FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
Commission File No. 0-21990
OXiGENE, INC.
(Exact name of registrant as specified in its charter)
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Delaware 13-3679168
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(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)
One Copley Place, Suite 602, Boston, MA 02116
(Address of principal executive offices)
(617) 536-9500
(Telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
Warrant to purchase one share of Common Stock
Title of Each Class
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The approximate aggregate market value of the voting stock held by
non-affiliates of the registrant as of March 19, 1998 was $160,791,403, based on
the closing price of $17.125 on that date.
As of March 19, 1998, the aggregate number of outstanding shares of Common Stock
of the registrant was 10,195,765 shares.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant's Proxy Statement for the Annual Meeting of Stockholders,
scheduled to be held on June 5, 1998, is incorporated by reference to Part III
(Items 10, 11, 12 and 13) of this Form 10-K.
SAFE HARBOR FOR FORWARDLOOKING STATEMENTS UNDER
THE SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical information contained herein, this Annual Report on
Form 10-K ("Annual Report") contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements involve known and unknown risks and uncertainties that may cause the
Company's actual results or outcomes to be materially different from those
anticipated and discussed herein. Further, the Company operates in an industry
sector where securities values may be volatile and may be influenced by
regulatory and other factors beyond the Company's control. Important factors
that the Company believes may cause such differences are discussed in the "Risk
Factors" section of this Annual Report and in the cautionary statements
accompanying the forward-looking statements in this Annual Report. In assessing
forward-looking statements contained herein, readers are urged to read carefully
all Risk Factors and cautionary statements contained in this Annual Report.
PART I
1. BUSINESS.
Introduction
OXiGENE, Inc. ("OXiGENE" or the "Company") is engaged primarily in research
into and development of products designed to enhance the clinical efficacy of
radiation and chemotherapy, the most common and traditional forms of
non-surgical cancer treatment. The Company's proprietary technology involves the
inhibition, measurement and stimulation of the cellular DNA repair process.
Since 1997, the Company, through collaborative arrangements, has also been
engaged in the development of two new classes of compounds that will be
clinically tested as a direct treatment of cancer.
OXiGENE's principal products, Neu-Sensamide(TM) and Oxi-104 (proposed
generic name declopramide), are sensitizers, drugs that make a tumor more
susceptible to damage by radiation or chemotherapy. Both products are based on
the Company's proprietary knowledge of the processes by which certain enzymes
repair damaged DNA sites, a function essential to a cell's survival. The cell's
enzymes that normally repair DNA damage to the tumor cell counter the cytotoxic
(cell-killing) effects of radiation and chemotherapy by repairing the tumor
cell's DNA that has been damaged by either of those therapies. When administered
in accordance with its prescribed regimen, the Company believes, on the basis of
its clinical studies, that Neu-Sensamide(TM) should make cancerous tumor cells
more sensitive to radiation by inhibiting DNA repair activity, consequently
increasing tumor damage from radiation therapy in those cells. Accordingly, the
Company expects that patient response to radiation therapy should be improved
and may result in increased tumor shrinkage, reduced side effects, or both.
Based on the results of preclinical animal studies, OXiGENE believes that
Oxi-104 alone may induce tumor growth-inhibiting and tumor-killing effects.
Neu-Sensamide(TM) is a proprietary reformulation of Sensamide,(TM) a
prototype drug in which metoclopramide is the active ingredient. In September
1997, the Company announced the first preliminary results of its European,
randomized, controlled Phase II/III clinical trial of Sensamide(TM) in
combination with radiation therapy in 218 patients with inoperable non-small
cell lung cancer ("NSCLC"), which indicated an increased median survival time
for those patients who received a full dosage of Sensamide(TM) plus radiation.
In March 1998, the Company supplemented those preliminary results with tumor
response data. The additional study data indicate that more patients with
squamous cell carcinoma (the most common form of lung cancer) and a Karnofsky
score (a benchmark for assessing the degree of illness in terminally ill
patients) of 90 or higher, when receiving Sensamide(TM) plus radiation,
experienced tumor response. Forty-seven (47%) of those patients experienced
complete or partial (complete is 100% and partial is 50% or greater) tumor
response, compared to 30% for patients who received radiation only. A
significant number of patients did not complete the Sensamide(TM) treatment
because of either the Central Nervous System (CNS) side effects associated with
metoclopramide (approximately 25%) or the progressive deterioration of their
health (approximately 20%). These CNS side effects (sedation, anxiety,
restlessness and depression), however, are reversible, have been well documented
in the clinical literature for more than 30 years, and were not unexpected by
the Company. The Company believes those results constitute sufficient proof of
the theory underlying its principal scientific concept to provide a basis for it
to continue advanced clinical studies with respect to its later generation
drugs, which, the Company believes, have reduced side effects from those
experienced with Sensamide(TM) (as described above).
In the fourth quarter of 1996, OXiGENE commenced an additional randomized,
controlled Phase III clinical trial in 226 patients with NSCLC using
Neu-Sensamide(TM), the Company's second-generation sensitizer drug. Based on
preliminary preclinical studies and a Phase I clinical trial, the Company
believes that Neu-Sensamide(TM) will show a reduced CNS side effect profile
compared to Sensamide,(TM) resulting in an increase of the number of patients
completing treatment. The Company intends to use the results of the
Sensamide(TM) study to support a New Drug Application ("NDA") for
Neu-Sensamide(TM) as a radiation sensitizer for the treatment of patients with
NSCLC.
In the fourth quarter of 1997, a 15-patient, open-label, Phase I study of
Neu-Sensamide(TM) in patients with glioblastoma, a highly malignant form of
brain cancer, commenced in the United States. The European Phase I/II
counterpart of this study was initiated in Sweden in the second quarter of 1996.
After the filing of an Investigational New Drug ("IND") application with
the U.S. Food and Drug Administration ("FDA") in March 1997, the Company
commenced Phase I/II clinical tests of Oxi-104, the Company's third generation
sensitizer, in combination with 5-FU and Cisplatin (chemotherapeutic agents) in
patients with advanced stages of cancer. This study is the first in which the
Company utilizes its compounds in combination with chemotherapeutic agents, as
distinguished from radiation. Oxi-104 is an N-substituted benzamide but, unlike
Sensamide(TM) and Neu-Sensamide,(TM) it is not based on metoclopramide (which is
a different compound in the chemical family of N-substituted benzamides).
Oxi-104 has been designed with a molecular structure that, the Company believes,
may reduce adverse side effects in patents while maintaining the sensitizing
properties of other N-substituted benzamides.
The first of the Company's products being developed, under a collaborative
arrangement, as a direct treatment of cancer is Cordycepin. A Phase I clinical
study of Cordycepin in combination with Pentostatin in patients with refractory
TdT-positive acute lymphoid leukemia started in the first quarter of 1997, in
collaboration with Boston Medical Center Corporation, an affiliate of Boston
University Medical Center ("BMC"), and the National Cancer Institute. The
collaboration with BMC was expanded with the appointment of Dr. Ronald Pero,
OXiGENE's Chief Scientific Officer, as a professor and member of BMC's
scientific staff and the creation of an OXiGENE-sponsored research facility that
will conduct research into, among other things, the potential therapeutic
synergies between N-substituted benzamides and Cordycepin and related compounds.
OXiGENE has an option to acquire an exclusive, world-wide, royalty-bearing
license with respect to any invention or product, including Cordycepin,
conceived in the course of work performed under the BMC agreement.
In May 1997, OXiGENE entered into an agreement with Arizona State
University ("ASU") to develop and test certain Combretastatin compounds,
including Combretastatin (hereinafter generally referred to as
"Combretastatin"). Combretastatins are naturally-occurring substances that were
identified and isolated by Dr. George R. Pettit, Regents Professor of Chemistry,
and his colleagues at ASU, from the South African bushwillow tree.
Combretastatin is believed to block the growth of new blood vessels into the
tumor and to destroy recently-formed blood vessels within the tumor. OXiGENE has
an option to acquire from ASU an exclusive, world-wide, royalty-bearing license
with respect to the commercial rights to Combretastatin.
The Company has also developed proprietary assays (tests) that measure
levels of the DNA repair enzyme PARP (Poly (ADP Ribose) Polymerase) in blood,
thereby suggesting DNA repair activity that the Company believes correlates to
immune function and status, and has identified a mixture of compounds, called
Nicoplex, that it believes may be capable of stimulating DNA repair. Based on
preclinical studies to date, OXiGENE has commenced the clinical development of
these product types.
There can be no assurance that the Company's existing and planned product
development efforts and clinical trials for Sensamide,(TM) Neu-Sensamide(TM),
OXI-104 or any other compound, will be successful or completed within
anticipated time frames, or at all; that regulatory approvals will be obtained
or will be as broad as those sought by the Company; or that any products, if
introduced, will achieve market acceptance. In addition, there can be no
assurance that the Company's technology will prove effective, that the Company
will be able to enter into strategic alliances or joint ventures or that the
terms thereof will be favorable to the Company, or that the Company will be
profitable. See "Risk Factors."
The Company was incorporated in New York in 1988, and subsequently was
re-incorporated in Delaware in 1992. The Company established a Swedish
subsidiary, OXiGENE Europe AB, in December 1994. The Company's principal
executive office is located at One Copley Place, Suite 602, Boston, MA 02116
(phone no.: 617-536-9500; fax no.: 617-536-4700, and in Sweden at
Blasieholmsgatan 2C, S-111 48 Stockholm, Sweden (phone no.: 011 46 8 678 8720;
fax no.: 011 46 8 678 8605) and at Scheelevagen 17, S-223 70 Lund, Sweden
(telephone no.: 011 46 46 16 8860; fax no.: 011 46 46 16 8866). Any references
in this Annual Report to "OXiGENE" or the "Company" shall mean OXiGENE, Inc. and
its wholly-owned Swedish subsidiary OXiGENE Europe AB.
Product Development and Marketing Strategy
OXiGENE's primary goal to date has been to develop products that enhance
the efficacy of existing forms of cancer treatment, such as radiation and
chemotherapy, and improve a patient's quality of life, by reducing side effects
and inhibiting the DNA repair function of, and increasing DNA damage in, tumor
cells that have been subjected to treatment. In 1997, the Company began to
expand its focus to include the development and clinical testing of Cordycepin
and Combretastatin, two classes of compounds that aim to treat cancer directly.
The Company believes these compounds complement its traditional sensitizer
program, and offer an opportunity to broaden the Company's product pipeline.
The Company currently intends to continue and expand its ongoing clinical
trial program in Europe and further develop and broaden its research and
clinical trial activities in the United States. The Company does not own or
lease any laboratories or other research and development facilities. In
connection with the BMC agreement, the Company has set up an office in Boston to
monitor its clinical trials and research activities in the United States.
The Company's policy has been to establish relationships with universities,
research organizations and other institutions in the field of oncology. The
Company intends further to broaden these relationships, rather than expand its
in-house research, development and clinical staff. Although the Company plans to
market its products, if and when approved for marketing, directly in certain
European countries, it has had preliminary discussions with unaffiliated
pharmaceutical companies regarding the formation of possible strategic alliances
or joint ventures for the manufacturing and marketing of its products in the
United States, the Far East and elsewhere. To date, the Company has not entered
into any such alliances or ventures. While OXiGENE is likely to explore license
and development opportunities for its technologies with other companies, there
can be no assurance that the Company will be successful in establishing and
maintaining collaborative agreements or licensing arrangements; that any
collaborative partner will not be pursuing alternative technologies or
developing alternative compounds either on its own or in collaboration with
others, directed at the same diseases as those involved in its collaborative
arrangements with the Company; that any such collaborative partners will devote
resources to the Company's technologies or compounds on a basis favorable to the
Company; that any such arrangements will be on terms favorable to OXiGENE; or
that, if established, such future licensees will be successful in
commercializing products. If the Company's collaboration arrangements are
terminated prior to their expiration or if the other parties to such
arrangements fail to adequately perform, there can be no assurance that
submission of product candidates for regulatory approval will not be delayed.
See "--Research and Development and Collaborative Arrangements."
OXiGENE has selected Caneire Teoranta (trading as Bioniche Teoranta,
"Bioniche"), a Canadian pharmaceutical company with FDA current Good
Manufacturing Practice ("cGMP") standard facilities, for the commercial batch
manufacturing of Neu-Sensamide(TM). The Bioniche agreement will enable the
Company to assemble and evaluate shelf-life and stability data for
Neu-Sensamide(TM) produced by Bioniche in connection with the Company's ongoing
Neu-Sensamide(TM) clinical trials in patients with inoperable NSCLC. Production
of quantities sufficient to conduct the Company's current and projected clinical
trials commenced at Bioniche's facilities in Ireland in January 1997.
Currently, the Company has collaborative arrangements with a number of
academic and other research institutions and organizations in the United States
and Europe, including: the University of Lund in Lund, Sweden; Boston Medical
Center in Boston, Massachusetts; the Swedish Cancer Society in Stockholm,
Sweden; the University of Kentucky Research Foundation in Lexington, Kentucky;
Aarhus University in Aarhus, Denmark; Gray Laboratory in Middlesex, United
Kingdom; Angiogene Ltd. in Oxfordshire, United Kingdom; Georgetown University in
Washington, D.C.; University of Florida in Gainesville, Florida; The University
of Texas M.D. Anderson Cancer Center in Houston, Texas; Baylor University in
Waco, Texas; and Arizona State University in Tempe, Arizona. See "--Research and
Development and Collaborative Arrangements."
In particular, the Company believes that its collaborations with the
University of Lund enable it to conduct clinical trials of its products in an
environment offering a more homogenous patient population at less cost and more
rapidly than the Company could achieve in the United States. The University of
Lund has historically provided, and continues to provide, the Company with
access to clinical trial facilities, patients and research facilities.
Additionally, the Company benefits indirectly from certain research grants
received by the University of Lund.
Technology Overview
OXiGENE's proprietary technology is based on the relationship between DNA
repair and DNA damage as affected by both the operation of Poly (ADP Ribose)
Polymerase ("PARP") (a DNA repair enzyme also known and formerly referred to as
Adenosine Diphosphate Ribosyl Transferase or ADPRT) and cell replication. Normal
cells in the human body are constantly subjected to external assault from
harmful environmental agents such as the sun's ultraviolet rays, toxic chemicals
in the diet and carcinogens such as smoke that are absorbed into the body, as
well as from internal assault from metabolic byproducts produced within the
cell. These assaults cause damage, or genetic lesions, to the DNA molecules,
which contain the genetic blueprint (instructions) for the cell. The cell's
structural integrity is dependent on its ability to read and translate those
blueprints. Repairing DNA damage is, therefore, essential to a cell's survival.
Consequently, the body attempts to counter this constant assault through its
genetic mechanisms that monitor genetic lesions to a cell's DNA molecules and to
repair them enzymatically.
Repair enzymes move constantly along the DNA molecule seeking out genetic
lesions and attempting to repair them through a process called "excision
repair." One of these enzymes is PARP. It identifies a genetic lesion, attaches
to the damaged site and engages other enzymes to help in the repair process. The
injured portion of the DNA molecule is then removed by enzymatic digestion and
additional enzymes repair the damage to that part of the molecule. As DNA is a
double helix composed of diametrically opposed strands, the repair enzymes can
use the unaffected strand of nucleotides (the class of nucleic acid compounds
from which genes are constructed) as a template for determining the correct
nucleotides to serve as replacement for the injured portion that has been
removed. The process is completed by the repair enzymes, which produce the
"complementary twin" and implant it in the previously removed damaged section.
The excision repair process is selective in that it concentrates on active
regions of the DNA helix, i.e., those containing the genes that are most vital
to the cell. Thus, when the rate of damage to a cell is more than the repair
system can handle, generally the repair mechanism first repairs lesions in a
cell that occur in frequently read genes, which are the genes that are important
to a cell's day-to-day survival. Damage occurring in inactive or structural
portions of the DNA that are not immediately important to a cell's survival is
repaired only as time permits, if at all. Therefore, OXiGENE believes that cells
become malignant or age by the accumulation of genetic lesions that the DNA
repair system has failed to correct properly or in a timely manner.
[BIOCHEMICAL PROCESS OF EXCISION REPAIR OF DAMAGED DNA]
Throughout life, cells replicate by division. Cell division (replication)
occurs very quickly and defects are unavoidable. Genetic defects constitute a
serious threat to a cell's survival. A persistent genetic defect, or mutation,
increases the risk of disease and death. Cancer is a disease in which a mutated
tumor cell divides uninterruptedly and in an uncontrolled manner. Normal cells
in the presence of tumor cells die because the tumor cells exhaust their
nourishment, inhibiting a normal cell's ability to survive and eventually
leading to organic malfunctions and possibly death.
[DRAWING OF THE DNA REPAIR PROCESS IN THE HUMAN BODY]
Traditionally, cancer treatment has been based on the theory that stopping
uncontrolled cell division may halt or slow tumor growth. Both radiation and
chemotherapy increase DNA damage in tumorous cells, causing toxicity and cell
death. Tumorous cells are known to die by either of two mechanisms, necrosis
(death with cell replication) and apoptosis (death without cell replication), or
both. Based on recent scientific evidence, the Company believes that lower doses
of radiation or chemotherapy cause tumor cell death primarily by apoptosis,
whereas at higher doses necrotic death is proportionately more prevalent.
OXiGENE's main product line of DNA repair inhibitors are based on N-substituted
benzamides, which, the Company believes, cause tumor toxicity primarily by
apoptosis. Presented in biological terms, apoptosis can be viewed as an
enzymatic inhibition of the DNA repair enzyme PARP, leading to the induction of
massive DNA damage, blocking of cell replication and eventually cell death.
Necrosis on the other hand is influenced by non-enzymatic DNA repair inhibition
such as would be the case if oxidative damage interacts directly with certain
chemical groups in the PARP enzyme to inhibit its function of removing DNA
lesions introduced by radiation or chemotherapy.
Apoptosis is initiated by cells as an alternative pathway to block cell
replication and induce death. Necrosis on the other hand causes cells to die
during replication (mitotic cell death) or permits cells to survive but with
mutation, potentially causing tumor disease. The advantage to a patient of
apoptotic death of tumorous cells, in contrast to necrotic death, is that it
allows normal living cells to absorb the various components that make up the
apoptotic, dying cells without further enzymatic digestion of the cellular
components as occurs with necrotic cell death. Accordingly, apoptosis causes
cell death without the many toxic side effects associated with necrosis and
enzymatic digestion. This is an important basis for OXiGENE's product research
and development, particularly its second and third generation products, since
its goal is to create drugs to counteract cancer that are also less hazardous to
the individual than those used today.
The Company's drugs are based on metoclopramide, a compound in the family
of N-substituted benzamides. N-substituted benzamides, together with the family
of nicotimamide compounds, have been developed into drugs for many different
medical indications, some of which have been used for more than 30 years. The
Company's recent research has focused on the mechanism of action of these
compounds and their possible regulation of PARP activity and, thereby,
regulation of the processes of DNA repair and apoptosis (programmed cell death
or cell death without cell replication). Based on its preclinical studies to
date, OXiGENE believes that DNA damage, such as that induced by radiation and
chemotherapy, activates the nuclear transcription factor kappa B ("NF-kB"),
which in turn may modulate PARP activity and activate several other genes that
protect cells against apoptosis-induced cytotoxicity and induce inflammatory
cytokine product. Therefore, the Company believes that a drug that can inhibit
NF-kB may be able to induce tumor killing by apoptosis and inhibit inflammatory
responses, which would sensitize DNA-damaging radio- and chemotherapies and at
the same time inhibit inflammation, a contributing factor to unwanted side
effects.
[SCHEMATIC OVERVIEW OF MODE OF ACTION OF DNA REPAIR INHIBITION]
OXiGENE's products are in an early stage of development. In order to
achieve profitable operations on a continuing basis, the Company, alone or in
collaboration with others, must successfully develop, manufacture, introduce and
market its products. The time frame necessary to achieve market success for any
individual product is long and uncertain. See "--Product Development and
Regulatory Processes." The products currently under development by the Company
will require significant additional research and development and extensive
preclinical and clinical testing prior to application for commercial use. There
can be no assurance that the Company's research or product development efforts
or those of its collaborative partners will be successfully completed, that any
compounds currently under development by the Company will be successfully
developed into drugs, or that any products will receive regulatory approval on a
timely basis, if at all.
DNA Repair Inhibition. Cancer therapy typically involves either or both of
surgery, to remove the primary tumor, and the application of cytotoxic
(cell-killing) agents, such as radiation or chemotherapy, to destroy primary and
secondary tumors that are too small, diverse or broadly spread to be removed
surgically (called metastases). Nearly all available radiation and
chemotherapies work by increasing DNA damage to tumor cells, thus blocking
replication of those cells and inhibiting their growth by necrosis or apoptosis,
or both, and eventually leading to their death. As tumorous cells replicate
substantially more frequently than normal cells, the body's normal DNA repair
mechanism tends to counteract the effects of radiation and chemotherapy
treatment by promoting the replication, or "regrowth," of the very tumors that
have been treated. The Company believes that this process may be prevented by
inhibiting the body's normal repair mechanism. Further, the Company believes
that certain chemical compounds are capable of serving as "sensitizers," which
supplement the radiation or chemotherapy phase of cancer treatment by inhibiting
DNA repair of the tumor cell and increasing DNA damage, thereby increasing the
efficiency of the cytotoxic agents. Drugs that exhibit sensitizing properties
permit an oncologist to elect either to achieve greater results with a given
dose of radiation therapy or chemotherapy, or to reduce the level of the
cytotoxic agent needed to achieve the same result. Frequently, however,
oncologists must cut short therapy because side effects associated with certain
sensitizing agents become intolerable before effective tumor killing can occur.
The Company believes that its principal, second and third generation products
are sensitizers that should be capable of inhibiting DNA repair of the tumor
cell and increasing DNA damage without intolerable side effects when used in
conjunction with traditional cancer treatments. See "--OXiGENE's Clinical Trial
Program."
DNA Repair Measurement and Stimulation. The PARP enzyme is an important
enzyme in the DNA repair process because it recognizes DNA damage and alters
certain proteins in the damaged site, enabling the other repair enzymes to gain
access to that site and to complete the excision repair process. Therefore, the
Company believes that if an individual's level of PARP is high, DNA repair is
being facilitated and DNA damage is being removed, and if an individual's level
of PARP is low, DNA repair is being inhibited and DNA damage will accumulate.
Consequently, by measuring individual levels of PARP, the Company believes it is
possible to determine how well the DNA repair process is functioning in
preventing accumulated DNA damage. OXiGENE believes that knowledge of DNA repair
activity may be useful for monitoring or screening individuals for
susceptibility to cancer, immune deficiencies, chemotherapeutic drug resistance
and the success or failure of chemopreventive treatment.
OXiGENE believes that knowledge of the body's metabolic function and its
related process known as "oxidative stress," in which a small number of
metabolic "mistakes" occur and cause the formation of certain intermediates that
damage DNA, and knowledge of the body's inflammatory response that causes a
decline in DNA repair, may lead to the development of drugs that may stimulate
DNA repair. Drugs of that type, the Company believes, could reduce a person's
susceptibility to cancer and certain diseases associated with the aging process
by increasing net DNA repair capacity.
Although the Company has conducted extensive preclinical cell and animal
research into, and is currently in the early stages of clinical testing of,
assays and drugs in some of the areas of DNA repair measurement and DNA repair
stimulation, there can be no assurance that any assays or drugs related to
either of these areas can or will be developed by the Company. See "--OXiGENE's
Clinical Trial Program."
OXiGENE's Clinical Trial Program
DNA Repair Inhibiting Products. OXiGENE has discovered certain compounds in
the family of N-substituted benzamides that it believes should be capable of
inhibiting PARP-modulated DNA repair and selectively reacting with radiation to
cause additional DNA damage preferentially in the treated area. OXiGENE believes
that this selectivity is due to tumor cells exhibiting increased DNA repair
activity as compared to normal cells, rendering them more sensitive to DNA
repair inhibition and death by apoptosis. The Company believes, on the basis of
its research activities to date, that its principal product, Neu-Sensamide(TM),
should act as a selective, targeted sensitizer of tumor tissue that will
sensitize radiation preferentially inside the treated area without producing
significant toxic side effects outside the treated area.
The current emphasis of the Company's clinical trial program is on
evaluating the safety and efficacy of Neu-Sensamide(TM) as a sensitizing agent
in combination with radiation therapy, with the goal of obtaining approval for
Neu-Sensamide(TM) as a radiation sensitizer. The Company does not intend to seek
marketing approval of Sensamide,(TM) the prototype of Neu-Sensamide,(TM)
although a European, randomized, controlled Phase II/III clinical trial of
Sensamide(TM) in 218 patients with inoperable NSCLC has been completed. In
September 1997, the first preliminary results of this study were announced,
which indicated an increased median survival time for those patients who
received a full dosage of Sensamide(TM) plus radiation. In March 1998, the
Company supplemented those preliminary results with tumor response data. The
additional study data indicate that more patients with squamous cell carcinoma
(the most common form of lung cancer) and a Karnofsky score (a benchmark for
assessing the degree of illness in terminally ill patients) of 90 or higher,
when receiving Sensamide(TM) plus radiation, experienced tumor response.
Forty-seven percent (47%) of those patients experienced complete or partial
(complete is 100% and partial is 50% or greater) tumor response, compared to 30%
for patients who received radiation only. A significant number of patients did
not complete the Sensamide(TM) treatment because of either the Central Nervous
System (CNS) side effects associated with metoclopramide (approximately 25%) or
the progressive deterioration of their health (approximately 20%). These CNS
side effects (sedation, anxiety, restlessness and depression), however, are
reversible, have been well documented in the clinical literature for more than
30 years, and were not unexpected by the Company. The Company believes those
results constitute sufficient proof of the theory underlying its principal
scientific concept to provide a basis for it to continue advanced clinical
studies with respect to its later generation drugs, which, the Company believes,
have reduced side effects from those that are experienced with Sensamide(TM) (as
described above).
In the fourth quarter of 1997, the Company commenced an additional
randomized, controlled Phase III clinical trial of Neu-Sensamide(TM) in 226
patients with NSCLC. The Company intends to use the results of the Sensamide(TM)
study to support an NDA for Neu-Sensamide(TM) as a radiation sensitizer for the
treatment of patients with NSCLC.
In the fourth quarter of 1996, the Company commenced a 15-patient,
open-label Phase I study of Neu-Sensamide(TM) in patients with glioblastoma, a
highly malignant form of brain cancer. The European Phase I/II counterpart of
this study was initiated in Sweden in the second quarter of 1996.
OXiGENE has collaborated with ILEX Oncology, Inc., a contract research
organization based in San Antonio, Texas ("ILEX"), on the development and
pre-clinical testing of Oxi-104. Oxi-104, the Company's third generation
sensitizer, is an N-substituted benzamide and, therefore, is covered by
OXiGENE's use patent for all N-substituted benzamides as sensitizers for
chemotherapy and radiation. The Company believes that Oxi-104 alone may induce
tumor growth-inhibiting and tumor-killing effects. Oxi-104 is an N-substituted
benzamide but, unlike Sensamide(TM) or Neu-Sensamide,(TM) it is not based on
metoclopramide. Oxi-104 has been designed with a molecular structure that, the
Company believes, may reduce side effects while maintaining the sensitizing
properties of other N-substituted benzamides. The Company intends to develop
Oxi-104 as a chemosensitizer. For the Company's two radiation sensitizers,
Sensamide(TM) and Neu-Sensamide(TM), currently the limiting doses are determined
by their central nervous system (CNS) side effects. By comparison, Oxi-104 has
not yet been shown to cause any CNS side effects in animal studies. After the
filing of an IND with the FDA in March 1997, the Company commenced a Phase I
clinical trial of Oxi-104.
Cordycepin/Pentostatin. In December 1996, the Company entered into a
clinical trial and sponsored research agreement with BMC, an affiliate of Boston
University Medical Center, pursuant to which BMC is conducting a Phase I
clinical study of 3'-deoxyadenosine (cordycepin) and 2'-deoxycoformycin
(pentostatin) in patients with refractory TdT-positive acute lymphoid leukemia.
The Phase I study commenced in the first quarter of 1997 in collaboration with
Boston University and the National Cancer Institute. The collaboration under the
BMC Agreement was expanded in August 1997, with the appointment of Dr. Pero,
OXiGENE's Chief Scientific Officer, as Research Professor of Medicine at BMC and
the set-up of an OXiGENE-sponsored laboratory facility at BMC. The BMC agreement
contemplates a collaborative program that focuses on research aimed at the
continued development of, and potential synergies between, N-substituted
benzamides, cordycepin and related compounds, and the conduct of clinical trials
in connection therewith. The BMC agreement grants OXiGENE an option to acquire
an exclusive, world-wide, royalty-bearing license with respect to the commercial
rights to any inventions made in the course of work conducted pursuant to the
BMC agreement, including to cordycepin.
Combretastatin. In May 1997, OXiGENE and Arizona State University entered
into an agreement to develop and test Combretastatin. Combretastatins are
naturally-occurring substances, that were identified and isolated by Dr. George
R. Pettit, Regents Professor of Chemistry, and his colleagues at ASU, from the
South African bushwillow tree. Combretastatin is believed to block the growth of
new blood vessels into the tumor and to destroy recently-formed blood vessels
within the tumor. Vasculature is critical to both the survival of a solid tumor
mass and its continued growth and, therefore, represent a key target in novel
cancer treatment. OXiGENE has an option to acquire an exclusive, world-wide,
royalty-bearing license with respect to the commercial rights to Combretastatin.
Early in the third quarter of 1998, the Company anticipates the commencement of
clinical trials of Combretastatin in the United Kingdom, and the filing of an
IND in the United States.
OXiGENE's products are in an early stage of development. In order to
achieve profitable operations on a continuing basis, the Company, alone or in
collaboration with others, must successfully develop, manufacture, introduce and
market its products. The time frame necessary to achieve market success for any
individual product is long and uncertain. See "--Product Development and
Regulatory Processes." The products currently under development by the Company
will require significant additional research and development and extensive
preclinical and clinical testing prior to application for commercial use. A
number of companies in the biotechnology and pharmaceutical industries have
suffered significant setbacks in clinical trials, even after showing promising
results in earlier studies or trials. Although the Company has obtained
favorable results to date in preclinical studies and clinical trials of certain
of its products, such results may not be indicative of results that will
ultimately be obtained in or throughout such clinical trials, and there can be
no assurance that clinical testing will show any of the Company's products to be
safe or efficacious. Additionally, there can be no assurance that the Company
will not encounter problems in its clinical trials that will cause the Company
to delay, suspend or terminate those clinical trials. There can also be no
assurance that the Company's research or product development efforts or those of
its collaborative partners will be successfully completed, that any compounds
currently under development by the Company will be successfully developed into
drugs, or that any products will receive regulatory approval on a timely basis,
if at all. If any such problems occur, the Company could be materially and
adversely affected.
A summary of the clinical trials related to the Company's products that are
currently under development is set forth in the table on the following page.
DNA Repair Measuring Products
- -----------------------------
PARP Assay Products. The Company believes that its knowledge of DNA repair
activity may be applied to monitor or screen individuals for susceptibility to
cancer, immune deficiencies and chemotherapeutic drug resistance. Studies have
shown that DNA repair capacity may vary from one individual to another. OXiGENE
has quantified individual levels of PARP as a DNA repair estimate. Pursuant to
an agreement, dated October 7, 1991, with Preventive Medicine Institute, a
not-for-profit corporation affiliated with the Strang Cancer Prevention Center
in New York, New York, the Company holds an exclusive worldwide license, which
expires in 2011, to certain patents and related know-how covering a PARP
diagnostic test that measures PARP levels in white blood cells. The Company
believes that a simple and inexpensive serum-based test may give a reliable
surrogate indication of the level of PARP in white blood cells. OXiGENE filed a
U.S. patent application in October 1994, with respect to such a test.
The New York University Medical Center, Department of Environmental
Medicine and the Center of Aids Research have conducted an investigation using
OXiGENE's assay for measuring PARP levels (i.e., a serum thiol-based surrogate
test) on 133 patients who were intravenous narcotic drug users and were infected
with the HIV virus that causes AIDS. The Company believes that this repair assay
may assess DNA repair activity by measuring total serum thiol levels. The
Company believes that preliminary results of this investigation indicate that
this assay may be effective in monitoring the progression of HIV-related
diseases. The Company believes that measuring a person's immune function through
DNA repair activity may be a better indication of HIV-related disease
progression and, consequently, survival than more commonly used indicators such
as CD4 cell counts. The Company intends to pursue the development of a
more-cost-effective, easy-to-administer version of the assay for
commercialization.
<PAGE>
Summary of OXiGENE's Clinical Trial Program
<TABLE>
<CAPTION>
Study Code Drug/Indication Phase and Design Total Patients Treatment Assignment
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
<S> <C> <C> <C> <C>
Lu-01 Sensamide(TM)in I/II; 23 All patients on
NSCLC uncontrolled, Sensamide(TM)(i.v.) with
open-label radiation
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
OXi-01 Sensamide(TM)in II/III; 226 Sensamide(TM)(i.v.) with
NSCLC controlled, radiation - 113;
randomized, Radiation only - 113
open-label
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
OXi-02 Comparative study I; placebo, 18 All patients receive
in healthy controlled, one dose of placebo
volunteers of double-blind (i.m.), Sensamide(TM)
Placebo, cross-over (i.v.), Neu-Sensamide(TM)
Sensamide(TM)and (i.m.) and
Neu-Sensamide(TM) Neu-Sensamide(TM)(i.m.)
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
OXi-03 Neu-Sensamide(TM)in III; controlled, 226 Neu-Sensamide(TM)(i.m.
