Exhibit 3.1

 

SECOND AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

DISC MEDICINE, INC

 

(Pursuant to Sections 242 and 245 of the

General Corporation Law of the State of Delaware)

 

Disc Medicine, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”),

 

DOES HEREBY CERTIFY:

 

1.          That the name of this corporation is Disc Medicine, Inc., and that this corporation was originally incorporated pursuant to the General Corporation Law on October 12, 2017 under the name Disc Medicine, Inc.

 

2.          That the Board of Directors duly adopted resolutions proposing to amend and restate the Certificate of Incorporation of this corporation, as amended, declaring said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:

 

RESOLVED, that the Certificate of Incorporation of this corporation, as amended, be amended and restated in its entirety to read as follows:

 

FIRST: The name of this corporation is Disc Medicine, Inc. (the “Corporation”).

 

SECOND: The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.

 

THIRD: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law.

 

FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is (i) 108,108,833 shares of Common Stock,

 

$0.0001 par value per share (“Common Stock”) and (ii) 84,166,666 shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”).

 

The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.

 

 

A.

COMMON STOCK

 

1.          General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth herein.

 

2.          Voting. The holders of the Common Stock are entitled to one vote for each share of Common Stock held at all meetings of stockholders (and written actions in lieu of meetings); provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Second Amended and Restated Certificate of Incorporation (this “Certificate of Incorporation”) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation or pursuant to the General Corporation Law. There shall be no cumulative voting. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or more series of Preferred Stock that may be required by the terms of this Certificate of Incorporation) the affirmative vote of the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Corporation entitled to vote, voting together as a single class on an as-converted basis, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law.

 

B.

PREFERRED STOCK

 

5,000,000 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series Seed Preferred Stock”, 41,666,666 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series A Preferred Stock”, and 37,500,000 of the authorized and unissued Preferred Stock of the Corporation are hereby designated “Series B Preferred Stock”, with the following rights, preferences, powers, privileges and restrictions, qualifications and limitations. The Series Seed Preferred Stock, Series A Preferred Stock and Series B Preferred Stock are referred to collectively, unless otherwise indicated, as the “Preferred Stock”. Unless otherwise indicated, references to “sections” or “subsections” in this Part B of this Article Fourth refer to sections and subsections of Part B of this Article Fourth.

 

 

1.

Dividends.

 

The holders of Preferred Stock shall be entitled to receive a non-cumulative dividend, out of the assets legally available therefor, prior and in preference to any payment of dividend on the Common Stock (other than dividends on shares of Common Stock payable in shares of Common Stock), at an annual rate of eight percent (8%) of the Applicable Original Issue Price (as defined below) per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock) (the “Preferred Dividend”); provided, however that such Preferred Dividend shall be payable only when, as and if declared by the Board of Directors of the Corporation (the “Board”) and the Board shall be under no obligation to declare and pay such dividends. The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in this Certificate of Incorporation) the holders of the Preferred Stock then outstanding shall first receive, or simultaneously receive, both (x) the Preferred Dividend and (y) a dividend on each outstanding share of Preferred Stock in an amount at least equal to (i) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Preferred Stock as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (B) the number of shares of Common Stock issuable upon conversion of a share of Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Preferred Stock determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (B) multiplying such fraction by an amount equal to the Applicable Original Issue Price; provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of Preferred Stock pursuant to this clause (y) shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest such dividend payable to the holders of Preferred Stock. The “Series Seed Original Issue Price” shall mean $1.00 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series Seed Preferred Stock. The “Series A Original Issue Price” shall mean $1.20 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock. The “Series B Original Issue Price” shall mean $2.40 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B Preferred Stock. The “Applicable Original Issue Price” shall mean, as the context so requires, the Series Seed Original Issue Price with respect to the Series Seed Preferred Stock, the Series A Original Issue Price with respect to the Series A Preferred Stock and the Series B Original Issue Price with respect to the Series B Preferred Stock.

 

In the event that the Corporation determines, subject to Section 3.3 below, and without limiting Section 2 below, to distribute (x) the proceeds (cash or otherwise) resulting from any sale, lease, license or other transfer of a significant portion of its assets or (y) the proceeds from any option to acquire securities or assets of the Corporation, the proceeds resulting therefrom (including in respect of any ongoing payments, such as milestone payments) shall be distributed in accordance with Section 2 below (and the amounts subsequently distributable pursuant to Section 2 will be reduced, or adjusted, as applicable, to take into account all payments made pursuant to this paragraph as if such payments, along with the consideration then payable under Section 2, had been paid in a single transaction), and not this Section 1.

 

 

2.           Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.

 

2.1     Preferential Payments to Holders of Preferred Stock

 

   2.1.1        Series B Preferred Stock and Series A Preferred Stock Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of each of the shares of Series B Preferred Stock and Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders or, in the case of a Deemed Liquidation Event (as defined below), out of the consideration payable to stockholders in such Deemed Liquidation Event or the Available Proceeds (as defined below), before any payment shall be made to the holders of the Series Seed Preferred Stock or the Common Stock by reason of their ownership thereof, and all on a pari passu basis, an amount per share equal to (i) in the case of each share of Series B Preferred Stock, one (1) times the Series B Original Issue Price plus any dividends declared but unpaid thereon (the “Series B Preference Amount”), and (ii) in the case of each share of Series A Preferred Stock, one (1) times the Series A Original Issue Price plus any dividends declared but unpaid thereon (the “Series A Preference Amount”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series B Preferred Stock and Series A Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1.1, the holders of shares of Series B Preferred Stock and Series A Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares of Series B Preferred Stock and Series A Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

   2.1.2        Series Seed Preferred Stock Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the shares of Series Seed Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders or, in the case of a Deemed Liquidation Event, out of the consideration payable to stockholders in such Deemed Liquidation Event or the Available Proceeds, after the payment in full of the Series B Preference Amount required to be paid to the holders of shares of Series B Preferred Stock and the Series A Preference Amount required to be paid to the holders of shares of Series A Preferred Stock but before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to one (1) times the Series Seed Original Issue Price, plus any dividends declared but unpaid thereon (the “Series Seed Preference Amount”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series Seed Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1.2, the holders of shares of Series Seed Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares of Series Seed Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. The Series B Preference Amount, Series A Preference Amount and the Series Seed Preference Amount, collectively, shall be referred to herein as the “Applicable Preference Amount.”

 

 

   2.2           Distribution of Remaining Assets. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, after the payment in full of all Applicable Preference Amounts required to be paid to the holders of shares of Preferred Stock pursuant to Subsection 2.1, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of the shares of Preferred Stock and Common Stock, pro rata based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to Common Stock pursuant to the terms of this Certificate of Incorporation immediately prior to such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event; provided, however, that if the aggregate amount which the holders of Preferred Stock are entitled to receive under Subsections 2.1 and 2.2 shall exceed two and one-half (2.5) times the Applicable Original Issue Price per share of a series of Preferred Stock (subject to appropriate adjustment in the event of a stock split, stock dividend, combination, reclassification, or similar event affecting such series of Preferred Stock) plus any dividends declared but unpaid thereon (the “Maximum Participation Amount”), each holder of such series of Preferred Stock shall be entitled to receive upon such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event the greater of (i) the Maximum Participation Amount applicable to Preferred Stock of the relevant series, and (ii) the amount such holder would have received if all shares of such series of Preferred Stock had been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event. The aggregate amount which a holder of a share of Preferred Stock of a given series is entitled to receive under Subsections 2.1 and 2.2 is hereinafter referred to as the “Liquidation Amount” of such series.

