserved for the residue
of the term over the fair market rental value of the Premises for the residue of
the term. In calculating the rent reserved there shall be included, in addition
to the Annual Fixed Rent and Additional Rent, the value of all other
considerations agreed to be paid or performed by Tenant during the residue. As
additional and cumulative obligations after any such termination, Tenant shall
also pay punctually to Landlord all the sums and shall perform all the
obligations which Tenant covenants in this Lease to pay and to perform in the
same manner and to the same extent and at the same time as if this Lease had not
been terminated. In calculating the amounts to be paid by Tenant pursuant to the
preceding sentence, Tenant shall be credited with any amount paid to Landlord
pursuant to the first sentence of this Section 11.2 and also with the net
proceeds of any rent obtained by Landlord by reletting the Premises, after
deducting all Landlord's reasonable expenses in connection with such reletting,
including, without limitation, all repossession costs, brokerage commissions,
fees for legal services and expenses of preparing the Premises for such
reletting, it being agreed by Tenant that Landlord may (i) relet the Premises or
any part or parts thereof for a term or terms which may at Landlord's option be
equal to or less than or exceed the period which would otherwise have
constituted the balance of the term hereof and may grant such concessions and
free rent as Landlord in its reasonable judgment considers advisable or
necessary to relet the same and (ii) make such alterations, repairs and
decorations in the Premises as Landlord in its reasonable judgment considers
advisable or necessary to relet the same, and no action of Landlord in
accordance with the foregoing or failure to relet or to collect rent under
reletting shall operate or be construed to release or reduce Tenant's liability
as aforesaid.

      Section 11.3. Remedies Cumulative. Except as otherwise expressly provided
herein, any and all rights and remedies which Landlord or Tenant may have under
this Lease and at law and equity shall be cumulative and shall not be deemed
inconsistent with each other, and any two or more of all such rights and
remedies may be exercised at the same time to the greatest extent permitted by
law.

      Section 11.4. Landlord's Right to Cure Defaults. At any time following ten
(10) days' prior notice to Tenant (except in cases of emergency when no notice
shall be required), Landlord may (but shall not be obligated to) cure any
default by Tenant under this Lease, and whenever Landlord so elects, all costs
and expenses incurred by Landlord, including reasonable attorneys' fees, in
curing a default shall be paid by Tenant to Landlord as Additional Rent on
demand, together with interest thereon at the rate provided in Section 11.7 from
the date of payment by Landlord to the date of payment by Tenant.

      Section 11.5. Effect of Waivers of Default. Any consent or permission by
Landlord or Tenant to any act or omission which


                                     - 29 -
<PAGE>

otherwise would be a breach of any covenant or condition herein, or any waiver
by Landlord or Tenant of the breach of any covenant or condition herein, shall
not in any way be held or construed (unless expressly so declared) to operate so
as to impair the continuing obligation of any covenant or condition herein, or
otherwise operate to permit the same or similar acts or omissions except as to
the specific instance. The failure of Landlord or Tenant to seek redress for
violation of, or to insist upon the strict performance of, any covenant or
condition of this Lease shall not be deemed a waiver of such violation nor
prevent a subsequent act, which would have originally constituted a violation,
from having all the force and effect of an original violation. The receipt by
Landlord of rent with knowledge of the breach of any covenant of this Lease
shall not be deemed to have been a waiver of such breach by Landlord or of any
of Landlord's remedies on account thereof, including its right of termination
for such default.

      Section 11.6. No Accord and Satisfaction. No acceptance by Landlord of a
lesser sum than the Annual Fixed Rent, Additional Rent or any other sum then due
shall be deemed to be other than on account of the earliest installment of such
rent or charge due, unless Landlord elects by notice to Tenant to credit such
sum against the most recent installment due. Any endorsement or statement on any
check or any letter accompanying any check or payment as rent or other charge
shall not be deemed an accord and satisfaction, and Landlord may accept such
check or payment without prejudice to Landlord's right to recover the balance of
such installment or pursue any other remedy under this Lease or otherwise.

      Section 11.7. Interest on Overdue Sums. If Tenant fails to pay Annual
Fixed Rent, Additional Rent or other sums payable by Tenant to Landlord within
ten (10) days of the due date thereof (i.e., the due date disregarding any
requirement of notice from Landlord), the amount so unpaid shall bear interest
at a variable rate (the "Delinquency Rate") equal to four percent (4%) in excess
of the base rate (prime rate) of BankBoston from time to time in effect
commencing with the eleventh (11th) day after the due date and continuing
through the day on which payment of such delinquent payment with interest
thereon is paid. If such rate is in excess of any maximum interest rate
permissible under applicable law, the Delinquency Rate shall be the maximum
interest rate permissible under applicable law. If BankBoston shall cease
publishing its base rate (prime rate), then the Landlord shall have the right to
designate a substitute base rate (prime rate) used by a Boston Area
Institutional Lender designated by Landlord to be used in determining the
Delinquency Rate.

      Section 11.8. Cost and Expenses: All costs and expenses incurred by or on
behalf of Landlord (including, without limitation, attorneys' fees and expenses)
in enforcing its rights hereunder or occasioned by any default of Tenant shall
be paid by Tenant.

                                   SECTION 12

                                    Mortgages

      Section 12.1. Rights of Mortgage Holders. No Annual Fixed Rent, Additional
Rent or any other charge which is paid more than one month prior to the due date
thereof and payments made in violation of this


                                     - 30 -
<PAGE>

provision shall (except to the extent that such payments are actually received
by a mortgagee in possession or in the process of foreclosing its mortgage) be a
nullity as against such mortgagee and Tenant shall be liable for the amount of
such payments to such mortgagee.

      In the event of any act or omission by Landlord which would give Tenant
the right to terminate this Lease or to claim a partial or total eviction,
Tenant shall not exercise any such right (a) until it shall have given notice,
in the manner provided in Section 13.1, of such act or omission to the holder of
any mortgage encumbering the Premises whose name and address shall have been
furnished to Tenant in writing, at the last address so furnished, and (b) until
a reasonable period of time for remedying such act or omission shall have
elapsed following the giving of such notice, provided that following the giving
of such notice, Landlord or such holder shall, with reasonable diligence, have
commenced and continued to remedy such act or omission or to cause the same to
be rendered.

      In the event any proceedings are brought for the foreclosure of, or in the
event of exercise of the power of sale under, any mortgage now or hereafter
encumbering the Premises, Tenant shall attorn to the purchaser upon such
foreclosure or sale or upon any grant of a deed in lieu of foreclosure and
recognize such purchaser as Landlord under this Lease.

      Section 12.2. Lease Subordinate. At Landlord's election, this Lease shall
be subject and subordinate to any mortgage now or hereafter on the Lot or
Building, or both, which are separately and together hereinafter in this Section
12.2 referred to as "the mortgaged premises", and to each advance made or
hereafter to be made under any mortgage, and to all renewals, modifications,
consolidations, replacements and extensions thereof and all substitutions
therefor. This Section 12.2 shall be self-operative and no further instrument of
subordination shall be required. In confirmation of such subordination, Tenant
shall execute and deliver promptly any certificate that Landlord or any
mortgagee may request. In the event that any mortgagee or its respective
successor in title shall succeed to the interest of Landlord, then, at the
option of such mortgagee or successor, this Lease shall nevertheless continue in
full force and effect and Tenant shall and does hereby agree to attorn to such
mortgagee or successor and to recognize such mortgagee or successor as its
Landlord. The word "mortgagee" as used in this Lease shall include the holder
for the time being whenever the context permits.

      Notwithstanding anything to the contrary contained in this Section 12.2,
Tenant shall not be required to subordinate this Lease to any mortgage or the
lien of any mortgage, nor shall the subordination provided herein be
self-operative unless the holder of such mortgage, as the case may be, shall
enter into an agreement with Tenant, recordable in form, to the effect that, in
the event of foreclosure of, or similar action taken under such mortgage,
Tenant's possession of the Premises under this Lease shall not be terminated or
disturbed by such mortgage holder or anyone claiming under such mortgage holder,
as the case may be, so long as Tenant shall not be in default under this Lease.
The form of any such agreement shall be the form required by any such mortgagee
in its sole and absolute discretion.