NSCLC randomized, or i.v.) with
open-label radiation - 113;
Radiation only - 113
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
OXi-04 Neu-Sensamide(TM) in I/II; 15 All patients on
glioblastoma uncontrolled, dose Neu-Sensamide(TM) (i.v.
escalation or i.m.)
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
OXi-05 Neu-Sensamide(TM) in I/II; 20 All patients on
NSCLC uncontrolled, dose Neu-Sensamide(TM) (i.v.
escalation or i.m.)
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
OXi-06 Neu-Sensamide(TM) in I; uncontrolled, 15 All patients on
glioblastoma dose escalation Neu-Sensamide(TM) (i.v.
or i.m.)
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
OXi-07 Neu-Sensamide(TM)in I; single-dose, 10 All patients on
NSCLC tumor uptake, Neu-Sensamide(TM)(i.m.)
pre-surgery
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
OXi-09 Neu-Sensamide(TM)in II; uncontrolled, 60 Radiation and
NSCLC combination study Neu-Sensamide(TM)in
combination with Taxol
and Cisplatin
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
OXi-10 Neu-Sensamide(TM)in II; uncontrolled, 60 Radiation and
NSCLC combination study Neu-Sensamide(TM)in
combination with
Cisplatin and Navelbine
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
OXi-401 OXi-104 in I; 15 Patients scheduled for
miscellaneous pharma-cokinetics OXi-104 in combination
cancers and dose with 5-FU (a
escalation, chemo-therapeutic
open-label agent)
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
OXi-402 OXi-104 in I; uncontrolled, 15 Patients scheduled for
miscellaneous dose escalation, OXi-104 in combination
cancers open-label with Cisplatin (a
chemo-therapeutic
agent)
- -------------------- ------------------------- -------------------- ------------------ ----------------------------
BU-01 Cordycepin in I; 30 Patient groups on
leukemia pharmaco-kinetics, various doses to
dose escalation, determine maximum
open-label tolerated dosage
</TABLE>
<TABLE>
<CAPTION>
Study Code Drug/Indication Country Status
- -------------------- ---------------------------- ------------------------------------- ---------------------------
<S> <C> <C> <C>
Lu-01 Sensamide(TM)in NSCLC Sweden Completed; Published 1995
- -------------------- ---------------------------- ------------------------------------- ---------------------------
OXi-01 Sensamide(TM)in NSCLC Norway; Denmark; Sweden; Completed with 218
Germany; UK patients
- -------------------- ---------------------------- ------------------------------------- ---------------------------
OXi-02 Comparative study in UK Completed
healthy volunteers of
Placebo, Sensamide(TM)
and Neu-Sensamide(TM)
- -------------------- ---------------------------- ------------------------------------- ----------------------------
OXi-03 Neu-Sensamide(TM) in NSCLC Norway; Denmark; Sweden; Ongoing
Germany; UK; USA
- -------------------- ---------------------------- ------------------------------------ -----------------------------
OXi-04 Neu-Sensamide(TM) in Sweden Ongoing
glioblastoma
- -------------------- ---------------------------- ------------------------------------- ---------------------------
OXi-05 Neu-Sensamide(TM) in NSCLC USA Ongoing
- -------------------- ---------------------------- ------------------------------------- ---------------------------
OXi-06 Neu-Sensamide(TM) in USA Ongoing
glioblastoma
- -------------------- ---------------------------- ------------------------------------- ---------------------------
OXi-07 Neu-Sensamide(TM) in NSCLC Sweden Ongoing
- -------------------- ---------------------------- ------------------------------------- ---------------------------
OXi-09 Neu-Sensamide(TM) in NSCLC USA Ongoing
- -------------------- ---------------------------- ------------------------------------- ---------------------------
OXi-10 Neu-Sensamide(TM) in NSCLC USA Ongoing
- -------------------- ---------------------------- ------------------------------------- ---------------------------
OXi-401 OXi-104 in USA Ongoing
miscellaneous cancers
- -------------------- ---------------------------- ------------------------------------- ---------------------------
OXi-402 OXi-104 in USA Ongoing
miscellaneous cancers
- -------------------- ---------------------------- ------------------------------------- ---------------------------
BU-01 Cordycepin in leukemia USA Ongoing
</TABLE>
Certain terms and abbreviations used in the foregoing table are explained in the
Glossary on page --.
<PAGE>
DNA Repair Stimulating Products
- -------------------------------
Cancer, as well as the general deterioration of the body leading to aging
disorders connected to immunity, is generally recognized in medicine as a
mutational disease arising from the build-up of genetic damage in unrepaired
areas of DNA. By enhancing DNA repair in the inactive areas of the DNA
structure, genetic damage build-up may be reduced with a reduction in cell
mutation. OXiGENE research in this area has to date concentrated on identifying
compounds that, the Company believes, may slow the natural production of DNA
repair inhibitors produced by the body when inflammatory cells are activated as
an early defense against infections or cancer cells. The Company believes, based
on its research to date, that by blocking this natural production of DNA repair
inhibitors by inflammatory cells, a net increase in DNA repair capacity can be
achieved.
The Company has developed a screening method based on DNA repair
measurements of in vivo-exposed spleen and cells. The Company has identified a
new mixture of naturally-occurring compounds that it believes should be capable
of stimulating DNA repair, and which is currently under evaluation by the
Company in human cell and animal models to improve enhancement of DNA repair.
OXiGENE has filed an international (PCT) patent application for this mixture of
potential DNA repair stimulators. There can be no assurance whether or when a
patent may be issued or its coverage, if one is issued.
The Company believes that DNA-repair-enhanced compounds may be used to
supplement, or under certain circumstances replace, chemopreventive or cancer
retardant agents already in use for cancer treatment, such as Tamoxifen(TM), as
well as chemopreventive agents in various stages of development. Any
DNA-repair-enhancer drugs currently being developed by OXiGENE are expected to
be based on naturally occurring compounds, rather than synthetic analogs.
Consequently, the Company believes that they may be less inherently toxic than
newly-synthesized chemopreventive agents developed by others that are already in
clinical trials. However, there can be no assurance that the Company will be
able to develop any such a drug, or if developed, that such a drug could be
successfully marketed.
Product Development and Regulatory Processes
Research in areas of interest to the Company typically initially involves
optimization of leading chemical structures into leading compounds. Once a
leading compound has been identified, the preclinical phase commences. In that
phase, certain selected compounds are tested for therapeutic potential in a
number of animal models and undergo laboratory testing, with the objective of
characterizing the investigated compounds in relation to existing treatment and
getting a first indication of the compounds' development potential. Successful
preclinical work may lead to the filing of an IND, or a foreign equivalent, with
the relevant national regulatory authorities. The IND is a permission to
administer the compound to humans in clinical trials in the United States.
Several years of research and testing generally are necessary before an IND may
be obtained and clinical development may commence. There can be no certainty
that submission of an IND will result in FDA authorization to commence clinical
trials or that authorization of a particular phase of a clinical trial program
will result in authorization of other phases or that the completion of any
clinical trials will result in FDA approval of a new product.
The clinical development of new drugs is subject to approval by the health
authorities in individual countries, which have broad discretionary powers. For
example, in the United States, the FDA reviews the results of all clinical
studies and can discontinue a trial at any time if it concludes there is a
significant safety issue, or if there is convincing evidence that the therapy is
not effective for the chosen indication. The requirements regarding the duration
of a clinical phase vary considerably among countries. For life threatening and
severely debilitating conditions where products provide meaningful therapeutic
benefit over existing treatments or where no satisfactory treatment currently
exists, however, it is possible to accelerate the development process in the
United States through the "Accelerated Drug Approval Program." In other
countries, the trial process for drugs directed toward life threatening diseases
is shortened typically by lowering the requirements regarding the patient sample
size required to be met in the trials.
The development and testing, time periods mentioned below are indications
only and may vary and be materially longer. Upon successful completion of the
development program, a New Drug Application ("NDA"), or a foreign equivalent,
may be submitted to the appropriate regulatory authorities, and, if approved,
the product may then be marketed upon the terms and conditions of such approval.
Submission of an NDA does not assure that the FDA will approve a product for
manufacturing and marketing. Clinical trials are typically conducted in three
sequential phases, but the phases may overlap.
Phase I. The purpose of a Phase I study is to evaluate the toxicity of the
tested compound and to establish how the tested compound is tolerated and
decomposed in the human body. A Phase I clinical trial traditionally tests the
compound for safety (adverse effects), dosage tolerance, metabolism,
distribution, excretion and pharmacodynamics in a small group of healthy
individuals. A Phase I study may last up to one year.
Phase II. A Phase II study marks the beginning of clinical trials on a
limited number of patients to (i) determine the efficacy of the compound for
specific indications, (ii) determine dosage tolerance and optimal dosage and
(iii) identify possible adverse effects and safety risks. The Phase II trials
also seek to establish the most effective route of administration. Trials are
conducted on a larger, but still limited number of carefully monitored patients.
A Phase II study may last up to two and one-half years.
Phase III. If preliminary evidence suggesting effectiveness has been
obtained during Phase II evaluations and the compound is found to have an
acceptable safety profile in Phase II evaluations, a Phase III trial may be
undertaken. A Phase III study is an extensive clinical trial involving a large
number of patients. The number of patients in a Phase III trial program depends
to a great extent on the clinical indications that the drug addresses. Trials
are often double-blinded and involve a detailed statistical evaluation of test
results. The compound is tested against placebo and existing treatment, if such
treatment is available. The product is manufactured in commercial quantities
(batch manufacturing) and tested for shelf life, or stability, and further
evaluation of the clinical efficacy and safety of the compound takes place. A
Phase III study may last several years and is the most time-consuming and
expensive part of a clinical trial program.
There can be no assurance that Phase I, Phase II or Phase III testing will
be completed successfully within any specified time period, if at all, with
respect to any of the Company's products.
OXiGENE, like other pharmaceutical companies, will be subject to strict
controls covering the manufacture, labeling, supply and marketing of any
products it may develop and market. The most important regulation is the
requirement to obtain and maintain regulatory approval of a product from the
relevant regulatory authority to enable that product to be marketed in a given
country. Further, OXiGENE is subject to strict controls over clinical trials of
its potential pharmaceutical products.
The regulatory authorities in each country may impose their own
requirements and may refuse to grant, or may require additional data before
granting, an approval even though the relevant product has been approved by
another authority. The United States and European Union ("EU"), as well as
certain other countries such as Japan and Israel, countries have very high
standards of technical appraisal and, consequently, in most cases a lengthy
approval process for pharmaceutical products. The time required to obtain such
approval in particular countries varies, but generally takes from six months to
several years, if at all, from the date of application, depending upon the
degree of control exercised by the regulatory authority, the duration of its
review procedures and the nature of the product. The trend in recent years has
been towards stricter regulation and higher standards.
In the United States, the primary regulatory authority is the FDA. In
addition to regulating clinical procedures and processes, the FDA investigates
and approves market applications for new pharmaceutical products and is
responsible for regulating the labeling, marketing and monitoring of all such
products, whether marketed or under investigation. Upon approval in the United
States, a drug may only be marketed for the approved indications in the approved
dosage forms and dosages. In addition to obtaining FDA approval for each
indication to be treated with each product, each domestic drug manufacturing
establishment must register with the FDA, list its drug products with the FDA,
comply with cGMP requirements and be subject to inspection by the FDA. Foreign
manufacturing establishments distributing drugs in the United States also must
comply with cGMP requirements and list their products and are subject to
periodic inspection by the FDA or by local authorities under agreement with the
FDA.
In Europe, the European Committee for Proprietary Medicinal Products
provides a mechanism for EU-member states to exchange information on all aspects
of product licensing and assesses license applications submitted under two
different procedures (the multistate and the high-tech concentration
procedures). The EU has established a European agency for the evaluation of
medical products, with both a centralized community procedure and a
decentralized procedure, the latter being based on the principle of mutual
recognition between the member states.
There can be no assurances that any of those products will ever obtain the
governmental approvals necessary to permit commercial sales of any of its
products. Further, even if regulatory approval of a product is obtained, such
approval may entail limitations on the indicated uses for which that product may
be marketed.
Research and Development and Collaborative Arrangements
OXiGENE's research and development programs are generally pursued in
collaboration with academic and other institutions. The Company incurred
approximately $7.3 million, $4.8 million and $2.8 million in research and
development expenses in the years ended December 31, 1997, 1996 and 1995,
respectively. Substantially all of these amounts represent external research and
development expenditures.
Currently, the Company is not required to pay any royalties or licensing
fees for technology and products developed with financial assistance from or at
the facilities of such agencies and institutions, except for a 5% gross royalty
payable in respect of an exclusive worldwide license of the patent covering the
PARP diagnostic assay and certain costs related to the filing, prosecuting and
maintaining of patents and copyrights. Recently, however, the Company has
entered into agreements with a number of universities, particularly in the
United States, that may require payment of royalties in respect of inventions
made in the course of work performed pursuant to those agreements in the event
the Company exercises its option under those agreements to acquire an exclusive,
world-wide license. Generally, royalty rates are not fixed and will be
negotiated when and if the Company exercises its option to acquire a license.
There can be no assurance that such licensing negotiations will be concluded
successfully or that any royalties or fees will not be material as to their
amount.
Unless otherwise noted, each of the below-described agreements and
arrangements terminates upon completion of the study or the expiration of one
year, whichever is earlier.
University of Lund, Lund, Sweden. In 1987, Dr. Ronald Pero, OXiGENE's Chief
Scientific Officer, was appointed to lead an international effort to develop
biomarkers and to contribute to the basic knowledge of DNA repair in relation to
human diseases, and was awarded professorial privileges and laboratory space at
the University of Lund in Lund, Sweden. The program is conducted primarily at
the Univerity of Lund's Wallenberg Laboratory. The Wallenberg Laboratory
specializes in providing research space to selected research projects being
developed within the academic community. Currently, the program focuses its
research efforts on immunology and tumor biology, areas directly related to the
Company's technology development. Most of the Company's research, development,
preclinical testing and clinical trials are carried out at the Wallenberg
Laboratory, financed by research grants and contracts. The University of Lund
has not claimed any proprietary interest in the products developed by the
Company there.
In April 1994, the Department of Oncology, Lund University Hospital and the
Company entered into an agreement with respect to the multicentered clinical
trial of 226 patients to evaluate Sensamide(TM) as a radiosensitizer. This
agreement provides that the Department of Oncology, Lund University Hospital
will provide all the clinical items necessary for the study in accordance with
the protocol approved by the Swedish Medical Drug Agency.
Boston Medical Center, Boston, Massachusetts. In August 1997, the Company
entered into a collaborative research agreement with Boston Medical Center
Corporation, an affiliate of Boston University Medical Center ("BMC"), pursuant
to which an ongoing research program will be conducted by Dr. Ronald Pero, Dr.
Ronald McCaffrey and Dr. Alan Sugar. The BMC research program consists of the
following components: (i) research by Dr. Pero into the DNA repair inhibiting
and other disease specific activities of N-substituted benzamides; (ii) research
by Drs. McCaffrey and Sugar into Cordycepin, Deoxycoformycin and related
compounds as novel therapeutic agents in the treatment of cancer and infectious
diseases, and (iii) research into the potential therapeutic synergies between
N-substituted benzamides and cordycepin and related compounds, and the
identification of other, novel therapeutic agents and develop and conduct
clinical trials for such agents. The budget for the research program will be
fixed from time to time by a committee consisting of OXiGENE and BMC
representatives established to administer the research program. Dr. McCaffrey
will continue to conduct a Phase I clinical study of Cordycepin in combination
with Pentostatin in patients with refractory TdT-positive acute lymphoid
leukemia (the Phase I study commenced in the first quarter of 1997, under a
prior agreement dated December 1, 1996 between the Company and BMC) in
collaboration with Boston University and the National Cancer Institute. The
initial term of the agreement expires on June 30, 2000, although the term is
automatically extended for additional twelve-month periods, provided that the
agreement may be terminated by either party upon twelve months' prior written
notice or upon certain other events. OXiGENE has an option to acquire an
exclusive, world-wide, royalty-bearing license with respect to any invention or
discovery made during and as a part of the research performed pursuant to the
agreement.
Swedish Cancer Society, Stockholm, Sweden. In 1992, the Swedish Cancer
Society awarded Dr. Ronald Pero, in his capacity as a faculty member of the
University of Lund, a three-year grant for a total of approximately $0.3 million
to investigate benzamide and nicotinamide analogs relating to Sensamide(TM) as
radiosensitizers. This grant was renewed in 1995 for a one year period totaling
approximately $0.2 million. The Company was not the recipient of any of these
funds. The study's principal objective was to determine what chemical features
give benzamide/nicotinamide compounds multiple forms of radiosensitizing action.
Although the grant has not been formally renewed, research under this
arrangement continues on an ongoing basis.
In 1992, Dr. Pero, in his capacity as a faculty member of the University of
Lund, was awarded another Swedish Cancer Society research grant (under principal
investigator Professor Goran Berglund), for a total of approximately $0.4
million over a three-year period, to direct the biological bank and biomarker
program portion of the Malmo Diet Study. This project had its funding renewed
until October 1996, but research under this arrangement has continued since then
research under this arrangement continues on an ongoing basis without a formal
renewal of the funding. The Company was not the recipient of any of these funds.
The Malmo Diet Study, sponsored in part by the World Health Organization,
involves a large ongoing controlled case study in which individuals between the
ages of 46 years and 64 years, living in the city of Malmo, Sweden, were invited
to participate in a study designed to evaluate dietary factors as causative
agents for cancer. Patient enrollment for the study was completed in October
1996. The city of Malmo was selected as the site of this study because of the
historically high incidence of cancer in its relatively homogeneous population.
University of Kentucky Research Foundation, Lexington, Kentucky. The
Company has entered into three agreements with the University of Kentucky
Research Foundation, under which research will be conducted by: (i) Professor
Myron K. Jacobson, into the structural basis of the difference between
Sensamide(TM) and Neu-Sensamide(TM); (ii) Professor Elaine L. Jacobson, into the
effects of Sensamide(TM), Neu-Sensamide(TM) and Oxi-104 on ADP-Ribose
metabolism; and (iii) Associate Professor Ching-Shih Chen, to synthesize
Combretastatin phosphate.
Dr. Michael Horsman, the Danish Cancer Society, Aarhus, Denmark. Under an
agreement, dated October 9, 1997, with the Danish Cancer Society, Department of
Experimental Clinical Oncology, Dr. Horsman will conduct research into the
enhancement of radiation damage and chemotherapeutic agents by N-substituted
benzamides, and the anti-tumor activity of Combretastatin.
Dr. David J. Chaplin, the Gray Laboratory Cancer Research Trust, Middlesex,
United Kingdom. Dr. Chaplin is Head of the Tumour Microcirculation Group at the
Gray Laboratory Cancer Research Trust ("Gray") and a director of Angiogene
Pharmaceuticals Ltd. Dr. Chaplin also serves as the Secretary of the Company's
Scientific Advisory Board. Under an agreement, dated December 12, 1997, between
the Company and Gray, Dr. Chaplin will conduct research into the vascular and
therapeutic effects of Combretastatin in various tumor models.
Dr. David J. Chaplin, Angiogene Ltd., Oxfordshire, United Kingdom. Under an
agreement, dated April 1, 1997, with Angiogene Pharmaceuticals Ltd., a Company
that is affiliated with Dr. Chaplin but is not affiliated with the company, Dr.
Chaplin will conduct research into the anti-inflammatory and anti-tumor necrosis
factor (alpha) effects of N-substituted benzamides and nicotinamides.
Dr. Mark Smulson, Georgetown University, Washington D.C. Under a September
1997 research agreement with Georgetown University, Dr. Smulson will conduct
research into the interference of N-substituted benzamides with the functioning
of PARP and related enzymes.
Dr. Dietmar W. Siemann, University of Florida, Gainesville, Florida. The
Company has entered into two agreements with the University of Florida, under
which research will be conducted by Dr. Siemann. Under a July 1997 agreement,
Dr. Siemann will conduct research into the molecular interactions underlying the
radio-and chemosensitizing effects of N-substituted benzamides. Under an October
1997 agreement, Dr. Siemann will conduct research into the influence of
Combretastatin on (i) the anti-tumor efficacy of certain chemotherapeutic drugs
and (ii) the metastatic spread of cancer cells.
Professor K. Kian Ang, The University of Texas M.D. Anderson Cancer Center,
Houston, Texas. Under a sponsored laboratory study agreement, dated June 11,
1997, with the University of Texas M.D. Anderson Cancer Center, Dr. Ang will
conduct research into the enhancing effect of Neu-Sensamide(TM) and Oxi-104 on
radiation-induced apoptosis in various tumor models.
Professor Robert R. Kane, Baylor University, Waco, Texas. Under a sponsored
program agreement, dated June 24, 1997, with Baylor University, Professor Kane
will conduct research into the molecular basis for the radiosensitizing action
of Sensamide(TM) and other N-substituted benzamides.
Arizona State University, Tempe, Arizona. The Company has entered into a
technology development agreement, dated May 27, 1997, with Arizona State
University ("ASU"), under which the Company has the exclusive option to acquire
an exclusive worldwide license to develop and commercialize the technology that
relates to a family of anti-cancer compounds known in the scientific community
by the name combretastatin, including Combretastatin, the University's patent
rights to develop, use and sell Combretastatin A-4. The Company's option expires
on May 28, 1999, provided that the agreement may be terminated by the Company
upon thirty days' prior written notice or upon certain other events. The
agreement also gives the Company the right to file an IND with respect to
clinical testing of Combretastatin and the right to technical assistance from
representatives of ASU.
Patents and Trade Secrets
Certain of OXiGENE's current products are based on available compounds that
are produced by others and are not subject to patent protection currently. The
Company anticipates that any products it develops hereafter may include or be
based on the same or other compounds owned or produced by unaffiliated parties,
as well as synthetic compounds it may discover. Although the Company expects to
seek patent protection for any compounds it discovers, there is no assurance
that any or all of them will be subject to effective patent protection. Further,
the development of regimens for the administration of pharmaceuticals, which
generally involve specifications for the frequency, timing and amount of
dosages, has been, and the Company believes will continue to be, important to
the Company's efforts, although those processes, as such, may not be patentable.
Patent Protection. It is the Company's policy to seek patent protection in
the United States and in foreign countries. Primarily because of differences
among patent laws in various jurisdictions, the scope of, and hence the
protection afforded by, any patents OXiGENE may receive may vary from
jurisdiction to jurisdiction even though they relate essentially to the same
subject matter.
The patent position of firms in the Company's industry generally involves
highly complex legal and other issues, resulting in both an apparent
inconsistency regarding the breadth of claims allowed in United States patents
and general uncertainty as to their legal interpretation and enforceability.
Accordingly, there can be no assurance that patent applications owned by the
Company will result in patents being issued or that, if issued, the patents will
afford competitive protection.
Further, there can be no assurance that products or processes developed by
the Company will not be covered by third party patents, in which case continued
development and marketing of those products or processes could require a license
under such patents. There can be no assurance that if a legal action were to be
brought against the Company on the basis of any third party patents, such action
would be resolved in the Company's favor. An unfavorable result against the
Company could result in monetary damages and injunctive relief. Further, even a
favorable result could cause expenditure of substantial monetary and other
resources in connection with the Company's defense against any such action.
Granted Patents and Pending Applications. The following is a brief
description of the Company's current patent position, both in the United States
and abroad. As U.S. patent applications are maintained in secrecy by the U.S.
Patent and Trademark Office until patents issue and because publication of
discoveries in the scientific or patent literature often lags behind actual
discoveries, OXiGENE cannot be certain that it was the first creator of
inventions covered by its pending applications or that it was the first to file
patent applications for those inventions.
As of March 8, 1998, the Company is the assignee of four granted U.S.
patents, five pending U.S. patent applications, and of granted patents and/or
pending applications in other countries (and/or international applications
designating other countries) corresponding to three of the granted U.S. patents
and all five of the pending U.S. applications. One of the pending U.S.
applications was filed in 1996; another is the national phase (entered in 1998)
of an international application based on a U.S. provisional application filed in
1995. Three of the pending U.S. applications were filed in 1997, of which one is
a continuation of an original U.S. application filed in 1994, and two are based
on a U.S. provisional application filed in 1996. In addition, the Company will
be the assignee of another pending U.S. provisional patent application filed in
1997, and of expected (but not yet filed) international and foreign counterparts
thereof.
Specifically, the Company is the assignee of a U.S. patent, granted April
20, 1993, for glutathione-s-transferase mu (an inherited enzyme) as a measure of
drug resistance, covering a test for resistance to nitrosoureas (a class of
chemotherapeutic agents). In addition, the Company is the assignee of a U.S.
patent, granted August 23, 1994, for tumor or cancer cell-killing therapy
(covering methods of using N-substituted benzamides including Sensamide(TM) and
Neu-Sensamide(TM) as radio- and chemosensitizers), and of granted patents in
Australia, Canada, Europe (designating 13 countries), Ireland, Israel, Mexico,
Russia and South Africa and an allowed patent application in Japan (as well as a
pending application in Denmark) corresponding thereto. The Company is also the
assignee of two U.S. patents, both granted October 1, 1996, for methods of
administering and pharmaceutical formulations containing N-substituted
benzamides and/or acid addition salts thereof (covering, e.g.,
Neu-Sensamide(TM)) and for methods of administering phenothiazines and/or acid
addition salts thereof, and of a granted South African patent and pending
European and other foreign applications corresponding to these two U.S. patents.
The Company's pending U.S. applications and international counterparts cover
further methods of testing or treatment and compositions, including methods of
using the Oxi-104 product.
Moreover, the Company is the exclusive licensee of a U.S. patent, granted
January 9, 1996, for a diagnostic test involving measurements related to the
cellular process of DNA repair and drug resistance, and is the exclusive
licensee of corresponding granted Canadian and European patents and a
corresponding pending Japanese patent application. The owner of the licensed
patents and application is Preventive Medicine Institute, a New York
not-for-profit corporation affiliated with the Strang Cancer Prevention Center
in New York, New York.
Trade Secrets and Technological Know-How. While the Company generally has
and will continue to pursue a policy of seeking patent protection to preserve
its proprietary technology, it also has and will continue to rely on trade
secrets, unpatented proprietary information and continuing technological
innovation to develop and maintain its competitive position. There can be no
assurance, however, that others will not independently develop substantially
equivalent proprietary information and technology or otherwise gain access to
such or equivalent trade secrets, proprietary information or technology or that
OXiGENE can meaningfully protect its rights to such secrets, proprietary
information and technology.
OXiGENE generally requires its employees and Scientific Advisory Board
members to enter into confidentiality agreements with the Company. Those
agreements provide that all confidential information developed or made known to
the individual during the course of the relationship is to be kept confidential
and not to be disclosed to third parties, except in specific circumstances. In
the case of employees, the agreements also provide that all inventions conceived
by such employees shall be the exclusive property of OXiGENE. There can be no
assurance, however, that any such agreement will provide meaningful protection
for the Company's trade secrets, proprietary information or technology in the
event of unauthorized use or disclosure of such information. Moreover, although
the Company has confidentiality agreements with the institutions that perform
its research, development, preclinical tests and clinical trials, the Company
has no such agreements with the employees of such institutions, and there can be
no assurance that these employees will abide by the terms of such agreements.
Employees
The Company's policy has been, and continues to be, to maintain a
relatively small number of executives and other employees and to rely as much as
possible on consultants and independent contractors for its research,
development, preclinical tests and clinical trials. As of March 31, 1997, the
Company had twenty-four full-time employees, of which twenty were engaged in
research and development and monitoring of clinical trials. Most of the
Company's preclinical tests and clinical trials are subcontracted and performed
at the University of Lund, Sweden, and at other European and U.S. centers and
organizations, including ILEX Oncology Inc., a contract research organization in
San Antonio, Texas.
Scientific Advisory Board
In August 1992, the Company established a Scientific Advisory Board, which
currently consists of nine members. The Scientific Advisory Board discusses, and
meets annually to evaluate, the Company's research and development projects.
Members of the Scientific Advisory Board receive no cash compensation, but are
reimbursed for reasonable out-of-pocket expenses, and have, from time to time,
received warrants or options to purchase shares of Common Stock of the Company.
Prior to the establishment of the Scientific Advisory Board, certain of its
members advised the Company on certain projects. Certain members of the
Scientific Advisory Board also have other relationships with the Company. See
"--Research and Development and Collaborative Arrangements." The members of the
Company's Scientific Advisory Board are:
Hans Wigzell, M.D., Ph.D., is Professor of Immunology at the Karolinska
Institute, Stockholm, Sweden, a well-known medical research institute in Europe.
Professor Wigzell is the chairman of OXiGENE's Scientific Advisory Board and
also serves as an advisor to the Company's Board of Directors. He has for many
years been a member of the Nobel committee for the prize in medicine, of which
he also has served as chairman. Professor Wigzell is currently a member of the
editorial board of several international medical journals and has published more
than 400 articles in the areas of tumor biology, immunology, cell biology and
infectious diseases.
David J. Chaplin, Ph.D., is head of the Tumor Microcirculation Group at the
Gray Laboratory, Mount Vernon Hospital, Middlesex, United Kingdom, and a
consultant to the Company. The Gray Laboratory is a leading radiation biology
research laboratory. He is a member of the Cancer Research Campaigns Clinical
Trials committee. Dr. Chaplin has published more than 100 papers in the area of
chemical radiosensitizers and tumor biology.
Michael R. Horsman, Ph.D., D.M.Sc., is an Associate Professor in the Danish
Cancer Societies' Department of Experimental Oncology at Aarhus University
Hospital, Denmark. Dr. Horsman has published more than 100 papers in the area of
tumor biology and the chemical modification of radiation, drug and heat damage
in tumors and normal tissues.
Myron Jacobson, Ph.D., is Professor and Chairman of the Division of
Medicinal Chemistry and Pharmaceutics, College of Pharmacy, and a member of the
Lucille Parker Markey Cancer Center of the University of Kentucky. Dr. Jacobson
has published more than 100 papers in the area of biological responses to DNA
damage.
Dick Killander, M.D., Ph.D., is Professor and Chairman of the Department
of Oncology, University of Lund Hospital, Lund, Sweden. Dr. Killander serves on
the board of the Swedish Cancer Foundation, and has published more than 100
articles in the areas of quantitative cytochemistry and clinical oncology. Dr.
Killander is the principal clinical investigator for the Company's ongoing
clinical trials.
Ronald P. McCaffrey, M.D., is Professor of Medicine, and Head of the
Developmental Therapeutics Unit at Boston University School of Medicine. Dr.
McCaffrey has published more than 100 papers in the general field of cancer
biology and treatment, with particular emphasis on leukemia and lymphoma. For
the past five years he has been Chairman of the Committee on Medical and
Scientific Affairs at the Leukemia Society of America, and a member of several
professional journal editorial boards.
Dietmar W. Siemann, Ph.D., is Professor and Associate Chair for Research in
the Department of Radiation Oncology at the University of Florida. Dr. Siemann
is a tumor biologist who has a particular interest in the interface between the
laboratory and the clinic. He has published more than 135 papers in the areas of
the tumor microenvironmental and chemical modification of cancer treatments.
Mark E. Smulson, Ph.D., is Professor of Biochemistry and Molecular Biology,
Georgetown University Medical Center, Washington, D.C., and is co-director of
the University's Lombardi Cancer Center's Program of ADP-Ribosylation and
Radiation Biology. Dr. Smulson has published over 200 papers and chapters on the
molecular biology aspects of the ADPRT (PARP) repair enzyme and its gene.
Recently, he was involved in the first purification of apopain (Caspase-3),
which cleaves PARP during programmed cell death (apoptosis), and has continued
to study the regulatory involvement of PARP, in the latter process in human
osteosarcoma cells and PARP knockout murine cells.
Alan Sugar, M.D., is Professor of Medicine, Boston University School of
Medicine, Boston, MA, and is Director of the Clinical Mycology Center at Boston
Medical Center. Dr. Sugar is an infectious diseases physician who specializes in
medical mycology, which are diseases caused by fungi. His research interests
include pre-clinical and clinical antifungal drug development and the mechanisms
of action of antifungal drugs. He has published over 100 papers and book
chapters and is the co-author of a book on medical mycology.
Competition
The industry in which the Company is engaged is characterized by rapidly
evolving technology and intense competition. The Company's competitors include,
among others, major pharmaceutical and biotechnology companies, many of which
have financial, technical and marketing resources significantly greater than
those of the Company. In addition, many of the small companies that compete with
the Company have also formed collaborative relationships with large, established
companies to support research, development, clinical trials and
commercialization of products that may be competitive with those of the Company.
Academic institutions, governmental agencies and other public and private
research organizations are also conducting research activities and seeking
patent protection and may commercialize products on their own or through joint
ventures or other collaborations.
The Company is aware of a number of companies engaged in the research,
development and testing of new cancer therapies or ways of increasing the
effectiveness of existing therapies. Such companies include, among others,
Agouron Pharmaceuticals, Inc., Bristol-Myers Squibb Company, Ciba-Geigy Ltd.,
Eli Lilly and Company, Glaxo Wellcome PLC, Johnson & Johnson, Matrix
Pharmaceuticals, Inc., NeoPharm, Inc., Pharmacyclics, Inc., Pierre Fabre S.A.
and U.S. Bioscience Inc., some of whose products have already received, or are
in the process of receiving, regulatory approval or are in later stages of
clinical trials. The Company is also aware of companies engaged in the research,
development and testing of diagnostic assays for cancer, including Introgen
Therapeutics, Inc., AntiCancer Inc., Transgene S.A. and Medarex Inc. There are
other companies that have developed, or are in the process of developing,
technologies that are, or in the future may be, the basis for competitive
products in the field of cancer therapy or other products the Company intends to
develop. Some of those products may have an entirely different approach or means
of accomplishing the same desired effects as the products being developed by the
Company, such as gene transfer therapy, immunotherapy and photodynamic therapy.