 

2.3

Deemed Liquidation Events.

 

2.3.1

Definitions.

 

Each of the following events shall be considered a “Deemed Liquidation Event” unless the Requisite Holders (as defined below), elect otherwise by written notice sent to the Corporation at least 15 days prior to the effective date of any such event:

 

(a)

a merger or consolidation in which

 

(i)

the Corporation is a constituent party, or

 

(ii)

a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation,

 

except, in either case, any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation; or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; or

 

 

(b)             (1) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets or intellectual property of the Corporation and its subsidiaries taken as a whole or (2) the sale or disposition (whether by merger, consolidation or otherwise, and whether in a single transaction or a series of related transactions) of one or more subsidiaries of the Corporation if substantially all of the assets or intellectual property of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.

 

The term “Requisite Holders” shall mean (i) the holders of at least a majority of the outstanding shares of Preferred Stock, voting or consenting together as a single class on an as- converted to Common Stock basis, and (ii) at least one holder of Series B Preferred Stock that, together with its affiliates, owns at least 4,166,666 shares of Series B Preferred Stock and did not purchase (and its affiliates did not purchase) any shares of Series A Preferred Stock pursuant to that certain Series A Preferred Stock Purchase Agreement, dated as of September 13, 2019, by and among the Corporation and the purchasers party thereto (each such holder, together with its affiliates, a “Specified Series B Holder”).

 

2.3.2

Effecting a Deemed Liquidation Event.

 

(a)          The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(i) unless the agreement or plan of merger or consolidation for such transaction (the “Merger Agreement”) provides that the consideration payable to the stockholders of the Corporation in such Deemed Liquidation Event shall be paid to the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2.

 

(b)          In the event of a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(ii) or 2.3.1(b), if the Corporation does not effect a dissolution of the Corporation under the General Corporation Law within ninety (90) days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Preferred Stock no later than the ninetieth (90^th) day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause; (ii) to require the redemption of such shares of Preferred Stock, and (iii) unless the Requisite Holders request otherwise in a written instrument delivered to the Corporation, the Corporation shall use the consideration received by the Corporation from such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board), together with any other assets of the Corporation available for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the “Available Proceeds”), on the one hundred fiftieth (150^th) day after such Deemed Liquidation Event, to redeem all outstanding shares of Preferred Stock of each series at a price per share equal to the Applicable Preference Amount of relevant series of Preferred Stock, provided that the consideration to be paid to stockholders of the Corporation is to be allocated in accordance with the preferences and priorities set forth in this Section 2. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Preferred Stock, then the Corporation, in accordance with the preferences and priorities set forth in this Section 2, shall redeem a pro rata portion of each holder’s shares of Series B Preferred Stock, Series A Preferred Stock and Series Seed Preferred Stock at the Applicable Preference Amount to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and shall redeem the remaining shares as soon as it may lawfully do so under General Corporation Law governing distributions to stockholders. Thereafter, any additional Available Proceeds shall be paid to the holders of shares of Preferred Stock to be redeemed pursuant to this Subsection 2.3.2(b) in an amount up to the Liquidation Amount of such share of Preferred Stock as soon as it may lawfully do so under Delaware law governing distributions to stockholders. Prior to the distribution or redemption provided for in this Subsection 2.3.2(b), the Corporation shall not expend or dissipate the consideration received from such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event or in the ordinary course of business. If the Corporation is required by the provisions this Section 2.3.2(b) to redeem shares, the redemption shall occur in accordance with the provisions of Sections 2.3.2(b), (c), (d) and (e). The date upon which any such redemption is required to be effected pursuant to this Section 2.3.2(b) shall be the “Redemption Date”.

 

 

(c)          Not less than 20 days prior to the Redemption Date, the Corporation shall send written notice of any redemption pursuant to this Section 2.3.2 (the “Redemption Notice”) to each holder of record of Preferred Stock as required by Section 2.3.2(b). Each Redemption Notice shall state:

 

(i)

the number of shares held by the holder that the Corporation shall redeem on the Redemption Date specified in the Redemption Notice (which number shall not be less than the number of shares the Corporation is then required to redeem);

 

(ii)

the Redemption Date and the redemption price; and

 

(iii)

that the holder is to surrender to the Corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares of Preferred Stock to be redeemed.

 

(d)         If the Corporation receives, on or prior to the 10th day after the date of delivery of the Redemption Notice to a holder of Preferred Stock, written notice from such holder that such holder elects to be excluded from the redemption provided in this Section 2.3.2, then the shares of Preferred Stock registered on the books of the Corporation in the name of such holder at the time of the Corporation’s receipt of such notice shall thereafter be “Excluded Shares.” Excluded Shares shall not be redeemed or redeemable pursuant to this Section 2.3.2, whether on such Redemption Date or thereafter.

 

 

(e)          On or before the applicable Redemption Date, each holder of shares to be redeemed on such Redemption Date, shall surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the redemption price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the shares represented by a certificate are redeemed, a new certificate representing the unredeemed shares shall promptly be issued to such holder.

 

(f)           If the Redemption Notice shall have been duly given, and if on the applicable Redemption Date the redemption price payable upon redemption of the shares to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that the certificates evidencing any of the shares so called for redemption shall not have been surrendered, dividends with respect to such shares shall cease to accrue after such Redemption Date and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the redemption price without interest upon surrender of their certificate or certificates therefor. Any shares of Preferred Stock that are redeemed or otherwise acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred.

 

   2.3.3        Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property, rights or securities to be paid or distributed to such holders pursuant to such Deemed Liquidation Event. The value of such property, rights or securities shall be determined in good faith by the Board.

 

   2.3.4       Allocation of Escrow and Contingent Consideration. In the event of a Deemed Liquidation Event pursuant to Subsection 2.3.1(a)(i), if any portion of the consideration payable to the stockholders of the Corporation is payable only upon satisfaction of contingencies (the “Additional Consideration”), the Merger Agreement shall provide that (a) the portion of such consideration that is not Additional Consideration (such portion, the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2 as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event; and (b) any Additional Consideration which becomes payable to the stockholders of the Corporation upon satisfaction of such contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2 after taking into account the previous payment of the Initial Consideration as part of the same transaction. For the purposes of this Subsection 2.3.4, consideration placed into escrow or retained as a holdback to be available for satisfaction of indemnification or similar obligations in connection with such Deemed Liquidation Event shall be deemed to be Additional Consideration.

 

 

3.

Voting.

 

  3.1           General. On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of this Certificate of Incorporation, holders of Preferred Stock shall vote together with the holders of Common Stock as a single class and on an as-converted to Common Stock basis.