                                     - 31 -
<PAGE>

      Section 12.3. UNUM Mortgage. Landlord represents that UNUM Life Insurance
Company of America ("UNUM") presently holds a mortgage on the Property. Upon
execution and delivery of this Lease, Landlord shall use good faith efforts to
obtain a so-called "Subordination, Non-disturbance and Attornment Agreement"
from UNUM in the form attached to this Lease as Exhibit J ("SNDA"). Landlord
shall have no liability or responsibility to Tenant if UNUM refuses to execute
and deliver the SNDA nor shall such failure affect the validity of this Lease.

                                   SECTION 13

                            Miscellaneous Provisions

      Section 13.1. Notices from One Party to the Other. All notices required or
permitted hereunder shall be in writing and addressed, if to Tenant, at the
Original Address of Tenant until the Term Commencement Date and thereafter to
the Premises or such other address as Tenant shall have last designated by
notice in writing to Landlord with a copy to Thomas G. Schnorr, Esq., Palmer &
Dodge LLP, One Beacon Street, Boston, MA 02108 and, if to Landlord, at the
Original Address of Landlord or such other address as Landlord shall have last
designated by notice in writing to Tenant. Any notice shall be deemed duly given
when delivered or tendered for delivery at such address. All notices shall be
sent either (i) by certified mail return receipt requested, postage prepaid or
(ii) by reputable overnight delivery service with signature required upon
delivery.

      Section 13.2. Lease Not to be Recorded; Notice of Lease. Tenant agrees
that it will not record this Lease. If the term of this Lease, including
options, exceeds seven years, Landlord and Tenant agree that, on the request of
either, they will enter and record a notice of lease in form reasonably
acceptable to Landlord.

      Section 13.3. Bind and Inure; Limitation of Landlord's Liability. The
obligations of this Lease shall run with the land, and this Lease shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No owner of the Premises shall be liable under this
Lease except for breaches of Landlord's obligations occurring while owner of the
Premises. The obligations of Landlord shall be binding upon the assets of
Landlord which comprise the Premises but not upon other assets of Landlord. No
individual partner, trustee, stockholder, officer, director, employee or
beneficiary of Landlord shall be personally liable under this Lease and Tenant
shall look solely to Landlord's interest in the Premises in pursuit of its
remedies upon an event of default hereunder, and the general assets of Landlord
and its partners, trustees, stockholders, officers, employees or beneficiaries
of Landlord shall not be subject to levy, execution or other enforcement
procedure for the satisfaction of the remedies of Tenant.

      Section 13.4. Acts of God. In any case where either party hereto is
required to do any act, delays caused by or resulting from acts of God, war,
civil commotion, fire, flood or other casualty, labor difficulties, shortages of
labor, materials or equipment, government regulations, unusually severe weather,
or other causes beyond such party's reasonable control shall not be counted in
determining the time during which work shall be completed, whether such time be


                                     - 32 -
<PAGE>

designated by a fixed date, a fixed time or a "reasonable time", and such time
shall be deemed to be extended by the period of such delay.

      Section 13.5. Landlord's Default. Landlord shall not be deemed to be in
default in the performance of any of its obligations hereunder unless it shall
fail to perform such obligations and unless within thirty (30) days after notice
from Tenant to Landlord specifying such default Landlord has not commenced
diligently to correct the default so specified or has not thereafter diligently
pursued such correction to completion. Tenant shall have no right, for any
default by Landlord, to offset or counterclaim against any rent due hereunder.

      Section 13.6. Brokerage. Tenant and Landlord warrant and represent to the
other that neither has had any dealings with any broker or agent in connection
with this Lease other than CB Whittier Partners and Fallon Hines & O'Connor
(collectively "Brokers"). Tenant and Landlord agree to defend with counsel
reasonably approved by the other, hold harmless and indemnify the other from and
against any and all cost, expense or liability for any compensation, commissions
and charges which may be asserted against the other as a result of the other's
breach of this warranty. Landlord shall pay commissions due and owing to Brokers
pursuant to its arrangements with Brokers.

      Section 13.7. Miscellaneous. This Lease shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts. There are no
prior oral or written agreements between Landlord and Tenant affecting this
Lease.

      Section 13.8. Security Deposit/Letter of Credit. Upon execution and
delivery of this Lease by Tenant, Tenant shall deposit with Landlord a Letter of
Credit in the amount and in form and substance satisfactory to Landlord in
Landlord's sole and absolute discretion (the "Letter of Credit") to be held and,
as applicable, presented and drawn upon and the proceeds thereof retained and
applied by Landlord as security for and in satisfaction of the faithful payment,
performance and observance by Tenant of the terms, covenants, provisions,
conditions and agreements of Tenant under and pursuant to this Lease. It is
agreed and understood that in the event of the occurrence of a Default of
Tenant, Landlord may present for payment and draw upon the Letter of Credit and
Landlord may use, apply or retain the whole or any part of the amounts available
to be drawn under the Letter of Credit to the extent required for the payment of
any Annual Fixed Rent, Additional Rent or any other sum which Landlord may
expend or be entitled to the payment of by reason of any Event of Default or any
failure of tenant to pay, perform or observe any term, covenant, condition or
provision of this Lease, including without limitation, any late charges,
interest payments or any damages or deficiency in the re-letting of the Premises
whether said damages or deficiency occurred before or after summary proceedings
or other re-entry by Landlord.

      If Landlord shall present, draw upon and apply or retain all or any
portion of the amounts evidenced by the Letter of Credit, Tenant shall
immediately replenish and reinstate the amount available to be drawn under the
Letter of Credit or cause a substitute Letter of Credit in the form and amount
required by this Lease to be re-issued so that at all times during the Term of
this Lease, Landlord shall be


                                     - 33 -
<PAGE>

entitled to draw upon the entire dollar amount of the Letter of Credit in the
amounts required hereunder notwithstanding any prior presentation or draw
thereon.

      The Letter of Credit must at all times be an "irrevocable clean"
commercial Letter of Credit in the amount required by this Lease and payable
through a Boston, Massachusetts Clearinghouse Bank, acceptable to Landlord in
Landlord's sole discretion. In addition, the Letter of Credit shall be payable
solely to the benefit of the Landlord from time to time under this Lease and
shall be automatically renewable and, upon the direction of Landlord,
transferable to and payable for the benefit of any successor Landlord under the
Lease. The Letter of Credit (or substitutes thereof consistent with the terms
hereof) shall be and remain presentable and payable for the time period
beginning on the date of this Lease through and including the date which is the
last to occur of (i) the date which is 60 days after the last day of the Term of
this Lease or (ii) the date which is 60 days after the date of delivery of the
entire Premises to Landlord in accordance with the terms and provisions of this
Lease or (iii) 60 days after the last of Tenant's monetary obligations to
Landlord under this Lease have been satisfied in full. Tenant shall bear all
costs and expenses in connection with procuring the Letter of Credit and
maintaining it in full force and effect for the time periods required hereunder.
In the event of a sale or other transfer of the Building, Tenant shall, at its
sole cost and expense, cause the Letter of Credit, in the form required
hereunder, to be issued to and for the benefit of such transferee or purchaser,
as designated by Landlord.

      The Landlord from time to time under this Lease, shall be entitled to
receive 60 days prior written notice of any cancellation of the Letter of Credit
for any reason and the Letter of Credit shall not be cancellable unless and
until Landlord shall have received such sixty (60) day advance written notice.
Upon (i) receiving notice of cancellation of the Letter of Credit or (ii)
failure of Tenant to deliver to Landlord a substitute Letter of Credit on or
before the date which is 30 days prior to any renewal date and whether or not
Tenant shall then be in default in the payment, performance or observance of any
term, covenant or provision of this Lease, Landlord shall be entitled to
present, draw upon and retain the entire amount of the Letter of Credit and upon
so doing, Landlord shall be entitled to hold, apply and retain the proceeds of
such payment (without any interest payable to Tenant) as if it were a cash
security deposit under this Lease to be applied against Event of Default from
time to time arising under this Lease in the same manner as if it were the
proceeds of the Letter of Credit.