There can be no assurance that the Company's competitors will not succeed in
developing technologies and products that are more effective, safer or more
affordable than those being developed by the Company.
Radiation therapy has been increasingly accepted as a complement to
chemotherapy in a multi-modality treatment of NSCLC. Further, a number of
organizations have developed new chemotherapeutic regimens that are under study
in late-stage clinical trials. To the best knowledge of the Company, however,
none of those organizations is, and none of the new forms of non-surgical cancer
treatment currently under development and in clinical trials appears to be,
directly competitive with Neu-Sensamide(TM) or Oxi-104 as a sensitizer.
As the Company's existing products are intended to complement and enhance
radiation therapy and chemotherapy as applied to NSCLC, the Company believes
that enhancements in those treatments, particularly if they lead to their
successful application, could increase the potential market for the Company's
products, although there can be no assurance in this regard. Moreover, if the
Company's products also complement new cancer treating therapies, the use of
these new therapies might also expand the Company's potential market.
The Company expects that if any of its products gain regulatory approval
for sale they will compete primarily on the basis of product efficacy, safety,
patient convenience, reliability, price and patent position. The Company's
competitive position also will depend on its ability to attract and retain
qualified scientific and other personnel, develop effective proprietary products
and implement joint ventures or other alliances with large pharmaceutical
companies in order to jointly market and manufacture its products.
Risk Factors
This Annual Report contains, in addition to historical information,
forward-looking statements that involve known and unknown risks and
uncertainties that may cause the Company's actual results or outcomes to be
materially different from those anticipated and discussed herein. Factors that
could cause or contribute to such differences include those discussed below as
well as those discussed elsewhere in this Annual Report.
History of Losses and Anticipated Future Financial Results; Uncertainty of
Future Profitability. The Company, as a development stage enterprise, has
experienced net losses every year since its inception and, as of December 31,
1997, had a deficit accumulated during the development stage of approximately
$25.5 million. The Company anticipates incurring substantial additional losses
over at least the next several years due to, among other factors, the need to
expend substantial amounts on its continuing clinical trials and anticipated
research and development activities and the general and administrative expenses
associated with those activities. The Company has not commercially introduced
any product and its products are in varying stages of development and testing.
The Company's ability to attain profitability will depend upon its ability to
develop products that are effective and commercially viable, to obtain
regulatory approval for the manufacture and sale of its products and to license
or otherwise market its products successfully. There can be no assurance that
the Company will ever achieve profitability or that profitability, if achieved,
can be sustained on an ongoing basis. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
Early Stage of Product Development; Uncertainties of Clinical Trials;
Unproven Safety and Efficacy. OXiGENE's products are in an early stage of
development. In order to achieve profitable operations on a continuing basis,
the Company, alone or in collaboration with others, must successfully develop,
manufacture, introduce and market its products. The time frame necessary to
achieve market success for any individual product is long and uncertain. See
"--Product Development and Regulatory Processes." The products currently under
development by the Company will require significant additional research and
development and extensive preclinical and clinical testing prior to application
for commercial use. A number of companies in the biotechnology and
pharmaceutical industries have suffered significant setbacks in clinical trials,
even after showing promising results in earlier studies or trials. Although the
Company has obtained favorable results to date in preclinical studies and
clinical trials of certain of its products, such results may not be indicative
of results that will ultimately be obtained in or throughout such clinical
trials, and there can be no assurance that clinical testing will show any of the
Company's products to be safe or efficacious. Additionally, there can be no
assurance that the Company will not encounter problems in its clinical trials
that will cause the Company to delay, suspend or terminate those clinical
trials. There can also be no assurance that the Company's research or product
development efforts or those of its collaborative partners will be successfully
completed, that any compounds currently under development by the Company will be
successfully developed into drugs, or that any products will receive regulatory
approval on a timely basis, if at all. If any such problems occur, the Company
could be materially and adversely affected.
Need for Additional Funds; Uncertainty of Future Funding. The Company's
operations to date have consumed substantial amounts of cash. Negative cash flow
from the Company's operations is expected to continue and even to accelerate
over at least the next several years. The Company's capital requirements will
depend on numerous factors, including: the progress of preclinical testing and
clinical trials; the progress of the Company's research and development
programs; the time and costs required to obtain regulatory approvals; the
resources devoted to manufacturing methods and advanced technologies; the
ability to obtain licensing arrangements; the cost of filing, prosecuting and,
if necessary, enforcing patent claims; the cost of commercialization activities
and arrangements; and the demand for the Company's products if and when
approved. The Company will have to raise substantial additional funds to
complete development of any product or bring products to market. Issuance of
additional equity securities by the Company, for these or other purposes, could
result in dilution to then existing stockholders. There can be no assurance that
additional financing will be available on acceptable terms, if at all. If
adequate funds are not available on acceptable terms, the Company may be
required to delay, scale back or eliminate one or more of its product
development programs or obtain funds through arrangements with collaborative
partners or others that may require the Company to relinquish rights to certain
of its technologies or products that the Company would not otherwise relinquish,
which may have a material adverse effect on the Company.
Dependence on Others for Clinical Development and Manufacturing and
Marketing. The Company has limited experience in drug development, the
regulatory approval process, manufacturing and marketing. Other than Dr. Ronald
W. Pero, Ph.D., the Company's Chief Scientific Officer, and two other employees,
the Company does not directly employ any scientists or other laboratory
personnel and all of its preclinical tests and clinical trials are subcontracted
to and performed at the University of Lund, Sweden and at other centers in
Europe and the United States, with the assistance of research and consulting
firms. Accordingly, OXiGENE has depended, and in the future is likely to
continue to depend, on others for assistance in many areas, including research,
conducting preclinical testing and clinical trials, the regulatory approval
process, manufacturing and marketing. Although the Company considers its
relations with existing collaborative partners to be satisfactory, all its
current arrangements are short term in nature. Funding requirements, competitive
factors or prioritization of other opportunities may lead the Company to seek
additional arrangements with third parties. While OXiGENE is likely to explore
license and development opportunities for its technologies with other companies,
there can be no assurance that the Company will be successful in establishing
and maintaining collaborative agreements or licensing arrangements; that any
collaborative partner will not be pursuing alternative technologies or
developing alternative compounds either on its own or in collaboration with
others, directed at the same diseases as those involved in its collaborative
arrangements with the Company; that any such collaborative partners will devote
resources to the Company's technologies or compounds on a basis favorable to the
Company; that any such arrangements will be on terms favorable to OXiGENE; or
that, if established, such future licensees will be successful in
commercializing products. Finally, if the Company's collaboration arrangements
are terminated prior to their expiration or if the other parties to such
arrangements fail to adequately perform, there can be no assurance that
submission of product candidates for regulatory approval will not be delayed.
See "--Research and Development and Collaborative Arrangements."
Clinical Trials; Government Regulation and Health Care Reform; Managed
Care. The Company's research and development activities, preclinical testing and
clinical trials, and the manufacturing and marketing of its products are subject
to extensive regulation by numerous governmental authorities in the United
States and other countries. See "--Product Development and Regulatory
Processes." Preclinical testing and clinical trials and manufacturing and
marketing of OXiGENE's products are and will continue to be subject to the
rigorous testing and approval processes of the FDA, the Swedish Medical Products
Agency and other corresponding foreign regulatory authorities. Clinical testing
and the regulatory process generally take many years and require the expenditure
of substantial resources. In addition, delays or rejections may be encountered
during the period of product development, clinical testing and FDA regulatory
review of each submitted application. Similar delays may also be encountered in
foreign countries. There can be no assurance that, even after such time and
expenditures, regulatory approval will be obtained for any products developed by
OXiGENE or that a product, if approved in one country, will be approved in other
countries. See "--Product Development and Regulatory Processes." Moreover, if
regulatory approval of a product is granted, such approval may entail
limitations on the indicated uses for which that product may be marketed.
Further, even if such regulatory approval is obtained, a marketed product, its
manufacturer and its manufacturing facilities are subject to continual review
and periodic inspections, and later discovery of previously unknown problems
(such as previously undiscovered side effects) with a product, manufacturer or
facility may result in restrictions on such product, manufacturer or facility,
including a possible withdrawal of the product from the market. Failure to
comply with the applicable regulatory requirements can, among other things,
result in fines, suspensions of regulatory approvals, product recalls, operating
restrictions, injunctions and criminal prosecution. Additionally, further
government regulation may be established which could prevent or delay regulatory
approval of the Company's products. Further, the U.S. Congress continues to
debate various health care reform proposals which, if adopted, may have a
material adverse effect on the Company. Moreover, continued cost control
initiatives by health care maintenance organizations and similar programs may
affect the financial ability and willingness of patients and their health care
providers to utilize certain therapies.
Competition and Risk of Technological Obsolescence. The Company is engaged
in a rapidly evolving field. Competition from other pharmaceutical companies,
biotechnology companies and research and academic institutions is intense and
expected to increase. Many of those companies and institutions have
substantially greater financial, technical and human resources than the Company.
Those companies and institutions also have substantially greater experience in
developing products, in conducting clinical trials, in obtaining regulatory
approval and in manufacturing and marketing pharmaceutical products.
Accordingly, competitors may succeed in obtaining regulatory approval for their
products more rapidly than the Company. The Company also competes with
universities and other research institutions in the development of products,
technologies and processes. Competitors have developed or are in the process of
developing technologies that are, or in the future may be, the basis for
competitive products. Some of those products may have an entirely different
approach or means of accomplishing the desired therapeutic effect than products
being developed by the Company. See "--Competition." There can be no assurance
that the Company's competitors will not succeed in developing technologies and
products that are more effective and/or cost competitive than those being
developed by the Company or that would render the Company's technology and
products less competitive or even obsolete. In addition, one or more of the
Company's competitors may achieve product commercialization or patent protection
earlier than the Company, which could materially adversely affect the Company.
Dependence on Patents and Proprietary Technology. To date, OXiGENE's
initial products, Sensamide(TM) and Neu-Sensamide(TM), have been based on
certain available compounds that are produced by others. The Company anticipates
that products it develops hereafter may include or be based on the same or other
compounds owned or produced by unaffiliated parties, as well as synthetic
compounds it may discover. Although the Company expects to seek patent
protection for any compounds it discovers and/or for any specific uses it
discovers for new or previously known compounds, there is no assurance that any
or all of them will be subject to effective patent protection. Further, the
development of regimens for the administration of pharmaceuticals, which
generally involve specifications for the frequency, timing and amount of
dosages, has been, and the Company believes may continue to be, important to the
Company's efforts, although those processes, as such, may not be patentable.
The Company's success will depend, in part, on its ability to obtain
patents, protect its trade secrets and operate without infringing on the
proprietary rights of others. As of March 8, 1998, the Company is the assignee
of four granted U.S. patents, five pending U.S. patent applications, and of
granted patents and/or pending applications in other countries (and/or
international applications designating other countries) corresponding to three
of the granted U.S. patents and all five of the pending U.S. applications. In
addition, the Company will be the assignee of a U.S. provisional patent
application filed in 1997, and of international and foreign counterparts thereof
expected to be filed in 1998. The patent position of pharmaceutical and
biotechnology firms like OXiGENE generally is highly uncertain and involves
complex legal and factual questions, resulting in both an apparent inconsistency
regarding the breadth of claims allowed in U.S. patents and general uncertainty
as to their legal interpretation and enforceability. Accordingly, there can be
no assurance that the Company's patent applications will result in patents being
issued, that any issued patents will provide the Company with competitive
protection or will not be challenged by others, or that the patents of others
will not have an adverse effect on the ability of the Company to do business.
Moreover, since some of the basic research relating to one or more of the
Company's patent applications and/or patents was performed at various
universities and/or funded by grants, particularly in Sweden, there can be no
assurance that one or more universities, employees of such universities and/or
grantors will not assert that they have certain rights in such research and any
resulting products, although the Company is not aware of any such assertions or
any basis therefor. Furthermore, there can be no assurance that others will not
independently develop similar products, will not duplicate any of the Company's
products or, if patents are issued to the Company, will not design around such
patents. In addition, the Company may be required to obtain licenses to patents
or other proprietary rights of others. No assurance can be given that any
licenses required under any such patents or proprietary rights would be made
available on terms acceptable to the Company, if at all. If the Company does not
obtain such licenses, it could encounter delays in product market introductions
while it attempts to design around such patents, or could find that the
development, manufacture or sale of products requiring such licenses is
foreclosed. In addition, the Company could incur substantial costs in defending
itself in suits brought against it or in connection with patents to which it
holds a license or in bringing suit to protect the Company's own patents against
infringement. The Company generally requires employees, Scientific Advisory
Board members and the institutions that perform its preclinical and clinical
tests (though not the employees of such institutions) to enter into
confidentiality agreements with the Company. Those agreements provide that all
confidential information developed or made known to the individual during the
course of the relationship with the Company is to be kept confidential and not
to be disclosed to third parties, except in specific circumstances. In the case
of employees, the agreements also provide that all inventions conceived by such
employees shall be the exclusive property of the Company. There can be no
assurance, however, that any such agreement will provide meaningful protection
for the Company's trade secrets or other confidential information in the event
of unauthorized use or disclosure of such information. See "--Patents and Trade
Secrets."
Dependence on Certain Officers and Directors and Others. The Company
believes that its success is, and will likely continue to be, materially
dependent upon its ability to retain the services of certain of its current
officers and directors, particularly Dr. Bjorn Nordenvall, its Chief Executive
Officer, Dr. Claus Moller, its Chief Medical Officer, and Dr. Ronald Pero, its
Chief Scientific Officer. The loss of the services of any of these individuals
could have a material adverse effect on the Company. In addition, the Company
has established relationships with universities, hospitals and research
institutions, particularly the University of Lund, Lund, Sweden, which have
historically provided, and continue to provide, the Company with access to
research laboratories, clinical trials, facilities and patients. Dr. Pero is a
Professor of Molecular Ecogenetics at the University of Lund. The Company
benefits indirectly from certain research grants received by Dr. Pero. The
Company is materially dependent on the research and development efforts of Dr.
Pero and his various relationships and affiliations, the loss of which could
have a material adverse effect on the Company's business. Additionally, the
Company believes that it may, at any time and from time to time, be materially
dependent on the services of consultants and other unaffiliated third parties.
Product Liability Exposure; Limited Insurance Coverage. The use of the
Company's products in clinical trials and for commercial applications, if any,
may expose the Company to liability claims, in the event such products cause
injury, disease or result in adverse effects. These claims could be made
directly by health care institutions, contract laboratories, patients or others
using such products. Although the Company has obtained liability insurance
coverage for its ongoing clinical trials, and there can be no assurance that
such coverage will be in amounts sufficient to protect the Company against
claims or recalls that could have a material adverse effect on the financial
condition and prospects of the Company. Further, adverse product and similar
liability claims could negatively impact the Company's ability to obtain or
maintain regulatory approvals for its technology and products.
Price Volatility of the Common Stock. The market price of the Common Stock
has been, and likely will continue to be, highly volatile as frequently is the
case with the publicly-traded securities of pharmaceutical research and
development companies. See "Market For Registrant's Common Equity and Related
Stockholder Matters." Factors such as results of clinical trials, announcements
of research developments and results by the Company or its competitors and
government regulatory action affecting the Company's products in both the United
States and foreign countries have had, and may continue to have, a significant
effect on the Company's business and on the market price of the Common Stock. As
of December 31, 1997, an aggregate of 49,612 Stock appreciation rights ("SARs"),
with a weighted average exercise price of $7.19 per SAR, had been granted to
certain clinical investigators and consultants. The Company is not required to
make any cash payments upon exercise of any such SAR. If and when the spread
between the market price of the Company's Common Stock and the exercise price of
the SARs changes, the charge for financial reporting purposes to research and
development will be adjusted to reflect an increase or decrease, as the case may
be, in the market price of the Company's Common Stock. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations." In
addition, substantially all of the shares of Common Stock issuable upon exercise
of outstanding options, SARs and warrants have been registered and may be sold
from time to time hereafter. Such sales, as well as future sales of Common Stock
by existing stockholders, or the perception that sales could occur, could
adversely affect the market price of the Common Stock. The price and liquidity
of the Common Stock may also be significantly affected by trading activity and
market factors related to the Nasdaq and Stockholm Stock Exchange markets, which
factors and the effects thereof may differ between those markets.
No Dividends. The Company has not declared or paid dividends on its Common
Stock since its inception and does not intend to declare or pay any dividends to
its stockholders in the foreseeable future. See "Market For Registrant's Common
Equity and Related Stockholder Matters."
<PAGE>
GLOSSARY OF SCIENTIFIC TERMS
Anti-emetic A drug which controls nausea and vomiting
Apoptosis A natural programmed cell death not involving cell
replication
CD4 cell counts A sub-set of white blood cells directly involved in
the natural protection against diseases
CGMP standards Current good manufacturing practice standards
required for regulatory affairs
Chemotherapy Drugs that control cancer growth
Cisplatin A chemotherapeutic compound
Control group A group of patients involved in a clinical trial
who are receiving placebos
Cross-over study A study in which each patient receives all
treatments singly, but at different times of the
study
Cytotoxic agent Tumor-killing agent
DNA Chemical building blocks of genetic material
Double-blind study A study in which neither the investigators
assessing the outcome of the trial nor the patients
know whether the patient is receiving the drug
being investigated or merely a placebo. The outcome
can only be determined when the results are decoded
Enzyme A protein that carries out a metabolic function by
converting one substance to another
Genetic blueprint The code that tells cells what to do and how to
function
Genetic lesions Damage to the DNA or in the genetic blueprint
i.m. Intramuscular
Immune deficiencies Suppression of the cells that fight disease within
the body
IND An "Investigational New Drug" application
filed with the U.S. Food and Drug
Administration that permits the
administration of compounds to humans in
clinical trials
In vivo-exposed spleen Spleen cells are exposed in the animal then taken
and cell out for testing
i.v. Intravenous
Malignant cell Cancer cell
Metabolic function Living process of growth and reproduction
NDA A "New Drug Application" filed with the U.S.
Food and Drug Administration, which, if
approved, allows a drug to be marketed in
the U.S.
Necrosis Cell death by decomposition after replication
N-substituted benzamide Class of drugs believed by OXiGENE to sensitize
radiation and chemotherapy
Nucleotides A class of nucleic acid compounds from which genes
are constructed
Open-label clinical trial A non-blinded clinical trial
Oxidative stress Undesired natural metabolism of oxygen-derived
molecules by the body that can induce DNA damage
PARP Poly (ADP Ribose) Polymerase--an enzyme involved in
the DNA repair process. Also known as Adenosine
Diphosphate Ribosyl Transferase or ADPRT
Placebo A non-active substance given to a control group of
patients in a clinical trial to duplicate the
treatment method, but without the administration of
the active drug under investigation
Radiation Physical energy that splits molecules and induces
DNA damage
Randomized clinical trial A clinical trial in which the allocation of
patients to treatment groups is made on a random
basis
Sensitization The process that renders a tumor more susceptible
to damage by radiation or chemotherapy
Serum thiol level The level of compounds in serum that react with
oxidative stress
<PAGE>
2. PROPERTIES.
In conjunction with the set-up of a laboratory facility at Boston Medical
Center, and in order to monitor the recently-commenced clinical trials in the
United States the Company closed its office in New York, New York, and relocated
its executive offices to Boston, Massachusetts. The Boston office lease has a
current annual rent of approximately $63,000 and expires on April 30, 2002, but
may be terminated at any time by the Company upon six months' written notice and
payment of a cancellation fee. In connection with the listing of its Common
Stock on the Stockholm Stock Exchange, the Company opened an executive office in
Stockholm, Sweden. The Stockholm office is leased at an annual rate of
approximately $41,000, and the lease expires on September 30, 2000. The Company
also leases an office at the Ideon Research Park in Lund, Sweden. The lease
expires on March 31, 2000, and the annual rent is approximately $42,000. The
Company does not own or lease any laboratories or other research and development
facilities.
3. LEGAL PROCEEDINGS.
There are no material suits or claims pending or, to the best of the
Company's knowledge, threatened against the Company.
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to the vote of security holders of the Company
during the fourth quarter of the year ended December 31, 1997.
Executive Officers of the Company
The executive officers of the Company and their ages at December 31, 1997,
were as follows:
Name Age Position
- ---- --- --------
Bjorn Nordenvall, M.D., Ph.D.. 45 Chief Executive Officer, President and
Chairman of the Board of Directors
Claus Moller, M.D., Ph.D...... 35 Chief Medical Officer and a Director
Ronald W. Pero, Ph.D.......... 57 Chief Scientific Officer and a Director
Bo Haglund.................... 45 Chief Financial Officer
Bjorn Nordenvall, M.D., Ph.D. was appointed as a Director in March 1995,
and became the Company's President and Chief Executive Officer in June 1995 and
Chairman of the Board of Directors in June 1996. From March to August 1996, Dr.
Nordenvall served as the Company's Chief Financial Officer. Dr. Nordenvall
serves as Chairman of the Company's Audit Committee. Dr. Nordenvall is a
specialist in general surgery and, from 1987 to September 1996, was president of
Sophiahemmet AB, a Stockholm-based hospital. During 1983 and 1984, Dr.
Nordenvall was president of Carnegie Medicine AB, Stockholm, Sweden, a
biotechnology company, and from 1977 through 1985, he practiced surgery at
Danderyd Hospital, Stockholm. From 1984 through 1986, Dr. Nordenvall served as a
consultant to Carnegie, a Swedish investment banking company, and, since 1984,
he has been a consultant to Skandia Insurance Company, a Swedish insurance
company.
Claus Moller, M.D., Ph.D. was appointed as a Director in March 1995 and
became the Company's Chief Medical Officer in March 1995. Since April 1, 1994,
Dr. Moller has served as a consultant to the Company, responsible for
coordinating the Company's European clinical trials. Dr. Moller is a director
and a principal shareholder of IPC Nordic A/S, a Danish pharmaceutical
consulting firm. From 1989 to 1994, Dr. Moller was medical director for
Synthelabo Scandinavia A/S, a Danish pharmaceutical company, and from 1983 to
1992, he was involved in cell biology and biomedical research at the University
of Copenhagen, Denmark.
Ronald W. Pero, Ph.D. is a co-founder of OXiGENE, and has been a Director
and the Company's Chief Scientific Officer since its inception. From November
1993 to June 1995, Dr. Pero also served as President of the Company. Dr. Pero
specializes in the field of DNA repair and its relation to cancer treatment, and
directs and coordinates the Company's research and development efforts. Dr. Pero
has been a fellow of the National Institute of Environmental Health Sciences in
Research Triangle Park, North Carolina, a director of the Division of
Biochemical Epidemiology at the Strang Cancer Prevention Center in New York
City, and currently holds faculty positions at both New York University Medical
Center and the University of Lund in Lund, Sweden, where he is a Professor of
Molecular Ecogenetics. Dr. Pero is also a member of the American Association of
Science, New York Academy of Sciences, International Preventive Oncology
Society, European Society for Therapeutic Radiation Oncology and The American
Association of Cancer Research, as well as serving as Scientific Director of the
Board of Trustees of the Swedish American Research Foundation. Dr. Pero has
published more than 175 manuscripts related to his research.
Bo Haglund was appointed Chief Financial Officer in August 1996. From
January 1992 to August 1996, Mr. Haglund was employed by D. Carnegie AB
("Carnegie") in various capacities, most recently heading its London operations,
focusing on the marketing of Nordic securities to U.K. investors. Prior to
joining Carnegie, from November 1990 to January 1992, Mr. Haglund was executive
vice president and chief financial officer of Swedish Exploration Consortium AB,
a Swedish publicly-traded company engaged in oil and gas exploration. From
January 1988 to October 1990, Mr. Haglund was vice president finance of Cool
Carriers AB, a shipping company, and from April 1982 to December 1987, he was
chief financial officer of Gulf Agency Group, a ship brokerage company.
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Effective November 19, 1996, the Company's Common Stock and Warrants
commenced trading on the Nasdaq National Market under the symbols "OXGN" and
"OXGNW," respectively. Prior thereto, since the completion of the Company's
initial public offering in August 1993, the Company's securities had been listed
for quotation on the Nasdaq Small-Cap Market. The Company's shares of Common
Stock are also traded on the Stockholm Stock Exchange in Sweden. The following
table sets forth the high and low per share and per warrant prices for the
Company's Common Stock and Warrants for each quarterly period within the two
most recent fiscal years.
Common Stock Warrants
------------ ---------
Calendar Year High Low High Low
- ------------- ---- --- ---- ---
1996
First Quarter $23.38 $ 9.25 $15.50 $ 2.88
Second Quarter 32.63 17.63 24.00 10.25
Third Quarter 27.00 17.00 18.00 8.63
Fourth Quarter 26.70 22.00 15.50 11.00
1997
First Quarter $36.25 $22.63 $26.25 $12.25
Second Quarter 35.00 26.25 25.25 15.56
Third Quarter 41.88 24.00 29.25 15.25
Fourth Quarter 29.25 15.25 18.50 6.50
As of March 24, 1998, there were 34 holders of record of the Company's
Common Stock and two holders of record of the Company's Warrants. The Company
believes, based on the number of proxy statements and related materials
distributed in connection with its 1997 Annual Meeting of Stockholders, that
there are more than 5,000 beneficial owners of its Common Stock.
The Company has not declared any cash dividends on its Common Stock since
its inception in 1988, and does not intend to pay cash dividends in the
foreseeable future. The Company presently intends to retain future earnings, if
any, to finance the growth and development of its business.
<PAGE>
6. SELECTED FINANCIAL DATA.
Summary Financial Information
OXiGENE, Inc.
(A development stage company)
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues:
Research income - - - - -
Interest income 50,897 265,440 420,949 684,039 2,217,467
------------------------------------------------------------------------------------------------
Total revenues 50,897 265,440 420,949 684,039 2,217,467
Operating Expenses:
Research and development 879,195 1,764,462 2,843,593 4,822,834 7,281,504
General and administrative 1,191,714 1,340,737 1,295,191 1,819,638 3,046,484
------------------------------------------------------------------------------------------------
Total operating expenses 2,070,909 3,105,199 4,138,784 6,642,472 10,327,988
------------------------------------------------------------------------------------------------
Net loss (2,020,012) (2,839,759) (3,717,835) (5,958,433) (8,110,521)
================================================================================================
Net loss per common share (0.50) (0.56) (0.63) (0.80) (0.83)
Weighted average number of
common shares outstanding
(in thousands) 4,026 5,037 5,876 7,440 9,770
1993 1994 1995 1996 1997
------------------------------------------------------------------------------------------------
Balance Sheet Data:
Cash and cash equivalents 7,516,941 1,193,999 10,406,605 40,517,182 40,136,662
Securities available for sale 0 3,291,128 502,020 0 0
Working capital 7,207,265 4,447,080 10,510,024 40,418,846 39,889,394
Total assets 7,550,838 4,770,951 11,227,251 41,168,759 41,152,357
Total liabilities 309,970 290,969 670,077 650,001 951,088
Deficit accumulated during
the development stage (4,842,280) (7,682,039) (11,399,874) (17,358,307) (25,468,828)
Total stockholders' equity 7,240,866 4,479,982 10,557,174 40,518,758 40,201,269
</TABLE>
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Overview
OXiGENE is a development-stage pharmaceutical company engaged in the
research and development of products designed to enhance the clinical efficacy
of radiation and chemotherapy, the most common and traditional forms of
non-surgical cancer treatment. OXiGENE has devoted substantially all of its
efforts and resources to research and development conducted on its own behalf
and through strategic collaborations with clinical institutions and other
organizations, particularly the University of Lund in Lund, Sweden.
Consequently, OXiGENE believes that its research and development expenditures
have been somewhat lower than those of other comparable development-stage
companies. OXiGENE has generated a cumulative net loss of approximately $25.5
million for the period from its inception through December 31, 1997.
OXiGENE expects to incur significant additional operating losses over at
least the next several years, principally as a result of its continuing clinical
trials and anticipated research and development expenditures. The principal
source of OXiGENE's working capital has been the proceeds of private and public
equity financings. As of December 31, 1997, OXiGENE had no long-term debt or
loans payable. Since its inception, the Company has had no material amount of
licensing or other fee income, and does not anticipate any such income for the
foreseeable future.
Results of Operations
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996.
During the years ended December 31, 1997 and 1996, the Company had no revenues,
except for approximately $2.2 million and $0.7 million of interest income,
respectively. The increase in interest income is attributable to the investment
of the net proceeds of the Company's secondary offering in connection with its
listing on the Stockholm Stock Exchange ("SSE"), which was completed in November
1996, as well as cash received upon exercise of options and warrants throughout
the year. See "Liquidity and Capital Resources." The Company's total operating
expenses for the year ended December 31, 1997 increased to approximately $10.3
million from approximately $6.6 million for the comparable 1996 period. Research
and development expenses for those years were approximately $7.3 million and
$4.8 million, respectively. Research and development expenditures are net of a
credit for financial reporting purposes of approximately $0.2 million related to
stock appreciation rights ("SARs") previously granted to certain clinical
investigators. Research and development expenditures for 1996 included a charge
for financial reporting purposes of approximately $1.0 million with respect to
such SARs. This charge was recorded because the market value per share of Common
Stock on December 31, 1997 ($17.50) exceeded the exercise price of stock
appreciation rights previously granted by the Company to certain clinical
investigators and consultants. Without giving effect to such charge, research
and development expenses increased by approximately $3.7 million compared to the
comparable 1996 period. The increase is primarily attributable to research and
development expenditures related to the Company's third generation sensitizer
OXi-104, Cordycepin, Combretastatin and its ongoing clinical trial program.
Generally, the Company makes payments to its clinical investigators if and when
certain predetermined milestones in its clinical trials are reached, rather than
on a fixed quarterly or monthly basis. As a result of the foregoing and the
existence of outstanding stock appreciation rights, research and development
expenses have fluctuated, and are expected to continue to fluctuate, from year
to year. General and administrative expenses for the year ended December 31,
1997 increased to approximately $3.0 million from approximately $1.8 million for
the comparable 1996 period. The increase in general and administrative expenses
is primarily attributable to: (i) the Company's participation in scientific
symposium, particularly the ECCO conference held in September 1997, in Hamburg,
Germany, where the Company released the first preliminary data of its
Sensamide(TM) study in patients with NSCLC, and other promotion activities, (ii)
establishing a clinical trial and research coordination center in Boston,
Massachusetts, and (iii) an increase in the number of staff required to monitor
the Company's clinical trials, and a general increase in expenses due to a
higher level of business activities. In an effort to preserve cash and reduce
cash flow requirements, the Company's policy has been to minimize the number of
employees and to use outside consultants to the extent practicable. OXiGENE
expects that its clinical trial expenses will increase as it proceeds with and
expands the Neu-Sensamide(TM) clinical trial program and it initiates research
and clinical trials on new compounds, including OXi-104, Combretastatin and
Cordycepin.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995.
OXiGENE had no revenues, except for approximately $0.7 million and $0.4 million
of interest income in the years ended December 31, 1996 and 1995, respectively.
The increase in interest income is attributable to the investment of the net
proceeds of the Company's secondary offering in connection with its listing on
the Stockholm Stock Exchange ("SSE"), which was completed in November 1996, as
well as cash received upon exercise of options and warrants throughout the year.
Total operating expenses for the year ended December 31, 1996 increased to
approximately $6.6 million from approximately $4.1 million for the comparable
1995 period. Research and development expenses for the year ended December 31,
1996 increased to approximately $4.8 from approximately $2.8 for the comparable
1995 period. General and administrative expenses for the year ended December 31,
1996 increased to approximately $1.8 from approximately $1.3 for the comparable
1995 period. The increase in operating expenses is primarily due to (i) the
costs and expenses associated with an expansion of the clinical trial program,
(ii) increases in research and development activities in connection with
OXiGENE's new compounds, (iii) investment banking fees paid to D. Carnegie AB
("Carnegie"), and (iv) expenses related to the establishing of an office in
Stockholm. The increase in research and development expenses was partly
attributable to an increase in the charge for financial reporting purposes of
approximately $1.0 million related to SARs previously granted to certain
clinical investigators.
Liquidity and Capital Resources
OXiGENE has experienced net losses and negative cash flow from operations
each year since its inception and, as of December 31, 1997, has an accumulated
deficit of approximately $25.5 million. The Company expects to incur substantial
additional expenses, resulting in significant losses, over at least the next
several years due to, among other factors, its continuing clinical trials and
anticipated research and development activities. To date, the Company has
financed its operations principally through the net proceeds it has received
from private and public equity financings, and from the exercise of outstanding
options and warrants.
OXiGENE had cash and cash equivalents of approximately $40.1 million and
$40.5 million at December 31, 1997 and December 31, 1996, respectively. This
relatively small decrease in cash and cash equivalents is due to the receipt by
OXiGENE of approximately $7.9 million from the exercise of outstanding options
and warrants during the year ended December 31, 1997, which almost offset the
net cash used in operating activities during that year.
OXiGENE's policy is to contain its fixed expenditures by maintaining a
relatively small number of employees and relying as much as possible on outside
services for its research, development, preclinical testing and clinical trials.
Quarterly payments are being made to the University of Lund, Lund, Sweden, for
preclinical research and clinical trials. For the years ended December 31, 1997,
1996, and 1995, the amount of such retainer was approximately $1.0 million, $0.3
million, and $0.2 million, respectively. In late 1991, OXiGENE engaged Cato
Research, Ltd., an independent clinical research firm in Durham, North Carolina
("Cato"), to, among other things, monitor OXiGENE's clinical trials. The amount
billed to OXiGENE by Cato during the years ended December 31, 1997, 1996, and
1995 was approximately $0.2 million, $0.3 million, and $0.7 million,
respectively. The continuous decrease in the amount billed by Cato prior to 1997
is due to the completion of the Company's Phase II/III clinical trial of
Sensamide(TM). In May 1996, OXiGENE in collaboration with ILEX(TM) Oncology Inc.