 

  3.2           Election of Directors. The holders of record of at least a majority of the outstanding shares of Series A Preferred Stock, exclusively and as a separate class, shall be entitled to elect three (3) directors of the Corporation (the “Series A Directors”). The holders of record of at least a majority of the outstanding shares of Series B Preferred Stock, exclusively and as a separate class, shall be entitled to elect two (2) directors of the Corporation (the “Series B Directors”, together with the Series A Directors, the “Preferred Directors”). The holders of record of a majority of the outstanding shares of Common Stock, exclusively and as a separate class, shall be entitled to elect one (1) director of the Corporation (the “Common Director”). Any director elected as provided in the preceding sentences may be removed without cause by, and only by, the affirmative vote of the holders of the shares of the class or series of capital stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders. If the holders of shares of Preferred Stock or Common Stock, as the case may be, fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors, voting exclusively and as a separate class, pursuant to the first three sentences of this Subsection 3.2, then any directorship not so filled shall remain vacant until such time as the holders of the Preferred Stock or Common Stock, as the case may be, elect a person to fill such directorship by vote or written consent in lieu of a meeting; and no such directorship may be filled by stockholders of the Corporation other than by the stockholders of the Corporation that are entitled to elect a person to fill such directorship, voting exclusively and as a separate class; provided, however, for administrative convenience, the initial Preferred Directors may also be appointed by the Board of Directors in connection with the approval of the initial issuance of Preferred Stock without a separate action by the holders of Preferred Stock. The holders of record of the shares of Common Stock and of any other class or series of voting stock (including the Series A Preferred Stock and the Series B Preferred Stock), exclusively and voting together as a single class, shall be entitled to elect the balance of the total number of directors of the Corporation. At any meeting held for the purpose of electing a director, the presence in person or by proxy of the holders of a majority of the outstanding shares of the class or series entitled to elect such director shall constitute a quorum for the purpose of electing such director. Except as otherwise provided in this Subsection 3.2, a vacancy in any directorship filled by the holders of any class or series shall be filled only by vote or written consent in lieu of a meeting of the holders of such class or series or by any remaining director or directors elected by the holders of such class or series pursuant to this Subsection 3.2.

 

 

3.3             Preferred Stock Protective Provisions. At any time when shares of Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly (including through any subsidiary of the Corporation) by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or this Certificate of Incorporation) the written consent or affirmative vote of the Requisite Holders given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.

 

   3.3.1        liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any merger or consolidation or any other Deemed Liquidation Event, or consent to any of the foregoing;

 

   3.3.2        amend, alter or repeal any provision of this Certificate of Incorporation or Bylaws of the Corporation;

 

   3.3.3        create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital stock unless the same ranks junior to the Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends and rights of redemption, or increase the authorized number of shares of Preferred Stock or Common Stock of the Corporation;

 

   3.3.4        (i) reclassify, alter or amend any existing security of the Corporation that is pari passu with any series of Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to such series of Preferred Stock in respect of any such right, preference, or privilege or (ii) reclassify, alter or amend any existing security of the Corporation that is junior to any series of Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to or pari passu with such series of Preferred Stock in respect of any such right, preference or privilege;

 

   3.3.5        purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of Common Stock of the Corporation other than repurchases of Common Stock of the Corporation from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service at a price no greater than the original purchase price pursuant to the provisions of the Corporation’s equity incentive plans and any applicable agreements thereunder;

 

 

   3.3.6        increase the number of shares reserved under any of the Corporation’s equity incentive plans;

 

   3.3.7        create, or authorize the creation of, or issue, or authorize the issuance of any debt security or create any lien or security interest (except for purchase money liens or statutory liens of landlords, mechanics, materialmen, workmen, warehousemen and other similar persons arising or incurred in the ordinary course of business) on the assets or intellectual property of the Corporation or otherwise incur any indebtedness for borrowed money in excess of $500,000 in the aggregate of the Corporation or any subsidiaries thereof;

 

   3.3.8        enter into or be a party to any transaction with any director, officer, or employee of the Corporation, any subsidiary thereof or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such director, officer, or employee, except for transactions made in the ordinary course of business and pursuant to reasonable requirements of the Corporation’s business and upon fair and reasonable terms that are approved by a majority of the disinterested members of the Board, including at least two (2) of the Preferred Directors;

 

   3.3.9        sell, assign, exclusively license, or dispose of any material portion of the assets, operating business, material technology or intellectual property of the Corporation or any subsidiaries thereof, other than licenses granted in the ordinary course of business;

 

   3.3.10      create, or hold capital stock in, any subsidiary that is not wholly owned (either directly or through one or more other subsidiaries) by the Corporation, or permit any subsidiary to create, or authorize the creation of, or issue or obligate itself to issue, any shares of any class or series of capital stock, or sell, transfer or otherwise dispose of any capital stock of any direct or indirect subsidiary of the Corporation, or permit any direct or indirect subsidiary to sell, lease, transfer, exclusively license or otherwise dispose (in a single transaction or series of related transactions) of all or substantially all of the assets of such subsidiary; or

 

3.3.11

increase or decrease the authorized number of directors constituting the Board.

 

3.4             Series A Preferred Stock Protective Provisions. At any time when shares of Series A Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly (including through any subsidiary of the Corporation) by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or this Certificate of Incorporation) the written consent or affirmative vote of holders owning at least a majority of the outstanding Series A Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.

 

 

   3.4.1        amend, alter or repeal any provision of this Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the voting or other powers, preferences, rights, privileges or restrictions of the Series A Preferred Stock;

 

   3.4.2        increase the authorized number of shares of Series A Preferred Stock; or

 

   3.4.3        waive any anti-dilution adjustment with respect to the Series A Preferred Stock set forth in this Certificate of Incorporation.

 

   3.5          Series B Preferred Stock Protective Provisions. At any time when shares of Series B Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly (including through any subsidiary of the Corporation) by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or this Certificate of Incorporation) the written consent or affirmative vote of holders owning at least a majority of the outstanding Series B Preferred Stock, including at least one Specified Series B Holder, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.

 

   3.5.1        amend, alter or repeal any provision of this Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the voting or other powers, preferences, rights, privileges or restrictions of the Series B Preferred Stock;

 

   3.5.2        increase the authorized number of shares of Series B Preferred Stock; or

 

   3.5.3        waive any anti-dilution adjustment with respect to the Series B Preferred Stock set forth in this Certificate of Incorporation.

 

4.

Optional Conversion.

 

The holders of the Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

 

   4.1          Right to Convert. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Applicable Original Issue Price by the Applicable Conversion Price (as defined below) in effect at the time of conversion. The “Series Seed Conversion Price” shall initially be equal to $1.00. Such initial Series Seed Conversion Price, and the rate at which shares of Series Seed Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below. The “Series A Conversion Price” shall initially be equal to $1.20. Such initial Series A Conversion Price, and the rate at which shares of Series A Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below. The “Series B Conversion Price” shall initially be equal to $2.40. Such initial Series B Conversion Price, and the rate at which shares of Series B Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below. The “Applicable Conversion Price” shall mean, as the context so requires, the Series Seed Conversion Price with respect to the Series Seed Preferred Stock, the Series A Conversion Price with respect to the Series A Preferred Stock and the Series B Conversion Price with respect to the Series B Preferred Stock.