      It is agreed and understood that any failure of Tenant to perform, observe
or comply with any term of provision contained in this Section 13.8 to be
performed or observed by Tenant shall entitle Landlord to the same rights and
remedies under this Lease, as a failure by Tenant to pay Annual Fixed Rent as
and when same shall be due and payable.


                                     - 34 -
<PAGE>

      The amount of the Letter of Credit shall at all times be $249,360.00.

      Section 13.9. Leasehold Lot. It is expressly understood and agreed by and
between Landlord and Tenant that this Lease, as and to the extent that it grants
Tenant the appurtenant right to use the Leasehold Parking Area, is a sublease
and is subject and subordinate to the Ground Lease with respect to the Leasehold
Lot and that no right, power or privilege granted to Tenant hereunder with
respect to the Leasehold Lot may be exercised or enjoyed by Tenant and no term,
covenant or condition of this Lease insofar as it relates to the Leasehold Lot
benefiting Tenant shall be operative if and to the extent that such exercise,
enjoyment or operation would not be permitted by or would violate or be in
conflict with any term, covenant or condition of the Ground Lease. Without
limiting the generality of the foregoing, it is expressly understood and agreed
that all rights of Tenant in and to any eminent domain awards in any way related
to the Leasehold Lot shall be, and is hereby expressly made, subject and
subordinate to the rights of the Landlord under the Ground Lease. Landlord
represents and warrants that a true and complete copy of the Ground Lease has
been delivered to Tenant's Counsel and that as of the date of execution and
delivery of this Lease by Landlord, Landlord is not in default of any term or
agreement under the Ground Lease which would give rise to a right to terminate
the Ground Lease by the Ground Lease Landlord. Landlord covenants and agrees
that Landlord will not violate any of the terms, covenants or conditions of the
Ground Lease. The cost of any and all insurance required to be carried by
Landlord under the Ground Lease or which Landlord carries in connection with the
Ground Lease shall be included in the costs payable by Tenant as Additional Rent
under Section 6.3 of the Lease. From and after the Term Commencement Date and to
the maximum extent, this agreement may be made effective according to law,
Tenant agrees to indemnify and save harmless the Town of Framingham, as landlord
under the Ground Lease (the "Ground Lease Landlord") from and against all claims
of whatever nature arising from any act, omission or negligence of Tenant,
Tenant's contractors, licensees, agents, servants, employees or customers, or
anyone claiming by, through or under Tenant so long as Tenant or any occupant
claiming under Tenant is using any part of the Leasehold Lot where such
accident, injury or damage results or is claimed to have resulted from any act,
omission or negligence on the part of Tenant or Tenant's contractors, licensees,
agents, servants, employees or customers or anyone claming by, through or under
Tenant. The foregoing indemnity and hold harmless agreement shall include
indemnity against all costs and expenses and liabilities incurred in or in
connection with any claim or proceeding brought thereon and the defense thereof
with counsel acceptable to the Ground Lease Landlord. To the maximum extent,
this agreement may be made effective according to law, Tenant agrees to use and
occupy the part of the entire Leasehold Lot which the Tenant is permitted to use
hereunder at Tenant's own risk and the terms of the Ground Lease and Landlord
shall have no responsibility or liability for any loss or damage to fixtures or
other personal property of Tenant or any person claiming by, through or under
Tenant.

      Section 13.10. Americans With Disabilities Act. Notwithstanding anything
contained in the Lease to the contrary, Landlord represents that it is currently
making good faith efforts to bring the common areas of the Building into
compliance with the requirements of Title III of the ADA. Tenant represents and
covenants that it shall conduct


                                     - 35 -
<PAGE>

its occupancy and use of the Premises in accordance with the ADA (including, but
not limited to modifying its policies, practices and procedures, and providing
auxiliary aids and services to disabled persons). If the Lease provides that the
Tenant is to complete certain alterations and improvements to the Premises,
Tenant agrees that all such work shall comply with the ADA. Furthermore, Tenant
covenants and agrees that any and all future alterations or improvements made by
Tenant to the Premises shall comply with the ADA. Landlord and Tenant agree to
indemnify the other for any costs, claims, damages, losses or expenses
(including the costs of consulting and legal fees) arising out of the other's
breaching its respective responsibilities for compliance with the ADA as
required in this Lease. This indemnity shall survive the expiration or earlier
termination of this Lease.

      WITNESS the execution hereof under seal as of the day and year first above
written.

      Landlord:                     NDNE 9/90 CORPORATE CENTER LLC


                                    By:   ________________________________

                                    Its:  ________________________________



      Tenant:                       GENZYME TRANSGENICS CORPORATION


                                    By:   ________________________________

                                    Its:  ________________________________

NDNE51


                                     - 36 -
<PAGE>

                                    EXHIBIT D

                    Specifications of Leasehold Improvements
                               and Tenant Layout:

                       Attached to and made part of Lease
                        dated as of May 26, 1999 between
                    NDNE 9/90 Corporate Center, LLC, Landlord
                                       and
                     Genzyme Transgenics Corporation, Tenant
                       with respect to certain premises at
                175 Crossing Boulevard, Framingham, Massachusetts

1. Dimensional floor plan indicating location of partitions and doors (details
required of partition and door types).

2. Location of standard electrical convenience outlets and telephone outlets.

3. Location and specification of special electrical outlets; e.g. copiers,
computers, etc.

4. Reflected ceiling plan showing layout of standard ceiling and lighting
fixtures. Partitions to be shown lightly with switches located indicating
fixtures to be controlled.

5. Locations and details of special ceiling conditions, lighting fixtures,
speakers, diffusers, sprinkler heads, etc.

6. Location and specifications of floor covering, paint or paneling with paint
colors referenced to standard color system.

7. Finish schedule plan indicating wall covering, paint, or paneling with paint
colors referenced to standard color system.

8. Details and specifications of special millwork, glass partitions, rolling
doors and grilles, blackboards, shelves, etc.

9. Hardware schedule indicating door number keyed to plan, size, hardware
required including butts, latchsets or locksets, closures, stops, and any
special items such as thresholds, soundproofing, etc. Keying schedule is
required.

10. Locations and verified dimensions of all built--in equipment (file cabinets,
lockers, plan files, etc.).

11. All necessary mechanical, plumbing and electrical and sprinkler drawings to
complete the Premises in accordance with Tenant's Plans and tie same into
Building systems.

12. All drawings to be uniform size (36" x 48") and shall incorporate the
standard project electrical and plumbing symbols and be at a scale of 1/8" = 1"
or larger.
<PAGE>

13. Location and details of special floor areas whose loading exceeds any of the
following:

                        50 pounds per square foot live load
                        20 pounds per square foot partition load
                        --

            TOTAL =     70 pounds per square foot

14. Location of any special soundproofing requirements.

15. Existence of any extraordinary HVAC requirements necessitating perforation
of structural members.

16. Location and details of any interior stairs, blended deck or other special
requirements affecting the structure.

17. Any necessary increase in the design loads for the building electrical
system and air conditioning system
<PAGE>

                                    EXHIBIT F

                              Rules and Regulations

                     175 Crossing Boulevard, Framingham, MA

      RULES AND REGULATIONS. Tenant agrees to observe the rights reserved to
Landlord in the Lease and agrees, for itself, its employees, agents, clients,
customers, invitees and guests, to comply with the following rules and
regulations and with such reasonable modifications thereof and additions thereto
as Landlord may make, from time to time, for the Building, the Lot or the
Leasehold Parking Area.

      1. Any sign, lettering, curtain, picture, notice, or advertisement
installed within Tenant's Premises (including but not limited to Tenant
identification signs on doors to the Premises) which is visible outside of the
Premises shall be installed at Tenant's cost and in such manner, character and
style as Landlord may approve in writing. No sign, lettering, picture, notice or
advertisement shall be placed on any outside window or in any position so as to
be visible from outside the Building or from any atrium or lobbies of the
Building.