("ILEX"), a contract research organization in San Antonio, Texas, established a
large-scale synthesis of OXi-104 in accordance with FDA current U.S. Good
Laboratory Practice standards ("cGLP"). In the year ended December 31, 1997 and
1996, the Company paid ILEX approximately $1.6 and $0.9 million, respectively.
The increase in the amounts paid to ILEX reflects the research and development
with respect to OXi-104 and Combretastatin, a compound that in preclinical
studies indicates toxicity toward tumor vasculature. The Company expects that
the amounts payable to ILEX will increase from time to time.
OXiGENE anticipates that the cash and cash equivalents at December 31,
1997, and income it will earn thereon should be sufficient to satisfy the
Company's projected cash requirements for approximately the next 30 months.
However, working capital and capital requirements may vary materially from
those now planned due to numerous factors including, but not limited to, the
progress with preclinical testing and clinical trials; progress of the Company's
research and development programs; the time and costs required to obtain
regulatory approvals; the resources the Company devotes to manufacturing methods
and advanced technologies; the ability of the Company to obtain collaborative or
licensing arrangements; the cost of filing, prosecuting, and, if necessary,
enforcing patent claims; the cost of commercialization activities and
arrangements; and the demand for its products if and when approved. The Company
anticipates that it might have to seek substantial additional private or public
financing or enter into a collaborative arrangement with one or more third
parties to complete the development of any product or bring products to market.
There can be no assurance that additional financing will be available on
acceptable terms, if at all.
OXiGENE had no material commitments for capital expenditures as of December
31, 1997.
Impact of Year 2000
The Company has completed a preliminary assessment to determine if its
computer system will function properly with respect to dates in the year 2000
and thereafter. Based on that assessment the Company believes that its computer
systems are year 2000 compliant.
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See Item 14 for a list of the OXiGENE Financial Statements and Schedules
and Supplementary Information filed as part of this report.
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
<PAGE>
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this Item, insofar as it relates to directors,
is incorporated herein by reference to the Company's definitive Proxy Statement
with respect to the Company's Annual Meeting of Stockholders scheduled to be
held on June 5, 1998. The information regarding executive officers is included
in Part I hereof under the caption "Executive Officers of the Company," and is
incorporated by reference into this Item 10.
11. EXECUTIVE COMPENSATION.
The information required by this Item is incorporated herein by reference
to the Company's definitive Proxy Statement with respect to the Company's Annual
Meeting of Stockholders scheduled to be held on June 5, 1998.
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is incorporated herein by reference
to the Company's definitive Proxy Statement with respect to the Company's Annual
Meeting of Stockholders scheduled to be held on June 5, 1998.
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is incorporated herein by reference
to the Company's definitive Proxy Statement with respect to the Company's Annual
Meeting of Stockholders scheduled to be held on June 5, 1998.
<PAGE>
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents Filed with this Report.
The following documents are filed as part of this report.
1. Financial Statements
The financial statements listed in the accompanying List of
Financial Statements covered by Report of Independent
Auditors.
2. Financial Statement Schedules
None.
3. Exhibits
Exhibit
Number Description
-------- -----------
3.1 Restated Certificate of Incorporation of the
Registrant.*
3.2 By-Laws of the Registrant.*
3.3 Certificate of Amendment of Certificate of
Incorporation.***
4.1 Representatives' Warrant Agreement (including form of
Representatives' Warrant Certificate), dated August 26,
1993, between the Company and RAS Securities Corp.*
4.2 Warrant Agreement (including form of Warrant
Certificate), dated August 26, 1993, between the
Company and America Stock Transfer & Trust Company.*
10.1 Patent License Agreement dated as of October 7, 1991
between Preventive Medicine Institute and Bio-Screen,
Inc.*
10.2 Amended and Restated Stock Incentive Plan of Registrant
dated as of May 15, 1993.*
10.3 Employment Agreement, dated as of April 4, 1997,
between Registrant and Dr. Ronald W. Pero.
10.4 Executive Employment Agreement, dated as of October 9,
1993, between Registrant and Bjorn Nordenvall, M.D.,
Ph.D.**
10.5 Consulting Agreement, dated as of October 9, 1995,
between OXiGENE (Europe) AB and B. Omentum Consulting
AB.**
10.6 Consulting Agreement, dated as of August 1, 1995,
between Registrant and IPC Nordic A/S.**
10.7 OXiGENE 1996 Stock Incentive Plan.***
10.8 Collaborative Research Agreement, dated as of August 1,
1997, between the Registrant and Boston Medical Center
Corporation.
10.9 Technology Development Agreement, dated as of May 27,
1997, between the Registrant and the Arizona Board of
Regents, acting for and on behalf of Arizona State
University. Portions of this Exhibit have been omitted
pursuant to a request for Confidential Treatment filed
with the Commission simultaneously with the filing of
this Annual Report.
10.10 Office Lease, dated February 26, 1997, between
Registrant and Copley Place Associates Nominee
Corporation.
10.11 Employment Agreement, dated as of April 4, 1997,
between Registrant and Dr. Claus Moller.
23 Consent of Ernst & Young, LLP.
27 Financial Data Schedule.
99.1 U.S. Patent Number 5,204,241, issued April 20, 1994,
registered to Ronald W. Pero, regarding
glutathione-s-transferase Mu as a measure of drug
resistance. ***
99.2 U.S. Patent Number 5,340,565, issued August 23, 1994,
registered to Ronald W. Pero, regarding tumor or cancer
cell killing therapy and agents useful therefor. ***
99.3 U.S. Patent Number 5,482,833, issued January 9, 1996,
registered to Ronald W. Pero and Daniel G. Miller,
regarding a test to determine the predisposition or
susceptibility to DNA-associated diseases. ***
99.4 International Application Published under the Patent
Cooperation Treaty (PCT) Number WO96/14565, published
May 17, 1996, registered to Ronald W. Pero, regarding a
method of testing immune competency. ***
-------------------------
* Incorporated by reference to the Registrant's
Registration Statement on Form S-1 (file no. 33-64968)
and any amendments thereto.
** Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December
31, 1994.
*** Incorporated by reference to the Registrant's
Registration Statement on Form S-3 (file no. 333-12867)
and any amendments thereto.
(b) Reports on Form 8-K.
The registrant filed no reports on Form 8-K during the fourth quarter
of the year ended December 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
OXiGENE, INC.
By:/S/ BJORN NORDENVALL
Bjorn Nordenvall
President and
Chief Executive Officer
April 14, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/S/ BJORN NORDENVALL President, Chief Executive Officer April 14, 1998
- --------------------------- and Director (principal executive
Bjorn Nordenvall officer)
officer)
/S/ BO HAGLUND Chief Financial Officer April 14, 1998
- ---------------------------
Bo Haglund
/s/ MARVIN H. CARUTHERS Director April 14, 1998
- ---------------------------
Marvin H. Caruthers
Director April , 1998
- ---------------------------
Michael Ionata
/S/ CLAUS MOLLER Director April 14, 1998
- ---------------------------
Claus Moller
/S/ RONALD W. PERO Director April 14, 1998
- ---------------------------
Ronald W. Pero
/S/ PER-OLOF SODERBERG Director April 14, 1998
- ---------------------------
Per-Olof Soderberg
/S/ GERALD A. EPPNER Director April 14, 1998
- ---------------------------
Gerald A. Eppner
</TABLE>
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of April 1,
1997, between OXiGENE Inc., a Delaware corporation ("OXiGENE"), and Dr. Ronald
W. Pero (the "Executive"). OXiGENE together with its subsidiary OXiGENE Europe
AB shall be referred to as the "Company."
W I T N E S S E T H:
WHEREAS, Executive is currently employed by OXiGENE in the capacity of
Executive Vice President, Scientific Affairs; and
WHEREAS, OXiGENE and Executive desire to enter into an agreement relating
to the continued employment of the Executive by OXiGENE for a four-year period
ending April 1, 2001.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, OXiGENE and Executive
hereby agree as follows:
1. Employment
1.1 Executive shall continue to serve in the capacity of Executive Vice
President, Scientific Affairs of OXiGENE, and shall have the duties,
responsibilities and authority assigned to Executive by the Board of Directors
of OXiGENE, ("Board") consistent with such position including, but not limited
to:
(a) all scientific matter, including "in-house" research, contract and GLP
pre-clinical research, the chemical aspects of GMP manufacturing and the
adaptation and development of pre-clinical procedures and discoveries into
clinical material; and
(b) all matters related to OXiGENE's Scientific Advisory Board, including
membership, meeting schedules and agenda, coordination of scientific projects,
public relations and publications and, subject to Compensation Committee
approval, compensation of the members of the Scientific Advisory Board.
Executive shall report directly to OXiGENE's President and Chief Executive
Officer.
1.2 Executive, so long as he is employed hereunder, (i) shall devote his
full professional time and attention to the services required of him as an
employee of OXiGENE, except as otherwise agreed and except as permitted in
accordance with paid vacation time subject to OXiGENE's existing vacation
policy, and subject to OXiGENE's existing policies pertaining to reasonable
periods of absence due to sickness, personal injury or other disability, (ii)
shall use his best efforts to promote the interests of OXiGENE, and (iii) shall
discharge his responsibilities in a diligent and faithful manner, consistent
with sound business practices. Notwithstanding the foregoing, Executive may
serve as a director of, and a consultant to, Campamed, Inc., provided such
activity does not interfere with Executive's ability to perform his duties and
responsibilities hereunder.
2. Term
The term of Executive's employment under this Agreement shall commence as
of April 1, 1997, and shall end April 1, 2001, unless terminated sooner as
hereinafter provided (the "Employment Term").
3. Base Salary; Stock Options
3.1 During the Employment Term, Executive shall receive an annual base
salary in an annual amount equal to $240,000 (such amount as adjusted, from time
to time, the "Base Salary"). Executive's salary shall be reviewed annually by
the Board. Executive and OXiGENE acknowledge that Executive has elected to defer
$180,000 of Executive's Base Salary pursuant to a deferred compensation plan
maintained by OXiGENE. The balance of Executive's Base Salary shall be payable
in equal installments no less frequently than monthly by OXiGENE Europe AB.
3.2 OXiGENE shall grant to Executive, subject to approval by the
Compensation Committee of the Board, pursuant to the OXiGENE Inc. 1996 Stock
Incentive Plan (the "Stock Plan"), an option to purchase 60,000 shares of common
stock of OXiGENE, $.01 par value per share, as of the date hereof. Such option
shall have an exercise price equal to the Fair Market Value (as defined in the
Stock Plan) on the date of grant of such option, and shall vest and become
exercisable in four (4) equal installments of 15,000 each on the first, second,
third and fourth anniversary of the date of grant of such option. The option
shall be evidenced by, and subject to, an option agreement having terms
described in the Stock Plan, except to the extent otherwise specified in this
Agreement, including Section 6 hereof.
4. Benefits
Executive shall be entitled to participate in or receive benefits under any
employee benefit plan, arrangement or perquisite generally made available by
OXiGENE during the Employment Term to its executives and key management
employees.
5. Business Expenses
Executive shall be entitled to receive prompt reimbursement for all
reasonable and customary expenses incurred by him in performing services
hereunder during the Employment Term; provided that such expenses are incurred
and accounted for in accordance with the policies and procedures established by
OXiGENE and approved by the Board.
6. Termination
6.1 OXiGENE may, upon giving Executive six (6) months' written notice,
terminate Executive's employment subject to all provisions of this Agreement.
Notwithstanding the foregoing, OXiGENE may terminate Executive's employment for
Cause without prior notice. Executive may, upon giving OXiGENE ten (10) days'
notice, terminate Executive's employment hereunder. If Executive terminates his
employment following a material breach of the Agreement by OXiGENE, which breach
remains uncured ten (10) days after written notice thereof is received by
OXiGENE (a "Termination with Good Reason"), Executive shall be treated as if his
employment was terminated by OXiGENE without Cause.
6.2 If Executive's employment is terminated by OXiGENE other than for Cause
(as defined below) or in the event of a Termination with Good Reason, then
OXiGENE shall provide the following to Executive:
(a) as soon as practicable after the effective date of Executive's
termination of employment ("Termination Date") a lump sum cash payment equal to
the aggregate of the following:
(1) the portion of Executive's then current Base Salary accrued to
the Termination Date but unpaid as of the Termination Date (the
"Unpaid Salary"); plus
(2) an amount equal to three (3) months' Base Salary; plus
(3) if Executive's termination is a Termination with Good Reason, an
amount equal to six (6) month's Base Salary.
(b) All stock options, stock appreciation rights, restricted stock, and
other incentive compensation granted to the Executive by OXiGENE shall, to the
extent vested, remain exercisable in accordance with the terms of the Stock Plan
(or prior applicable plan) and the agreement entered pursuant thereto and the
Executive may exercise all such vested options and rights, and shall receive
payments and distributions accordingly.
6.3 Except as otherwise set forth in this Section 6, all obligations of
OXiGENE under this Agreement shall cease if, during the Employment Term, OXiGENE
terminates Executive for Cause or the Executive resigns his employment other
than in a Termination with Good Reason. Upon such termination, Executive shall
be entitled to receive in a lump sum cash payment as soon as practicable after
the Termination Date an amount equal to the Unpaid Salary.
6.4 The foregoing payments upon Executive's termination shall constitute
the exclusive payments due Executive upon termination from his employment with
OXiGENE under this Agreement or otherwise, provided, however, that except as
stated above, such payments shall have no effect on any benefits which may be
payable to Executive under any plan of OXiGENE which provides benefits after
termination of employment, other than severance pay or salary continuation
pursuant to an OXiGENE plan which amount shall be reduced by the severance
amount received by Executive pursuant to this Agreement.
6.5 For the purposes of this Agreement, the term "Cause" shall mean any of
the following:
(a) the (i) continued failure by Executive to perform substantially his
duties on behalf of OXiGENE if Executive fails to remedy that breach within ten
(10) days of OXiGENE's written notice to Executive of such breach; or (ii)
material breach of any other provision of this Agreement by the Executive, if
the Executive fails to remedy that breach within ten (10) days of OXiGENE's
written notice to Executive of such breach; or
(b) any act of fraud, material misrepresentation or material omission,
misappropriation, dishonesty, embezzlement or similar conduct against OXiGENE or
any affiliate, or conviction of Executive for a felony or any crime involving
moral turpitude.
6.6 Upon termination of Executive's employment for any reason, Executive
shall resign from the Board of OXiGENE, and any of its affiliates of which he is
then a director; such resignations shall be effective not later than the
effective date of termination of his employment unless otherwise mutually agreed
by Executive and the Board.
7. No Solicitation; Confidentiality; Work for Hire
7.1 Executive nor any Executive-Controlled Person (defined below) will,
without the prior written consent of the Board, directly or indirectly solicit
for employment, employ in any capacity or make an unsolicited recommendation to
any other person that it employ or solicit for employment any person who is or
was, at any time during the nine (9) month period prior to the Termination Date,
an officer, executive or key employee of OXiGENE or of any affiliate of OXiGENE.
As used in this Agreement, the term "Executive-Controlled Person" shall mean any
company, partnership, firm or other entity as to which Executive possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such entity, whether through the ownership of voting
securities, by contract or otherwise.
7.2 (a) Executive acknowledges that, through his status as Executive Vice
President, Scientific Affairs of OXiGENE and as a member of the Board, he has,
and will have, possession of important, confidential information and knowledge
as to the business of OXiGENE and its affiliates, including, but not limited to,
information related to drugs and compounds developed or under development by the
Company, financial results and projections, future plans, the provisions of
other important contracts entered into by OXiGENE and its affiliates, possible
acquisitions and similar information. Executive agrees that all such knowledge
and information constitutes a vital part of the business of OXiGENE and its
affiliates and is by its nature trade secrets and confidential information
proprietary to OXiGENE and its affiliates (collectively, "Confidential
Information"). Executive agrees that he shall not, so long as the Company
remains in existence, divulge, communicate, furnish or make accessible (whether
orally or in writing or in books, articles or any other medium) to any
individual, firm, partnership or corporation, any knowledge or information with
respect to Confidential Information directly or indirectly useful in any aspect
of the business of OXiGENE or any of its affiliates. As used in the preceding
sentence, "Confidential Information" shall not include any knowledge or
information that: (i) is or becomes available to others, other than as a result
of breach by Executive of this Section 7.2; (ii) was available to Executive on a
nonconfidential basis prior to its disclosure to Executive through his status as
an officer or employee of OXiGENE or any affiliate; or (iii) becomes available
to Executive on a nonconfidential basis from a third party (other than OXiGENE,
any affiliate or any of its or their representatives) who is not bound by any
confidentiality obligation to OXiGENE or any affiliate.
(b) All memoranda, notes, lists, records and other documents or papers (and
all copies thereof), including such items stored in computer memories, on
microfiche or by any other means, made or compiled by or on behalf of Executive
or made available to him relating to OXiGENE are and shall be OXiGENE's property
and shall be delivered to OXiGENE promptly upon the termination of Executive's
employment with OXiGENE or at any other time on request and such information
shall be held confidential by Executive after the termination of his employment
with OXiGENE.
7.3 As used in this Agreement, "Restricted Period" shall mean the twelve
(12) months following Executive's termination of employment.
7.4 The Executive grants the Company and each affiliate of the Company, as
appropriate, all rights in and to the contribution made by the Executive to any
projects or matters on which the Executive works during the Term. The Executive
acknowledges that each such matter and the contribution made by the Executive
thereto shall constitute a work made for hire within the meaning of the United
States copyright law and other applicable laws. The Company reserve's all rights
with respect to information relating to the Company's products, including, but
not limited to, the right to apply for patents.
7.5 The provisions contained in this Section 7 as to the time periods,
scope of activities, persons or entities affected, and territories restricted
shall be deemed divisible so that, if any provision contained in this Section 7
is determined to be invalid or unenforceable, such provisions shall be deemed
modified so as to be valid and enforceable to the full extent lawfully
permitted.
7.6 Executive agrees that the provisions of this Section 7 are reasonable
and necessary for the protection of OXiGENE and that they may not be adequately
enforced by an action for damages and that, in the event of a breach thereof by
Executive or any Executive-Controlled Person, OXiGENE shall be entitled to apply
for and obtain injunctive relief in any court of competent jurisdiction to
restrain the breach or threatened breach of such violation or otherwise to
enforce specifically such provisions against such violation, without the
necessity of the posting of any bond by OXiGENE. Executive further covenants and
agrees that if he shall violate any of his covenants under this Section 7,
OXiGENE shall be entitled to an accounting and repayment of all profits,
compensation, commissions, remuneration or other benefits that Executive
directly or indirectly has realized and/or may realize as a result of, growing
out of or in connection with any such violation. Such a remedy shall, however,
be cumulative and not exclusive and shall be in addition to any injunctive
relief or other legal or equitable remedy to which OXiGENE is or may be
entitled. Accordingly, Executive agrees that he shall reimburse OXiGENE for any
reasonable attorneys' fees and expenses that OXiGENE might incur in enforcing
this Section 7 if it is judicially determined that Executive has breached this
Section 7.
8. Taxes
Any amounts payable to the Executive hereunder shall be paid to the
Executive subject to all applicable taxes required to be withheld by the Company
pursuant to federal, state or local law. The Executive shall be solely
responsible for all taxes imposed on the Executive by reason of his receipt of
any amounts of compensation or benefits payable hereunder.
9. Amendments
This Agreement may not be altered, modified or amended except by a written
instrument signed by each of the parties hereto.
10. Assignment
Neither this Agreement nor any of the rights or obligations hereunder shall
be assigned or delegated by any party hereto without the prior written consent
of the other parties; provided, however, that any payments and benefits owed to
Executive under this Agreement shall inure to the benefit of his heirs and
personal representatives.
11. Waiver
Waiver by any party hereto of any breach or default by any other party of
any of the terms of this Agreement shall not operate as a waiver of any other
breach or default, whether similar to or different from the breach or default
waived.
12. Severability
In the event that any one or more of the provisions of this Agreement shall
be or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.
13. Notices
All notices and other communications provided for in this Agreement shall
be in writing and shall be deemed to have been duly given when personally
delivered or when mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive, to him as follows:
Dr. Ronald Pero
Tornaplatsen 3
S-223 63 Lund
Sweden
With a copy to:
If to OXiGENE, to it as follows:
OXiGENE Inc.
110 East 59th Street
New York, New York 10022
Attention: M. Andica Kunst, Esq.
With a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Gerald A. Eppner, Esq.
or to such other address or such other person as Executive or OXiGENE shall
designate in writing in accordance with this Section 13, except that notices
regarding changes in notices shall be effective only upon receipt.
14. Headings
Headings to Sections in this Agreement are for the convenience of the
parties only and are not intended to be a part of, or to affect the meaning or
interpretation of, this Agreement.
15. Governing Law
This Agreement shall be governed by the laws of the State of New York
without reference to the principles of conflict of laws. Each of the parties
hereto consents to the jurisdiction of the federal and state courts of the State
of New York in connection with any claim or controversy arising out of or
connected with this Agreement. Service of process in any such proceeding may be
made upon each of the parties hereto at the address of such party as determined
in accordance with Section 13 of this Agreement, subject to the applicable rules
of the court in which such action is brought.
16. All Other Agreements Superseded
This Agreement contains the entire agreement between Executive and OXiGENE
with respect to all matters relating to Executive's employment with OXiGENE and,
as of the date hereof, will supersede and replace any other agreements, written
or oral, between the parties relating to the terms or conditions of Executive's
employment with OXiGENE other than agreements relating to options entered into
pursuant to the Stock Plan or a predecessor plan of OXiGENE.
IN WITNESS WHEREOF, OXiGENE and Executive have caused this Agreement to be
executed as of the date first above written.
____________________________
Ronald W. Pero
OXiGENE Inc.
By: _________________________
Name:
Title:
COLLABORATIVE RESEARCH AGREEMENT
--------------------------------
This agreement ("AGREEMENT") is made as of August 1, 1997 ("EFFECTIVE
DATE") by and between BOSTON MEDICAL CENTER CORPORATION (hereinafter referred to
as "BMCC"), a Massachusetts not-for-profit corporation, having its principal
place of business at One Boston Medical Center Place, Boston, Massachusetts
02118, which is a member institution of the Boston University Medical Center,
and OXiGENE, Inc., (hereinafter referred to as "OXiGENE"), a Delaware
corporation, having its principal place of business at 110 East 59th Street, New
York, New York 10022.
WHEREAS, BMCC has developed certain technology involving cordycepin,
deoxycoformycin and other related compounds, as potential novel agents for use
in cancer and infectious diseases, and has established, within its Department of
Medicine, a research unit (referred to as the Developmental Therapeutics Unit)
to focus on the continued study and clinical development of these and other
novel therapeutic agents; and
WHEREAS, OXiGENE and BMCC entered into a Clinical Trial and Sponsored
Research Agreement, effective as of December 1, 1996 (the "CORDYCEPIN
AGREEMENT", a copy of which is attached hereto for reference purposes only as
Appendix A), pursuant to which BMCC, among other things, is carrying out
clinical and laboratory-based research studies on cordycepin, deoxycoformycin
and other related compounds as novel therapeutic agents; and
WHEREAS, OXiGENE is engaged in the design and development of drugs that
enhance the clinical efficacy of radiation therapy and chemotherapy in cancer
treatment; and
WHEREAS, the continued study and further development of these radiation-
and chemo-sensitizing drugs in collaboration and conjunction with the BMCC
Developmental Therapeutics Unit's on-going studies on cordycepin,
deoxycoformycin and other related compounds, as contemplated by this AGREEMENT,
is of mutual interest and benefit to OXiGENE and BMCC; and
WHEREAS, OXiGENE and BMCC wish to expand their collaboration to additional
areas of research;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and other good and valuable considerations, the receipt of
which is acknowledged, the parties hereby agree as follows:
ARTICLE I--APPOINTMENT
----------------------
1.1 In order to achieve the objectives contemplated by this AGREEMENT, BMCC
shall support Dr. Ronald W. Pero, Professor of Molecular Ecogenetics at
the University of Lund in Lund, Sweden ("LUND UNIVERSITY"), and
OXiGENE's Chief Scientific Officer, in his application to the BMCC
Medical-Dental Staff to become a member of the Scientific Staff. Dr.
Pero shall be a Research Program Director within the Developmental
Therapeutics Unit of the BMCC Department of Medicine. With his
appointment to the Medical Dental Staff, Dr. Pero will enjoy all the
rights and benefits, and assume all the responsibilities and
obligations, as a member of the Scientific Staff as set forth in the
BMCC Medical Dental Staff Bylaws.
1.2 In conjunction with the appointment contemplated by Section 1.1, BMCC
will propose Dr. Pero for appointment to the rank of Research Professor
of Medicine at Boston University School of Medicine. This appointment,
in accordance with Boston University Policy on Faculty Appointments,
will constitute a secondary professorial appointment to Dr. Pero's
primary professorial appointment at LUND UNIVERSITY. Dr. Pero will
enjoy all the rights and benefits, and will assume all the
responsibilities and obligations, of full professorial status in the
Department of Medicine of Boston University School of Medicine.
1.3 BMCC will provide Dr. Pero with appropriate laboratory and
administrative space and facilities within the BMCC Developmental
Therapeutics Unit (the "FACILITY") to carry out the activities
contemplated by this AGREEMENT.
1.4 By virtue of his appointment as a Research Program Director, Dr. Pero
will have the authority, subject to review and approval by Dr. Joseph
Loscalzo, Chairman of the Department of Medicine of BMCC, to recruit
and appoint appropriately qualified individuals to serve as members of
his research and administrative staff within the Developmental
Therapeutics Unit.
ARTICLE II--RESEARCH PROGRAM
----------------------------
2.1 BMCC and OXiGENE agree to conduct programs of laboratory-based and
clinical research at the FACILITY (the "RESEARCH PROGRAM") in
accordance with the terms of this AGREEMENT. The RESEARCH PROGRAM shall
have the following component parts:
(i) A laboratory-based and clinical program pursuant to which Dr.
Pero will conceive, direct, manage and conduct research aimed
at the continued development of N-substituted benzamides as
therapeutic agents, in continuity with his on-going work at
LUND UNIVERSITY as described in the N-substituted benzamide
Statement of Work attached hereto as Appendix B (the
"N-SUBSTITUTED BENZAMIDE PROGRAM").
(ii) The ongoing laboratory-based and clinical program pursuant to
which Drs. McCaffrey and Sugar will conceive, direct, manage
and conduct research aimed at the continued development of
cordycepin, deoxycoformycin and other related compounds, as
novel therapeutic agents in cancer and infectious diseases as
described in the Cordycepin Statement of Work in Appendix B of
the CORDYCEPIN AGREEMENT which previously governed that
program (the "CORDYCEPIN PROGRAM").
(iii) Additional laboratory-based and clinical projects to be
proposed by Drs. Pero, McCaffrey and Sugar and other members
of the BMCC and Boston University faculty to: (a) explore
potential therapeutic synergies between N-substituted
benzamides and cordycepin and related compounds; and (b) to
identify novel therapeutic agents for use in treating human
disease.
(iv) A program to conceive, design and conduct clinical trials
employing novel therapeutic agents and/or strategies in
defined disease states.
2.2 OXiGENE understands that BMCC's primary mission is patient care,
education and advancement of knowledge, and that the RESEARCH PROGRAM
contemplated by this AGREEMENT shall be performed in a manner
consistent with that mission. The manner of conducting, and the
research projects to be undertaken pursuant to the RESEARCH PROGRAM
shall be determined by a committee (the "RESEARCH PROGRAM REVIEW
COMMITTEE") initially consisting of:
(i) Dr. Pero, Research Program Director, Developmental
Therapeutics Unit;
(ii) Dr. Ronald P. McCaffrey, Head, Developmental Therapeutics
Unit;
(iii) Dr. Joseph Loscalzo, Chairman, BMCC Department of Medicine;
and
(iv) a representative designated by OXiGENE; initially this
representative shall be Dr. Claus Moller, OXiGENE's Chief
Medical Officer.
The Committee shall operate under the Chairmanship of Dr. Loscalzo.
ARTICLE III -- COMPENSATION
---------------------------
3.1 In consideration of BMCC's agreement to conduct the RESEARCH PROGRAM as
determined and approved by the RESEARCH PROGRAM REVIEW COMMITTEE,
OXiGENE agrees to pay to BMCC the amounts set forth in Schedule 3.1
attached hereto (the "INITIAL RESEARCH BUDGET"). The INITIAL RESEARCH
BUDGET shall cover the expense of conducting the RESEARCH PROGRAM at
the FACILITY for the 12-month period ending July 31, 1998.
3.2 The RESEARCH PROGRAM REVIEW COMMITTEE shall determine and approve a
budget for each 12-month period subsequent to the INITIAL RESEARCH
BUDGET (each a "SUBSEQUENT BUDGET" and together with the INITIAL
BUDGET, the "BUDGET") no later than three (3) months prior to the
beginning of the 12-month period to which such SUBSEQUENT BUDGET
relates. The RESEARCH PROGRAM REVIEW COMMITTEE, by unanimous decision,
shall allocate each BUDGET to the component parts of the RESEARCH
PROGRAM. The RESEARCH PROGRAM REVIEW COMMITTEE shall review each BUDGET
from time to time to determine if any reallocations are necessary or
appropriate.
3.3 BUDGET payments to be made pursuant to ARTICLE III shall be made in
quarterly installments in advance, with the first payment due promptly
after the EFFECTIVE DATE. BUDGET payments shall be made in the name of
"BOSTON MEDICAL CENTER CORPORATION," and if by check shall be sent to
Boston Medical Center Corporation, Office of Grants and Contracts, One
Boston Medical Center Place, Suite V412, Boston, Massachusetts 02118,
Attention: Director. If payments are made by wire transfer, they shall
be sent to State Street Bank, ABA Number 011000028, to the credit of
Account Number 6960-770-3, Beneficiary Boston Medical Center.
ARTICLE IV--REVIEW, CONSULTATION, AND ACCESS
--------------------------------------------
4.1 From time to time during the performance of the RESEARCH PROGRAM,
OXiGENE representatives, upon reasonable advance notice, shall have the
opportunity to meet and consult with Drs. Pero, McCaffrey, Sugar and
any other Principal Investigator funded under the BUDGET regarding the
progress and performance of the RESEARCH PROGRAM.
4.2 Drs. Pero, McCaffrey, Sugar and all Principal Investigators funded from
the BUDGET, shall provide:
(a) a quarterly accounting, by project, of funds expended;
(b) a written progress report on the RESEARCH PROGRAM every six
(6) months;
(c) and a comprehensive written progress report on the RESEARCH
PROGRAM every twelve (12) months
to the RESEARCH PROGRAM REVIEW COMMITTEE, with copies to OXiGENE, the
Chairman of the BMCC Department of Medicine and the Director of the
Office of Technology Transfer of Boston University. The reports
contemplated by this Section 4.2 shall include an accounting of the
disposition of funds, and a projection of budget requirements during
the next twelve (12) months.
ARTICLE V--PUBLICATION
----------------------
5.1 Each Principal Investigator of any RESEARCH PROGRAM conducted at the
FACILITY and funded from the BUDGET shall be free to publish or to
present at professional scientific conferences the results of the
RESEARCH PROGRAM conducted pursuant to this AGREEMENT. In order to
protect against loss of confidentiality or patent rights as a result of
any such publication or presentation, a Principal Investigator shall
submit copies of drafts of any intended publication or presentation of
results of the RESEARCH PROGRAM conducted pursuant to this AGREEMENT to
OXiGENE at least thirty (30) days prior to the anticipated date of
submission of data for publication or presentation. If OXiGENE, in its
reasonable judgment, requires additional time to seek patent
protection, then the Principal Investigator shall defer the submission
of the materials for such publication or presentation for an additional
thirty (30) days.
ARTICLE VI--CONFIDENTIALITY
---------------------------
6.1 OXiGENE may wish, from time to time, in connection with the RESEARCH
PROGRAM to be conducted at the FACILITY pursuant to this AGREEMENT, to
disclose to RESEARCH PROGRAM personnel information that is confidential
and proprietary in nature. All such information which has been
indicated as confidential orally if disclosed orally or has been marked
confidential if disclosed in writing, electronically or visually, shall
be kept confidential by RESEARCH PROGRAM personnel for a period of five
(5) years from the date of receipt of such CONFIDENTIAL INFORMATION.
This obligation shall not apply to any information which:
(a) was already known to RESEARCH PROGRAM personnel as evidenced
by written records;
(b) is, or at some future time, becomes publicly known under
circumstances not involving a breach of this AGREEMENT by
RESEARCH PROGRAM personnel, or any other person subject to a
confidentiality or non-disclosure obligation to OXiGENE;
(c) RESEARCH PROGRAM personnel are legally compelled, by
applicable law, to disclose, provided, however, that in such
an event RESEARCH PROGRAM personnel shall give prompt notice
to OXiGENE of such a requirement so that it may seek a
protective order or other appropriate remedy.
6.2 All RESEARCH PROGRAM personnel to whom OXiGENE discloses CONFIDENTIAL
INFORMATION shall sign a CONFIDENTIALITY AGREEMENT in the form attached
hereto as Appendix C.
6.3 Neither RESEARCH PROGRAM personnel, nor BMCC, its trustees, officers,
employees and agents shall be liable for any claim or damage resulting
from the disclosure of CONFIDENTIAL INFORMATION, except to the extent
that same results from negligence or willful misconduct of any such
person or entity. In no event shall RESEARCH PROGRAM personnel and
BMCC, its trustees, officers, employees and agents be liable for
indirect, special or consequential damages (including, but not limited
to, lost profits). In no event shall the liability of RESEARCH PROGRAM
personnel and BMCC, its trustees, officers, employees and agents exceed
the amounts payable to BMCC under this AGREEMENT. The foregoing
notwithstanding, RESEARCH PROGRAM personnel and BMCC agree that the
provisions regarding CONFIDENTIAL INFORMATION contained in this
AGREEMENT are fair and reasonable, that money damages would not be a
sufficient remedy for any breach of this AGREEMENT by RESEARCH PROGRAM
personnel or BMCC, and that in addition to all other remedies, OXiGENE
shall be entitled to specific performance and injunctive or other
equitable relief as a remedy for such breach.