 

 

  4.2           Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

 

4.3

Mechanics of Conversion.

 

   4.3.1        Notice of Conversion. In order for a holder of Preferred Stock to voluntarily convert shares of Preferred Stock into shares of Common Stock, the holders of Preferred Stock shall (a) provide written notice to the Corporation’s transfer agent at the office of the transfer agent for the applicable series of Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent) that such holder elects to convert all or any number of such holder’s shares of Preferred Stock and, if applicable, any event on which such conversion is contingent and (b), if such holder’s shares are certificated, surrender the certificate or certificates for such shares of Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the applicable series of Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent). Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the shares of Common Stock to be issued. If required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such notice and, if applicable, certificates (or lost certificate affidavit and agreement) shall be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the specified shares shall be deemed to be outstanding of record as of such date. The Corporation shall, as soon as practicable after the Conversion Time (i) issue and deliver to such holder of Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, (ii) pay in cash such amount as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (iii) pay all declared but unpaid dividends on the shares of Preferred Stock converted.

 

   

4.3.2          Reservation of Shares. The Corporation shall at all times when the Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Certificate of Incorporation. Before taking any action which would cause an adjustment reducing the Applicable Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Applicable Conversion Price.

 

   4.3.3        Effect of Conversion. All shares of Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Subsection 4.2 and to receive payment of any dividends declared but unpaid thereon. Any shares of Preferred Stock so converted shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.

 

   4.3.4        No Further Adjustment. Upon any such conversion, no adjustment to the Applicable Conversion Price shall be made for any declared but unpaid dividends on the Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.

 

   4.3.5        Taxes. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Preferred Stock pursuant to this Section 4. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

 

 

4.4

Adjustments to Applicable Conversion Price for Diluting Issues.

 

   4.4.1     Special Definitions. For purposes of this Article Fourth, the following definitions shall apply:

 

(a)            “Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

 

(b)            “Original Issue Date” shall mean the date on which the first share of Series B Preferred Stock was issued.

 

(c)            “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.

 

(d)            “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Subsection 4.4.3 below, deemed to be issued) by the Corporation after the Original Issue Date, other than (1) the following shares of Common Stock and (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) and (2), collectively, “Exempted Securities”):

 

(i)

shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on, or upon conversion of, the Preferred Stock;

 

(ii)

shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split up or other distribution on shares of Common Stock that is covered by Subsection 4.5, 4.6, 4.7 or 4.8;

 

(iii)

shares of Common Stock, Options or Convertible Securities issued after the Original Issue Date to employees, officers or directors of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Corporation, including the approval of at least a majority of the Preferred Directors, and the Requisite Holders;

 

(iv)

shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security;

 

 

(v)

shares of Common Stock, Options or Convertible Securities issued as acquisition consideration pursuant to the acquisition of another corporation by the Corporation by merger, consolidation, acquisition, strategic alliance, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided that such issuances are approved by the Board of Directors of the Corporation, including the approval of at least a majority of the Preferred Directors; or

 

(vi)

shares of Common Stock, Options or Convertible Securities issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board of Directors of the Corporation, including the approval of at least a majority of the Preferred Directors.

 

4.4.2          No Adjustment of Applicable Conversion Price. No adjustment in the Applicable Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives (i) any consent required pursuant to Subsection 3.4.3 or 3.5.3, as applicable, and (ii) written notice from the Requisite Holders agreeing that no such adjustment shall be made to the Applicable Conversion Price of such series of Preferred Stock as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.

 

4.4.3

Deemed Issue of Additional Shares of Common Stock.

 

  (a)           If the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.

 

 

(b)             If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the Applicable Conversion Price pursuant to the terms of Subsection 4.4.4, are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the Applicable Conversion Price computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to such Applicable Conversion Price as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause (b) shall have the effect of increasing the Applicable Conversion Price to an amount which exceeds the lower of (i) the Applicable Conversion Price in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (ii) the Applicable Conversion Price that would have resulted from any issuances of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.

 

(c)             If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to Applicable Conversion Price pursuant to the terms of Subsection 4.4.4 (either because the consideration per share (determined pursuant to Subsection 4.4.5) of the Additional Shares of Common Stock subject thereto was equal to or greater than the Applicable Conversion Price then in effect, or because such Option or Convertible Security was issued before the Original Issue Date), are revised after the Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto determined in the manner provided in Subsection 4.4.3(a) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

 

(d)             Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the Applicable Conversion Price pursuant to the terms of Subsection 4.4.4, the Applicable Conversion Price shall be readjusted to such Applicable Conversion Price as would have obtained had such Option or Convertible Security (or portion thereof) never been issued.

 

 

(e)             If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the Applicable Conversion Price provided for in this Subsection 4.4.3 shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses

 

(b) and (c) of this Subsection 4.4.3). If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to the Applicable Conversion Price that would result under the terms of this Subsection 4.4.3 at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the Applicable Conversion Price that such issuance or amendment took place at the time such calculation can first be made.

 

4.4.4        Adjustment of Applicable Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the Corporation shall at any time after the Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 4.4.3), without consideration or for a consideration per share less than the Applicable Conversion Price in effect immediately prior to such issuance or deemed issuance, then the Applicable Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:

 

CP₂ = (CP₁* (A + B)) ÷ (A + C).

 

For purposes of the foregoing formula, the following definitions shall apply:

 

(a)             “CP2” shall mean the Applicable Conversion Price in effect immediately after such issuance or deemed issuance of Additional Shares of Common Stock

 

(b)             “CP1” shall mean the Applicable Conversion Price in effect immediately prior to such issuance or deemed issuance of Additional Shares of Common Stock;

 

(c)             “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issuance or deemed issuance of Additional Shares of Common Stock (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issuance or deemed issuance or upon conversion or exchange of Convertible Securities (including the Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issuance or deemed issuance);

 

 

(d)              “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued or deemed issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by the Corporation in respect of such issue by CP1); and

 

(e)              “C” shall mean the number of such Additional Shares of Common Stock issued or deemed issued in such transaction.

 

4.4.5        Determination of Consideration. For purposes of this Subsection 4.4, the consideration received by the Corporation for the issuance or deemed issuance of any Additional Shares of Common Stock shall be computed as follows:

 

(a)

Cash and Property: Such consideration shall:

 

(i)

insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest;

 

(ii)

insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board; and

 

(iii)

in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received that is attributable to the Additional Shares of Common Stock, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board.

 

(b)             Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Subsection 4.4.3, relating to Options and Convertible Securities, shall be determined by dividing:

 

(i)

The total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

 

 

(ii)

the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

 

4.4.6           Multiple Closing Dates. In the event the Corporation shall issue on more than one date Additional Shares of Common Stock that are a part of one transaction or a series of related transactions and that would result in an adjustment to the Applicable Conversion Price pursuant to the terms of Subsection 4.4.4, then, upon the final such issuance, the Applicable Conversion Price shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).