      2. Tenant, its customers, invitees, licensees, and guests shall not
obstruct sidewalks, entrances, passages, courts, corridors, vestibules, halls,
elevators and stairways in and about the Building. Tenant shall not place
objects against glass partitions or doors or windows or adjacent to any open
common space which would be unsightly from the Building corridors or from the
exterior of the Building, and will promptly remove the same upon notice from
Landlord.

      3. Tenant shall not make noises, cause disturbances, create vibrations,
odors or noxious fumes or use or operate any electrical or electronic devices or
other devices that emit sound waves or are dangerous to other tenants and
occupants of the Building or that would interfere with the operation of any
device or equipment or radio or television broadcasting or reception from or
within the Building or elsewhere, or with the operation of roads or highways in
the vicinity of the Building and shall not place or install any projections,
antennae, aerials or similar devices inside or outside the Premises.

      4. Tenant shall not make any room-to-room canvass to solicit business from
other tenants in the Building, and shall not exhibit, sell or offer to sell,
use, rent or exchange any item or services in or from the Premises unless
ordinarily embraced within Tenant's use of the Premises as specified in its
lease.

      5. Tenants shall not waste electricity or water and agree to cooperate
fully with Landlord to assure the most effective operation of the Building's
heating and air conditioning and shall refrain from attempting to adjust any
controls. Tenant shall keep public corridor doors closed.
<PAGE>

      6. Doors keys for doors in the Premises will be furnished at the
commencement of the Lease by Landlord. Tenant shall not affix additional locks
on doors or windows and shall purchase duplicate keys only from Landlord. When
the Lease is terminated, Tenant shall return all keys to Landlord and will
provide to Landlord the means of opening any safes, cabinets or vaults left in
the Premises.

      7. Tenant assumes full responsibility for protecting its space from theft,
robbery and pilferage, which includes keeping doors locked and other means of
entry to the Premises closed and secured.

      8. Peddlers, solicitors and beggars shall be reported to the office of the
Building or as Landlord otherwise requests.

      9. Tenant shall not install nor operate machinery or any mechanical
devices of a nature not directly related to Tenant's ordinary use of the
Premises without the written permission of Landlord. In no event shall vending
machines of any type be installed or used in the Premises.

      10. No person or contractor not employed or approved by Landlord shall be
used to perform window washing, cleaning, decorating, repair or other work in
the Premises.

      11. Tenant may not (without Landlord's approval therefor, which approval
will be signified on Tenant Plans submitted pursuant to the Lease) and Tenant
shall not permit or suffer anyone to cook in the Premises (except for the use of
a microwave oven) -

      12. Tenant shall not:

            (1)   Use the Premises for lodging, manufacturing or for any immoral
                  or illegal purposes.

            (2)   Use the Premises to engage in the manufacture or sale of, or
                  permit the use of, any spirituous, fermented, intoxicating or
                  alcoholic beverages on the Premises.

            (3)   Use the Premises to engage in the manufacture or sale of, or
                  permit the use of, any illegal drugs on the Premises.

      13. In no event shall any person bring into the Building inflammables such
as gasoline, kerosene, naphtha and benzene (except for small quantities of
naptha and benzene which shall be permitted and used in connection with the
cleaning of Tenant's office equipment), or explosives or firearms or any other
article of intrinsically dangerous nature. If by reason of the failure of Tenant
to comply with the provisions of this paragraph, any insurance premium payable
by Landlord for all or any part of the Building shall at any time be increased
above normal insurance premium payable by Landlord for all or any part of the
Building shall at any time be increased above normal insurance premiums for
insurance not covering the items aforesaid, Landlord shall have the option to
either terminate the Lease or to require Tenant to make immediate payment for
the whole of the increased insurance premium.
<PAGE>

      14. Tenant shall comply with all applicable federal, state and municipal
laws, ordinances and regulations and building rules, and shall not directly or
indirectly make any use of the Premises which may be prohibited thereby or which
shall be dangerous to person or property or shall increase the cost of insurance
or require additional insurance coverage.

      15. If Tenant desires signal, communication, alarm or other utility or
service connection installed or changed, the same shall be made at the expense
of Tenant, with approval and under direction of Landlord.

      16. Bicycles shall not be permitted in the Building in other than
Landlord-designated locations.

      17. Tenant shall cooperate and participate in all security programs
affecting the Building, the Lot or the Leasehold Parking Area.

      18. In the event Landlord allows one or more tenants in the Building to do
any act prohibited herein, Landlord shall not be precluded from denying any
other tenant the right to do any such act.

      19. Tenant, or the employees, agents, servants, visitors or licensees of
Tenant shall not at any time place, leave or discard any rubbish, paper,
articles, or objects of any kind whatsoever outside the doors of the Premises or
in the corridors or passageways of the Building. No animals or birds shall be
brought or kept in or about the Building.

      20. Landlord shall have the right to prohibit any advertising by Tenant
which, in Landlord's reasonable opinion, tends to impair the reputation of the
Building or its desirability for offices, and, upon written notice from
Landlord, Tenant will refrain from or discontinue such advertising.

      21. Except as otherwise expressly set forth in the Lease, Tenant shall not
mark, paint, drill into, or in any way deface any part of the Building or the
Premises. No boring, driving of nails or screws, cutting or stringing of wires
shall be permitted, except with the prior written consent of Landlord which
consent shall not be unreasonably withheld or delayed, and as Landlord may
direct. Tenant shall not install any resilient tile or similar floor covering in
the Premises except with the prior approval of Landlord. The use of cement or
other similar adhesive material is expressly prohibited. Nothing contained
herein or in the Lease shall be construed to prevent Tenant from placing wall
hangings, framed awards, certificates and salutations and paintings on the walls
of the Premises. Nothing contained herein or in the Lease shall be deemed or
construed to preclude Tenant from banging normal and customary art work such as
photographs or paintings on the interior walls of the Premises provided that
Tenant shall repair any holes upon removal.

      22. Landlord shall have the right to limit or control the number and
format of listings on the main Building directory.
<PAGE>

      23. Tenant's use of delivery areas, loading areas and freight elevators
shall be scheduled in advance with Landlord and shall be subject to the approval
of Landlord which approval will not be unreasonably withheld or delayed.

      24. The rights of Tenant in the entrances, corridors, elevators and
escalators of the Building are limited to ingress to and egress from Tenant's
Premises for the Tenant and its employees, licensees and invitees, and no tenant
shall use, or permit the use of, the entrances, corridors, escalators or
elevators for any other purpose. No Tenant shall invite to the Tenant's
Premises, or permit the visit of, persons in such numbers or under such
conditions as to interfere with the use and enjoyment of any of the plazas,
entrances, corridors, escalators, elevators and other facilities of the Building
by other tenants. Fire exits and stairways are for emergency use only, and they
shall not be used for any other purposes by the Tenant, its employees, licensees
or invitees. No Tenant shall encumber or obstruct, or permit the encumbrance or
obstruction of any of the sidewalks, plazas, entrances, corridors, escalators,
elevators, fire exits or stairways of the Building or Lot or the driveways or
parking areas on the Lot or Leasehold Parking Area.

      25. Landlord may refuse admission to the Building outside of ordinary
business hours to any person not known to the watchman in charge or not having a
pass issued by the Landlord or not properly identified, and may require all
persons admitted to or leaving the Building outside of normal business hours to
register. Tenant's employees, agents and visitors shall be permitted to enter
and leave the Building whenever appropriate arrangements have been previously
made between the Landlord and the Tenant with respect thereto. Each tenant shall
be responsible for all persons for whom he requests such permission and shall be
liable to the Landlord for all acts of such persons. In case of invasion, riot,
public excitement or other commotion, Landlord may prevent all access to the
Building during the continuance of the same, by closing the doors or otherwise,
for the safety of the tenants and protection of property in the Building.
Landlord may require any person leaving the Building with any package or other
object to exhibit a pass from the tenant from whose Premises the package or
object is being removed, but the establishment and enforcement of such
requirements shall not impose any responsibility on Landlord for the protection
of any tenant against the removal of property from the Premises of the tenant.
Landlord shall, in no way, be liable to any tenant for damages or loss arising
from the admission, exclusion or ejection of any person to or from the Tenant's
Premises or the Building under the provisions of this rule.