ARTICLE VII--PUBLICITY
----------------------
7.1 Neither party shall use the name of the other party or of any of the
RESEARCH PERSONNEL in any advertising or promotional material without
the prior written approval of the other party. The foregoing
notwithstanding, (i) BMCC shall acknowledge OXiGENE'S financial
contribution and sponsorship of the RESEARCH PROGRAM in BMCC's
customary reports and publications; (ii) OXiGENE may file a copy of
this AGREEMENT (redacted to the extent permitted by applicable law to
ensure confidentiality) as an exhibit to, and disclose the existence
and describe the terms of this AGREEMENT in, its press releases,
reports and filings, including, but not limited to, releases, reports
and filings with the US Securities and Exchange Commission and relevant
non-US government authorities; and (iii) OXiGENE may make reference to
technical publication by RESEARCH PROGRAM personnel or their
co-authors. Any publicity of this AGREEMENT pursuant to this ARTICLE VI
shall describe the relationship of the parties accurately and
appropriately.
ARTICLE VIII--INVENTIONS AND PATENTS
------------------------------------
8.1 BMCC shall own all rights to any patentable discovery or invention made
at the FACILITY in the course of work conducted under the RESEARCH
PROGRAM and funded from the BUDGET, including, but not limited to,
processes, methods, formulas and techniques (collectively,
"INVENTIONS").
8.2 A committee (the "PATENT COMMITTEE") consisting of Drs. Pero and
McCaffrey, the Director of the Office of Technology Transfer of Boston
University, one additional representative to be nominated by BMCC and
two additional representatives to be nominated by OXiGENE, shall, from
time to time, but no less frequently than every six (6) months,
evaluate observations, discoveries and inventions made at the FACILITY
in the course of work conducted under the RESEARCH PROGRAM, and
determine whether to proceed with the filing of a patent application
with respect to any such observation, discovery or invention. The costs
of such patent filing shall be the responsibility of OXiGENE. Any
patent filing and prosecution expense incurred by OXiGENE pursuant to
this AGREEMENT shall be offset against future royalties due by OXiGENE
in respect of any LICENSE (as defined in Section 8.3). In the event
that the PATENT COMMITTEE determines that a patent should not be filed
pursuant to this AGREEMENT, each of BMCC or OXiGENE, as the case may
be, may file a patent application in its respective name and at its
respective expense, and shall so inform the other party. In the event
that such a patent is commercialized by either BMCC and OXiGENE, BMCC
and OXiGENE will negotiate financial terms (including royalties and the
distribution thereof) with respect to such a patent in good faith,
recognizing the origin of the INVENTION to be in the RESEARCH PROGRAM,
and thus subject to the overall terms and conditions of ARTICLE VIII.
8.3 OXiGENE shall have the option to acquire an exclusive, worldwide,
royalty-bearing license (a "LICENSE"), including the right to
sublicense, to make, have made, use, lease, market and sell products
embodying, or produced through the use of, any INVENTION. Any agreement
with respect to a LICENSE shall include financial terms generally and
customarily found in license agreement, including a royalty on net
sales within the range set forth in Schedule 8.3 attached hereto and
appropriate due diligence and administrative provisions.
8.4 Any LICENSE granted to OXiGENE pursuant to Section 8.3 shall be subject
to the Boston University Medical Center Patent Policy, except that
royalty income received by BMCC from INVENTIONS made in the course of
work conducted under the N-SUBSTITUTED BENZAMIDE PROGRAM shall be
distributed as follows:
(i) 20% to BMCC for its unrestricted use;
(ii) 80% to BMCC to be applied against future BUDGETS for the
RESEARCH PROGRAM.
provided, however, that royalty income received by BMCC from JOINT
INVENTIONS (as defined below) shall be distributed fifty percent (50%)
in accordance with Boston University Medical Center Patent Policy and
fifty percent (50%) in accordance with the provisions of this Section
8.4. For purposes of this AGREEMENT, a "JOINT INVENTION" is any
invention made at the FACILITY in the course of work conducted under
the RESEARCH PROGRAM that is the subject of a U.S. patent application
in which the persons properly named as inventors under U.S. patent law
include at least (a) one (1) individual whose RESEARCH PROGRAM work is
funded from the BUDGET and whose work is primarily related to the
N-SUBSTITUTED BENZAMIDE PROGRAM, and (b) one (1) individual funded by
BMCC whose work is primarily related to the components of the RESEARCH
PROGRAM set forth in Sections 2.1 (iii) and (iv).
8.5 Royalty income received from INVENTIONS made in the course of work
conducted under the CORDYCEPIN PROGRAM shall be distributed in
accordance with the Boston University Medical Center Patent Policy.
8.6 If OXiGENE elects to exercise its option to acquire a LICENSE, OXiGENE
and BMCC agree to negotiate the specific terms thereof in good faith.
The parties agree to use their reasonable best efforts to complete any
LICENSE negotiations, including the execution of an agreement, within
six (6) months of OXiGENE'S written notice to BMCC electing to exercise
its option, provided, however, that if OXiGENE and BMCC agree that
reasonable progress has been made in the negotiations of a particular
LICENSE agreement, the six-month period shall be extended for one
period of ninety (90) days to allow for the conclusion of such
negotiations. If no agreement on the terms and conditions of a
particular LICENSE agreement can be reached within the period provided
in the preceding sentence, then BMCC shall be free to negotiate a
license arrangement with a third party. If the terms and conditions
agreed to between BMCC and any third party, taken in total, are
materially more favorable to such third party than those that were last
offered to, and not accepted by, OXiGENE (the "THIRD PARTY TERMS"),
BMCC shall give prompt written notice (the "THIRD PARTY LICENSE
NOTICE") to OXiGENE of the THIRD PARTY TERMS, and OXiGENE shall have a
right of first refusal (exercisable by written notice to BMCC within
ten (10) days after receipt by OXiGENE of the THIRD PARTY LICENSE
NOTICE) to enter into a license arrangement with BMCC on the THIRD
PARTY TERMS.
8.7 If OXiGENE declines to exercise its option to acquire a LICENSE because
the subject matter of the INVENTION is outside its strategic focus, and
BMCC licenses such INVENTION to a third party, income received by BMCC
from such third party licensee shall be distributed in accordance with
the provisions of Section 8.4.
ARTICLE IX -- LIABILITY
-----------------------
9.1 OXiGENE shall defend, indemnify and hold harmless BMCC, its trustees,
officers, employees and agents and their respective successors, heirs
and assigns (collectively, the "INDEMNITEES"), against any and all
liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) that may be incurred by, or imposed
upon, the INDEMNITEES, or any of them, in connection with any claim,
suit, demand, action or judgment arising out of the following:
(a) the design, production, manufacture, sale, use in commerce,
lease, or promotion by OXiGENE or by an affiliate or
sublicensee of OXiGENE of any product, process or service
relating to or developed pursuant to this Agreement; or
(b) any other activities to be carried out pursuant to this
Agreement.
9.2 OXiGENE shall have no obligation to indemnify against any liability,
damage, loss or expense (including reasonable attorneys' fees and
expenses of litigation) to the extent the same is attributable to: (i)
the negligence or willful misconduct of any of the INDEMNITEES; or (ii)
if the RESEARCH PROGRAM involves a clinical trial of an investigational
drug, a failure of any of the INDEMNITEES to adhere to the terms of the
protocol or OXiGENE'S written instructions relative to use of the
investigational drug; or (iii) the loss by BMCC of its status as a
not-for-profit corporation under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended.
9.3 BMCC MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE CONDITION OF THE
RESEARCH OR ANY INVENTION(S) OR PRODUCT(S), WHETHER TANGIBLE,
CONCEIVED, DISCOVERED OR DEVELOPED UNDER THIS AGREEMENT; OR THE
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE RESEARCH OR
ANY SUCH INVENTION OR PRODUCT. BMCC SHALL NOT BE LIABLE FOR ANY DIRECT,
CONSEQUENTIAL OR OTHER DAMAGES SUFFERED BY OXiGENE, ANY LICENSEE OR ANY
OTHERS RESULTING FROM THE USE OF THE RESEARCH OR ANY SUCH INVENTION OR
PRODUCT.
ARTICLE X -- INDEPENDENT CONTRACTOR
-----------------------------------
10.1 For the purpose of this AGREEMENT and all services to be provided
hereunder, the parties shall be, and shall be deemed to be, independent
contractors and not agents or employees of the other party. Neither
party shall have authority to make any statements, representations or
commitments of any kind, or to take any action which shall be binding
on the other party, except as may be explicitly provided for herein or
authorized in writing.
ARTICLE XI -- TERMS AND TERMINATION
-----------------------------------
11.1 The initial term of this AGREEMENT shall be from July 1, 1997 through
June 30, 2000. This AGREEMENT shall automatically be extended for
additional 12- month periods, provided, however, that either party may
give written notice (a "TERMINATION NOTICE") to the other party that it
desires to terminate this AGREEMENT, in which case this AGREEMENT shall
terminate effective as of the date that is twelve (12) months from the
TERMINATION NOTICE.
11.2 BMCC may terminate the AGREEMENT upon thirty (30) days prior written
notice to OXiGENE if circumstances beyond its control reasonably
preclude continuation of the RESEARCH PROGRAM.
11.3 If, based on any of the meetings or reports specified in ARTICLE IV,
OXiGENE, in its sole and absolute discretion, determines that
scientific progress in any one or more of the components of the
RESEARCH PROGRAM has been inadequate and that it wishes to terminate
funding for said component, then OXiGENE may give written notice to
BMCC of its determination, in which case funding for such RESEARCH
PROGRAM component will terminate effective three (3) months after
receipt of said notice by BMCC.
11.4 In the event that either party shall be in default of any of its
obligations under this AGREEMENT and shall fail to remedy such default
within sixty (60) days after receipt of written notice thereof, the
party not in default shall have the right to terminate this AGREEMENT
immediately by giving written notice thereof.
11.5 Termination or cancellation of this AGREEMENT shall not affect the
rights and obligations of the parties accrued prior to termination.
Upon any termination of this AGREEMENT, BMCC shall be entitled to be
compensated for all reasonable out-of-pocket expenses and uncancellable
commitments incurred as of the effective date of termination in an
amount not to exceed the remaining amount then budgeted for the
RESEARCH PROGRAM.
11.6 ARTICLES VI and VIII and any other provisions of this AGREEMENT which
by their nature extend beyond the termination of this AGREEMENT shall
survive such termination. If an INVENTION(S) made prior to the
termination of this AGREEMENT results in royalty income subsequent to
the termination of this AGREEMENT and said royalty income comes from
INVENTIONS made in the course of work conducted under the N-SUBSTITUTED
BENZAMIDE PROGRAM, it shall be distributed as follows:
(i) 50% to BMCC and
(ii) 50% to OXiGENE
until BMCC has received five million dollars ($5,000,000) in cumulative
payments, and thereafter:
(iii) 20% to BMCC and
(iv) 80% to OXiGENE.
If said royalty income is from JOINT INVENTIONS, fifty percent (50%)
shall be distributed in accordance with Boston University Medical
Center Patent Policy and fifty percent (50%) in accordance with the
provisions of this Section 11.6.
ARTICLE XII -- MEDIATION/ARBITRATION
------------------------------------
12.1 In the event a controversy or dispute arises between the parties
relating to any provision of this AGREEMENT, including, but not limited
to, the specific terms of any LICENSE agreement being negotiated in
connection with the exercise of OXiGENE'S option pursuant to Section
8.3 hereof, or the breach of any provision of this AGREEMENT, the
parties agree to use the following procedure prior to either party
pursuing other available remedies.
(a) The parties shall promptly hold a meeting, such meeting to be
attended by individuals with decision-making authority
regarding the dispute, in an attempt to negotiate a resolution
of the dispute in good faith.
(b) If within thirty (30) days after such meeting the parties have
not succeeded in negotiating a resolution of the dispute, they
agree to submit the dispute to mediation by the American
Arbitration Association (the "AAA"), the cost of such
mediation to be borne equally by both parties.
(c) The parties agree to participate in good faith in the
mediation and negotiations related thereto for a period of
thirty (30) days. If the parties are not successful in
resolving the dispute through mediation, then either party may
submit the dispute to arbitration, unless the parties mutually
agree otherwise.
12.2 Arbitration shall be subject to the following terms:
(a) The arbitration shall be held at a mutually agreeable location
in the Boston, Massachusetts metropolitan area.
(b) The arbitrator(s) shall be an independent, impartial third
party(ies) having no direct or indirect personal or financial
relationship to any of the parties to the dispute, who
has(have) agreed to accept the appointment as arbitrator(s) on
the terms set out in this ARTICLE XII.
(c) The arbitrator(s) shall be an active or retired attorney, law
professor or judicial officer with at least five (5) years
experience in commercial technology transfer matters and a
familiarity with the laws governing proprietary rights in
intellectual property.
(d) The arbitrator(s) shall be selected as follows:
Each party shall submit a description of the matter to be
arbitrated together with the terms of this ARTICLE XII to the
AAA at its Regional Office in Boston, Massachusetts. The AAA
shall submit to the parties a list of the qualified
arbitrators available to arbitrate the matter. The first
arbitrator acceptable to both parties shall be deemed the
selected arbitrator with respect to the dispute then at issue
under this AGREEMENT. In the event of a failure to select a
mutually agreeable arbitrator, the parties will each select an
arbitrator and the two arbitrators will select a third
arbitrator.
(e) Within sixty (60) days after selection of the arbitrator(s),
each party shall submit a description of the matter to be
arbitrated to said arbitrator(s).
(f) From the date the arbitrator(s) is in possession of both
parties' submitted material, the arbitrator(s) shall have
forty-five (45) days in which to hear oral testimony and
render a decision. Each party shall have a maximum of two (2)
working days during said forty-five day period in which to
present oral testimony.
(g) Time periods set forth in this ARTICLE XII may be altered only
by mutual consent of the parties;
(h) The arbitrator(s) shall announce the award in writing
accompanied by written findings explaining the facts
determined in support of the award and any relevant
conclusions of law;
(i) The fees of the arbitrator(s) and any other costs and fees
associated with the arbitration shall be paid in accordance
with the decision of the arbitrator(s), except that the
prevailing party shall pay no more than one-half of such
costs.
(j) Except as provided in Section 12.2(i) the decision of the
arbitrator(s) shall be final and binding on all parties, and
judgment may be entered thereon in any court having
jurisdiction thereof.
ARTICLE XIII -- GENERAL
-----------------------
13.1 This AGREEMENT may not be assigned by either party without the prior
written consent of the other party, provided, however, that OXiGENE may
assign this AGREEMENT, in whole or in part, to any person controlling,
under common control with or controlled by OXiGENE. The foregoing
notwithstanding, the sale of all or substantially all of OXiGENE'S
assets or the merger or consolidation of OXiGENE with or into another
entity shall not be deemed an assignment by OXiGENE of this AGREEMENT.
13.2 This AGREEMENT constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof, and supersedes and
replaces any prior agreement or understanding, whether written or oral.
No representations and warranties, other than those expressly set forth
herein, shall be deemed to have been made. The foregoing
notwithstanding, the CORDYCEPIN AGREEMENT is hereby terminated and
shall no longer have any force and effect, except provisions relating
to the STUDY (as defined in the CORDYCEPIN AGREEMENT) and ARTICLE VIII,
including APPENDIX E (with respect to the licensing of cordycepin)
shall remain in effect. This AGREEMENT may not be amended, modified or
supplemented, unless signed by the parties hereto.
13.3 Any notice required by this AGREEMENT shall be deemed sufficiently
given if sent in writing by prepaid, first class, certified or
registered mail, return receipt requested, addressed in the case of
BMCC to:
Office of General Counsel
Boston Medical Center Corporation
One Boston Medical Center Place, Suite 217
Boston, MA 02118
Attn.: General Counsel
with a copy to:
Office of Technology Transfer
Community Technology Fund
Boston University
108 Bay State Road
Boston, MA 02215
Attn.: Director
and in the case of OXiGENE to:
OXiGENE, Inc.
110 East 59th Street, 29th Floor
New York, NY 10022
Attn.: Vice President
with a copy to:
OXiGENE Europe AB
Ideon Research Park
Scheelevagen 17
S-223 70 Lund,
SWEDEN
Attn.: Chief Scientific Officer
or at such other address as may be designated by notice given from time
to time pursuant to the terms of this provision.
13.4 This AGREEMENT shall be construed and enforced in accordance with the
laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have caused this agreement to be executed
by their duly authorized representatives.
OXiGENE, Inc BOSTON MEDICAL CENTER
CORPORATION
By: -------------------------- By: -------------------------
Name: Bo Haglund Name: Kevin Ward
Title: Chief Financial Officer Title: Director of Financial Planning
TECHNOLOGY DEVELOPMENT AGREEMENT
No. 206-01.OPT
THIS AGREEMENT, made this 27th day of May, 1997 (the "EFFECTIVE DATE"), is by
and between the ARIZONA BOARD OF REGENTS, a body corporate of the State of
Arizona, acting on behalf of and for ARIZONA STATE UNIVERSITY of Tempe, Arizona
("ASU") and OXiGENE Europe AB, a corporation organized under the laws of Sweden
having its principal place of business located at IDEON Research Park,
Scheelevagen 17, S-223 70 Lund, SWEDEN ("OPTIONEE").
RECITALS
--------
A. Certain inventions, generally characterized as a family of Anti-cancer
drugs known under the name "Combretastatins" and collectively referred
to as the "TECHNOLOGY", were made in the course of research at ASU by
G. Robert Pettit, and others and are covered by ASU's Patent Rights as
defined below.
B. ASU owns certain patent applications and patents covering the
TECHNOLOGY as set forth in Paragraph 1.1 (ASU's PATENT RIGHTS), and ASU
may file one or more additional applications claiming the TECHNOLOGY or
novel adaptations or modifications of it.
C. The National Cancer Institute sponsored part of the development of the
TECHNOLOGY and, as a consequence, this Agreement is subject to
overriding obligations to the Federal Government as set forth in 35
U.S.C. 200-212 and applicable governmental implementing regulations.
D. ASU is desirous that the TECHNOLOGY be developed and utilized to the
fullest extent so that the benefits can be enjoyed by the general
public.
E. The OPTIONEE is desirous of obtaining certain rights from ASU for the
commercial development, use and sale of products or services covered by
ASU's PATENT RIGHTS, and ASU is willing to grant such rights;
AGREEMENT
---------
1. DEFINITIONS
1.1. "ASU's PATENT RIGHTS" shall mean patent rights to any subject
matter claimed in or covered by any of the following:
Under ASU Case No. 206:
----------------------
U.S. Patent Nos. 5,409,953 & 5,569,786 entitled "Isolation,
Structural Elucidation and Synthesis of Novel Antineoplastic
Substances Denominated "Combretastatins""
Under ASU Case No. 224:
----------------------
U.S. Patent No. 4,996,237 entitled "Combretastatin A-4"
Under ASU Case No. 516:
----------------------
U.S. Patent No. 4,940,726 entitled "Cell Growth Inhibitory
Macrocyclic Lactones Denominated Combretastatin D-1 and
Combretastatin D-2"
Under ASU Case No. 700:
----------------------
U.S. Patent No. 5,561,122 entitled "Combretastatin A-4
Prodrug"
and continuing applications thereof including all additions,
renewals, divisions, substitutions, continuations and
continuation-in-part applications; any patents issuing on said
application or continuing applications including reissues; and
any corresponding foreign applications or patents.
1.2. "LICENSED PRODUCT" shall mean any material, composition,
composition of matter, compound, device or embodiment the use
of which would constitute, but for any license granted to the
OPTIONEE, pursuant to a LICENSE AGREEMENT, if entered, an
infringement of any pending or issued claim within ASU's
PATENT RIGHTS as defined herein.
1.3. "LICENSED METHOD" shall mean any method, procedure, process or
other subject matter whose use or practice would constitute,
but for any license granted to OPTIONEE, pursuant to a LICENSE
AGREEMENT, if entered, an infringement of any claim in the ASU
PATENT RIGHTS as defined herein.
1.4. "KNOW-HOW" shall mean all technical data, information,
materials and technical expertise that relates to TECHNOLOGY,
including without limitation, chemical and physical data and
techniques, clinical data, medical uses, product forms,
formulations, and specifications.
1.5. "NET SALES" means the total of the gross invoice prices of
LICENSED PRODUCTS sold by the OPTIONEE, if the parties enter a
LICENSE AGREEMENT, an AFFILIATE or a sublicensee, if
applicable, less the sum of the following actual and customary
deductions where applicable: cash, trade or quantity
discounts; sales, use, tariff, import/export duties or other
excise taxes imposed on or levied with respect to any sale of
LICENSED PRODUCTS; transportation charges and allowances or
credits to customers because of rejections or returns.
Transfers to an AFFILIATE or sublicensee for end use by such
AFFILIATE or sublicensee if applicable shall be treated as NET
SALES.
1.6. "AFFILIATE" means any corporation or other business entity
that, directly or indirectly, controls, is controlled by or is
under common control with OPTIONEE provided, however, that in
any country where the local law shall not permit foreign
equity participation of at least 50%, then an "AFFILIATE"
shall include any company in which the OPTIONEE shall own or
control, directly or indirectly, the maximum percentage of
such outstanding stock or voting rights permitted by local
law.
1.7. "INVENTOR" shall, for the purposes of this Agreement, mean Dr.
George R. Pettit and others whose names appear on the patents
or patent applications described under Section 1.1.
1.8. "TERM" shall mean that period beginning on the EFFECTIVE DATE
and ending on the date that is twenty four months from the
EFFECTIVE DATE.
1.9. "LICENSE AGREEMENT" means the license agreement between ASU
and OPTIONEE that shall result if OPTIONEE exercises its
option pursuant to Article 4 and the parties are successful in
negotiating pursuant to Article 6.
1.10. "TECHNOLOGY" means certain inventions, generally characterized
as a family of anti-cancer drugs known under the name
"Combretastatins", which were made in the course of research
at ASU by Drs. G. Robert Pettit, et. al. and are covered by
ASU's Patent Rights as defined herein.
2. SCOPE OF GRANT AND DURATION
2.1. On the terms and conditions set forth in this Agreement, ASU
hereby grants to OPTIONEE an exclusive option to acquire an
exclusive world-wide license to ASU's PATENT RIGHTS to make,
have made, market, sell, sub-license and otherwise use
LICENSED PRODUCTS and to practice the LICENSED METHOD.
2.2. Said option shall have a duration for the TERM specified in
Section 1.10.
2.3. No license shall be deemed to have been granted unless and
until OPTIONEE exercises its option and a LICENSE AGREEMENT is
executed and delivered by OPTIONEE and ASU as contemplated by
this Agreement.
2.4. Under this Agreement, OPTIONEE, in its own name, shall have
the right to file an Investigational New Drug Application
(IND) with the United States Food & Drug Administration (US
FDA) with respect to clinical testing of the TECHNOLOGY.
3. OPTION FEE
As consideration for this Agreement, OPTIONEE agrees to pay to ASU an
Option Fee of * payable upon execution of this Agreement. This fee is
not refundable, but if the OPTIONEE exercises its option, the OPTIONEE
shall have the right, in its sole and absolute discretion, to credit
this Option Fee *.
- -------------
* Omitted pursuant to request for confidential treatment.
4. TECHNICAL ASSISTANCE & TECHNICAL ASSISTANCE FEE
4.1. ASU shall:
4.1.1. Permit representatives from OPTIONEE (and, if the
parties enter a LICENSE AGREEMENT, representatives of
a person or entity to which OPTIONEE has granted a
sub-license in accordance with the LICENSE AGREEMENT)
to visit the facilities of ASU for the purpose of
personally observing the practice and testing of
TECHNOLOGY or the production of LICENSED PRODUCT, and
4.1.2. Arrange for its representatives to visit such
facilities as may be designated by OPTIONEE in order
to provide to OPTIONEE (or, if the parties enter a
LICENSE AGREEMENT, any person or entity to which
OPTIONEE has granted a sub-license in accordance with
the LICENSE AGREEMENT) any technical assistance and
advice as OPTIONEE (or, if the parties enter a
LICENSE AGREEMENT, any person or entity to which
OPTIONEE has granted a sub-license in accordance with
the LICENSE AGREEMENT) may reasonably require in
connection with the production, packaging,
inspecting, and testing of the TECHNOLOGY and the
LICENSED PRODUCTS or the LICENSED METHODS.
4.2. OPTIONEE shall give ASU reasonable prior notice of any
intended visits or required assistance as contemplated by
Sections 4.1.1. and 4.1.2 above and the visits shall be of
reasonable duration and made at reasonable times during
regular business hours. OPTIONEE shall bear the entire cost of
the visits made pursuant to sub-paragraph (4.1.1) and shall
promptly reimburse ASU for all reasonable salary, travel and
other expenses actually incurred by ASU's technical personnel
in the course of the visits made to the facilities of OPTIONEE
(or any person or entity to which OPTIONEE has granted a
sub-license in accordance with the LICENSE AGREEMENT)
facilities pursuant to sub-paragraph (4.1.2).
4.3. In consideration of the assistance to be provided by ASU as
contemplated by this Article 4, OPTIONEE shall pay ASU an
aggregate fee of $100,000 in addition to the option fee and
any future license issue fee, and in addition to any costs
paid or reimbursed by OPTIONEE pursuant to Section 4.2. This
fee is payable in two installments of $50,000 each, the first
of which is due no later than one hundred eighty (180) days
from the EFFECTIVE DATE of this Agreement and the second of
which is due no later than one year and one hundred eighty
(180) days from the EFFECTIVE DATE of this Agreement.
5. EXERCISE OF THE OPTION
If OPTIONEE elects to exercise its option to a LICENSE AGREEMENT under
Section 2.1 hereof, OPTIONEE shall notify ASU in writing pursuant to
Article 15 (Notices) prior to the expiration of the TERM of this
Agreement. Failure of OPTIONEE to so notify ASU shall be deemed an
election by the OPTIONEE not to secure a license.
6. TERMS OF PROPOSED LICENSE
If OPTIONEE exercises its option to a LICENSE AGREEMENT as contemplated
by Sections 2.1 and 5, OPTIONEE and ASU shall thereupon negotiate in
good faith and shall use its best efforts to arrive at mutually
agreeable, reasonable terms and conditions for the license. The terms
of the License Agreement shall include, but not be limited to, the
following provisions:
6.1. A worldwide, exclusive license to make, have made, market,
sell and otherwise use the LICENSED PRODUCTS and to practice
the LICENSED METHOD for the life of ASU's PATENT RIGHTS;
6.2. A right to sub-license ASU's PATENT RIGHTS worldwide;
6.3. A License Issue Fee payable as follows:
6.3.1. * payable upon execution of the LICENSE AGREEMENT.
6.3.2. * payable upon each June 1 and December 1 following
the EFFECTIVE DATE of the LICENSE AGREEMENT until
all * payments have been made.
- -------------
* Omitted pursuant to request for confidential treatment.
6.4. A royalty rate * of the NET SALES of LICENSED PRODUCTS and *
of the NET SALES by the sub-licensee of LICENSED PRODUCTS;
- -------------
* Omitted pursuant to request for confidential treatment.
6.5. Minimum annual royalties in an amount equal to Twenty Thousand
US Dollars ($20,000.00) which will commence upon OPTIONEE's
receipt of marketing approval from the US FDA or any other
European regulatory agency. Such minimum annual royalties
shall be fully credited against earned royalties;
6.6. Technical assistance provided by ASU under terms substantially
similar to those specified in Sections 4.1 and 4.2 of this
Agreement.
6.7. OPTIONEE acknowledges that ASU, for its own internal purposes,
may allocate the Option Fee and future License Issue Fee
payments to ASU Case Nos. 224 and 700. OPTIONEE further
acknowledges that ASU will allocate future earned royalties to
LICENSED PRODUCTS according to the patent claims that the
LICENSED PRODUCTS are sold under. These allocations shall not
relieve OPTIONEE from its obligations to make fee payments as
provided for under this Agreement.
6.8. All costs incurred by ASU from and after the effective date of
the LICENSE AGREEMENT in filing, prosecuting and maintaining
ASU's PATENT RIGHTS in the United States and elsewhere shall
be borne by OPTIONEE. ASU shall prepare and deliver to
OPTIONEE a report setting forth the countries in which it has
filed and intends to file applications with respect to ASU's
PATENT RIGHTS. OPTIONEE may ask ASU in writing to eliminate
certain countries in which OPTIONEE intends not to market the
LICENSED PRODUCTS. OPTIONEE shall not be responsible for any
costs incurred by ASU for the eliminated countries after
receipt of such request by OPTIONEE.
6.9. The following diligence requirements will be included in the
LICENSE AGREEMENT and will have to be met by OPTIONEE:
6.9.1. Filing for approval by the US FDA or other European
regulatory agency to commence at least one Phase II
clinical trial involving ASU's PATENT RIGHTS no later
than one (1) year from the EFFECTIVE DATE of the
LICENSE AGREEMENT; and
6.9.2. Filing for approval by the US FDA or other European
regulatory agency to commence at least one Phase III
clinical trial involving ASU's PATENT RIGHTS no later
than one (1) year from the completion of a Phase II
clinical trial or two (2) years from the initiation
of a Phase II clinical trial whichever is earlier in
time; and
6.9.3. OPTIONEE shall use its best efforts to make a valid
application for an NDA with the US FDA no later than
six months after completion of the first Phase III
clinical trial.
6.9.4. The clinical trials referred to in Paragraphs 6.8.1
and 6.8.2 above shall be conducted at the expense of
OPTIONEE or an AFFILIATE of OPTIONEE.
6.9.5. The parties shall promptly advise one another of any
confirmed instances, which come to their attention of
severe or unexpected reactions from the use of any
LICENSED PRODUCT.
6.9.6. In the event that OPTIONEE, in its sole and absolute
discretion, determines that (i) filing for US FDA or
European regulatory approval is not warranted by the
clinical testing data with respect to the clinical
trials contemplated by Sections 6.8.1 and/or 6.8.2,
or (ii) further development of the TECHNOLOGY is not
economically feasible, OPTIONEE shall so notify ASU
and provide ASU with a report setting forth in
reasonable detail the basis for its determination,
whereupon OPTIONEE may terminate this Agreement with
no further obligation to ASU except for the payment
of any fees which came due or royalties accrued prior
to the date of notification by OPTIONEE.
6.9.7. Meet the reasonably anticipated market demand for
such LICENSED PRODUCTS following commencement of
marketing and during the term of the LICENSE
AGREEMENT.
6.10 OPTIONEE shall agree to manufacture LICENSED PRODUCTS in
accordance with applicable US law.
6.11 Indemnification of ASU under terms substantially similar to
those set forth in Section 14 of this Agreement.
6.12 Provisions identical to those contained in Sections 20.6,
20.7, 20.8 and 20.9 of this Agreement.
6.13 In the event OPTIONEE and ASU are unable to conclude a LICENSE
AGREEMENT within six (6) months ("NEGOTIATION PERIOD") after
OPTIONEE notifies ASU pursuant to Section 5 of this Agreement,
then ASU shall be free to negotiate a license arrangement with
a third party. If, for a maximum of one (1) year after the
NEGOTIATION PERIOD, ASU and a third party agree on the terms
and conditions of a license agreement with respect to ASU's
PATENT RIGHTS, and such terms and conditions are more
favorable to the third party than those that were last offered
to and not accepted by OPTIONEE, then ASU shall give prompt
written notice (the "THIRD PARTY LICENSE NOTICE") to OPTIONEE
of the terms and conditions and OPTIONEE shall have a right of
first refusal (exercisable by written notice to ASU within
thirty (30) days after receipt by OPTIONEE of the THIRD PARTY
LICENSE NOTICE) to enter into a license arrangement with ASU
on the terms and conditions negotiated between ASU and such
third party and set forth in the THIRD PARTY LICENSE NOTICE.
7. DUE DILIGENCE REQUIRED UNDER THIS OPTION
7.1. OPTIONEE shall diligently undertake such research and testing
of the TECHNOLOGY and the LICENSED PRODUCTS as is reasonably
necessary to evaluate its interest in exercising the option.
7.2. OPTIONEE shall finance the pre-clinical development, stability
testing, batch manufacturing, pre-clinical toxicity studies
and pharmacokinetics of Combretastatin A-4 and/or
Combretastatin A-4 Prodrug within the TERM of this Agreement.
OPTIONEE further agrees to use its best efforts to conduct
pre-clinical development, stability testing, toxicity studies
and pharmacokinetics on all other compounds within ASU's
PATENT RIGHTS.
7.3. OPTIONEE agrees to initiate, at its own expense, at least one
Phase I clinical trial using Combretastatin A-4 and/or
Combretastatin A-4 Prodrug within the TERM of this Agreement.
Said Phase I clinical trial shall be independent of any
clinical trials being conducted by the British Cancer Research
Campaign (BCRC). ASU agrees to notify the BCRC of the
existence of this Agreement and to request that the BCRC
coordinate its clinical trial activity with that of OPTIONEE
so that any BCRC clinical trial activity does not contravene
or conflict with OPTIONEE's rights under this Agreement or the
LICENSE AGREEMENT, if one is entered.
7.4. OPTIONEE shall provide ASU with four progress reports covering
its activities relating to the development and testing of
Licensed Products as described in Paragraph 7.2 in six month
intervals, the first such progress report to be delivered on
or before the date that is six months following the EFFECTIVE
DATE of this Agreement.