 

4.5           Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Original Issue Date effect a subdivision of the outstanding Common Stock, the Applicable Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Applicable Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

 

4.6           Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the Applicable Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Applicable Conversion Price then in effect by a fraction:

 

(1)               the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

 

(2)               the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

 

Notwithstanding the foregoing (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Applicable Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Applicable Conversion Price shall be adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (b) no such adjustment shall be made if the holders of Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of such event.

 

4.7           Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of Section 1 do not apply to such dividend or distribution, then and in each such event the holders of Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of such event.

 

4.8           Adjustment for Merger or Reorganization, etc. Subject to the provisions of Subsection 2.3, if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 4.4, 4.6 or 4.7), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of such series of Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions in this Section 4 with respect to the rights and interests thereafter of the holders of the Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the Applicable Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Preferred Stock.

 

 

4.9           Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Applicable Conversion Price pursuant to this Section 4, the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than ten (10) days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each affected holder of Preferred Stock a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of Preferred Stock (but in any event not later than ten (10) days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Applicable Conversion Price then in effect, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Preferred Stock held by such holder.

 

4.10

Notice of Record Date. In the event:

 

(a)            the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

 

(b)            of any capital reorganization of the Corporation, any reclassification of the Common Stock, or any Deemed Liquidation Event; or

 

(c)            of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation, then, and in each such case, the Corporation will send or cause to be sent to the holders of the Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Preferred Stock and the Common Stock. Such notice shall be sent at least ten (10) days prior to the record date or effective date for the event specified in such notice.

 

 

5.

Mandatory Conversion.

 

5.1              Trigger Events. Upon either (a) the closing of the sale of shares of Common Stock in a firm-commitment underwritten public offering of the Common Stock at a price per share equal to at least $3.00, pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $50 million of gross proceeds to the Corporation and in connection with such offering the Corporation’s Common Stock is listed for trading on the NASDAQ Global Select Market, NASDAQ Global Market or the New York Stock Exchange (a “Qualified IPO”), or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the Requisite Holders (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “Mandatory Conversion Time”), then (i) all outstanding shares of Preferred Stock shall automatically be converted into shares of Common Stock, at the then effective conversion rate as calculated pursuant to Subsection 4.1 and (ii) such shares may not be reissued by the Corporation.

 

5.2              Procedural Requirements. All holders of record of shares of Preferred Stock shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Preferred Stock pursuant to this Section 5. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of such notice, each holder of shares of Preferred Stock in certificated form shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice. If so required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. All rights with respect to the Preferred Stock converted pursuant to Subsection 5.1, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender any certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Subsection 5.2. As soon as practicable after the Mandatory Conversion Time and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for Preferred Stock, the Corporation shall (a) issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and (b) pay cash as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Preferred Stock converted. Such converted Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.

 

 

6.          Redeemed or Otherwise Acquired Shares. Any shares of Preferred Stock that are redeemed or otherwise acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Preferred Stock following redemption.

 

7.          Waiver. Except as otherwise set forth herein, any of the rights, powers, preferences and other terms of the Preferred Stock set forth herein may be waived on behalf of all holders of Preferred Stock by the affirmative written consent or vote of the Requisite Holders.

 

8.          Notices. Any notice required or permitted by the provisions of this Article Fourth to be given to a holder of shares of Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the General Corporation Law, and shall be deemed sent upon such mailing or electronic transmission.

 

FIFTH: Subject to any additional vote required by this Certificate of Incorporation or Bylaws, in furtherance and not in limitation of the powers conferred by statute, the Board is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws of the Corporation.

 

SIXTH: Subject to any additional vote required by this Certificate of Incorporation, the number of directors of the Corporation shall be determined in the manner set forth in the Bylaws of the Corporation.

 

SEVENTH: Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.

 

EIGHTH: Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws of the Corporation may provide. The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board or in the Bylaws of the Corporation.

 

NINTH: To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the General Corporation Law or any other law of the State of Delaware is amended after approval by the stockholders of this Article Ninth to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law as so amended.

 

Any repeal or modification of the foregoing provisions of this Article Ninth by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.

 

 

TENTH: To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers and agents of the Corporation (and any other persons to which General Corporation Law permits the Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law.

 

Any amendment, repeal or modification of the foregoing provisions of this Article Tenth shall not (a) adversely affect any right or protection of any director, officer or other agent of the Corporation existing at the time of such amendment, repeal or modification or (b) increase the liability of any director of the Corporation with respect to any acts or omissions of such director, officer or agent occurring prior to, such amendment, repeal or modification.

 

ELEVENTH: The Corporation renounces, to the fullest extent permitted by law, any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any Excluded Opportunity. An “Excluded Opportunity” is any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of (i) any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (ii) any holder of Preferred Stock or any partner, member, director, stockholder, employee, affiliate or agent of any such holder, other than someone who is an employee of the Corporation or any of its subsidiaries (collectively, the persons referred to in clauses (i) and (ii) are “Covered Persons”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person’s capacity as a director of the Corporation while such Covered Person is performing services in such capacity. Any repeal or modification of this Article Eleventh will only be prospective and will not affect the rights under this Article Eleventh in effect at the time of the occurrence of any actions or omissions to act giving rise to liability. Notwithstanding anything to the contrary contained elsewhere in this Certificate of Incorporation, the affirmative vote of the Requisite Holders will be required to amend or repeal, or to adopt any provisions inconsistent with this Article Eleventh, and any such amendment, repeal or adoption shall not reduce the rights of any Covered Person with respect to any acts or omissions of such Covered Person prior to such amendment, repeal or adoption.

 

 

TWELFTH: Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the General Corporation Law or the Corporation’s certificate of incorporation or bylaws or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. If any provision or provisions of this Article Twelfth shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article Twelfth (including, without limitation, each portion of any sentence of this Article Twelfth containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.

 

*  *  *

 

3.          That the foregoing amendment and restatement was approved by the holders of the requisite number of shares of the Corporation in accordance with Section 228 of the General Corporation Law.

 

4.          That this Certificate of Incorporation, which restates and integrates and further amends the provisions of this Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.

 

 

IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on this 1^st day of September, 2021.

 

	By:	/s/ John Quisel
		John Quisel, Chief Executive Officer

 

Exhibit 3.3

 

BY-LAWS

 

of

 

DISC MEDICINE, INC.

(the “Corporation”)

 

1.           Stockholders

 

(a)          Annual Meeting. The annual meeting of stockholders shall be held for the election of directors each year at such place, date and time as shall be designated by the Board of Directors. Any other proper business may be transacted at the annual meeting. If no date for the annual meeting is established or said meeting is not held on the date established as provided above, a special meeting in lieu thereof may be held or there may be action by written consent of the stockholders on matters to be voted on at the annual meeting, and such special meeting or written consent shall have for the purposes of these By-laws or otherwise all the force and effect of an annual meeting.

