The Company leases real estate for office, lab, warehouse and production space under noncancelable leases that expire at various dates through 2035, subject to the Company’s options to terminate or renew certain leases for an additional five to ten years. The Company leases vehicles under operating leases for certain employees and has fleet services agreements for service on these vehicles. The minimum lease term for each newly leased vehicle is 367 days with renewal options. The Company may terminate the vehicle lease after the minimum lease term upon thirty days’ prior notice. The Company also leases other equipment under noncancelable operating and finance leases that expire at various dates through 2025.

On January 1, 2013, the Company entered into finance lease arrangements with 65 Dan Road SPE, LLC, 85 Dan Road Associates, LLC, Dan Road Equity I, LLC and 275 Dan Road SPE, LLC for office and laboratory space in Canton, Massachusetts. 65 Dan Road SPE, LLC, 85 Dan Road Associates, LLC, Dan Road Equity I, LLC and 275 Dan Road SPE, LLC are related parties as the owners of these entities are also stockholders of the Company. In August 2021, the Company purchased the building (the “275 Dan Road Building”) under the lease with 275 Dan Road SPE, LLC for $6,013 and the lease was terminated. The Company recorded an asset of $4,943 to buildings within fixed asset, net in accordance with ASC 842-20-40-2 Purchase of the Underlying Asset to account for the purchase of the leased asset. Other than the lease with 275 Dan Road SPE, LLC which was terminated in August 2021, the remaining three leases were set to terminate on December 31, 2022 and each contained a renewal option for a five-year period with a rental rate at the greater of (i) rent for the last year of the prior term, or (ii) the then fair market value. The Company exercised the option to extend the leases for an additional five years in November 2021 and is currently negotiating the rental rate for those properties with the landlord. The Company used its best estimate to calculate the lease assets and liabilities in the renewal period and reassessed the classification for these leases according to ASC 842-10-25-1 Lease Classification. As a result, these leases were reclassified from finance leases to operating leases. The related finance lease assets and liabilities were reclassified to operating lease right-of-use assets and operating lease obligations on the consolidated balance sheet as of December 31, 2021. Due to the competitive real estate market for biotechnology companies in Massachusetts, the negotiated rental rate could differ materially from management’s estimates, which may significantly increase the lease assets and lease liabilities currently reported on the consolidated financial statements.

The Company owes some accrued but unpaid lease obligations under the aforementioned leases as detailed in the section below. Effective April 1, 2019, the Company agreed to accrue interest on the accrued but unpaid lease obligations at an interest rate equal to the rate charged under the 2019 Credit Agreement. These accrued but unpaid lease obligations as well as the accrued interest on these obligations were subordinated to the 2019 Credit Agreement. With the termination of the 2019 Credit Agreement and the execution of the 2021 Credit Agreement (see Note “13. Long-Term Debt Obligations”) in August 2021, these obligations are no longer subordinated to the Company’s existing loans.

In connection with the purchase of the 275 Dan Road Building in August 2021, the Company paid 50% of the accrued but unpaid lease obligations associated with this building and the accrued interest thereof. The remaining balance is being paid in five quarterly installments ending on January 3, 2023. The interest on the balance of the accrued but unpaid lease obligations associated with the 275 Dan Road Building was reduced to an annual simple rate of 4.5%.

The accrued but unpaid lease obligations as well as the related interest accruals are shown below.


	June 30,		December 31,
	2022		2021
Principal portion of rent in arrears		6,792		7,246
Unpaid operating and common area maintenance costs		-		558
Total accrued but unpaid lease obligations		6,792		7,804

Accrued interest on accrued but unpaid lease obligations		1,957		1,938

The principal portion of rent in arrears was included in the short-term portion of operating lease obligations other than the balance related to the 275 Dan Road Building that was included in accrued expenses and other current liabilities on the consolidated balance sheets as of June 30, 2022 and December 31, 2021. The unpaid operating and common area maintenance costs, and the accrued interest on the accrued but unpaid lease obligations were included in accrued expenses and other current liabilities on the consolidated balance sheets as of June 30, 2022 and December 31, 2021.

The components of lease cost were as follows:


	Classification	Six Months Ended June 30,
		2022		2021
Finance lease
Amortization of right-of-use assets	COGS and SG&A	$	213	$	603
Interest on lease liabilities	Interest Expense		7		661
Total Finance lease cost			220		1,264
Operating lease cost	COGS, R&D, SG&A		4,808		3,015
Short-term lease cost	COGS, R&D, SG&A		1,391		1,414
Variable lease cost	COGS, R&D, SG&A		2,201		2,449
Total lease cost		$	8,620	$	8,142

Supplemental balance sheet information related to finance leases was as follows:


	June 30, 2022			December 31, 2021
Property and equipment, gross	$	1,174		$	1,174
Accumulated depreciation		(1,174	)		(961	)
Property and equipment, net	$	-		$	213

Finance lease obligations	$	-		$	200

Supplemental cash flow information related to leases was as follows:


	Six Months Ended June 30,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases		4,630		3,228
Operating cash flows for finance leases		7		1,022
Financing cash flows for finance leases		200		1,374

Right-of-use assets obtained in exchange for lease obligations
Operating leases		364		29,092
Finance leases		-		-


	June 30, 2022			December 31, 2021
Weighted-average remaining lease term
Finance leases		-			0.45
Operating leases		7.86			8.22

	June 30, 2022			December 31, 2021
Weighted-average discount rate
Finance leases		-			11.30	%
Operating leases		4.54	%		4.51	%

As of June 30, 2022, maturities of lease liabilities were as follows:


	Operating leases			Finance leases
2022 (remaining 6 months)	$	9,713		$	-
2023		8,165			-
2024		7,315			-
2025		7,526			-
2026		7,435			-
Thereafter		25,966			-
Total lease payments		66,120			-
Less: interest		(10,549	)		-
Total lease liabilities	$	55,571		$	-