7.5. The parties shall promptly advise one another of any confirmed
instances, which come to their attention of severe or
unexpected reactions from the use of any LICENSED PRODUCT.
7.6. OPTIONEE shall be entitled to exercise prudent and reasonable
business judgment in meeting its due diligence obligations
hereunder. If OPTIONEE determines in its sole and absolute
discretion that continuation of any further development or
clinical testing of the TECHNOLOGY or LICENSED PRODUCTS is not
warranted by available testing data, or otherwise is not
economically feasible the OPTIONEEE shall so notify ASU and
provide ASU with a report setting forth in reasonable detail
the basis for its determination, whereupon OPTIONEE may
terminate this Agreement with no further obligation to ASU
except for the payment of any fees which came due or royalties
accrued prior to the date of notification by OPTIONEE.
7.7. Promptly after the EFFECTIVE DATE of this Agreement and from
time to time during the TERM of this Agreement, and to the
extent that ASU has all necessary legal and contractual rights
to do so, ASU shall disclose to OPTIONEE all technical
information and KNOW-HOW pertaining to LICENSED PRODUCT that
is known by ASU and with respect to which ASU is then
empowered to grant the rights granted to OPTIONEE in this
Agreement. ASU shall from time to time during the TERM of this
Agreement disclose to OPTIONEE all further necessary technical
information and KNOW-HOW that ASU may acquire or develop
during the TERM of this Agreement pertaining to the
TECHNOLOGY.
8. PATENT PROSECUTION AND MAINTENANCE
8.1. ASU shall diligently prosecute and maintain the patents and
patent applications identified as ASU's PATENT RIGHTS. All
domestic and foreign patent applications shall be filed in the
name of ASU and shall be held in the name of ASU.
8.2. Upon request by OPTIONEE ASU shall provide OPTIONEE with
copies of all relevant documentation so that OPTIONEE may be
informed and apprised of the continuing prosecution, and
OPTIONEE agrees to keep this documentation confidential.
8.3. ASU shall use all reasonable efforts to amend any patent
application to include claims requested by OPTIONEE and
required to protect the products contemplated to be sold under
the LICENSE AGREEMENT.
9. LIFE OF THE AGREEMENT
9.1. Unless earlier terminated by operation of law or by acts of
the parties in accordance with the terms of this Agreement,
this Agreement shall be in full force and effect from the
Effective Date to and including the last date of the TERM
specified in Section 1.10.
9.2. Any termination of this Agreement shall not affect the rights
and obligations set forth in the following Articles:
Article 12 Use of Names and Trademarks
Article 14 Indemnification
Article 17 Late Payments
9.3. Any termination of this Agreement shall not relieve OPTIONEE
of its obligation to pay any monies accrued and owing at the
time of such termination and shall not impair any ASU's right
to collect any monies then due and owed to it.
10. TERMINATION BY ASU
In the event OPTIONEE violates or fails to perform any material term or
covenant of this Agreement, ASU may give written notice of such default
(Notice of Default) to OPTIONEE. If OPTIONEE should fail to cure such
default (or shall have failed to commence steps reasonably designed to
cure such default) within thirty (30) days of the effective date of
such notice, ASU shall have the right to terminate this Agreement by a
second written notice (Notice of Termination) to OPTIONEE. If a Notice
of Termination is sent to OPTIONEE this Agreement shall automatically
terminate on the effective date of such Notice of Termination. These
notices shall be subject to Article 15 (Notices).
11. TERMINATION BY OPTIONEE
OPTIONEE shall have the right at any time and from time to time to
terminate this Agreement in whole or as to any portion of ASU's PATENT
RIGHTS by giving notice in writing to ASU. Such notice shall be given
in accordance with Article 15 (Notices) and such termination shall
effective as of the date that is thirty (30) days from the effective
date of such notice or such other date as may be set forth in the
notice of termination, whichever is later.
<PAGE>
12. USE OF NAMES AND TRADEMARKS
12.1. Nothing contained in this Agreement shall be construed as
conferring any right to use in advertising, publicity, or
other promotional activities any name, trade name, trademark,
service mark or other designation of either party hereto
(including contraction, abbreviation or simulation of any of
the foregoing). Unless required by law, the use of the name
"ASU" or "Arizona State University" or "Arizona Board of
Regents" is expressly prohibited.
12.2. Notwithstanding Section 12.1, above, OPTIONEE and any
AFFILIATE of OPTIONEE shall have the right to disclose and/or
to file as an exhibit to filings required to be made by
OPTIONEE or any AFFILIATE of OPTIONEE with the Securities &
Exchange Commission the existence and terms of this Agreement
and the proposed LICENSE AGREEMENT.
12.3. It is understood that ASU shall be free to release to the
inventors and senior administrative officials employed by ASU
the terms and conditions of this Agreement upon their request.
It is further understood that should a third party inquire
whether a license to ASU's PATENT RIGHTS is available, ASU may
disclose the existence and the TERM of this Agreement to such
third party, but shall not disclose the name of the OPTIONEE,
except where ASU is required to release such information under
either the Arizona Public Records Act or other applicable law.
13. LIMITED WARRANTY
13.1. ASU represents and warrants to OPTIONEE that it has the
corporate power and legal right to execute and deliver this
Agreement and the LICENSE AGREEMENT, if one is negotiated, and
to perform its obligations. The execution and delivery of this
Agreement by ASU does not violate any (i) provision of law or
regulation applicable to ASU, or (ii) other agreement or
arrangement, whether written or oral, to which ASU is a party
or by which it or its properties are bound. ASU has not
received any notice alleging that any of the patents included
in ASU's PATENT RIGHTS infringe on the patents or other
proprietary technology of a third party. To the best of ASU's
knowledge, the ASU's PATENT RIGHTS do not infringe on the
patents or other proprietary technology of a third party, nor
does ASU know of any basis for such a claim of infringement.
13.2. This Agreement and the associated TECHNOLOGY are provided
without warranty, merchantability, or fitness for a particular
purpose or any other warranty, express or implied. Subject to
Section 13.1, ASU makes no representation or warranty that the
LICENSED PRODUCTS or LICENSED METHODS will not infringe any
patent or other proprietary right.
13.3. In no event will ASU be liable for any incidental, special or
consequential damages in connection with the use of the
TECHNOLOGY or LICENSED PRODUCTS except to the extent such
damages are the result of ASU's willful misconduct or gross
negligence.
13.4. Nothing in this Agreement shall be construed as:
13.4.1. Subject to Section 13.1, a warranty or representation
by ASU as to the validity or scope of any ASU's
PATENT RIGHTS; or
13.4.2. Subject to Section 13.1, a warranty or representation
that anything made, used, sold or otherwise disposed
of under any license of ASU's PATENT RIGHTS is or
will be free from infringement of patents of third
parties; or
13.4.3. An obligation to bring or prosecute actions or suits
against third parties for patent infringement,
provided, however, that if ASU fails or declines to
bring or prosecute any such action or suit, OPTIONEE
has the right to undertake such action or suit in its
own name; or
13.4.4. Conferring by implication, estoppel or otherwise any
license or rights under any patents of ASU other than
ASU's PATENT RIGHTS set forth in Section 1.1,
regardless of whether such patents are dominant or
subordinate to ASU's Patent Rights; or
13.4.5. An obligation to furnish any know-how not included in
ASU's PATENT RIGHTS.
14. INDEMNIFICATION
14.1. OPTIONEE agrees to indemnify, hold harmless and defend ASU,
its officers, employees and agents; the sponsors of the
research that lead to the TECHNOLOGY; and the INVENTOR of the
patents and patent application included in ASU's PATENT RIGHTS
(collectively, the INDEMNITEES) against any and all claims,
suits, losses, damages, costs, fees, and expenses resulting
from or arising out of exercise of this Agreement; provided,
however, that OPTIONEE shall have no obligation to indemnify
any INDEMNITEE for the negligence or willful misconduct of or
breach of representation contained in this Agreement by such
INDEMNITEE.
14.2. ASU shall promptly notify OPTIONEE in writing of any claim or
suit brought against ASU in respect of which ASU intends to
invoke the provisions of this Article 14. OPTIONEE will keep
ASU informed on a current basis of its defense of any claims
pursuant to this Article 14.
15. NOTICES
Any payment, notice or other communication required or permitted to be
made or given to either party pursuant to this Agreement shall be
deemed sufficiently made or given on the date of mailing if sent to the
party by certified or registered mail, postage prepaid, addressed to it
at its address set forth below or to such other address as shall have
been designated by written notice given in accordance with the
provisions of this Section 14.
In the case of ASU:
------------------
Office of Technology Collaborations & Licensing
Office of the Vice Provost for Research
Arizona State University
P. O. Box 873511
Tempe, AZ 85287-3511
In the case of OPTIONEE: COPY TO:
----------------------- -------
OXiGENE Europe AB OXiGENE, Inc.
IDEON Research Park 110 East 59th Street
Scheelevagen 17 New York, NY 10022
S-223 70 Lund, SWEDEN Attn.: Vice President
Any notice required or permitted to be given pursuant to this Agreement
shall be deemed effective 10 days following receipt of a notice given
in accordance with the provisions of this Section 15.
16. ASSIGNABILITY
This Agreement is binding upon and shall inure to the benefits of ASU,
its successors and assigns, but shall be personal to OPTIONEE and
assignable by OPTIONEE only with the prior written consent of ASU,
which consent shall not be unreasonably withheld, provided, however
that OPTIONEE may assign this Agreement to an AFFILIATE without ASU's
consent but with notice to ASU in accordance with Section 15.
17. LATE PAYMENTS
In the event fees or payments contemplated by this Agreement are not
received by ASU when due, OPTIONEE agrees to pay ASU interest charges
at a rate per annum of either a) Ten (10) percent, or b) five (5)
percent plus the rate of interest which is charged by the San Francisco
Federal Reserve Bank to member banks twenty-five (25) days prior to the
date the payment was due, whichever is greater. Such interest shall be
calculated from the date payment was due until actually received by ASU
18. WAIVER
It is agreed that no waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth shall be
deemed a waiver as to any subsequent and/or similar breach or default.
19. GOVERNING LAWS
This Agreement shall be interpreted and construed in accordance with
the laws of the State of Arizona.
20. MISCELLANEOUS
20.1. The headings of the several sections are inserted for
convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this
Agreement.
20.2. This Agreement will not be binding upon the parties until it
has been signed below on behalf of each party; it shall then
be effective as of the EFFECTIVE DATE. No amendment or
modification shall be valid or binding upon the parties unless
made in writing and signed by each party.
20.3. In case any of the provisions contained in this Agreement
shall be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability
shall not affect any other provisions hereof, but this
Agreement shall be construed as if such invalid or illegal or
unenforceable provisions had never been contained herein.
20.4. This Agreement embodies the entire understanding of the
parties and shall supersede all previous communications,
representations, or undertakings, whether verbal or written,
between the parties relating to its subject matter.
20.5. OPTIONEE agrees that the personnel of OPTIONEE will not for
any purpose be considered employees or agents of ASU and that
OPTIONEE assumes full responsibility for the actions of its
personnel while performing services under this Agreement, and
shall be solely responsible for their supervision, daily
direction and control, payment of salary (including
withholding income taxes and social security), worker's
compensation and disability benefits. ASU agrees that the
personnel of ASU will not for any purpose be considered
employees or agents of OPTIONEE and that ASU assumes full
responsibility for the actions of its personnel while
performing services under this Agreement, and shall be solely
responsible for their supervision, daily direction and
control, payment of salary (including withholding income taxes
and social security), worker's compensation and disability
benefits.
20.6. The parties agree to comply with all applicable state and
federal laws, rules, regulations and executive orders as to
equal employment opportunity, nondiscrimination and
affirmative action.
20.7. This Agreement is subject to Section 38-511, Arizona Revised
Statutes.
20.8. In the event of a dispute under this Agreement, the parties
agree to use arbitration if, and then only to the extent
required under Sections 12-1518 and 12-133, Arizona Revised
Statutes.
20.9. To the extent required by Section 35-214, Arizona Revised
Statutes, OPTIONEE agrees to retain all books, accounts,
reports, files and other records of OPTIONEE relating to this
Agreement and make those records available at all reasonable
times, upon prior written notice, for inspection and audit by
ASU or the Auditor General of the State of Arizona, or their
agents, during the terms of and for a period of five (5) years
after the completion of this Agreement. The records shall be
provided at Arizona State University, Tempe, Arizona, or
another location designated by ASU upon reasonable notice to
OPTIONEE.
IN WITNESS WHEREOF, both ASU and OPTIONEE have executed this Agreement, in
duplicate originals, by their respective officers hereunto duly authorized, as
of the EFFECTIVE DATE.
ARIZONA BOARD OF REGENTS OXiGENE Europe AB
a body corporate of the State of Arizona
acting for ("OPTIONEE")
ARIZONA STATE UNIVERSITY
("ASU")
BY:----------------------- BY:----------------------
BY:----------------------
COPLEY PLACE
BOSTON, MASSACHUSETTS
OFFICE LEASE
to
OXIGENE, Inc.
FROM THE OFFICE OF:
Goulston & Storrs, P.C.
400 Atlantic Avenue
Boston, Massachusetts 02110-3333
<PAGE>
OFFICE LEASE
COPLEY PLACE
BOSTON, MASSACHUSETTS
TABLE OF CONTENTS
1. BASIC DATA
2. HABENDUM; TERM
3. POSSESSION
4. BASE RENT
5. ADDITIONAL RENT
A. Definitions
(i) Base Year
(ii) Base Year Operating Expenses
(iii) Calendar Year
(iv) Tenants Proportionate Share
(v) Taxes
(vi) Operating Expenses
B. Expense Adjustment
6. USE OF PREMISES
7. CONDITION OF PREMISES
8. SERVICES
A. List of Services
B. Billing for Electricity
C. Interruption of Services
D. Charges for Services
E. Energy Conservation
9. REPAIRS; HAZARDOUS MATERIALS
10. ADDITIONS AND ALTERATIONS
11. COVENANT AGAINST LIENS
12. INSURANCE
A. Waiver of Subrogation
B. Coverage
C. Avoid Action Increasing Rates
13. FIRE OR CASUALTY
14. WAIVER OF CLAIMS - INDEMNIFICATION
15. NONWAIVER
16. CONDEMNATION
17. ASSIGNMENT AND SUBLETTING
18. SURRENDER OF POSSESSION
19. HOLDING OVER
20. ESTOPPEL CERTIFICATE
21. SUBORDINATION
22. CERTAIN RIGHTS RESERVED BY LANDLORD
23. RULES AND REGULATIONS
24. LANDLORD'S REMEDIES
25. EXPENSES OF ENFORCEMENT
26. COVENANT OF QUIET ENJOYMENT
27. SECURITY DEPOSIT
28. REAL ESTATE BROKER
29. UNDERLYING LEASES
30. NOTICE TO MORTGAGEE AND GROUND LESSOR
31. ASSIGNMENT OF RENTS
32. PERSONAL PROPERTY TAXES
33. MISCELLANEOUS
A. Rights Cumulative
B. Interest
C. Terms
D. Binding Effect
E. Lease Contains All Terms
F. Delivery for Examination
G. No Air Rights
H. Modification of Lease
I. Intentionally Deleted
J. Transfer of Landlord's Interest
K. Landlord's Title
L. Prohibition Against Recording
M. Captions
N. Covenants and Condition
O. Only Landlord/Tenant Relationship
P. Application of Payments
Q. Definition of Landlord
R. Time of Essence
S. Governing Law
T. Partial Invalidity
U. Size of Premises
34. NOTICES
35. LIMITATION ON LIABILITY
36. LANDLORD'S DESIGNATED AGENT
37. COMMENCEMENT AND TERMINATION DATES
38. CANCELLATION OPTION
39. CONSTRUCTION
40. PARKING
Exhibit A Plan of Premises
Exhibit B Work Letter
Exhibit C Rules and Regulations
Exhibit D Cleaning Specifications
Exhibit E Measurement Standards
Exhibit F Holidays
Exhibit G Affirmative Action and Resident Preference Goals
<PAGE>
OFFICE LEASE
COPLEY PLACE
BOSTON, MASSACHUSETTS
THIS INSTRUMENT is an Agreement of Lease in which the Landlord and the
Tenant are the parties hereinafter named, and which relates to space in the
Office Section of Copley Place (hereinafter referred to as the "Office Section")
located at 100 Huntington Avenue, Boston, Suffolk County, Massachusetts (the
project known as Copley Place, including without limitation the hotel portions
thereof, plazas, pedestrian bridges, service areas and all other common areas,
together with all present and future easements, additions, improvements, air
rights and other rights appurtenant thereto, is hereinafter referred to as the
"Property"), subject to the covenants, terms, provisions and conditions of this
Lease. The "Office Section" means that portion of the building (the "Building")
located at the aforesaid address consisting of seven (7) levels of office area
containing approximately 845,000 square feet of rentable floor area. The
Building also contains retail shopping, restaurant, parking and other
facilities, which are not included within the Office Section. The Building does
not, however, include the hotel or residential portions of the Property or the
pedestrian bridges. In consideration thereof, Landlord and Tenant covenant and
agree as follows:
1. BASIC DATA.
- -- -----------
The following sets forth basic data and, where appropriate,
constitutes definitions of the terms hereinafter listed.
Date: February 26, 1997
Landlord: COPLEY PLACE ASSOCIATES NOMINEE
CORPORATION, a Delaware nominee corporation
Present Mailing Address
of Landlord: c/o Urban Retail Properties
Suite 600
Four Copley Place
Boston, Massachusetts 02116
Tenant: OXIGENE, Inc., a Delaware corporation
Present Mailing Address
of Tenant: OXIGENE, Inc.
110 East 59th Street, 29th Floor
New York, NY 10022
Commencement Date: Subject to Paragraph 37 hereof, the earlier
of May 1, 1997, or the date of Substantial Completion
of the Premises (as defined in the Work Letter (the
"Work Letter") attached hereto as Exhibit B) whichever
is the first to occur.
Termination Date: Subject to Paragraph 37 hereof, five (5) years after
the Commencement Date, unless sooner terminated as
provided in this Lease.
Base Rent: At the rate of Fifty-Nine Thousand Three Hundred
Fifty-Three and 00/100 Dollars ($59,353.00) per annum,
in equal monthly installments of Four Thousand Nine
Hundred Forty-Six and 08/100 Dollars ($4,946.08)
(computed on the basis of $30.50 per rentable square
foot per annum at 1,946 rentable square feet of space).
(See Paragraph 4)
Base Year: The Calendar Year 1997.
Base Year Operating
Expenses: The amount of Operating Expenses incurred with respect
to the Base Year.
Tenant's Proportionate
Share: 0.24% (computed on the basis of 95% occupancy).
Use: General office purposes including a kitchenette for
employee use only.
Premises: That portion of the Office Section designated on
the plan attached hereto as Exhibit A and commonly
described as approximately 1,946 rentable square feet,
consisting of a portion of the Sixth Floor of One
Copley Place. Excepted and excluded from the Premises
are the roof or ceiling, the floor and all perimeter
walls of the Premises, except the inner surfaces
thereof, but the entry doors to the Premises are not
excluded from the Premises and are a part thereof for
all purposes; and Tenant agrees that Landlord shall
have the right to place in the Premises (but in such
manner as to reduce to a minimum interference with
Tenant's use of the Premises and properly enclosed)
utility lines, pipes and the like, to serve premises
other than the Premises, and to replace and maintain
and repair such utility lines, pipes and the like, in,
over and upon the Premises.
Common Areas: Those portions of the Property not leased to
any tenant, but for the benefit of the Property and its
tenants, such as landscaped areas, malls, pedestrian
walkways and bridges, restrooms, service areas and the
like.
Guarantor of
Tenant's Obligations: None.
Security Deposit: Seventy Thousand and 00/100 Dollars
($70,000) reduced by Fourteen Thousand and 00/100
Dollars ($14,000) on each anniversary of the
Commencement Date.
Broker: Collectively, Thompson Doyle & Company and Whittier
Partners
2. HABENDUM; TERM.
- -- ---------------
A. To have and to hold the Premises for the term commencing on the
Commencement Date and ending on the Termination Date, and the right to use the
Common Areas during such term in common with others entitled thereto. The Term
of this Lease (hereinafter referred to as the "Term") shall commence on the
Commencement Date specified in Paragraph 1 hereof and end on the Termination
Date specified in Paragraph I hereof, unless sooner terminated as provided
herein.
B. During the first month of the Term, the parties shall execute an
agreement setting forth the Commencement Date and the Termination Date of the
Lease.
<PAGE>
3. POSSESSION.
- -- -----------
A. In the event the Premises shall not be substantially completed and
ready for occupancy on July 1, 1997, then Tenant shall have the option,
effective as of July 1, 1997, to cancel this Lease and the parties shall have no
further obligations hereunder and the terms of this Lease shall be null and
void. The Premises shall be substantially complete and ready for occupancy if
the Premises satisfy the requirements for Substantial Completion as set forth in
Exhibit B attached hereto.
B. If Tenant shall enter the Premises or any part thereof prior to the
Commencement Date (which Tenant may not do without Landlord's prior written
consent), such entry shall be at Tenant's sole risk and without interference to
any work then being performed in the Building by Landlord or other tenants or
occupants, and all of the covenants and conditions of this Lease shall be
binding upon the parties hereto with respect to such whole or part of the
Premises.
C. Except as set forth in Paragraph 37 hereof, the occurrence of any
of the events described in this Paragraph 3 shall not be deemed to accelerate or
defer the Termination Date.
4. BASE RENT.
- -- ----------
Tenant shall pay to Landlord or Landlord's agent without notice or
demand at the present mailing address of Landlord, or at such other place as
Landlord may from time to time designate in writing, in coin or currency which,
at the time of payment, is legal tender for private or public debts in the
United States of America, the Base Rent specified in Paragraph I hereof in the
equal monthly installments specified in Paragraph I hereof in advance on or
before the first day of each and every month during the Term, without any
abatement, counterclaim, set-off or deduction whatsoever. Notwithstanding the
foregoing sentence, Tenant shall pay the first full monthly installment of the
Base Rent at the time of execution of this Lease. If the Term commences other
than on the first day of a month or ends other than on the last day of the
month, the Base Rent for such month shall be prorated. The prorated Base Rent
for the portion of the month in which the Term commences shall be paid on the
first day of the first full month during the Term.
5. ADDITIONAL RENT.
- -- ----------------
In addition to paying the Base Rent specified in Paragraph 4 hereof,
Tenant shall pay as "Additional Rent" the amounts determined pursuant to
Sub-Paragraphs B through C, inclusive, of this Paragraph 5. The Base Rent and
the Additional Rent are sometimes herein collectively referred to as the "Rent".
All amounts due under this Paragraph 5 as Additional Rent shall be payable for
the same periods and in the same manner, time and place as the Base Rent,
without any abatement, counterclaim, set-off or deduction whatsoever. Without
limitation on other obligations of Tenant which shall survive the expiration of
the Term, the obligations of Tenant to pay the Additional Rent provided for in
this Paragraph 5 shall survive the expiration of the Term. For any partial
Calendar Year, Tenant shall be obligated to pay only a pro rata share of the
Additional Rent, based on the number of days of the Term falling within such
Calendar Year.
<PAGE>
A. Definitions. As used in this Paragraph 5, the terms:
(i) "Base Year" shall mean the calendar year specified in
Paragraph I hereof.
(ii) "Base Year Operating Expenses" shall mean the sum
specified in Paragraph 1 hereof.
(iii) "Calendar Year" shall mean each calendar year in
which any part of the Term falls, through and including the
year in which the Term expires.
(iv) "Tenants Proportionate Share" shall mean the percentage
specified in Paragraph I hereof, being the percentage calculated
by dividing the rentable area contained in the Premises by
802,750 (being 95% of the rentable square foot area of the Office
Section), such rentable area shall be determined by Landlord on a
uniform basis for the tenants of the Office Section.
(v) "Taxes" shall mean all real estate taxes and
assessments, special or otherwise, levied or assessed upon or
with respect to the Building or any part thereof and Common Areas
which Landlord determines in its sole judgment to be for the
benefit of the Building and ad valorem taxes for any personal
property of Landlord used in connection therewith. Should the
Commonwealth of Massachusetts, or any political subdivision
thereof, or any other governmental authority having jurisdiction
over the Building, (a) impose a tax, assessment, charge or fee,
which Landlord shall be required to pay, by way of substitution
for or as a supplement to such real estate taxes and ad valorem
personal property taxes, or (b) impose an income or franchise tax
or a tax on rents in substitution for or as a supplement to a tax
levied against the Building or any part thereof and/or the
personal property used in connection with the Building or any
part thereof, all such taxes, assessments, fees or charges
(hereinafter defined as "in lieu of taxes") shall be deemed to
constitute Taxes hereunder. Taxes shall also include, in the year
paid, all fees and costs incurred by Landlord in seeking to
obtain a reduction of, or a limit on the increase in, any Taxes,
regardless of whether any reduction or limitation is obtained.
Except as hereinabove provided with regard to "in lieu of taxes",
Taxes shall not include any inheritance, estate, succession,
transfer, gift, franchise, net income or capital stock tax.
(vi) "Operating Expenses" shall mean (a) Taxes and (b) all expenses, costs
and disbursements of every kind and nature, paid or incurred by Landlord in
operating, owning, managing, leasing, repairing and maintaining the Office
Section, the Building, the Property and their appurtenances as such Taxes,
expenses, costs and disbursements are allocated to the Office Section by the
Landlord in its sole judgment or as the same are incurred directly in the
operation of Office Section, including but without limitation: premiums for
fire, casualty, liability and such other insurance as Landlord may from time to
time maintain; security expenses; compensation and all fringe benefits,
workmen's compensation insurance premiums and payroll taxes paid by Landlord to,
for or with respect to all persons engaged in operating, maintaining, or
cleaning; steam, water, sewer, electric, gas, telephone, and other utility
charges not billed directly to tenants by Landlord or the utility; expenses
incurred in connection with the central plant furnishing heating, ventilating
and air conditioning to the Office Section (and to the Building and the Property
where and to the extent the expenses of the Building and the Property are
otherwise allocable to the Office Section), which expenses may include a fee
paid to the operator of such central plant; costs of lighting, ventilating,
(including maintaining and repairing ventilating fans and fan rooms) making
routine repairs to and maintenance of underground roadways (and the access ramps
servicing such roadways) and railroad platforms and railroad rights of way
(including track); costs of repairing and maintaining fire protection systems
relating to the underground roadways, access ramps, railroad platforms and
railroad rights of way; costs of building and cleaning supplies and equipment
(including rental); cost of maintenance, cleaning and repairs; cost of snow
plowing or removal, or both, and care of interior and exterior landscaping;
payments to independent contractors under contracts for cleaning, operating,
management, maintenance and repair (which payments may be to affiliates of
Landlord); all other expenses paid in connection with cleaning, operating
management, maintenance and repair, including reasonable reserves for the
replacement of capital improvements and equipment contained in and/or used in
connection with operations; costs of any capital improvements completed after
the Base Year as reasonably amortized by Landlord, with interest on the
unamortized amount at the rate of the greater of (i) 12% per annum or (ii) 2%
per annum above the base rate of interest charged from time to time by The First
National Bank of Boston (but in no event at a rate which is more than the
highest lawful rate allowable in The Commonwealth of Massachusetts), to the
extent the cost of the particular capital improvement exceeds the amount of the
unused reserve, if any, for the replacement thereof previously included in
Operating Expenses and insurance proceeds, if any, received by Landlord on
account of damage to the particular capital improvement; increases in ground
rent or similar payments, if any (determined for the applicable Calendar Year on
an accrual basis). Operating Expenses shall not, however, include the following:
a. Costs of alterations of any tenant's premises for a
particular tenant and not for the benefit of the Office
Section or any group of tenants therein;
b. Principal or interest payments on loans secured by mortgages
or trust deeds on the Building and/or on the Property;
c. depreciation, except as otherwise provided herein;
d. interest and amortization of any superior mortgages or
increases in interest or debt on any mortgages or changes in
deeds of trust or any other debt for borrowed money;
e. leasehold improvements made for tenants of the Office
Section or the Building;
f. brokerage commissions;
g. refinancing costs;
h. the costs of a capital nature, including capital
improvements, capital repairs, capital equipment and capital
tools as determined in accordance with generally accepted
accounting principles; leasing commissions;
j. fines and/or penalties asserted against Landlord for
untimely payment of monies due;
k. the costs including permit, license and inspection fees
incurred in renovating or otherwise improving or decorating,
painting or redecorating vacant space or space for the
tenants or other occupants including the costs of tenant
installations incurred in connection with preparing space
for a new tenant;
1. any expense for which Landlord is otherwise compensated
through the proceeds of insurance or condemnation
proceedings;
m. legal fees incurred in connection with any negotiation of,
or disputes arising out of, any lease in the Office Section
of the Building (except for legal fees incurred in
connection with the Sublease (as hereinafter defined));
n. costs of special services rendered to any tenant in the
Office Section or the Building which are not generally
available to other tenants in the Office Section or the
Building;
o. the Landlord's cost of any service sold to the tenants or
other occupants for which the Landlord is entitled to be
reimbursed for an additional charge or rental over and above
the basic rent and escalation payable under the lease with
that tenant or occupant;
p. the costs of services or improvements which are not provided
to Tenant but which are provided to other tenants or
occupants of the Office Section or the Building;
q. the costs incurred due to the violation by Landlord of any
of the terms and conditions of the lease or any other lease
related to the Office Section or the Building (except for
costs incurred in connection with the Sublease);
r. the overhead and profit increments paid to subsidiaries or
affiliates of Landlord for management or other services to
the Building or Building Project or for supplies or other
materials to the extent that the cost of the services,
supplies, or materials exceed the costs that would have been
paid had the services, supplies or materials been provided
by unaffiliated parties on a competitive basis; and
s. the compensation paid to clerks, attendants, or other
persons in commercial concessions operated by the Landlord.
If less than 95% of the Office Section's rentable area shall have been
occupied by tenant(s) at any time during any Calendar Year, Operating Expenses
shall be determined for such Calendar Year to be an amount equal to the like
expense which would normally be expected to be incurred had such occupancy been
95% throughout such Calendar Year.
B. Expense Adjustment. Tenant shall pay to Landlord or Landlord's
agent as Additional Rent, a sum ("Expense Adjustment Amount") equal to Tenant's
Proportionate Share of the amount by which (i) Operating Expenses (subject to
adjustment pursuant to Paragraph 36C hereof) incurred with respect to each
Calendar Year exceeds (ii) Base Year Operating Expenses. The Expense Adjustment
Amount with respect to each Calendar Year shall be paid in monthly installments,
in an amount estimated from time to time by Landlord and communicated by written
notice to Tenant, which estimate may be revised to reflect, without limitation,
increases in Taxes during any period. Landlord shall cause to be kept books and
records showing Operating Expenses in accordance with an appropriate system of
accounts and accounting practices consistently maintained. Following the close
of each Calendar Year, Landlord shall cause the amount of the Expense Adjustment
Amount for such Calendar Year to be computed based on Operating Expenses for
such Calendar Year and Landlord shall deliver to Tenant a statement of such
amount and Tenant shall pay any deficiency to Landlord as shown by such
statement within thirty (30) days after receipt of such statement. If the total
of the estimated monthly installments paid by Tenant during any Calendar Year
exceed the actual Expense Adjustment Amount due from Tenant for such Calendar
Year, at Landlord's option such excess shall be either credited against
payments next due hereunder or refunded by Landlord, provided Tenant is not then
in default hereunder. Delay in computation of the Expense Adjustment Amount or
failure to deliver a statement of such amount shall not be deemed a default
hereunder or a waiver of Landlord's right to collect the Expense Adjustment
Amount. In computing the Expense Adjustment Amount, the following provisions
relating to Taxes shall be applicable: The amount of any refund of Taxes
received by Landlord shall be credited against Taxes for the Calendar Year in
which such refund is received; provided, however, that in the event Landlord
receives a refund of Taxes after the Termination Date (as the same may be
accelerated or extended as provided elsewhere in this Lease) which refund
relates to a Calendar Year during the Term hereof, the amount of such refund
fairly allocable to Tenant shall be refunded to Tenant by Landlord (net of
Tenant's allocated share of the cost of obtaining such refund and the cost, if
any, of making such refund); and further provided that if Tenant expands into
space formerly occupied by other tenants, which expansion space becomes subject
to this Lease, Tenant shall not be entitled to any refund or credit in
connection with a refund or abatement of Taxes for periods prior to Tenant's
occupancy of such expansion space. All references to Taxes "for" a particular
Calendar Year shall be deemed to refer to Taxes due and payable during such
Calendar Year without regard to when such Taxes are assessed or levied.
6. USE OF PREMISES.
- -- ----------------
Tenant shall use and occupy the Premises in accordance with law; and
solely as an office for the type of business specified in Paragraph I hereof and
for no other purpose or purposes.
7. CONDITION OF PREMISES.
- -- ----------------------
The Premises are demised to Tenant and Tenant accepts the same "as is"
and all work necessary to prepare the Premises for Tenant's occupancy shall be
performed at Tenant's sole cost and expense, in accordance with the applicable
provisions of this Lease. Tenant's taking possession of any portion of the
Premises shall be conclusive evidence that such portion of the Premises was in
good order and satisfactory condition when Tenant took possession excluding
items of damage caused by Tenant or its agents, independent contractors or
suppliers. No promise of Landlord to alter, remodel or improve the Premises, the
Office Section or the Building and no representation by Landlord or its agents
respecting the condition of the Premises, the Office Section or the Building
have been made to Tenant or relied upon by Tenant other than as may be contained
elsewhere in this Lease (including Exhibit B attached hereto) or in any written
amendment hereto signed by Landlord and Tenant.