 

(b)          Special Meetings. Special meetings of stockholders may be called by the Chief Executive Officer, if one is elected, or, if there is no Chief Executive Officer, a President, or by the Board of Directors, but such special meetings may not be called by any other person or persons. The call for the meeting shall state the place, date, hour and purposes of the meeting. Only the purposes specified in the notice of special meeting shall be considered or dealt with at such special meeting.

 

(c)          Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a notice stating the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present and vote at such meeting, and, in the case of a special meeting, the purpose or purposes of the meeting, shall be given by the Secretary (or other person authorized by these By-laws or by law) not less than ten (10) nor more than sixty (60) days before the meeting to each stockholder entitled to vote thereat and to each stockholder who, under the Certificate of Incorporation or under these By-laws is entitled to such notice. If mailed, notice is given when deposited in the mail, postage prepaid, directed to such stockholder at such stockholder’s address as it appears in the records of the Corporation. Without limiting the manner by which notice otherwise may be effectively given to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the Delaware General Corporation Law (the “DGCL”).

 

If a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place, if any, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken, except that if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

 

(d)          Quorum. The holders of a majority in interest of all stock issued, outstanding and entitled to vote at a meeting, present in person or represented by proxy, shall constitute a quorum. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present. The stockholders present at a duly constituted meeting may continue to transact business until adjournment notwithstanding the withdrawal of enough stockholders to reduce the voting shares below a quorum.

 

(e)          Voting and Proxies. Except as otherwise provided by the Certificate of Incorporation or by law, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by either written proxy or by a transmission permitted by Section 212(c) of the DGCL, but no proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period or is irrevocable and coupled with an interest. Proxies shall be filed with the Secretary of the meeting, or of any adjournment thereof. Except as otherwise limited therein, proxies shall entitle the persons authorized thereby to vote at any adjournment of such meeting.

 

(f)          Action at Meeting. When a quorum is present, any matter before the meeting shall be decided by vote of the holders of a majority of the shares of stock voting on such matter except where a larger vote is required by law, by the Certificate of Incorporation or by these By-laws. Any election of directors by stockholders shall be determined by a plurality of the votes cast, except where a larger vote is required by law, by the Certificate of Incorporation or by these By-laws. The Corporation shall not directly or indirectly vote any share of its own stock; provided, however, that the Corporation may vote shares which it holds in a fiduciary capacity to the extent permitted by law.

 

(g)         Presiding Officer. Meetings of stockholders shall be presided over by the Chairman of the Board, if one is elected, or in his or her absence, the Vice Chairman of the Board, if one is elected, or if neither is elected or in their absence, a President. The Board of Directors shall have the authority to appoint a temporary presiding officer to serve at any meeting of the stockholders if the Chairman of the Board, the Vice Chairman of the Board or a President is unable to do so for any reason.

 

(h)         Conduct of Meetings. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the presiding officer of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding officer of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the presiding officer of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

 

(i)          Action without a Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required or permitted by law to be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office, by hand or by certified mail, return receipt requested, or to the Corporation's principal place of business or to the officer of the Corporation having custody of the minute book. Every written consent shall bear the date of signature and no written consent shall be effective unless, within sixty (60) days of the earliest dated consent delivered pursuant to these By-laws, written consents signed by a sufficient number of stockholders entitled to take action are delivered to the Corporation in the manner set forth in these By-laws. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

 

(j)          Stockholder Lists. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Nothing contained in this Section 1(j) shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least ten (10) days prior to the meeting in the manner provided by law. The list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law.

 

2.           Directors

 

(a)         Powers. The business of the Corporation shall be managed by or under the direction of a Board of Directors who may exercise all the powers of the Corporation except as otherwise provided by law, by the Certificate of Incorporation or by these By-laws. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled.

 

(b)         Number and Qualification. Unless otherwise provided in the Certificate of Incorporation or in these By-laws, the number of directors which shall constitute the whole board shall be determined from time to time by resolution of the Board of Directors. Directors need not be stockholders.

 

 

(c)         Vacancies; Reduction of Board. A majority of the directors then in office, although less than a quorum, or a sole remaining Director, may fill vacancies in the Board of Directors occurring for any reason and newly created directorships resulting from any increase in the authorized number of directors. In lieu of filling any vacancy, the Board of Directors may reduce the number of directors.

 

(d)         Tenure. Except as otherwise provided by law, by the Certificate of Incorporation or by these By-laws, directors shall hold office until their successors are elected and qualified or until their earlier resignation or removal. Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

 

(e)         Removal. To the extent permitted by law, a director may be removed from office with or without cause by vote of the holders of a majority of the shares of stock entitled to vote in the election of directors.

 

(f)          Meetings. Regular meetings of the Board of Directors may be held without notice at such time, date and place as the Board of Directors may from time to time determine. Special meetings of the Board of Directors may be called, orally or in writing, by the Chief Executive Officer, if one is elected, or, if there is no Chief Executive Officer, the President, or by any Director, designating the time, date and place thereof. Directors may participate in meetings of the Board of Directors by means of conference telephone or other communications equipment by means of which all directors participating in the meeting can hear each other, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting.

 

(g)         Notice of Meetings. Notice of the time, date and place of all special meetings of the Board of Directors shall be given to each director by the Secretary, or Assistant Secretary, or in case of the death, absence, incapacity or refusal of such persons, by the officer or one of the directors calling the meeting. Notice shall be given to each director in person, by telephone, or by facsimile, electronic mail or other form of electronic communications, sent to such director’s business or home address at least twenty-four (24) hours in advance of the meeting, or by written notice mailed to such director’s business or home address at least forty-eight (48) hours in advance of the meeting.

 

(h)         Quorum. At any meeting of the Board of Directors, a majority of the total number of directors shall constitute a quorum for the transaction of business. Less than a quorum may adjourn any meeting from time to time and the meeting may be held as adjourned without further notice.

 

(i)          Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, unless otherwise provided in the following sentence, a majority of the directors present may take any action on behalf of the Board of Directors, unless a larger number is required by law, by the Certificate of Incorporation or by these By-laws. So long as there are two (2) or fewer Directors, any action to be taken by the Board of Directors shall require the approval of all Directors.

 

 

(j)          Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the records of the meetings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

(k)         Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, establish one or more committees, each committee to consist of one or more directors. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

 

Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval or (ii) adopting, amending or repealing any provision of these By-laws.

 

Except as the Board of Directors may otherwise determine, any such committee may make rules for the conduct of its business, but in the absence of such rules its business shall be conducted so far as possible in the same manner as is provided in these By-laws for the Board of Directors. All members of such committees shall hold their committee offices at the pleasure of the Board of Directors, and the Board may abolish any committee at any time.

 

3.           Officers

 

(a)         Enumeration. The officers of the Corporation shall consist of one or more Presidents (who, if there is more than one, shall be referred to as Co-Presidents), a Secretary, and such other officers, including, without limitation, a Treasurer, a Chief Executive Officer and one or more Vice Presidents (including Executive Vice Presidents or Senior Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Board of Directors may determine. The Board of Directors may elect from among its members a Chairman of the Board and a Vice Chairman of the Board.