      26. Except as permitted in the Lease, Tenant shall not obtain, accept or
use in its Premises food, beverages, barbering, boot blacking, floor polishing,
lighting maintenance, cleaning or other similar services from any persons not
authorized by Landlord in writing to furnish such services, provided always that
charges for such services by persons authorized by Landlord are not excessive.
Such services shall be furnished only to such hours, in such places within the
Tenant's Premises and under such regulations as may be fixed by the Landlord.
<PAGE>

Notwithstanding the foregoing to the contrary, Tenant may (a) have bottled water
delivered to and consumed in the Premises and (b) use coffee making equipment in
the Premises for [purposes of consumption by Tenant's agents, servants,
employees and business invitees.

      27. There shall not be used in any space, or in the public halls of the
building, either by any tenant or by jobbers or others, in the delivery or
receipt of merchandise or mail any hand trucks, except those equipped with
rubber tires and side guards.

      28. Tenant shall, at Tenant's sole cost and expense, join and shall, at
all times during the Original Term or any proper extension thereof, be a member
of the MetroWest Transportation Management Association. The provisions hereof
shall apply to any assignee or sublessee of Tenant.

      29. All entrance doors in each Tenants Premises shall be left locked when
the Tenant's Premises are not in use. Entrance doors shall not be left open at
any time. All windows in each Tenant's Premises shall be kept closed at all
times and all blinds or drapes therein above ground floor shall be lowered or
closed when and as reasonably required because of the position of the sun,
during the operation of the Building air conditioning system to cool or
ventilate the Tenant's Premises.

      30. No acids, vapors or other materials shall be discharged or permitted
to be discharged into the waste lines, vents or flues of the Building which may
damage them. The water and wash closets and other plumbing fixtures in or
serving any Tenant's Premises shall not be used for any purpose other than the
purpose for which they were designed or constructed and no sweepings, rubbish,
rags, acids or other foreign substances shall be deposited therein. All damages
resulting from any misuses of the fixtures shall be borne by the tenant who, or
whose servants, employees, agents, visitors or licensees, shall have caused the
same.

      31. Except as otherwise expressly set forth in the Lease, no signs,
advertisement, notice or other lettering shall be exhibited, inscribed, painted
or affixed by any tenant or any part of the outside or inside of the Premises or
the Building or Lot or Leasehold Parking Area without the prior written consent
of Landlord. In the event of the violation of the foregoing by Tenant, Landlord
may remove the same without any liability, and may charge the expense incurred
by such removal to the tenant or tenants violating this rule.

      32. Intentionally omitted

      33. Entry and exiting to and from the Lot and to and from the Leasehold
Parking Area and use of all roads, driveways and walkways on the Lot or the
Additional Parking Area shall be subject to such traffic and use rules and
regulations as Landlord may promulgate and provide to Tenant from time to time.
<PAGE>

                                    EXHIBIT G

                                OPTIONS TO EXTEND

OPTION TO EXTEND. Tenant shall have the right and option, which said option and
right shall not be severed from this Lease or separately assigned, mortgaged or
transferred, to extend the Term of this Lease for two (2) additional consecutive
periods of five (5) years each (hereinafter referred to respectively as the
"First Extension Period" and the "Second Extension Period" and sometimes
individually as an "Extension Period"), provided that (a) Tenant shall give
Landlord notice of Tenant's exercise of such option at least nine (9) full
calendar months prior to the expiration of (i) the Original Term in the case of
the option with respect to the First Extension Period and (ii) the First
Extension Period in the case of the option with respect to the Second Extension
Period and (b) no Event of Default (after expiration of applicable notice and
cure periods, if any) shall exist at the time of giving each applicable notice
and on the date of the commencement of each respective Extension Period and (c)
the original Tenant named in this Lease or its Affiliate is itself occupying the
entire Premises both at the time of giving the applicable notice and at the time
of commencement of the applicable Extension Period. Except for the amount of
Annual Fixed Rent (which is to be determined as hereinafter provided), all the
terms, covenants, conditions, provisions and agreements in the Lease contained
shall be applicable to the additional periods through which the Term of this
Lease shall be extended as aforesaid, except that there shall be no further
options to extend the Term of this Lease beyond the Second Extension Period, nor
shall Landlord be obligated to make or pay for any improvements to the Premises
nor pay any inducement payments of any kind or nature. If Tenant shall give
notice of its exercise of each such option to extend in the manner and within
the time period provided aforesaid, the Term of this Lease shall be extended
upon the giving of each such notice without the requirement of any further
attention on the part of either Landlord or Tenant except to the extent
necessary to determine the Annual Fixed Rent as hereafter set forth. Landlord
hereby reserves the right, exercisable by Landlord in its sole discretion, to
waive (in writing) any condition precedent set forth in clauses (a), (b) or (c)
above.

If Tenant shall fail to give timely notice of the exercise of any such option as
aforesaid or if any of the conditions set forth above are not satisfied as and
when specified herein, Tenant shall have no right to extend the Original Term of
this Lease, time being of the essence of the foregoing provisions. Failure of
Tenant to timely exercise its option with respect to the First Extension Period
shall terminate Tenant's rights with respect to the option for the Second
Extension Period. Any termination of this Lease Agreement shall terminate the
rights hereby granted Tenant.

The Annual Fixed Rent payable for each twelve (12) month period during each
Extension Period shall be 97.5% of the Fair Market Rental Value (as said term is
hereinafter defined) calculated an each case as of commencement of the
applicable Extension Period but in no event less than the Annual Fixed Rent plus
Additional
<PAGE>

Rent per annum payable for and with respect to the 12 calendar month period
immediately preceding commencement of the applicable Extension Period. "Fair
Market Rental Value" shall be computed as of the beginning of the applicable
Extension Period at the then current annual rental charges, including provisions
for subsequent increases and adjustments, for leases then currently being
negotiated or executed in comparable space and buildings located in 9/90
Corporate Center and other similar first class office buildings in Framingham,
MA. In determining Fair Market Rental Value, the following factors, among
others, shall be taken into account and given effect: size of the premises,
location of the premises, location of the building, allowances or lack of
allowances (if any) and lease term.

Dispute as to Fair market Value. Landlord shall initially designate the Fair
Market Rental Value and shall furnish data in support of such designation to
Tenant. If Tenant disagrees with Landlord's designation of the Fair Market
Rental value, Tenant shall have the right, by written notice given to Landlord
within thirty (30) days after Tenant has been notified of Landlord's
designation, to submit such Fair Market Rental value to arbitration as follows:
Fair Market Rental Value shall be determined by agreement between Landlord and
Tenant but if Landlord and Tenant are unable to agree upon the Fair Market
Rental Value at least seven (7) months prior to the date upon which the Fair
Market Rental Value is to take effect, then the Fair Market Rental Value shall
be determined by appraisal as follows: The Landlord and Tenant shall each
appoint a Qualified Appraiser (as said term is hereinafter defined) at least six
(6) months prior to the commencement of the period for which Fair Market Rental
value is to be determined and shall designate the Qualified Appraiser so
appointed by notice to the other party. The two appraisers so appointed shall
meet within ten (10) days after both appraisers are designated in an attempt to
agree upon the Fair Market Rental Value for the applicable Extension Period and
if, within fifteen (15) days after both appraisers are designated, the two
appraisers do not agree upon the Fair Market Rental Value, then each appraiser
shall, not later than thirty (30) days after both appraisers have been chosen,
deliver a written report to both the Landlord and Tenant setting forth the Fair
Market Rental value as determined by each such appraiser taking into account the
factors set forth in this Exhibit G. If the lower of the two determinations of
Fair Market Rental Value as determined by such two appraisers is equal to or
greater than 95% of the higher of the Fair Market Rental Value as determined by
such two appraisers, the Fair Market Rental value shall be deemed to be the
average of such Fair Market Rental value as set forth in such two
determinations. If the lower determination of Fair Market Rental Value is less
than 95% of the higher determination of Fair Market Rental Value, the two
appraisers shall promptly appoint a third Qualified Appraiser and shall
designate such third Qualified Appraiser by notice to Landlord and Tenant. The
cost and expenses of each appraiser appointed separately by Tenant and Landlord
shall be borne by the party who appointed the appraiser. The cost and expenses
of the third appraiser shall be shared equally by Tenant and Landlord. If the
two appraisers cannot agree on the identity of the third Qualified Appraiser at
least three (3) months prior to commencement of the period for which Fair Market
Rental Value to be determined, then the third Qualified Appraiser shall be
<PAGE>