8. SERVICES.
- -- ---------
A. List of Services.
Landlord shall provide the following services, the costs of which are
included within Operating Expenses, on all days during the Term, except Sundays
and holidays (as set forth on Exhibit F attached hereto), unless otherwise
stated, and subject to all governmental rules, regulations and guidelines
applicable thereto:
(i) Heating and air conditioning in the Premises during the normal
heating and air conditioning seasons, from Monday through Friday, during
the period from 8 a.m. to 6 p.m. and on Saturday during the period from 8
a.m. to 1 p.m. Tenant will pay for all heating and air conditioning
requested and furnished prior to or following such hours at rates to be
established from time to time by Landlord. As of the date hereof, the
current rate for such additional services is forty-five dollars ($45.00)
per hour per floor per tenant. Requests for any additional services shall
be in writing and delivered to Landlord not later than 2 p.m. of the
previous day.
(ii) Adequate electrical wiring and facilities for standard building
lighting fixtures provided by Landlord and for Tenant's incidental uses (it
being understood that Tenant is to bear the cost of replacement of all
lamps, tubes, ballasts and starters for lighting fixtures in the Premises);
provided that (a) the connected electrical load for lighting and incidental
use equipment does not exceed an average of five watts per square foot of
the Premises; (b) the electricity so furnished for incidental uses will be
at a nominal 120 volts and no electrical circuit for the supply of such
incidental use will have a current capacity exceeding 20 amperes; and (c)
such electricity will be used only for equipment and accessories normal to
office usage. If Tenant's requirements for electricity for lighting and
incidental uses are in excess of those set forth in the preceding sentence,
Landlord reserves the right to require Tenant to install the conduit,
wiring and other equipment necessary to supply electricity for such excess
incidental use requirements at Tenant's expense. City water from the
regular Building outlets for drinking, lavatory and toilet purposes.
(iv) Janitorial services as delineated in Exhibit D attached hereto.
(v) Window washing of the inside and outside of windows in the
Building's perimeter walls as may be situated in the Premises as delineated
in Exhibit D attached hereto.
(vi) Non-exclusive automatic passenger elevator service at all times.
(vii) Non-exclusive freight elevator service subject to reasonable
scheduling by Landlord.
(viii) Security services at a level consistent with other first class
office buildings in Boston, Massachusetts.
<PAGE>
B. Billing for Electricity.
(i) Separate Metering. In the event that Landlord in its sole
discretion makes arrangements with the utility company supplying
electricity to the Premises for separate metering and billing, Tenant shall
pay (as hereinafter described) for the use of all electrical service to the
Premises (other than the electrical service necessary for Landlord to
fulfill its obligation to provide heating and air conditioning as provided
in Paragraph 8A(i) hereof). Tenant shall be billed directly by such utility
company and Tenant agrees to pay each bill promptly in accordance with its
terms. In the event that for any reason Tenant cannot be billed directly,
Landlord shall forward each bill received by it with respect to the
Premises to Tenant which Tenant shall pay promptly in accordance with its
terms.
(ii) Intentionally deleted.
C. Interruption of Services.
Tenant agrees that Landlord shall not be liable in damages, by
abatement of Rent or otherwise, for failure to furnish or delay in furnishing
any service, or for any diminution in the quality or quantity thereof, when such
failure or delay or diminution is occasioned, in whole or in part, by repairs,
renewals, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, or other fuel at the Building after
reasonable effort so to do, by any accident or casualty whatsoever, by act or
default of Tenant or other parties, or by any other cause beyond Landlord's
reasonable control; and such failures or delays or diminution shall never be
deemed to constitute an eviction or disturbance of Tenant's use and possession
of the Premises or relieve Tenant from paying Rent or performing any of its
obligations under this Lease.
<PAGE>
D. Charges for Services.
Charges for any service for which Tenant is required to pay, from time
to time hereunder, including but not limited to after hours heating or air
conditioning shall be due and payable at the same time as the installment of
Rent with which they are billed, or if billed separately, shall be due and
payable as further Additional Rent within ten (10) days after such billing. If
Tenant shall fail to make payment for any such services, Landlord may, without
notice to Tenant, in addition to any and all other remedies available under this
Lease or otherwise, discontinue any or all of such services and such
discontinuance shall not be deemed to constitute an eviction or disturbance of
Tenant's use and possession of the Premises or relieve Tenant from paying Rent
or performing any of its other obligations under this Lease.
E. Energy Conservation.
Notwithstanding anything to the contrary in this Paragraph 8 or
elsewhere in this Lease, Landlord shall have the right to institute such
policies, programs and measures as may be necessary or desirable, in Landlord's
reasonable discretion, for the conservation and/or preservation of energy or
energy related services if consistent with similar programs instituted generally
in first-class office buildings in Boston, or as may be required to comply with
any applicable codes, rules and regulations, whether mandatory or voluntary.
9. REPAIRS; HAZARDOUS MATERIALS.
- -- -----------------------------
Tenant will, at Tenant's own expense, keep the Premises, including all
improvements, fixtures and furnishings therein, in good order, repair and
condition at all times during the Term, and Tenant shall promptly and adequately
repair all non-structural damage to the Premises and replace or repair all
damaged or broken glass, fixtures and appurtenances on the Premises, under the
supervision and subject to the reasonable approval of Landlord, and within any
reasonable period of time specified by Landlord. If Tenant does not do so,
Landlord may, but shall not be obligated to, make such repairs and replacements,
and Tenant shall pay Landlord the cost thereof, including a percentage of the
cost thereof (to be uniformly established for the Office Section) sufficient to
reimburse Landlord for all overhead, general conditions, fees and other costs or
expenses arising from Landlord's involvement with such repairs and replacements
forthwith upon being billed for same. Landlord may, but shall not be required
to, enter the Premises, upon reasonable prior notice, at all reasonable times
(and at any time in emergency situations) to make such repairs, alterations,
improvements and additions to the Premises, to the Office Section or the
Building or to any equipment located in the Office Section or the Building as
Landlord shall desire or deem necessary or as Landlord may be required to do by
governmental authority or court order or decree. Landlord shall use reasonable
efforts not to interfere with Tenant's business.
Tenant shall not (either with or without negligence) cause or permit the
escape, disposal or release of any biologically or chemically active or
hazardous substances, or materials (collectively the "Hazardous Materials").
Tenant shall not allow the storage or use of Hazardous Materials in any manner
not sanctioned by law or by the highest standards prevailing in the industry for
the storage and use of such Hazardous Materials, nor allow to be brought into
the Building any Hazardous Materials except to use in the ordinary course of
Tenant's business, and then only after written notice is given to Landlord of
the identity of Hazardous Materials. Without limitation, Hazardous Materials
shall include those described in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section
6901 et seq., any applicable state or local laws and the regulations adopted
under these acts. If any lender or governmental agency shall ever require
testing to ascertain whether or not there has been any release of Hazardous
Materials, then the reasonable costs thereof shall be reimbursed by Tenant to
Landlord upon demand as additional charges if such requirement applies to the
Premises. In addition, Tenant shall execute affidavits, representations and the
like from time to time as Landlord may reasonably request concerning Tenant's
best knowledge and belief regarding the presence of Hazardous Materials on the
Premises. In all events, Tenant shall indemnify Landlord in the manner elsewhere
provided in this Lease from any release of Hazardous Materials on the Premises
occurring while Tenant is in possession or elsewhere if caused by Tenant or
persons acting under Tenant. The within covenants shall survive the expiration
or earlier termination of the Term.
10. ADDITIONS AND ALTERATIONS.
- --- --------------------------
A. Tenant shall not, without the prior written consent of Landlord,
make any alterations, improvements or additions to the Premises exceeding Two
Thousand Five Hundred and 00/100 Dollars ($2,500) in value. Landlord's refusal
to give said consent shall be conclusive. If Landlord consents to said
alterations, improvements or additions, it may impose such reasonable conditions
with respect thereto as Landlord deems reasonably appropriate, including,
without limitation, requiring Tenant to furnish Landlord with security for the
payment of all costs to be incurred in connection with such work, insurance
against liabilities which may arise out of such work, and plans and
specifications plus permits necessary for such work, requiring Tenant to perform
such work at times designated by Landlord. The work necessary to make any
alterations, improvements or additions to the Premises, whether prior to or
subsequent to the Commencement Date, shall be done at Tenant's expense to the
extent it exceeds the Construction Allowance (as defined in Paragraph 39 herein)
by employees of or contractors hired by Landlord except to the extent Landlord
gives its prior written consent to Tenant's hiring its own contractors, such
consent not to be unreasonably withheld. It is understood that Landlord's
consent to the hiring by Tenant of Tenant's own contractors may be withheld if
Landlord's permitting such hiring might reasonably be expected to adversely
affect other construction in the Building or might reasonably be expected to
result in an interruption of services provided to tenants of the Building.
Tenant shall promptly pay to Landlord or Tenant's contractors, as the case may
be, when due, the cost of all such work and of all decorating required by reason
thereof. Tenant shall also pay to Landlord a percentage of the cost of such work
(such percentage to be established on a uniform basis for the Office Section)
sufficient to reimburse Landlord for all overhead, general conditions, fees and
other costs and expenses actually incurred by Landlord and arising from
Landlord's involvement with such work. In connection with seeking Landlord's
approval, Tenant shall provide to Landlord plans and specifications regarding
proposed alterations, additions or improvements, as Landlord shall reasonably
require, and Tenant shall, in addition to all other expenses which Tenant is
obligated to pay to Landlord hereunder, pay to Landlord the expense reasonably
incurred by Landlord in connection with the review of such information. Upon
completion of such work Tenant shall deliver to Landlord, if payment is made
directly to contractors, evidence of payment, contractors' affidavits and full
and final waivers of all liens for labor, services or materials, all in form
satisfactory to Landlord. Tenant shall defend and hold Landlord, Landlord's
lessor, any mortgagee, the MTA (hereinafter defined), the Property and the
Building harmless from all costs, damages, liens and expenses related to such
work except for the gross negligence or willful misconduct of Landlord's
contractors or employees. All work done by Tenant or its contractors pursuant to
Paragraphs 9 or 10 shall be done in a first-class workmanlike manner using only
good grades of materials and shall comply with all insurance requirements and
all applicable laws and ordinances and rules and regulations of governmental
departments or agencies. Notwithstanding anything contained herein to the
contrary, Landlord shall be obligated to provide the Construction Allowance as
specified in Paragraph 39 herein.
B. All alterations, improvements and additions to the Premises,
whether temporary or permanent in character, made or paid for by Landlord or
Tenant, shall without compensation to Tenant become Landlord's property at the
termination of this Lease by lapse of time or otherwise and shall, unless
Landlord requests their removal (in which case Tenant shall remove the same as
provided in Paragraph 18), be relinquished to Landlord in good condition,
ordinary wear excepted.
Tenant may install, maintain, replace, remove or use any
communications or computer wires, cables and related devices (collectively the
"Lines") at the Property in or serving the Premises, provided: (a) Tenant shall
obtain Landlord's prior written consent, such consent not to be unreasonably
withheld, use an experienced and qualified contractor approved in writing by
Landlord, such approval not to be unreasonably withheld, and comply with all of
the other provisions of Paragraph 10A, (b) any such installation, maintenance,
replacement, removal or use shall not interfere with the use of any then
existing Lines at the Building, (c) an acceptable number of spare Lines and
space for additional Lines shall be maintained for existing and future occupants
of the Building, as determined "in Landlord's reasonable opinion, (d) if Tenant
at any time uses any equipment that may create an electromagnetic field
exceeding the normal insulation ratings or ordinary twisted pair riser cable or
cause radiation higher than normal background radiation, the Lines therefor
(including riser cables) shall be appropriately insulated to prevent such
excessive electromagnetic fields or radiation, (e) as a condition to permitting
the installation of new Lines, Landlord shall require that Tenant remove
existing Lines located in or serving the Premises, (f) Tenant's rights shall be
subject to the rights of any regulated telephone company, and (g) Tenant shall
pay all costs in connection therewith. Landlord reserves the right to require
that Tenant remove any Lines located in or serving the Premises which are
installed in violation of these provisions, or which are at any time in
violation of any laws, ordinances, rules or regulations or represent a dangerous
or potentially dangerous condition (but only if such Lines were installed by
Tenant), within three (3) days after written notice.
Landlord may (but shall not have the obligation to): (i) install new
Lines at the Building, (ii) create additional space for Lines at the Property,
and (iii) reasonably direct, monitor and/or supervise the installation,
maintenance, replacement and removal of, the allocation and periodic
reallocation of available space (if any) for, and the allocation of excess
capacity (if any) on, any Lines now or hereafter installed at the Building by
Landlord, Tenant or any other party (but Landlord shall have no right to monitor
or control the information transmitted through such Lines). Such rights shall
not be in limitation of other rights that may be available to Landlord by law or
otherwise. If Landlord exercises any such rights, Landlord may charge Tenant for
the costs reasonably attributable to Tenant, or may include those costs and all
other costs in Operating Expenses under Paragraph 5A(vi) (including without
limitation, costs for acquiring and installing Lines and risers to accommodate
new Lines and spare Lines, any associated computerized system and software for
maintaining records of Line connections, and the fees of any consulting
engineers and other experts); provided, any capital expenditures included in
Operating Expenses hereunder shall be amortized (together with reasonable
finance charges) as provided in Paragraph 5A(vi).
Tenant shall not, without the prior written consent of Landlord in
each instance, such consent not to be unreasonably withheld or delayed, grant to
any third party a security interest or lien in or on the Lines, and any such
security interest or lien granted without Landlord's written consent shall be
null and void. Except to the extent arising from the intentional or negligent
acts of Landlord or Landlord's agents or employees, Landlord shall have no
liability for damages arising from, and Landlord does not warrant that the
Tenant's use of any Lines will be free from the following (collectively called
"Line Problems"): (x) any eavesdropping or wire-tapping by unauthorized parties,
(y) any failure of any Lines to satisfy Tenant's requirements, or (z) any
shortages, failures, variations, interruptions, disconnections, loss or damage
caused by the installation, maintenance, replacement, use or removal of Lines by
or for other tenants or occupants at the Building, by any failure of the
environmental conditions or the power supply for the Building to conform to any
requirements for the Lines or any associated equipment, or any other problems
associated with any Lines by any other cause. Under no circumstances shall any
Line Problems be deemed an actual or constructive eviction of Tenant, render
Landlord liable to Tenant for abatement of Rent, or relieve Tenant from
performance of Tenant's obligations under this Lease. Landlord in no event shall
be liable for damages by reason of loss of profits, business interruption or
other consequential damage arising from any Line Problems.
11. COVENANT AGAINST LIENS.
- --- -----------------------
Tenant has no authority or power to cause or permit any lien or
encumbrance of any kind whatsoever, whether created by act of Tenant, operation
of law or otherwise, to attach to or be placed upon the Property, the Building
or the Premises, or to affect any estate or interest of Landlord, Landlord's
lessor, any mortgagee or the MTA. Tenant covenants and agrees not to suffer or
permit any lien of mechanics, materialmen or others to be placed against the
Property, the Building or the Premises, or to affect any estate or interest of
Landlord, Landlord's lessor, any mortgagee or the MTA, with respect to work or
services claimed to have been performed for or materials claimed to have been
furnished to Tenant or the Premises, and, in case of any such lien attaching or
notice of any lien, or claim therefor being asserted, Tenant covenants and
agrees to cause same to be immediately released and removed of record. In the
event that such lien is not immediately released and removed, Landlord, at its
sole option, may take all action necessary to release and remove such lien
(without any duty to investigate the validity thereof) and Tenant shall promptly
upon notice reimburse Landlord for all sums, costs and expenses (including
reasonable attorneys' fees) incurred by Landlord in connection therewith.
<PAGE>
12. INSURANCE.
- --- ----------
A. Waiver of Subrogation.
Landlord and Tenant each hereby waive any and every claim for recovery
from the other for any and all loss of or damage to the Building or the Premises
or to the contents thereof, which loss or damage is covered by valid and
collectible physical damage insurance policies, to the extent that such loss or
damage is recoverable under said insurance policies. Inasmuch as this mutual
waiver will preclude the assignment of any such claim by subrogation (or
otherwise) to an insurance company (or any other person), Landlord and Tenant
each agree to give to each insurance company which has issued, or in the future
may issue, to it policies of physical damage insurance, written notice of the
terms of this mutual waiver, and to have said insurance policies properly
endorsed, if necessary, to prevent the invalidation of said insurance coverage
by reason of said waiver. Tenant's waiver of subrogation as hereinabove set
forth shall also run to the benefit of and extend to Landlord's lessor and the
MTA.
B. Coverage.
Tenant shall purchase and maintain insurance during the entire Term
for the benefit of Tenant, Landlord, Landlord's lessor, any mortgagee and the
MTA (as their respective interests may appear) with terms, coverages and in
companies satisfactory to Landlord, and with such increases in limits as
Landlord may from time to time request, but initially Tenant shall maintain the
following coverages in the following amounts:
<PAGE>
(i) Commercial General Liability Insurance covering Tenant,
Landlord, Landlord's lessor, the MTA and Landlord's management agent
for claims of bodily injury, personal injury and property damage
arising out of Tenant's operations, assumed liabilities or use of the
Premises, for limits of liability not less than:
Bodily Injury and Property $2,000,000 each occurrence
Damage Liability $2,000,000 annual aggregate
Personal Injury Liability $2,000,000 annual aggregate
0% Insured's participation
(ii) Comprehensive Automobile Insurance covering all owned,
nonowned and hired automobiles of Tenant including the loading and
unloading of any automobile with limits of liability not less than:
Bodily Injury and Property $2,000,000 each person
Damage Liability $2,000,000 each accident
(iii) Physical Damage Insurance covering all additions,
improvements and alterations to the Premises which are beyond the
building standard tenant improvements provided by Landlord and all
office furniture, trade fixtures, office equipment, merchandise and all
other items of Tenant's property on the Premises. Such insurance shall
be written on an "all risks" of physical loss or damage basis, for the
full replacement cost value of the covered items and in amounts that
meet any coinsurance clauses of the policies of insurance.
Tenant shall, prior to the commencement of the Term, furnish to Landlord
certificates evidencing such coverage, on ACORD Form 27, which certificates
shall state that such insurance coverage may not be changed or canceled without
at least thirty (30) days' prior written notice to Landlord and Tenant and shall
name Landlord and Landlord's management agent as additional insureds.
C. Avoid Action Increasing Rates.
Tenant shall comply with all applicable laws and ordinances, all
orders and decrees of court and all requirements of other governmental
authorities having jurisdiction over the Building and of the applicable rating
bureau, and shall not, directly or indirectly, make any use of the Premises in
violation of the Use specified in Article I which may thereby be prohibited or
be dangerous to person or property or which may jeopardize any insurance
coverage or may increase the cost of insurance or require additional insurance
coverage. If, by reason of the failure of Tenant to comply with the provisions
of this Paragraph 12C after notice from Landlord and a period of two (2) days
after such notice is given to Tenant to cure such violation, (i) any insurance
coverage is jeopardized Landlord may, in addition to all other remedies which
may be available to Landlord, terminate this Lease or (ii) insurance premiums
are increased, Landlord shall have the option either to terminate this Lease or
to require Tenant to make immediate payment of the increased insurance premium.
13. FIRE OR CASUALTY.
- --- -----------------
A. Paragraph 9 hereof notwithstanding, if the Premises or the access
thereto shall be damaged by fire or other casualty and if such damage does not
render all or a material portion of the Premises untenantable and if the
Premises, the Office Section or the Building are not substantially damaged (as
hereinafter defined), then Landlord shall, subject to building and zoning laws
then applicable, repair and restore the same with reasonable promptness, subject
to reasonable delays for insurance adjustments and delays caused by matters
beyond Landlord's reasonable control, but shall not be obligated to expend
therefor an amount in excess of the proceeds of insurance recovered with respect
thereto. If all or a material portion of the Premises are rendered untenantable
by fire or other casualty, or if the Premises, the Office Section or the
Building are substantially damaged by fire or other casualty (the term
"substantially damaged" meaning damage of such a character that the same cannot,
in ordinary course, reasonably be expected to be repaired within ninety (90)
days from the time that repair work would commence), then, in either such case,
Landlord shall have the right to terminate this Lease by giving notice of
Landlord's election so to do not later than one hundred twenty (120) days after
Landlord has ascertained all information required by Landlord to determine
whether or not to terminate this Lease, including without limitation the amount
of insurance proceeds which are available to Landlord for restoration. In the
event Landlord gives such termination notice, this Lease shall terminate (with
appropriate proration(s) of Rent being made for Tenant's possession of the
tenantable portion of the Premises after the date of such damage) as of the date
specified in such notice (but in no event sooner than thirty (30) days after the
date of such notice) with the same force and effect as if the date specified
were the date originally established as the expiration date hereof Landlord
shall have no liability to Tenant, and Tenant shall not be entitled to terminate
this Lease by virtue of any delays in completion of such repairs and
restoration. Further, in the event this Lease is not terminated, Landlord shall
not be obligated to restore any portion of the Office Section or the Building
outside of the Premises which is not necessary for reasonable access to and
egress from the Premises. Except as otherwise provided below, Rent shall abate
on those portions of the Premises as are, from time to time, untenantable as a
result of such damage.
B. In the event the Premises, the Office Section or the Building is
damaged by fire or other casualty resulting from the act or neglect of Tenant,
its agents, contractors, employees or invitees and if this Lease shall not be
terminated by Landlord as a result of such damage, Tenant shall not be released
from any of its obligations hereunder including, without limitation, its duty to
pay Rent, and Rent shall not be abated.
C. Notwithstanding anything to the contrary herein set forth, Landlord
shall have no duty pursuant to this Paragraph 13 to repair or restore any
portion of the alterations, additions or improvements in the Premises or the
decorations thereto except to the extent that such alterations, additions,
improvements and decorations were provided by Landlord, at Landlord's cost, at
the, beginning of the Term. If Tenant desires any other or additional repairs or
restoration and if Landlord consents thereto, the same shall be done at Tenant's
sole cost and expense subject to all of the provisions of Paragraph 9 hereof.
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.
14. WAIVER OF CLAIMS - INDEMNIFICATION.
- --- -----------------------------------
To the extent not prohibited by law, Landlord, its partners, its
managing agent, Landlord's lessor, any mortgagee, the MTA and their respective
officers, agents, servants and employees shall not be liable for any damage
either to person or property or resulting from the loss of use thereof sustained
by Tenant or by other persons due to the Building, or any part thereof or any
appurtenances thereof becoming out of repair, or due to the happening of any
accident or event in or about the Office Section, the Premises or the Building,
or due to any act or neglect of any tenant or occupant of the Office Section,
the Building or of any other person or entity. This provision shall apply
particularly, but not exclusively, to damage caused by gas, electricity, snow,
frost, steam, sewage, sewer gas or odors, fire, water, noise, vibration, fumes
or by the bursting or leaking of pipes, faucets, sprinklers, plumbing fixtures
and windows, and shall apply whether the damage was due to any of the causes
specifically enumerated above or to some other cause of an entirely different
kind. Tenant further agrees that all personal property upon the Premises, or
upon loading docks, receiving and holding areas, or freight elevators of the
Building shall be at the risk of Tenant only, and that Landlord shall not be
liable for any loss or damage thereto or theft thereof. Without limitation of
any other provisions hereof, Tenant agrees to defend, protect, indemnify and
save harmless Landlord, Landlord's lessor, any mortgagee and the MTA from and
against all liability to third parties which arose (or which were claimed to
have arisen) within or without the Premises or out of acts or omissions of
Tenant and its servants, agents, employees, contractors, suppliers, workers and
invitees. Without limitation of any other provisions hereof, Landlord agrees to
defend, protect, indemnify and save harmless Tenant from and against all
liability to third parties which arose (or which were claimed to have arisen)
within or without the Premises or out of acts or omissions of Landlord and its
servants, agents, employees, contractors, suppliers and workers.
<PAGE>
15. NONWAIVER.
- --- ----------
No waiver of any provision of this Lease shall be implied by any
failure of Landlord to enforce any remedy on account of the violation of such
provision, even if such violation be continued or repeated subsequently, and no
express waiver shall affect any provision other than the one specified in such
waiver and that one only for the time and in the manner specifically stated. No
receipt of monies by Landlord from Tenant after the termination of this Lease
shall in any way alter the length of the Term or of Tenant's right of possession
hereunder or after the giving of any notice shall reinstate, continue or extend
the Term or affect any notice given Tenant prior to the receipt of such monies,
it being agreed that after the service of notice or the commencement of a suit
or after final judgment for possession of the Premises, Landlord may receive and
collect any Rent due, and the payment of said Rent shall not waive or affect
said notice, suit or judgment.
16. CONDEMNATION.
- --- -------------
If the Property, the Building or any portion thereof shall be taken or
condemned by any competent authority for any public or quasi-public use or
purpose (a "taking"), or if the configuration of any roadway, street, alley, or
railroad line adjacent to or beneath the Building is changed by any competent
authority and such taking or change in configuration makes it necessary or
desirable to remodel or reconstruct the Building or any part thereof, Landlord
shall have the right, exercisable at its sole discretion, to cancel this Lease
upon not less than ninety (90) days' notice prior to the date of cancellation
designated in the notice. No money or other consideration shall be payable by
Landlord to Tenant for the right of cancellation and Tenant shall have no right
to share in the condemnation award or in any judgment for damages caused by such
taking or change in configuration. Tenant shall be entitled to file a claim for
its trade fixtures, all of which it may remove.
17. ASSIGNMENT AND SUBLETTING.
- --- --------------------------
A. Tenant shall not, without the prior written consent of Landlord
(which consent shall not be unreasonably withheld or delayed) (i) assign, convey
or mortgage this Lease or any interest hereunder; (ii) permit to occur or exist
any assignment of this Lease, or any lien upon Tenant's interest, voluntarily or
by operation of law; (iii) sublet the Premises or any part thereof, or (iv)
permit the use of the Premises by any parties other than Tenant and its
employees. Any such action on the part of Tenant shall be void and of no effect.
Notwithstanding the foregoing, the sale of all or substantially all of Tenant's
assets, or the merger or consolidation of Tenant with a person controlling,
controlled by or under common control with Tenant, shall not be deemed an
assignment, conveyance, sublet or mortgage of this Lease. Landlord's consent to
any assignment, subletting or transfer or Landlord's election to accept any
assignee, subtenant or transferee as the tenant hereunder and to collect rent
from such assignee, subtenant or transferee shall not release Tenant or any
subsequent tenant from any covenant or obligation under this Lease. Landlord's
consent to any assignment, subletting or transfer shall not constitute a waiver
of Landlord's right to withhold its consent to any future assignment,
subletting, or transfer. If Tenant is a corporation and if at any time during
the Term the person or persons who own a majority of its voting shares at the
time of the execution of this Lease cease to own a majority of such shares,
Tenant shall so notify Landlord, and Landlord may terminate this Lease by notice
to Tenant given not later than ninety (90) days thereafter. This provision shall
not apply whenever Tenant is a corporation the outstanding voting stock of which
is listed on a recognized security exchange. For the purposes of this provision,
stock ownership shall be determined in accordance with Section 544 of the
Internal Revenue Code of 1986, as amended through December 31, 1989, and the
regulations thereunder, and the term "voting stock" shall refer to shares of
stock regularly entitled to vote for the election of directors of the
corporation.
B. Without limitation of the rights of Landlord hereunder in respect
thereto, if there is any assignment of this Lease by Tenant or a subletting of
the whole of the Premises by Tenant at a rent which, in either case, exceeds the
rent payable hereunder by Tenant, or if there is a subletting of a portion of
the Premises by Tenant at a rent in excess of the subleased portion's pro rata
share of the rent payable hereunder by Tenant, then Tenant shall pay to
Landlord, as additional rent, forthwith upon Tenant's receipt of each
installment of any such excess rent, fifty percent (50%) of any such excess rent
(excluding any monies received from the sale of Tenant's fixtures, equipment or
personal property). The provisions of this paragraph shall apply to each and
every assignment of the Lease and each and every subletting of all or a portion
of the Premises, whether to a subsidiary or controlling corporation or any other
person, firm or entity, in each case on the terms and conditions set forth
herein. Each request by Tenant for permission to assign this Lease or to sublet
the whole or any part of the Premises shall be accompanied by a warranty by
Tenant as to the amount of rent to be paid to Tenant by the proposed assignee or
sublessee. Landlord or its authorized representatives shall have the right at
all reasonable times, upon prior written notice to Tenant, to audit the books,
records and papers of Tenant relating to any consideration received in
connection with such an assignment or subletting, and shall have the right to
make reasonable copies thereof which shall be kept confidential. If the excess
rent being paid shall be found understated, Tenant shall within thirty (30) days
after demand pay the deficiency, and Landlord's cost of such audit and if
understated by more than five percent (5%), Landlord shall have the right to
terminate this Lease upon thirty (30) days' notice. For the purposes of this
Paragraph 17B, the term "rent" shall mean all Base Rent, Additional Rent or
other payments and/or consideration payable by one party to another related to
the use and occupancy of all or a portion of the Premises.
18. SURRENDER OF POSSESSION.
- --- ------------------------
Upon the expiration of the Term or upon the termination of Tenant's
right of possession to all or a portion of the Premises, whether by lapse of
time or at the option of Landlord as herein provided, Tenant shall forthwith
quietly and peaceably surrender the Premises or portion thereof to Landlord in
good order, repair and condition, ordinary wear and casualty excepted. Any
interest of Tenant in the alterations, improvements and additions to the
Premises made or paid for by Landlord or Tenant shall, without compensation to
Tenant, become, at Landlord's option, Landlord's property at the termination of
this Lease by lapse of time or otherwise and if such option is exercised such
alterations, improvements and additions shall be relinquished to Landlord in
good condition, ordinary wear excepted. Within seven (7) days prior to the
termination of the Term or of Tenant's right of possession Tenant shall remove
office furniture, trade fixtures, office equipment and all other items of
Tenant's property on the Premises. Tenant shall pay to Landlord upon demand the
reasonable cost of repairing any damage to the Premises and to the Building
caused by any removal required hereunder. If Tenant shall fail or refuse to
remove any such property from the Premises, Tenant shall be conclusively
presumed to have abandoned the same, and title thereto shall thereupon pass to
Landlord without any cost either by set-off, credit, allowance or otherwise, and
Landlord may at its option accept the title to such property or, at Tenant's
expense, may (i) remove the same or any part in any manner that Landlord shall
choose, repairing any damage to the Premises caused by such removal, and (ii)
store, destroy or otherwise dispose of the same without incurring liability to
Tenant or any other person.
19. HOLDING OVER.
- --- -------------
In addition to performing all of Tenant's other obligations hereunder,
Tenant shall pay to Landlord an amount as Rent equal to the greater of (i) the
monthly market rental rate for a term of not less than one (1) year for similar
premises in the Building without regard to concessions such as tenant
improvement allowance and free rent, if any, or (ii) the sum of one hundred
fifty percent (I 5 0%) of one-twelfth the Base Rent and one hundred fifty
percent (150%) of one-twelfth the Additional Rent paid by Tenant during the
previous Calendar Year herein provided, such amount to be paid monthly during
each month or portion thereof for which Tenant shall retain possession of the
Premises or any part thereof after the termination of the Term or of Tenant's
right of possession, whether by lapse of time or otherwise, and also shall pay
all damages sustained by Landlord, whether direct or consequential, on account
thereof. At the option of Landlord, expressed in a written notice to Tenant and
not otherwise, such holding over shall constitute a renewal of this Lease for a
period of one year at such Base Rent and Additional Rent as would be applicable
for such year, and if Landlord does not so notify Tenant, such holding over
shall constitute the Tenant a tenant-at-will from month to month. The provisions
of this Paragraph 19 shall not be deemed to limit or constitute a waiver of any
other rights or remedies of Landlord provided herein or at law.
20. ESTOPPEL CERTIFICATE.
- --- ---------------------
Tenant agrees that, from time to time upon not less than ten (10)
days' prior request by Landlord, Landlord's lessor or any mortgagee, Tenant or
Tenant's duly authorized representative having knowledge of the following facts
will deliver to Landlord a statement in writing certifying (i) that this Lease
is unmodified and in full force and effect (or if there have been modifications,
a description of such modifications and that the Lease as modified is in full
force and effect); (ii) the dates to which Rent and other charges have been
paid; (iii) to the best of Tenant's knowledge, Landlord is not in default under
any provision of this Lease, or, if in default, the nature thereof in detail;
(iv) that the Premises have been delivered to Tenant by Landlord and accepted by
Tenant; (v) that there are no proceedings pending against Tenant which have been
adversely decided and which would affect Tenant's obligations under this Lease;
(vi) that Tenant has not made a claim against Landlord which has not been
resolved or satisfied; and (vii) such further matters as may be reasonably
requested by Landlord, it being intended that any such statement may be relied
upon by any prospective assignee of Landlord, any mortgagee or prospective
mortgagee of the Building, any prospective assignee of any such mortgagee, or
any prospective and/or subsequent purchaser or transferee of all or a part of
Landlord's interest in the Property, the Office Section or the Building, or any
other person having an interest therein. Tenant shall execute and deliver
whatever instruments may be required for such purposes, and in the event Tenant
fails so to do within ten (10) days after demand in writing, Tenant shall be
considered in default under this Lease.
21. SUBORDINATION.
- --- --------------
This Lease and all rights of Tenant hereunder are subject and
subordinate to any mortgage or mortgages, blanket or otherwise, made by Landlord
and which do now or may hereafter affect the Property or the Building and to any
and all renewals, modifications, consolidations, replacements and extensions
thereof, and to any ground or other lease, or similar instrument now or
hereafter placed against the Building. It is the intention of the parties that
this provision be self-operative and that no further instrument shall be
required to effect such subordination of this Lease. Tenant shall, however, upon
demand at any time or times execute, acknowledge and deliver to Landlord without
expense to Landlord, any and all instruments that may be necessary or proper to
subordinate this Lease and all rights of Tenant hereunder to any such mortgage
or mortgages or to confirm or evidence such subordination. Tenant covenants and
agrees, in the event any proceedings are brought for the foreclosure of any such
mortgage, to attorn, without any deductions or set-offs whatsoever, to the
purchaser upon any such foreclosure sale if so requested to do by such
purchaser, and to recognize such purchaser as the Landlord under this Lease.