 

 

(b)         Election. The Presidents, Treasurer and Secretary shall be elected annually by the Board of Directors at their first meeting following the annual meeting of stockholders. Other officers may be chosen by the Board of Directors at such meeting or at any other meeting.

 

(c)         Qualification. No officer need be a stockholder or Director. Any two or more offices may be held by the same person. Any officer may be required by the Board of Directors to give bond for the faithful performance of such officer’s duties in such amount and with such sureties as the Board of Directors may determine.

 

(d)         Tenure. Except as otherwise provided by the Certificate of Incorporation or by these By-laws, each of the officers of the Corporation shall hold office until the first meeting of the Board of Directors following the next annual meeting of stockholders and until such officer’s successor is elected and qualified or until such officer’s earlier resignation or removal. Any officer may resign by delivering his or her written resignation to the Corporation, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

 

(e)         Removal. The Board of Directors may remove any officer with or without cause by a vote of a majority of the directors then in office.

 

(f)          Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors.

 

(g)         Chairman of the Board and Vice Chairman. Unless otherwise provided by the Board of Directors, the Chairman of the Board of Directors, if one is elected, shall preside, when present, at all meetings of the stockholders and the Board of Directors. The Chairman of the Board shall have such other powers and shall perform such duties as the Board of Directors may from time to time designate.

 

Unless otherwise provided by the Board of Directors, in the absence of the Chairman of the Board, the Vice Chairman of the Board, if one is elected, shall preside, when present, at all meetings of the stockholders and the Board of Directors. The Vice Chairman of the Board shall have such other powers and shall perform such duties as the Board of Directors may from time to time designate.

 

(h)         Chief Executive Officer. The Chief Executive Officer, if one is elected, shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.

 

(i)          Presidents. The Presidents shall, subject to the direction of the Board of Directors, each have general supervision and control of the Corporation’s business and any action that would typically be taken by a President may be taken by any Co-President. If there is no Chairman of the Board or Vice Chairman of the Board, a President shall preside, when present, at all meetings of stockholders and the Board of Directors. The Presidents shall have such other powers and shall perform such duties as the Board of Directors may from time to time designate.

 

 

(j)          Vice Presidents and Assistant Vice Presidents. Any Vice President (including any Executive Vice President or Senior Vice President) and any Assistant Vice President shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.

 

(k)         Treasurer and Assistant Treasurers. The Treasurer shall, subject to the direction of the Board of Directors, have general charge of the financial affairs of the Corporation and shall cause to be kept accurate books of account. The Treasurer shall have custody of all funds, securities, and valuable documents of the Corporation, except as the Board of Directors may otherwise provide. The Treasurer shall have such other powers and shall perform such duties as the Board of Directors may from time to time designate.

 

Any Assistant Treasurer shall have such powers and perform such duties as the Board of Directors may from time to time designate.

 

(l)          Secretary and Assistant Secretaries. The Secretary shall record the proceedings of all meetings of the stockholders and the Board of Directors (including committees of the Board) in books kept for that purpose. In the absence of the Secretary from any such meeting an Assistant Secretary, or if such person is absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof. The Secretary shall have charge of the stock ledger (which may, however, be kept by any transfer or other agent of the Corporation) and shall have such other duties and powers as may be designated from time to time by the Board of Directors.

 

Any Assistant Secretary shall have such powers and perform such duties as the Board of Directors may from time to time designate.

 

(m)        Other Powers and Duties. Subject to these By-laws, each officer of the Corporation shall have in addition to the duties and powers specifically set forth in these By-laws, such duties and powers as are customarily incident to such officer’s office, and such duties and powers as may be designated from time to time by the Board of Directors.

 

4.            Capital Stock

 

(a)         Certificates of Stock. Each stockholder shall be entitled to a certificate of the capital stock of the Corporation in such form as may from time to time be prescribed by the Board of Directors. Such certificate shall be signed by a President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. Such signatures may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the time of its issue. Every certificate for shares of stock which are subject to any restriction on transfer and every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall contain such legend with respect thereto as is required by law. The Corporation shall be permitted to issue fractional shares.

 

 

(b)         Transfers. Subject to any restrictions on transfer, shares of stock may be transferred on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, and with such proof of the authenticity of signature as the Corporation or its transfer agent may reasonably require.

 

(c)         Record Holders. Except as may otherwise be required by law, by the Certificate of Incorporation or by these By-laws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these By-laws.

 

It shall be the duty of each stockholder to notify the Corporation of such stockholder’s post office address.

 

(d)         Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not precede the date on which it is established, and which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, more than ten (10) days after the date on which the record date for stockholder consent without a meeting is established, nor more than sixty (60) days prior to any other action. In such case only stockholders of record on such record date shall be so entitled notwithstanding any transfer of stock on the books of the Corporation after the record date.

 

If no record date is fixed, (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, (ii) the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in this state, to its principal place of business, or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded, and (iii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

 

(e)         Lost Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

 

 

5.           Indemnification

 

(a)          Definitions. For purposes of this Section 5:

 

(i)           “Corporate Status” describes the status of a person who is serving or has served (A) as a Director of the Corporation, (B) as an Officer of the Corporation, (C) as a Non-Officer Employee of the Corporation, or (D) as a director, partner, trustee, officer, employee or agent of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan, foundation, association, organization or other legal entity for which such person is or was serving at the request of the Corporation. For purposes of this Section 5(a)(i), a Director, Officer or Non-Officer Employee of the Corporation who is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary shall be deemed to be serving at the request of the Corporation. Notwithstanding the foregoing, “Corporate Status” shall not include the status of a person who is serving or has served as a director, officer, employee or agent of a constituent corporation absorbed in a merger or consolidation transaction with the Corporation with respect to such person’s activities prior to said transaction, unless specifically authorized by the Board of Directors or the stockholders of the Corporation;

 

(ii)          “Director” means any person who serves or has served the Corporation as a director on the Board of Directors of the Corporation;

 

(iii)         “Disinterested Director” means, with respect to each Proceeding in respect of which indemnification is sought hereunder, a Director of the Corporation who is not and was not a party to such Proceeding;

 

(iv)         “Expenses” means all reasonable attorneys fees, retainers, court costs, transcript costs, fees of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), travel expenses, duplicating costs, printing and binding costs, costs of preparation of demonstrative evidence and other courtroom presentation aids and devices, costs incurred in connection with document review, organization, imaging and computerization, telephone charges, postage, delivery service fees, and all other disbursements, costs or expenses of the type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settling or otherwise participating in, a Proceeding;

 

(v)          “Liabilities” means judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement;

 

(vi)         “Non-Officer Employee” means any person who serves or has served as an employee or agent of the Corporation, but who is not or was not a Director or Officer;

 

 

(vii)        “Officer” means any person who serves or has served the Corporation as an officer of the Corporation appointed by the Board of Directors of the Corporation;

 

(viii)       “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, inquiry, investigation, administrative hearing or other proceeding, whether civil, criminal, administrative, arbitrative or investigative; and

 

(ix)          “Subsidiary” shall mean any corporation, partnership, limited liability company, joint venture, trust or other entity of which the Corporation owns (either directly or through or together with another Subsidiary of the Corporation) either (i) a general partner, managing member or other similar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such corporation, partnership, limited liability company, joint venture or other entity, or (B) 50% or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other entity.