appointed by the American Arbitration Association ("AAA") sitting in Boston,
Massachusetts and acting in accordance with its rules and regulations. The costs
and expenses of the AAA proceeding shall be borne equally by the Landlord and
Tenant. The third appraiser shall promptly make its own independent
determination of Fair Market Rental Value for the Premises taking into account
the factors set forth in this Exhibit G and shall promptly notify Landlord and
Tenant of his determination. If the determinations of the Fair Market Rental
Value of any two of the appraisers shall be identical in amount, said amount
shall be deemed to be the Fair Market Rental Value for the Premises. If the
determinations of all three appraisers shall be different in amount, the average
of the two nearest in amount shall be deemed the Fair Market Rental Value. The
Fair Market Rental Value of the subject space determined in accordance with the
provisions of this Section shall be binding and conclusive on Tenant and
Landlord. As indicated above, in no event shall the Fair Market Rental Value be
less than the Annual Fixed Rent plus Additional Rent applicable to the 12
calendar month period immediately preceding the commencement of the applicable
Extension Period. As used herein, the term "Qualified Appraiser" shall mean any
disinterested person (a) who is employed by an appraisal firm of recognized
competence in the greater Boston area, (b) who has not less than ten (10) years
experience in appraising and valuing properties of the general location, type
and character as the Premises, and (c) who is either a Senior Real Property
Appraiser of the Society of Real Estate Appraisers or a member of the Appraisal
Institute (or any successor organization). Notwithstanding the foregoing, if
either party shall fail to appoint its appraiser within the period specified
above (such party referred to hereinafter as the "Failing Party"), the other
party may serve notice on the Failing Party requiring the Failing Party to
appoint its appraiser within ten (10) days of the giving of such notice and if
the Failing Party shall not respond by appointment of its appraiser within said
ten (10) day period, then the appraiser appointed by the other party shall be
the sole appraiser whose determination of Fair Market Rental Value shall be
binding and conclusive upon Tenant and Landlord. If, for any reason, Fair Market
Rental Value shall not have been determined by the time of commencement of the
Extension Period and until such rent is determined, Tenant shall pay Annual
Fixed Rent during the Extension Period in an amount (the "Interim Rent") equal
to the Annual Fixed Rent plus Additional Rent payable during the twelve (12)
month period immediately preceding the Extension Period and upon receipt of a
final determination of Fair Market Rental Value as hereinabove set forth, any
overpayment or underpayment of Interim Rent shall be paid promptly to the party
entitled to receive the same.
<PAGE>

Witness our hands and seals this day of March, 1999.


Landlord:                              NDNE 9/90 CORPORATE CENTER LLC


                                       By:  ________________________________

                                       Its: ________________________________


Tenant:                                GENZYME TRANSGENICS CORPORATION


                                       By:  ________________________________

                                       Its: ________________________________
<PAGE>

                                    Exhibit J

             SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

      THIS AGREEMENT is made this _____ day of March, 1999, by and among Genzyme
Transgenics Corporation ("Tenant"), NDNE 9/90 Corporate Center LLC ("Landlord")
and UNUM Life Insurance Company of America ("Mortgagee").

                                   WITNESSETH:

      WHEREAS, Landlord is the owner and holder of fee simple title in and to
certain real property (the "Premises") situated in Framingham, County of
Middlesex, Commonwealth of Massachusetts and described in Exhibit A attached
hereto and by this reference made a part thereof; and

      WHEREAS, Landlord and Tenant have entered into an Agreement of Lease (the
"Lease") dated as of March 26, 1999 demising a part of the Premises (the "Leased
Premises") to Tenant; and

      WHEREAS, Landlord has made, executed and delivered to Mortgagee a certain
Note (the "Note") dated December 14, i998, which Note is secured by a Mortgage
and Security Agreement (the "Mortgage") of the Premises of even date with the
Note, which Mortgage was filed for record in the Middlesex (South Registry of
Deeds ("Registry") on December 14, 1998 as Instrument Number 1100 prior to the
recording of this Agreement; and

      WHEREAS, the Lease was assigned by Landlord to Mortgagee by an Assignment
of Rents, Leases and Other Benefits (the "Assignment"), filed for record in the
aforesaid Office simultaneously with the recording of the Mortgage and prior to
the recording of this Agreement;

      NOW, THEREFORE, in consideration of the mutual promises herein contained
and other good and valuable consideration, the receipt and sufficiency whereof
are hereby acknowledged, Tenant, Landlord, and Mortgagee, intending to be
legally bound hereby, covenant and agree as follows:

      1. The Lease and Tenant's leasehold estate created thereby, including all
rights and options to purchase the Leased Premises, shall be and are completely
and unconditionally subject and subordinate to the lien of the Mortgage and to
all the terms, conditions and provisions thereof, to all advances made or to be
made thereunder, and to any renewals, extensions, modifications or replacements
thereof, provided, however, that at anytime hereafter, at the election of the
Mortgagee Mortgagee shall have the right to declare the Lease superior to the
lien, provisions, operation and effect of the Mortgage.

      2. In the event Mortgagee obtains title to the Leased Premises through
foreclosure or deed in lieu of foreclosure under the Mortgage and provided that
Tenant is not in default under any provision of the Lease beyond any applicable
notice, cure or grace periods and is then in possession of the Leased Premises
neither the right of possession of Tenant to the Leased Premises nor (except as
otherwise expressly provided in this agreement) shall any of the Tenant's other
rights
<PAGE>

under the Lease be affected or disturbed, and Tenant agrees to continue
occupancy of the Leased Premises under the same terms and conditions of the
Lease and will attorn to the Mortgagee, its successors and assigns, to the same
extent and with the same force as if Mortgagee were the Landlord under the
Lease.

      3. By virtue of the Assignment, Mortgagee shall be entitled, but not
obligated, to exercise the claims, rights, powers, privileges, options and
remedies of the Landlord under the Lease and shall be further entitled to the
benefits of, and to receive and enforce performance of, all of the covenants to
be performed by Tenant under the Lease as though Mortgagee were named therein as
the Landlord.

      4. Mortgagee shall not, by virtue of the Assignment or this Agreement, be
or become subject to any liability or obligation to Tenant under the Lease or
otherwise, until Mortgagee shall have obtained title to the Leased Premises, by
foreclosure or otherwise, and then only to the extent of liabilities or
obligations accruing subsequent to the date that Mortgagee has obtained title to
the Leased Premises. Furthermore, notwithstanding the foregoing to the contrary,
Mortgagee shall not be liable for: (a) the completion of the Leased Premises or
any improvements for Tenant's use and occupancy; (b) latent and/or patent
defects in construction of the Leased Premises or any other part of the
Premises; (c) breach of any representation or warranty in the Lease (including,
but not limited to those relating to use, compliance with zoning, landlord's
title, landlord's authority. habitability and/or fitness for a particular
purpose) made or given by any prior landlord; (d) loss or damages resulting from
environmental contamination not caused by Mortgagee; (e) consequential or
punitive damages; or (f) for any reason, any amount in excess of the value of
Mortgagee's interest in the Premises. Notwithstanding the foregoing to the
contrary, the provisions of this paragraph 4 shall not be deemed or construed to
relieve Mortgagee from any ongoing maintenance and repair obligations of the
Landlord under Section 8.2 of the Lease even if the need for such repair or
maintenance arose (without fault of Tenant) prior to the date Mortgagee obtains
title.