Tenant agrees to execute and deliver at any time and from time-to-time, upon the
request of Landlord or of any holder of such mortgage or of such purchaser, any
instrument which, in the sole judgment of such requesting party, may be
necessary or appropriate in any such foreclosure proceeding or otherwise to
evidence such attornment. Tenant and Landlord further agree that if so requested
by any mortgagee of Landlord, this Lease shall be made superior to any such
mortgage and that they will execute such documents as may be required by such
mortgagee to effect the superiority of this Lease to such mortgage.
22. CERTAIN RIGHTS RESERVED BY LANDLORD.
- --- ------------------------------------
Landlord shall have the following rights (but not obligations), each
of which Landlord may exercise without notice to Tenant (except with respect to
(i) which shall require no less than thirty (30) days prior written notice) and
without liability to Tenant for damage or injury to property, person or business
on account of the exercise thereof, and the exercise of any such rights shall
not be deemed to constitute an eviction or disturbance of Tenant's use or
possession of the Premises and shall not give rise to any claim for set-off or
abatement of Rent or any other claim:
(i) To change the Building's name or street address.
(ii) To install, affix and maintain any and all signs on the
exterior and on the interior of the Building.
(iii) To decorate or to make repairs, alterations,
additions, or improvements, whether structural or otherwise, in and
about the Building, or any part thereof, and for such purposes to
enter upon the Premises, and during the continuance of any of said
work, to temporarily close doors, entryways, public space and
corridors in the Building and to interrupt or temporarily suspend
services or use of facilities, all without affecting any of Tenant's
obligations hereunder, so long as the Premises are reasonably
accessible and usable, and with the use of reasonable efforts not to
interfere with Tenant's business.
(iv) To furnish door keys for the entry door(s) in the
Premises at the commencement of this Lease and to retain at all times,
and to use in appropriate instances, keys to all doors within and into
the Premises. Tenant agrees to purchase only from Landlord additional
duplicate keys as required, to change no locks, and not to affix locks
on doors without the prior written consent of Landlord not to be
unreasonably withheld. Notwithstanding the provisions for Landlord's
access to Premises, Tenant relieves and releases Landlord of all
responsibility arising out of theft, robbery, pilferage and personal
assault. Upon the expiration of the Term or of Tenant's right of
possession, Tenant shall return all keys to Landlord and shall
disclose to Landlord the combination of any safes, cabinets or vaults
left in the Premises.
(v) To designate and approve all window coverings used in
the Building.
(vi) To approve the weight, size and location of safes,
vaults and other heavy equipment and articles in and about the
Premises and the Building so as not to exceed the legal live load
limit of seventy (70) pounds per square foot, as designated by the
structural engineers for the Building, and to require all such items
and furniture and similar items to be moved into or out of the
Building and Premises only at such times and in such manner as
Landlord shall direct in writing. Tenant shall not install or operate
machinery or any mechanical devices of a nature not directly related
to Tenant's ordinary use of the Premises without the prior written
consent of Landlord. Movements of Tenant's property into or out of the
Building or the Premises and within the Building are entirely at the
risk and responsibility of Tenant, and Landlord reserves the right to
require permits before allowing any property to be moved into or out
of the Building or the Premises.
(vii) To establish security policies and other controls for
the purpose of regulating all property and packages, both personal and
otherwise, to be moved into or out of the Building and Premises and
all persons using the Building both during and after normal office
hours.
(viii) To regulate delivery and service of supplies and the
usage of the loading docks, receiving areas and freight elevators.
(ix) To show the Premises to prospective tenants during the
last six (6) months of the Term at reasonable times upon reasonable
notice and, if vacated or abandoned, to show the Premises at any time,
and to prepare the Premises for reoccupancy.
(x) To erect, use and maintain pipes, ducts, wiring and
conduits, and appurtenances thereto, in and through the Premises at
reasonable locations.
(xi) To enter the Premises at any reasonable time to inspect
the Premises upon reasonable prior notice as set forth herein, except
in the case of an emergency.
(xii) To grant to any person or to reserve unto itself the
exclusive right to conduct any business or render any service in the
Building.
<PAGE>
23. RULES AND REGULATIONS.
- --- ----------------------
Tenant agrees to observe the rules and regulations for the Building
attached hereto as Exhibit C and made a part hereof. Landlord shall have the
right from time to time to prescribe additional rules and regulations which, in
its reasonable judgment, may be desirable for the use, entry, operation and
management of the Premises, the Office Section and the Building, each of which
rules and regulations and any amendments thereto shall become a part of this
Lease. Tenant shall comply with all such rules and regulations; provided,
however, that such rules and regulations shall not contradict or, abrogate any
right or privilege herein expressly granted to Tenant. The rules and regulations
shall be enforced by Landlord in a non-discriminatory manner.
24. LANDLORD'S REMEDIES.
- --- --------------------
If default shall be made in the payment of the Rent or any installment
thereof or in the payment of any other sum required to be paid by Tenant under
this Lease or under the terms of any other agreement between Landlord and Tenant
and such default shall continue for five (5) days after written notice to
Tenant, or if default shall be made in the observance or performance of any of
the other covenants or conditions in this Lease which Tenant is required to
observe and perform and such default shall continue for ten (10) days after
written notice to Tenant (provided, however, if Tenant has commenced curing such
default and is diligently proceeding with such cure, Tenant shall have a period
of up to thirty (30) days after written notice to Tenant to cure such default),
or if a default involves a hazardous condition and is not cured by Tenant
immediately upon written notice to Tenant, or if the interest of Tenant in this
Lease shall be levied on under execution or other legal process, or if any
voluntary petition in bankruptcy or for corporate re-organization (but not
including the merger or consolidation of Tenant with or into a person
controlling, controlled by or under common control with Tenant) or any similar
relief shall be filed by Tenant, or if any involuntary petition in bankruptcy
shall be filed against Tenant under any federal or state bankruptcy or
insolvency act and shall not have been dismissed within sixty (60) days from the
filing thereof, or if a receiver shall be appointed for Tenant or any of the
property of Tenant by any court and such receiver shall not have been dismissed
within forty-five (45) days from the date of his appointment, or if Tenant shall
make an assignment for the benefit of creditors, or if Tenant shall admit in
writing Tenant's inability to meet Tenant's debts as they mature, or if Tenant
shall cease to occupy the Premises for a period of twenty (20) consecutive days
during the Term, then Landlord may treat the occurrence of any one or more of
the foregoing events as a breach of this Lease, and thereupon at its option may,
after the expiration of all notice and grace periods set forth herein, if any,
without any further notice or any demand of any kind to Tenant or any other
person, have any one or more of the following described remedies in addition to
all other rights and remedies provided at law or in equity or elsewhere herein:
(i) Landlord may terminate this Lease and the Term created
hereby and shall give Tenant written notice of Landlord's election to
do so and the effective date thereof (the "Effective Date"), in which
event Landlord may forthwith repossess the Premises and shall be
entitled to recover, forthwith as liquidated damages, in addition to
any other sums or damages for which Tenant may be liable to Landlord,
a sum of money equal to the present value (such present value to be
computed on the basis of a per annum discount rate equal to 200 basis
points below the effective annual yield on U.S. Treasury obligations
which could be purchased on the business day next succeeding the
Effective Date and mature closest to the Termination Date) of the Rent
provided to be paid by Tenant for the balance of the Term over the
present value of the fair market rental value of the Premises, after
deduction from the present value of such fair market rental value of
all anticipated expenses of reletting. Should the present value of the
fair market rental value of the Premises, after deduction of all
anticipated expenses of reletting, for the balance of the Term exceed
the present value of the Rent provided to be paid by Tenant for the
balance of the Term, Landlord shall have no obligation to pay to
Tenant the excess or any part thereof or to credit such excess or any
part thereof against any other sums or damages for which Tenant may be
liable to Landlord.
(ii) Landlord may terminate this Lease and the Term as
provided in (i) above and forthwith repossess the Premises and shall
be entitled to recover forthwith, in addition to any other sums or
damages for which Tenant may be liable to Landlord, a sum of money
equal to amounts then due and the present value (computed as
aforesaid) of all or a portion of the Rent and other sums to become
due under this Lease for all or a part of the period from the
Effective Date to the Termination Date. Furthermore, Landlord shall
have the right from time to time to recover from Tenant, and Tenant
shall remain liable for all Rent which would have been due, other than
Rent accelerated and paid pursuant to the foregoing sentence, and any
other sums thereafter accruing as they become due under this Lease
during the period from the Effective Date to the Termination Date. In
any such case, Landlord may (but shall be under no obligation to,
except as required by law) relet the Premises or any part thereof for
the account of Tenant, for such rent, from time to time (which may be
for a term extending beyond the Term of this Lease), and upon such
terms as Landlord in Landlord's sole discretion shall determine, and
Landlord shall not be required to accept any tenant offered by Tenant
or to observe any instructions given by Tenant relative to such
reletting. Also, in any such case, Landlord may change the locks or
other entry devices of the Premises and make repairs, alterations and
additions in or to the Premises and redecorate same to the extent
deemed by Landlord necessary or desirable, and Tenant shall upon
written demand pay the cost thereof together with Landlord's expenses
of reletting, including without limitation, brokerage commissions
payable to Landlord's agent or to others. Landlord may collect the
rents from any such reletting and apply the same to the payment of
expenses of reentry, redecoration, repair and alterations and the
reasonable expenses of reletting and the excess or residue remaining
to the payment of Rent and other sums in this Lease provided to be
paid by Tenant and not theretofore paid by acceleration or otherwise,
and any such excess or residue shall operate only as an offsetting
credit against the amount of Rent and other sums then due and owing
or, at Landlord's option, shall be refunded to Tenant to the extent
paid as a result of acceleration or shall be applied as an offsetting
credit against Rent and other sums thereafter becoming due and payable
hereunder; provided that in no event shall Tenant be entitled to a
credit on its indebtedness to Landlord or refunds of amounts
accelerated in excess of the aggregate of the amount paid as a result
of acceleration and the amount would have been payable by Tenant for
the period for which the credit to Tenant is being determined, had no
default occurred. No such reentry, repossession, repairs, alterations,
additions or relenting shall operate to release Tenant in whole or in
part from any of Tenant's obligations hereunder, and Landlord may, at
any time and from time to time, sue and recover judgment for any
deficiencies from time to time remaining after the application from
time to time of the proceeds of any such reletting.
(iii) Landlord, without thereby waiving such default, may
cure the same for the account and at the expense of Tenant, without
notice in a case of emergency, as determined by Landlord in its sole
discretion, or in case of correction of a dangerous or hazardous
condition, and in any other case if such default continues after ten
(10) days from the date of the giving by Landlord to Tenant of written
notice of such default or of intention to cure. Bills for any expense
incurred by Landlord in connection with any such performance by
Landlord shall be for the account of Tenant, and shall be due and
payable in accordance with the terms of said bills, and if not paid
when due, the amounts thereof shall become immediately due and payable
as Additional Rent under this Lease.
25. EXPENSES OF ENFORCEMENT.
- --- ------------------------
Tenant shall pay upon demand all Landlord's reasonable and customary
costs, charges and expenses including the fees and out-of-pocket expenses of
counsel, agents and others retained by Landlord incurred in enforcing Tenant's
obligations hereunder or incurred by Landlord in any litigation, negotiation or
transaction in which Tenant causes Landlord without Landlord's fault to become
involved or concerned.
26. COVENANT OF QUIET ENJOYMENTMENT.
- --- --------------------------------
Landlord covenants that Tenant, on paying the Rent, charges for
Services and other payments herein reserved and on keeping, observing and
performing all the other terms, covenants, conditions, provisions and agreements
herein contained on the part of Tenant to be kept, observed and performed shall,
during the Term, peaceably and quietly have, hold and enjoy the Premises subject
to the terms, covenants, conditions, provision and agreements hereof, without
hindrance or ejection by any persons lawfully claiming by, through or under
Landlord, the Foregoing covenant of quiet enjoyment being in lieu of any other
covenant, expressed or implied.
27. SECURITY DEPOSIT
- --- ----------------
Tenant hereby deposits with Landlord the sum of the Security Deposit
specified in Paragraph. 1 hereof (hereinafter referred to as "Collateral"), as
security for the prompt, full and faithful performance by Tenant of each and
every provision of this Lease and of all obligations of Tenant hereunder.
Landlord agrees to deposit the Collateral in an interest bearing account.
A. If Tenant fails to perform any of its obligations hereunder,
Landlord may use, apply or retain the whole or any part of the Collateral for
the payment of (i) any Rent or other sums of money which Tenant may not have
paid when due, (ii) any sum expended by Landlord on Tenant's behalf in
accordance with the provisions of this Lease, and/or (iii) any sum which
Landlord may expend or be required to expend by reason of Tenant's default,
including, without limitation, any damage or deficiency in or from the relenting
of the Premises as provided in Paragraph 24. The use, application or retention
of p the Collateral, or any portion thereof, by Landlord shall not prevent
Landlord from exercising any other right or remedy provided by this Lease or by
law (it being intended that Landlord shall not first be required to proceed
against the Collateral) and shall not operate as a limitation on any recovery to
which Landlord may otherwise be entitled. If any portion of the Collateral is
used, applied or retained by Landlord for the purposes set forth above, Tenant
agrees, within ten (10) days after written demand therefor is made by Landlord,
to deposit cash with Landlord in an amount sufficient to restore the Collateral
to its original amount.
B. If Tenant shall fully and faithfully comply with all of the
provisions of this Lease, the Collateral, or any balance thereof, shall be
returned to Tenant, with interest accrued on the Collateral, or any balance
thereof held by Landlord from time to time, after the expiration of the Term or
upon any later date after which Tenant has vacated the Premises. In the absence
of evidence satisfactory to Landlord of my permitted assignment of the right to
receive the Collateral, or of the remaining balance, thereof, Landlord may
return the same to the named Tenant herein regardless of one or more assignments
of Tenant's interest in this Lease or the Collateral. In such event, upon. the
return of the Collateral, or the remaining balance thereof to the named Tenant,
Landlord shall be completely relieved of liability under this Paragraph 27 or
otherwise with respect to the Collateral.
C. Tenant acknowledges that Landlord has the right to transfer or
mortgage its interest in the Premises and the Building and in this Lease and
Tenant agrees that in the event of any such transfer or mortgage, Landlord shall
have the right to transfer or assign the Collateral to the transferee or
mortgagee. Upon such transfer or assignment, Landlord shall thereby be released
by Tenant from all liability or obligation for the return of such Collateral and
Tenant shall look solely to such transferee or mortgagee for the return of the
Collateral, such transferee or mortgagee having no greater obligations in
respect of the Collateral than the Landlord had.
28. REAL ESTATE BROKER.
- --- -------------------
The Tenant represents that Tenant has dealt with (and only with) the
Broker specified in Paragraph I hereof as broker in connection with this Lease,
and that insofar as Tenant knows, no other broker negotiated this Lease or is
entitled to any commission in connection therewith. Tenant agrees to indemnify,
defend and hold harmless Landlord its employees and agents from and against any
claims made by any broker or finder other than the Broker named above for a
commission or fee in connection with this Lease.
The Landlord represents that Landlord has dealt with (and only with)
the Broker specified in Paragraph I hereof as broker in connection with this
Lease, and that insofar as Landlord knows, no other broker negotiated this Lease
or is entitled to any commission in connection therewith. Landlord agrees to
indemnify, defend and hold harmless Tenant its employees and agents from and
against any claims made by any broker or finder other than the Broker named
above for a commission or fee in connection with this Lease.
29. UNDERLYING LEASES.
- --- ------------------
Landlord is the lessee of the air rights premises within which the
Building is constructed pursuant to that certain Sublease (the "Sublease") dated
September 1, 1982 by and between a predecessor of Urban Investment and
Development Co. ("Urban"), as lessor. Urban is the lessee of said air rights
premises and other adjacent air rights premises which collectively are referred
to as Copley Place, pursuant to that certain Amended and Restated Lease (the
"Underlying Lease") dated January 31, 1980 by and between Urban and the
Massachusetts Turnpike Authority ("MTA"), as lessor.
Landlord hereby gives notice to Tenant that it supports the
Affirmative Action and Resident Preference goals set forth on Exhibit G attached
hereto, and encourages Tenant, but Tenant is not obligated, to pursue such goals
in Tenant's own employment practices. In connection with hiring to fill
permanent jobs at the Premises, Tenant shall not discriminate against any
employee or applicant for employment because of race, color, religious creed,
national origin, age or sex. Tenant shall comply to the extent applicable, with
Title VII of the U.S. Civil Rights Act and M.G.L. c.15IB with respect to
employment at the Premises.
30. NOTICE TO MORTGAGEE AND GROUND LESSOR.
- --- --------------------------------------
After receiving notice from any person, firm or other entity that it
holds a mortgage which includes the Premises, the Building or the Office Section
as part of the mortgaged premises, or that it is the ground lessor under a
ground lease (which term shall include the Underlying Lease and the Sublease)
with Landlord, as ground lessee, which includes the Premises, the Building or
the Office Section as part of the demised premises, no notice from Tenant to
Landlord shall be effective unless and until a copy of the same is given to such
holder or ground lessor, and the curing of any of Landlord's defaults by such
holder or ground lessor shall be treated as performance by Landlord. Such holder
or ground lessor shall be given such reasonable time as may be necessary to
effect such cure or to foreclose the mortgage or terminate the ground lease, as
the case may be. For the purposes of Paragraph 21, this Paragraph 30, Paragraph
31 and Paragraph 34, the term "mortgage" includes a mortgage on a leasehold
interest of Landlord (but not one on Tenant's leasehold interest).
31. ASSIGNMENT OF RENTS.
- --- --------------------
With reference to any assignment by Landlord of Landlord's interest in
this Lease, or the rents payable hereunder, conditional in nature or otherwise,
which assignment is made to the holder of a mortgage or ground lease (which term
shall include the Underlying Lease and the Sublease) on property which includes
the Premises, the Building or the Office Section, Tenant agrees:
(i) that the execution thereof by Landlord, and the
acceptance thereof by the holder of such mortgage, or the ground
lessor, shall never be treated as an assumption by such holder or
ground lessor of any of the obligations of Landlord hereunder, unless
such holder, or ground lessor, shall, by notice sent to Tenant,
specifically otherwise elect; and
(ii) that, except as aforesaid, such holder or ground lessor
shall be treated as having assumed Landlord's obligations hereunder
only upon a foreclosure of such holder's mortgage and the taking of
possession of the Premises, or in the case of a ground lessor, the
assumption of Landlord's position hereunder by such ground lessor. In
no event shall the acquisition of title to the Building and the land
on which the same is located by a purchaser which, simultaneously
therewith, leases the entire Building or such land back to the seller
thereof be treated as an assumption, by operation of law or otherwise,
of Landlord's obligations hereunder, but Tenant shall look solely to
such seller lessee, and its successors from time to time in title,
for performance of Landlord's obligations hereunder. In any such
event, this Lease shall be subject and subordinate to the lease to
such seller. For all purposes, such seller-lessee, and its successors
in title, shall be the landlord hereunder unless and until Landlord's
position shall have been assumed by such purchaser-lessor.
32. PERSONAL PROPERTY TAXES.
- --- ------------------------
Tenant shall pay all taxes which may be lawfully charged, assessed, or
imposed upon all fixtures and equipment of every type and also upon all personal
property in the Premises, and Tenant shall pay all license fees which may
lawfully be imposed upon the business of Tenant conducted upon the Premises.
33. MISCELLANEOUS.
- --- --------------
A. Rights Cumulative. All rights and remedies of Landlord under this
Lease shall be cumulative and none shall exclude any other rights and remedies
allowed by law. All rights and remedies of Tenant under this Lease shall be
cumulative and none shall exclude any other rights and remedies allowed by law,
except as otherwise provided herein.
B. Interest. All payments becoming due under this Lease and remaining
unpaid when due shall bear interest until paid at the rate of two percent (2%)
per annum above the prime rate of interest charged from time to time by The
First National Bank of Boston (but in no event at a rate which is more than the
highest rate which is at the time lawful in the Commonwealth of Massachusetts).
C. Terms. The necessary grammatical changes required to make the
provisions hereof apply either to corporations or partnerships or individuals,
men or women, as the case may require, shall in all cases be assumed as though
in each case fully expressed.
D. Binding Effect. Each of the provisions of this Lease shall extend
to and shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective successors or assigns,
provided this clause shall not permit any assignment by Tenant contrary to the
provisions of Paragraph 17 hereof. All indemnities, covenants and agreements of
Tenant contained herein shall inure to the benefit of Landlord's agents and
employees.
E. Lease Contains All Terms. All of the representations and
obligations of Landlord and Tenant are contained herein and in the Exhibits
attached hereto, and no modification, waiver or amendment of this Lease or of
any of its conditions or provisions shall be binding upon Landlord unless in
writing signed by Landlord or by a duly authorized agent of Landlord empowered
by a written authority signed by Landlord. Furthermore, no modification, waiver
or amendment of this Lease or of any of its conditions or provisions shall be
binding upon Tenant unless in writing signed by Tenant or by a duly authorized
agent of Tenant empowered by a written authority signed by Tenant.
F. Delivery for Examination. Submission of this Lease for examination
shall not bind Landlord in any manner, and no lease or obligations of Landlord
shall arise until this instrument is signed by both Landlord and Tenant and
delivery is made to each.
G. No Air Rights. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease.
H. Modification of Lease. If any lender requires, as a condition to
its lending funds the repayment of which is to be secured by a mortgage or trust
deed on the Premises and Building or either, that certain modifications be made
to this Lease, which modifications will not require Tenant to pay any additional
amounts or otherwise change materially the rights or obligations of Tenant
hereunder, Tenant shall, upon Landlord's request, execute appropriate
instruments effecting such modifications.
I. Intentionally Deleted.
J. Transfer of Landlord's Interest. Tenant acknowledges that Landlord
has the right to transfer its interest in the Premises, the Office Section and
the Building and in this Lease, and Tenant agrees that in the event of any such
transfer Landlord shall automatically be released from all liability under this
Lease and Tenant agrees to look solely to such transferee for the performance of
Landlord's obligations hereunder. Tenant further acknowledges that Landlord may
assign its interest in this Lease to a mortgage lender as additional security
provided that such an assignment shall not release Landlord from its obligations
hereunder and that Tenant shall be entitled to continue to look to Landlord for
the performance of its obligations hereunder.
K. Landlord's Title. Landlord's title is and always shall be paramount
to the title of Tenant. Nothing herein contained shall empower Tenant to commit
or engage in any act which can, shall or may encumber the title of Landlord.
L. Prohibition Against Recording. Neither this Lease, nor any
memorandum, affidavit or other writing with respect thereto, shall be recorded
by Tenant or by anyone acting through, under or on behalf of Tenant, and the
recording thereof in violation of this provision shall make this Lease null and
void at Landlord's election.
M. Captions. The captions of paragraphs and subparagraphs are for
convenience only and shall not be deemed to limit, construe, affect or alter the
meaning of such paragraphs or subparagraphs.
N. Covenants and Condition. All of the covenants of Tenant hereunder
shall be deemed and construed to be "conditions", if Landlord so elects, as well
as "covenants" as though the words specifically expressing or importing
covenants and conditions were used in each separate instance.
O. Only Landlord/Tenant Relationship. Nothing contained in this Lease
shall be deemed or construed by the parties hereto or by any third party to
create the relationship of principal and agent, partnership, joint venturer or
any association between Landlord and Tenant, it being expressly understood and
agreed that neither the method of computation of Rent nor any act of the parties
hereto shall be deemed to create any relationship between Landlord and Tenant
other than the relationship of landlord and tenant.
P. Application of Payments. Landlord shall have the right to apply
payments received from Tenant pursuant to this Lease (regardless of Tenant's
designation of such payments) to satisfy any obligations of Tenant hereunder, in
such order and amounts as Landlord in its sole discretion may elect.
Q. Definition of Landlord. All indemnities, covenants and agreements
of Tenant contained herein which inure to the benefit of Landlord shall be
construed to also inure to the benefit of Landlord's agents and employees.
R. Time of Essence. Time is of the essence of this Lease and each of
its provisions.
S. Governing Law. Interpretation of this Lease shall be governed by
the law of the Commonwealth of Massachusetts.
T. Partial Invalidity. If any term, provision or condition contained
in this Lease shall, to any extent, be invalid or unenforceable, the remainder
of this Lease (or the application of such term, provision or condition to
persons or circumstances other than those in respect of which it is invalid or
unenforceable) shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
U. Size of Premises. The size of Premises will be determined on the
basis of the standards set forth in Exhibit E attached hereto. With regard to
Base Rent, Operating Expenses, and with regard to all other payments which are
computed based upon the rentable area of the Premises, it is understood that the
amounts payable as set forth in this Lease are predicated upon assumed rentable
area set forth in this Lease. Not later than ninety (90) days after the
Commencement Date, an exact measurement of the rentable area of the Premises
shall be made in accordance with Exhibit E, and if said measurement shall
indicate rentable area different from that recited in this Lease, Landlord and
Tenant shall promptly execute a supplemental instrument adjusting the amounts
payable hereunder to conform to the exact measurements. Such adjustments shall
be made by multiplying the amount subject to adjustment by a fraction, the
numerator of which is the actual rentable area of the Premises and the
denominator of which is the rentable area of the Premises originally set forth
herein. Any payment due from either party to the other as a result of any
adjustments made hereunder shall be paid promptly upon rendition of a statement
by the party entitled to additional Rent, or Rent refund as the case may be.
34. NOTICES
- --- -------
All notices to be given under this Lease shall be in writing and
either hand delivered; delivered by reputable overnight courier, delivery
acknowledged by recipient; or deposited in the United States mail, certified or
registered mail with return receipt requested, postage prepaid, addressed as
follows:
A. If to Landlord:
c/o Urban Retail Properties
Suite 600
Four Copley Place
Boston, Massachusetts 02116
Attn: Building Manager
with copies to:
Urban Retail Properties
Suite 1300
900 North Michigan Avenue
Chicago, Illinois 60611-1575
Attn: Law Department
or to such other person or such other address designated by notice sent by
Landlord or Tenant, and as provided in Paragraph 30 of this Lease.
B. If to Tenant:
OXIGENE, Inc.
I 10 East 59th Street, 29th Floor
New York, N.Y. 10022
Attn: Vice President
After receiving notice from any person, firm or other entity that it
holds a mortgage which includes the Building as part of the mortgaged premises,
no notice from Tenant to Landlord shall be effective unless and until a copy of
the same is given to such holder, and the curing of any of Landlord's defaults
by such holder shall be treated as performance by Landlord. Such holder shall be
given such reasonable time as may be necessary to effect such cure or to
foreclose the mortgage, as the case may be. For the purposes of Paragraph 21,
Paragraph 30, Paragraph 31 and this Paragraph 34, the term mortgage" includes a
mortgage on a leasehold interest of Landlord (but not one on Tenant's leasehold
interest).
Notice by mail shall be deemed to have been given as of the date of
mailing as aforesaid, but for purposes of computing the period during which a
party may cure notice shall be deemed to have been given three (3) business days
after mailing. Notice by hand delivery or reputable overnight courier shall be
deemed to have been given at the time of delivery.
35. LIMITATION ON LIABILITY.
- --- ------------------------
It is expressly understood and agreed by Tenant that none of
Landlord's covenants, undertakings or agreements are made or intended as
personal covenants, undertakings or agreements by Landlord or its partners, and
any liability for damage or breach or nonperformance by Landlord shall be
collectible only out of Landlord's interest in the Building and no personal
liability is assumed by, nor at any time may be asserted against, Landlord's
partners or any of Landlord's directors, officers, agents, employees, legal
representatives, successors or assigns, all such liability, if any, being
expressly waived and released by Tenant. The provisions of this Paragraph 35
shall expressly be applicable to and inure to the benefit of Landlord's
successors and assigns. In no event shall Landlord or its constituent partners
be liable for any incidental or consequential damages in connection with its
obligations under, or any action taken by Landlord or its constituent partners
in connection with, this Lease.
It is expressly understood and agreed by Landlord that none of
Tenant's covenants, undertakings or agreements are made or intended as personal
covenants, undertakings or agreements by Tenant or its partners, and any
liability for damage or breach or nonperformance by Tenant shall be collectible
only out of Tenant's interest in the Lease and no personal liability is assumed
by, nor at any time may be asserted against, Tenant's partners or any of
Tenant's directors, officers, agents, employees, legal representatives,
successors or assigns, all such liability, if any, being expressly waived and
released by Landlord. In no event shall Tenant or its constituent partners be
liable for any incidental or consequential damages in connection with its
obligations under, or any action taken by Tenant or its constituent partners in
connection with, this Lease.
<PAGE>
36. LANDLORD'S DESIGNATED AGENT.
- --- ----------------------------
It is expressly understood and agreed by Tenant that the provisions of
this Lease may be enforced on behalf of Landlord by an agent designated by
Landlord for such purpose, and such enforcement shall be equally effective
whether in the name of Landlord or such agent.
37. COMMENCEMENT AND TERMINATION DATES.
- --- -----------------------------------
If Landlord shall not have substantially completed Landlord's Work (as
set forth in the Work Letter) by five (5) days prior to the Commencement Date
("Landlord's Completion Date") so as to enable Tenant to complete Tenant's Work
(as set forth in the Work Letter) then notwithstanding Paragraph 3 of this
Lease, the Commencement Date shall be deferred for the number of days after
Landlord's Completion Date required for Landlord to substantially complete
Landlord's Work, and the Termination Date shall be extended by the number of
days by which the Commencement Date was so deferred; provided, however, the
Commencement Date shall not be deferred if the Premises are not substantially
completed by reason of any "Tenant Delays" set forth in Paragraph K of the Work
Letter.
38. CANCELLATION OPTION.
- --- --------------------
Tenant shall have the option to cancel this Lease (the "Cancellation
Option") upon notice to Landlord (the "Cancellation Notice") of Tenant's
exercise of the Cancellation Option, such Cancellation Notice to be delivered
not less than six (6) months prior to the "Cancellation Date" (as hereinafter
defined); provided, however, the Cancellation Notice, shall only be effective if
(i) Tenant is not at the time of delivery of the Cancellation Notice or at the
Cancellation Date in default of its obligations under this Lease and, (ii)
simultaneously with the delivery of the Cancellation Notice, Tenant pays to
Landlord the Cancellation Fee (as hereinafter defined). The Cancellation Date
shall be the date which is six (6) months after Landlord's receipt of the
Cancellation Notice; provided, however, the Cancellation Date may not be earlier
than the last day of the thirty-sixth (36th) full calendar month of the Term or
later than the Termination Date. The Cancellation Fee shall be an amount
determined based upon the Cancellation Date as follows: If the Cancellation Date
is on the last day of the thirty-sixth (36th) full calendar month of the Term,
the Cancellation Fee shall equal Thirty-Eight Thousand Nine Hundred Twenty and
00/100 Dollars ($38,920.00); If the Cancellation Date is after the last day of
the thirty-sixth (36th) full calendar month of the Term, the Cancellation Fee
shall be an amount equal to Thirty-Eight Thousand Nine Hundred Twenty and 00/100
Dollars ($38,920.00), less Three Thousand Two Hundred Forty-Three and 33/100
Dollars ($3,243.33) for every month that the Cancellation Date extends beyond
the thirty-sixth (36th) full calendar month of the Term.
39. CONSTRUCTION
- --- ------------
In connection with the Tenant Improvement Work and in accordance with
the terms of the Work Letter, an amount equal to $30.00 per rentable square foot
of the Premises shall be paid by the Landlord as the Landlord's contribution
toward the Tenant Improvement Work. So long as Tenant is not in default
hereunder, any excess unused Construction Allowance may be credited against Base
Rent.
<PAGE>
40. PARKING.
- --- --------
Tenant shall have the right during the Term to use up to two (2)
non-reserved parking spaces in the garage located within and serving the
Property, subject to payment by Tenant for such use at the prevailing rate
therefor charged by the operator of the garage from time to time; provided,
however, at Landlord's option, all or some of Tenant's parking may be relocated
to the Dartmouth Street Garage in the property adjacent to the Building and
located on Dartmouth Street, in which event, the payment due for use of such
relocated spaces shall be at the prevailing rate charged therefor by the
operator of the Dartmouth Street Garage. In the event of non-payment of parking
charges due hereunder by the Tenant, Landlord shall have the right to terminate
Tenant's rights with respect to parking without any obligation to reinstate such
right to parking in the event Tenant attempts to resume payment for parking.
<PAGE>
Executed as a sealed instrument as of the date first above written.
LANDLORD:
COPLEY PLACE ASSOCIATES
NOMINEE CORPORATION
By: Overseas Management, Inc.,
a Delaware corporation, Agent
By:-------------------------------------
Paul Grant
Its:--------------------------------
TENANT:
OXIGENE, Inc.
a Delaware corporation
By:-------------------------------------
Its Vice President
Hereunto duly authorized
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-3 No. 33-95910, Form S-3 No. 33-64968 and Form S-3 No. 333-15241) and
related Prospectuses of OXiGENE, Inc. and the Registration Statement (Form S-8
No. 333-05787) pertaining to the Amended and Restated Stock Incentive Plan of
OXiGENE, Inc. of our report dated January 12, 1998, with respect to the
consolidated financial statements of OXiGENE, Inc. included in this Annual
Report (Form 10-K) for the year ended December 31, 1997.
ERNST & YOUNG LLP
New York, New York
April 10, 1998
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