Item 1.01 Entry into a Material Definitive Agreement.
On June 11, 2019, Ironwood Pharmaceuticals, Inc. (the “Company”) entered into a lease (the “Lease”) with MA-100 Summer Street Owner, L.L.C. (the “Summer Street Landlord”) for approximately 39,000 square feet of office space located on the 23
rd
floor of 100 Summer Street, Boston, Massachusetts (the “Summer Street Property”). The Summer Street Property is expected to serve as the Company’s new headquarters beginning in the fourth quarter of 2019, replacing its existing headquarters at 301 Binney Street in Cambridge, Massachusetts.
The Company took possession of the Summer Street Property on June 11, 2019, with the term of the Lease ending 11 years after such date, unless terminated earlier. The Company is generally entitled to one five-year option to extend the term of the Lease and an ongoing right of first offer with respect to an additional floor of the building, subject to certain occupancy and other conditions set forth in the Lease.
The Company is not responsible for base rent for the first 14 months after taking possession of the Summer Street Property. Thereafter, the Company’s monthly base rent will be approximately $243,000, with annual increases of 2%. The Company is only responsible for the payment of operating expenses and real estate taxes for the building in a given year to the extent the Company’s pro rata share of such expenses and taxes exceed the Company’s pro rata share of the building’s operating expenses and real estate taxes for the base year of the Lease. The Summer Street Landlord is required to contribute approximately $3,800,000 toward the cost of initial alterations of the Summer Street Property.
As a security deposit, the Company has obtained a letter of credit for approximately $971,000, which may be drawn down by the Summer Street Landlord to be applied for certain purposes upon the Company’s breach of certain provisions under the Lease. The Lease also contains customary provisions allowing the Summer Street Landlord to terminate the Lease if the Company fails to remedy a breach of any of its obligations within specified time periods, or upon bankruptcy or insolvency of the Company.
The foregoing description of the Lease is only a summary and is qualified in its entirety by reference to the complete terms and conditions of the Lease, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
On June 13, 2019, the Company issued a press release in connection with entering into the Lease for the Summer Street Property. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
Item 1.02 Termination of a Material Definitive Agreement.
On June 11, 2019, the Company entered into a lease termination agreement (the “Lease Termination”) with BMR-Rogers Street LLC (the “Binney Street Landlord”) to terminate the Company’s existing lease for approximately 108,000 square feet of office space located on the 1
st
and third 3
rd
floors of 301 Binney Street, Cambridge, Massachusetts (the “Binney Street Property”). The termination is expected to go into effect on or before November 1, 2019 (subject to the Company’s one-time right to extend the termination date for up to 30 days) in exchange for an $8,950,000 payment to the Binney Street Landlord. The Company’s monthly base rent for the Binney Street Property is approximately $715,000, with annual increases of 3%, plus the Company’s pro rata share of the building’s operating expenses and real estate taxes. The Binney Street Property currently serves as the Company’s headquarters but is expected to be replaced by the Summer Street Property.
The foregoing description of the Lease Termination is only a summary and is qualified in its entirety by reference to the complete terms and conditions of the Lease Termination, which is attached as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
2