      5. Tenant shall not pay an installment of rent or any part thereof more
than one month prior to the due date of such installment, and Mortgagee shall be
entitled to recover from Tenant, as rent under the Lease any payment of rent or
additional rent made by Tenant to Landlord for more than one month in advance,
and Mortgagee shall not be bound or affected by any amendment or modification of
the Lease, made without the written consent of Mortgagee, which consent shall
not be unreasonably withheld.

      6. Tenant shall not agree to an early buyout of its lease obligations
without the prior written consent of Mortgagee. In the event such consent is
given, Tenant agrees to deliver the buyout monies in full to Mortgagee.

      7. To the extent permitted by law, Tenant and Landlord agree that
Mortgagee shall be entitled to all payments made by Tenant under the federal
Bankruptcy Code (and/or similar state creditor's rights law) as the result of
Tenant rejecting the Lease. Such lease rejection payments shall be made by
Tenant directly to Mortgagee.

      8. After notice is given to Tenant by Mortgagee, pursuant to the
Assignment, that the rentals under the Lease should be paid to Mortgagee, Tenant
shall pay to Mortgagee, or in accordance with the
<PAGE>

directions of Mortgagee, all rentals and other monies due and to become due to
the Landlord under the Lease, and Landlord hereby irrevocably authorizes Tenant
to make such payments to Mortgagee and hereby releases and discharges Tenant of,
and from any liability to Landlord on account of any such payments.

      9. This Agreement shall inure to the benefit of and shall be binding upon
Tenant, Landlord and Mortgagee, and their respective heirs, personal
representatives, successors and assigns. In the event any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall, at the option of Mortgagee, not affect any other
provisions of this Agreement, but this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
This Agreement shall be governed by and construed according to the laws of the
Commonwealth of Massachusetts.

      10. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instruments.

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.


                                     TENANT:

                                     Genzyme Transgenics Corporation


                                     By:  ________________________________

                                     Its: ________________________________


                                     LANDLORD:

                                     NDNE 9/90 Corporate Center LLC

                                     By:  NDNE 9/90, Inc.
                                     Its: Manager


                                     By:  ________________________________
                                          John J. O'Neil, III
                                     Its:  Executive Vice President
<PAGE>

                                     MORTGAGEE:

                                     UNUM Life Insurance Company of America


                                     By:  ________________________________

                                     Its: ________________________________


STATE OF ______________________
COUNTY OF _____________________, ss ______________________, 19__

      Then personally appeared the above-named ___________________ and
acknowledged the foregoing instrument to be his free act and deed, in his said
capacity, and the free act and deed of said ___________________.


                                               ____________________________
                                               Notary Public


STATE OF ______________________
COUNTY OF _____________________, ss ______________________, 19__

      Then personally appeared the above-named ___________________ and
acknowledged the foregoing instrument to be his free act and deed, in his said
capacity, and the free act and deed of said ___________________.


                                               ____________________________
                                               Notary Public


STATE OF ______________________
COUNTY OF _____________________, ss ______________________, 19__

      Then personally appeared the above-named ___________________ and
acknowledged the foregoing instrument to be his free act and deed, in his said
capacity, and the free act and deed of said ___________________.


                                               ____________________________
                                               Notary Public


NDNE51
<PAGE>

                                   EXHIBIT "A"

                                       FOR

             SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT


<PAGE>

                                                                    Exhibit 10.2

1.    Adopted by the Board of Directors on May 1, 1993; Approved by the
      stockholders on June 25, 1993.
2.    Amended by the Board of Directors on September 24, 1993 (No stockholder
      approval required).
3.    Amended by the Board of Directors on October 24, 1994, March 17, 1995 and
      April 6, 1995; Approved by the stockholders on May 19, 1995.
4.    Amended by the Board of Directors on March 13, 1996; Approved by the
      stockholders on May 15, 1996.
5.    Amended by the Board of Directors on March 3, 1997; Approved by the
      stockholders on May 28, 1997.
6.    As amended by the Board of Directors on March 4, 1998; Approved by the
      stockholders on May 27, 1998.
7.    As amended by the Board of Directors on March 3, 1999; Approved by the
      stockholders on May 25, 1999.

                         GENZYME TRANSGENICS CORPORATION

                           1993 Equity Incentive Plan

Section 1.  Purpose

      The purpose of the Genzyme Transgenics Corporation 1993 Equity Incentive
Plan (the "Plan") is to attract and retain key employees and consultants to
provide an incentive for them to assist the Company to achieve long-range
performance goals, and to enable them to participate in the long-term growth of
the Company.

Section 2.  Definitions

      "Affiliate" means any business entity in which the Company owns directly
or indirectly 50% or more of the total combined voting power or has a
significant financial interest as determined by the Committee.

      "Award" means any Option, Stock Appreciation Right, Performance Share,
Restricted Stock or Stock Unit awarded under the Plan.

      "Board" means the Board of Directors of the Company.

      "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

      "Committee" means either any one of one or more committees of the Board
appointed by the Board to administer the Plan, the members of which are
"Non-Employee Directors" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, or any successor provision (the "Rule") to the
extent necessary to comply with the Rule.

<PAGE>

      "Common Stock" or "Stock" means the Common Stock, $0.01 par value, of
the Company.

      "Company" means Genzyme Transgenics Corporation.

      "Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Committee, to receive amounts due or
exercise rights of the Participant in the event of the Participant's death. In
the absence of an effective designation by a Participant, designated Beneficiary
shall mean the Participant's estate.

      "Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.

      "Incentive Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 which is intended to meet the
requirements of Section 422 of the Code or any successor provision.

      "Nonstatutory Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 which is not intended to be an
Incentive Stock Option.

      "Option" means an Incentive Stock Option or a Nonstatutory Stock Option.

      "Participant" means a person selected by the Committee to receive an
Award under the Plan.

      "Performance Cycle" or "Cycle" means the period of time selected by the
Committee during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.

      "Performance Shares" mean shares of Common Stock which may be earned by
the achievement of performance goals awarded to a Participant under Section 8.

      "Reporting Person" means a person subject to Section 16 of the Securities
Exchange Act of 1934 or any successor provision.

      "Restricted Period" means the period of time selected by the Committee
during which an award of Restricted Stock may be forfeited to the Company.

      "Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.

      "Stock Appreciation Right" or "SAR" means a right to receive any excess in
value of shares of Common Stock over the exercise price awarded to a Participant
under Section 7.

<PAGE>

      "Stock Unit" means an award of Common Stock or units that are valued in
whole or in part by reference to, or otherwise based on, the value of Common
Stock, awarded to a Participant under Section 10.

<PAGE>

Section 3.  Administration

      The Plan shall be administered by the Committee. The Committee shall have
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The Committee's
decisions shall be final and binding. To the extent permitted by applicable law,
the Committee may delegate to one or more executive officers of the Company the
power to make Awards to Participants who are not Reporting Persons and all
determinations under the Plan with respect thereto, provided that the Committee
shall fix the maximum amount of such Awards for the group and a maximum for any
one Participant.

Section 4.  Eligibility

      All employees, and in the case of Awards other than Incentive Stock
Options, consultants of the Company or any Affiliate capable of contributing
significantly to the successful performance of the Company, other than a person
who has irrevocably elected not to be eligible, are eligible to be Participants
in the Plan.

Section 5.  Stock Available for Awards

      (a) Subject to adjustment under subsection (b), Awards may be made under
the Plan for up to 3,390,000(1) shares of Common Stock. If any Award in respect
of shares of Common Stock expires or is terminated unexercised or is forfeited
for any reason or settled in a manner that results in fewer shares outstanding
than were initially awarded, including without limitation the surrender of
shares in payment for the Award or any tax obligation thereon, the shares
subject to such Award or so surrendered, as the case may be, to the extent of
such expiration, termination, forfeiture or decrease, shall again be available
for award under the Plan, subject, however, in the case of Incentive Stock
Options, to any limitation required under the Code. Common Stock issued through
the assumption or substitution of outstanding grants from an acquired company
shall not reduce the shares available for Awards under the Plan. Shares issued
under the Plan may consist in whole or in part of authorized but unissued shares
or treasury shares.

      (b) In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below fair market value, or other similar
transaction affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee, subject, in the case of Incentive
Stock Options, to any limitation required under the Code, shall

- ----------
(1) This number includes 224,350 shares reserved for issuance upon the exercise
of outstanding options to purchase shares of common stock of TSI Corporation,
which options were assumed by the Company in October 1994 in connection with the
Company's acquisition of TSI Corporation.

<PAGE>

equitably adjust any or all of (i) the number and kind of shares in respect of
which Awards may be made under the Plan, (ii) the number and kind of shares
subject to outstanding Awards, and (iii) the award, exercise or conversion price
with respect to any of the foregoing, and if considered appropriate, the
Committee may make provision for a cash payment with respect to an outstanding
Award, provided that the number of shares subject to any Award shall always be a
whole number.

Section 6.  Stock Options

      (a) Subject to the provisions of the Plan, the Committee may award
Incentive Stock Options and Nonstatutory Stock Options and determine the number
of shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The terms
and conditions of Incentive Stock Options shall be subject to and comply with
Section 422 of the Code, or any successor provision, and any regulations
thereunder.

      (b) The Committee shall establish the option price at the time each Option
is awarded, which price shall not be less than 100% of the Fair Market Value of
the Common Stock on the date of award.

      (c) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may specify in the applicable Award or
thereafter. The Committee may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.

      (d) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment may be made in whole or in part in cash or, to the extent permitted
by the Committee at or after the award of the Option, by delivery of a note or
shares of Common Stock owned by the optionee, including Restricted Stock, valued
at their Fair Market Value on the date of delivery, or such other lawful
consideration as the Committee may determine.

      (e) The Committee may provide for the automatic award of an Option upon
the delivery of shares to the Company in payment of an Option for up to the
number of shares so delivered.

Section 7.  Stock Appreciation Rights

      (a) Subject to the provisions of the Plan, the Committee may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised. SARs shall have an
exercise price of not less than the Fair Market Value of the Common Stock on the
date of award, or in the case of SARs in tandem with Options, the exercise price
of the related Option.

<PAGE>

      (b) An SAR related to an Option which can only be exercised during limited
periods following a change in control of the Company, may entitle the
Participant to receive an amount based upon the highest price paid or offered
for Common Stock in any transaction relating to the change in control or paid
during the thirty-day period immediately preceding the occurrence of the change
in control in any transaction reported in the stock market in which the Common
Stock is normally traded.

Section 8.  Performance Shares

      (a) Subject to the provisions of the Plan, the Committee may award
Performance Shares and determine the number of such shares for each Performance
Cycle and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other. The payment value of Performance Shares shall
be equal to the Fair Market Value of the Common Stock on the date the
Performance Shares are earned or, in the discretion of the Committee, on the
date the Committee determines that the Performance Shares have been earned.

      (b) The Committee shall establish performance goals for each Cycle, for
the purpose of determining the extent to which Performance Shares awarded for
such Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. During any Cycle, the
Committee may adjust the performance goals for such Cycle as it deems equitable
in recognition of unusual or non-recurring events affecting the Company, changes
in applicable tax laws or accounting principles, or such other factors as the
Committee may determine.

      (c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares which have been
earned on the basis of performance in relation to the established performance
goals. The payment values of earned Performance Shares shall be distributed to
the Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable thereafter. The Committee shall determine,
at or after the time of award, whether payment values will be settled in whole
or in part in cash or other property, including Common Stock or Awards.

Section 9.  Restricted Stock

      (a) Subject to the provisions of the Plan, the Committee may award shares
of Restricted Stock and determine the duration of the Restricted Period during
which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. Shares of Restricted
Stock shall be issued for no cash consideration or such minimum consideration as
may be required by applicable law.

      (b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee, during
the Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Committee may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of

<PAGE>

the Participant and unless otherwise determined by the Committee, deposited by
the Participant, together with a stock power endorsed in blank, with the
Company. At the expiration of the Restricted Period, the Company shall deliver
such certificates to the Participant or if the Participant has died, to the
Participant's Designated Beneficiary.

Section 10. Stock Units

      (a) Subject to the provisions of the Plan, the Committee may award Stock
Units subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Committee shall determine.

      (b) Shares of Common Stock awarded in connection with a Stock Unit Award
shall be issued for no cash consideration or such minimum consideration as may
be required by applicable law.

Section 11. General Provisions Applicable to Awards

      (a) Limitations on Transferability. Options shall not be transferable by
the recipient other than by will or the laws of descent and distribution and are
exercisable during such person's lifetime only by such person or by such
person's guardian or legal representative; provided that the Committee may in
its discretion waive such restriction in any case.

      (b) Documentation. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and regulatory
laws and accounting principles.

      (c) Committee Discretion. Each type of Award may be made alone, in
addition to or in relation to any other type of Award. The terms of each type of
Award need not be identical, and the Committee need not treat Participants
uniformly. Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Committee at the time
of award or at any time thereafter.

      (d) Settlement. The Committee shall determine whether Awards are settled
in whole or in part in cash, Common Stock, other securities of the Company,
Awards or other property. The Committee may permit a Participant to defer all or
any portion of a payment under the Plan, including the crediting of interest on
deferred amounts denominated in cash and dividend equivalents on amounts
denominated in Common Stock.

      (e) Dividends and Cash Awards In the discretion of the Committee, any
Award under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and (ii)
cash payments in lieu of or in addition to an Award.

<PAGE>

      (f) Termination of Employment. The Committee shall determine the effect on
an Award of the disability, death, retirement or other termination of employment
of a Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or Designated Beneficiary may
receive payment of an Award or exercise rights thereunder.

      (g) Change in Control. In order to preserve a Participant's rights under
an Award in the event of a change in control of the Company, the Committee in
its discretion may, at the time an Award is made or at any time thereafter, take
one or more of the following actions: (i) provide for the acceleration of any
time period relating to the exercise or realization of the Award, (ii) provide
for the purchase of the Award upon the Participant's request for an amount of
cash or other property that could have been received upon the exercise or
realization of the Award had the Award been currently exercisable or payable,
(iii) adjust the terms of the Award in a manner determined by the Committee to
reflect the change in control, (iv) cause the Award to be assumed, or new rights
substituted therefor, by another entity, or (v) make such other provision as the
Committee may consider equitable and in the best interests of the Company.

      (h) Withholding. The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Options under the Plan no later than the date
of the event creating the tax liability. The Company and its Affiliates may, to
the extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the Participant. In the Committee's discretion, the
Participant may pay any taxes due with respect to an Option in whole or in part
in shares of Common Stock, including shares retained from the Option creating
the tax obligation, valued at their Fair Market Value on the date of retention
or delivery.

      (i) Foreign Nationals. Awards may be made to Participants who are foreign
nationals or employed outside the United States on such terms and conditions
different from those specified in the Plan as the Committee considers necessary
or advisable to achieve the purposes of the Plan or comply with applicable laws.

      (j) Amendment of Award. The Committee may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the same or
a different type, changing the date of exercise or realization and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.

Section 12. Miscellaneous

      (a) Limitation on Number of Shares Granted. Notwithstanding any other
provision of the Plan, the aggregate number of shares of Common Stock subject to
Options and SARs that may be granted within any fiscal year to any one Eligible
Person under the Plan shall not exceed that number of shares equal to 20% of the
total number of shares reserved for issuance under the Plan, except for grants
to new hires during the fiscal year of hiring which shall not exceed that

<PAGE>

number of shares equal to 30% of the total number of shares reserved for
issuance under the Plan.

      (b) No Right To Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to continued employment. The Company expressly reserves
the right at any time to dismiss a Participant free from any liability or claim
under the Plan, except as expressly provided in the applicable Award.

      (c) No Rights As Shareholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
shareholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.

      (d) Effective Date. Subject to the approval of the shareholders of the
Company, the Plan shall be effective on May 1, 1993. Prior to such approval,
Awards may be made under the Plan expressly subject to such approval.

      (e) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no amendment shall be made
without shareholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement.

      (f) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Massachusetts.


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<PAGE>
<ARTICLE> 5

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<PERIOD-END>                               JUL-04-1999
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