 

(b)        Indemnification of Directors and Officers. Subject to the operation of Section 5(d) of these By-laws, each Director and Officer shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), and to the extent authorized in subsections (i) through (iv) of this Section 5(b).

 

(i)           Actions, Suits and Proceedings Other than By or In the Right of the Corporation. Each Director and Officer shall be indemnified and held harmless by the Corporation against any and all Expenses and Liabilities that are incurred or paid by such Director or Officer or on such Director’s or Officer’s behalf in connection with any Proceeding or any claim, issue or matter therein (other than an action by or in the right of the Corporation), which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director’s or Officer’s Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.

 

(ii)          Actions, Suits and Proceedings By or In the Right of the Corporation. Each Director and Officer shall be indemnified and held harmless by the Corporation against any and all Expenses that are incurred by such Director or Officer or on such Director’s or Officer’s behalf in connection with any Proceeding or any claim, issue or matter therein by or in the right of the Corporation, which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director’s or Officer’s Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in or not opposed to the best interests of the Corporation; provided, however, that no indemnification shall be made under this Section 5(b)(ii) in respect of any claim, issue or matter as to which such Director or Officer shall have been finally adjudged by a court of competent jurisdiction to be liable to the Corporation, unless, and only to the extent that, the Court of Chancery or another court in which such Proceeding was brought shall determine upon application that, despite adjudication of liability, but in view of all the circumstances of the case, such Director or Officer is fairly and reasonably entitled to indemnification for such Expenses that such court deems proper.

 

 

(iii)         Survival of Rights. The rights of indemnification provided by this Section 5(b) shall continue as to a Director or Officer after he or she has ceased to be a Director or Officer and shall inure to the benefit of his or her heirs, executors, administrators and personal representatives.

 

(iv)         Actions by Directors or Officers. Notwithstanding the foregoing, the Corporation shall indemnify any Director or Officer seeking indemnification in connection with a Proceeding initiated by such Director or Officer only if such Proceeding (including any parts of such Proceeding not initiated by such Director or Officer) was authorized in advance by the Board of Directors of the Corporation, unless such Proceeding was brought to enforce such Officer’s or Director’s rights to indemnification or, in the case of Directors, advancement of Expenses under these By-laws in accordance with the provisions set forth herein.

 

(c)         Indemnification of Non-Officer Employees. Subject to the operation of Section 5(d) of these By-laws, each Non-Officer Employee may, in the discretion of the Board of Directors of the Corporation, be indemnified by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, against any or all Expenses and Liabilities that are incurred by such Non-Officer Employee or on such Non-Officer Employee’s behalf in connection with any threatened, pending or completed Proceeding, or any claim, issue or matter therein, which such Non-Officer Employee is, or is threatened to be made, a party to or participant in by reason of such Non-Officer Employee’s Corporate Status, if such Non-Officer Employee acted in good faith and in a manner such Non-Officer Employee reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The rights of indemnification provided by this Section 5(c) shall exist as to a Non-Officer Employee after he or she has ceased to be a Non-Officer Employee and shall inure to the benefit of his or her heirs, personal representatives, executors and administrators. Notwithstanding the foregoing, the Corporation may indemnify any Non-Officer Employee seeking indemnification in connection with a Proceeding initiated by such Non-Officer Employee only if such Proceeding was authorized in advance by the Board of Directors of the Corporation.

 

(d)         Determination. Unless ordered by a court, no indemnification shall be provided pursuant to this Section 5 to a Director, to an Officer or to a Non-Officer Employee unless a determination shall have been made that such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal Proceeding, such person had no reasonable cause to believe his or her conduct was unlawful. Such determination shall be made by (i) a majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors, (ii) a committee comprised of Disinterested Directors, such committee having been designated by a majority vote of the Disinterested Directors (even though less than a quorum), (iii) if there are no such Disinterested Directors, or if a majority of Disinterested Directors so directs, by independent legal counsel in a written opinion, or (iv) by the stockholders of the Corporation.

 

 

(e)         Advancement of Expenses to Directors Prior to Final Disposition.

 

(i)           The Corporation shall advance all Expenses incurred by or on behalf of any Director in connection with any Proceeding in which such Director is involved by reason of such Director’s Corporate Status within thirty (30) days after the receipt by the Corporation of a written statement from such Director requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by such Director and shall be preceded or accompanied by an undertaking by or on behalf of such Director to repay any Expenses so advanced if it shall ultimately be determined that such Director is not entitled to be indemnified against such Expenses. Notwithstanding the foregoing, the Corporation shall advance all Expenses incurred by or on behalf of any Director seeking advancement of expenses hereunder in connection with a Proceeding initiated by such Director only if such Proceeding (including any parts of such Proceeding not initiated by such Director) was (A) authorized by the Board of Directors of the Corporation, or (B) brought to enforce such Director’s rights to indemnification or advancement of Expenses under these By-laws.

 

(ii)          If a claim for advancement of Expenses hereunder by a Director is not paid in full by the Corporation within thirty (30) days after receipt by the Corporation of documentation of Expenses and the required undertaking, such Director may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and if successful in whole or in part, such Director shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such advancement of Expenses under this Section 5 shall not be a defense to an action brought by a Director for recovery of the unpaid amount of an advancement claim and shall not create a presumption that such advancement is not permissible. The burden of proving that a Director is not entitled to an advancement of expenses shall be on the Corporation.

 

(iii)         In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Director has not met any applicable standard for indemnification set forth in the DGCL.

 

(f)          Advancement of Expenses to Officers and Non-Officer Employees Prior to Final Disposition.

 

(i)           The Corporation may, at the discretion of the Board of Directors of the Corporation, advance any or all Expenses incurred by or on behalf of any Officer or any Non-Officer Employee in connection with any Proceeding in which such person is involved by reason of his or her Corporate Status as an Officer or Non-Officer Employee upon the receipt by the Corporation of a statement or statements from such Officer or Non-Officer Employee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by such Officer or Non-Officer Employee and shall be preceded or accompanied by an undertaking by or on behalf of such person to repay any Expenses so advanced if it shall ultimately be determined that such Officer or Non-Officer Employee is not entitled to be indemnified against such Expenses.

 

 

(ii)          In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Officer or Non-Officer Employee has not met any applicable standard for indemnification set forth in the DGCL.

 

(g)         Contractual Nature of Rights.

 

(i)           The provisions of this Section 5 shall be deemed to be a contract between the Corporation and each Director and Officer entitled to the benefits hereof at any time while this Section 5 is in effect, in consideration of such person’s past or current and any future performance of services for the Corporation. Neither amendment, repeal or modification of any provision of this Section 5 nor the adoption of any provision of the Certificate of Incorporation inconsistent with this Section 5 shall eliminate or reduce any right conferred by this Section 5 in respect of any act or omission occurring, or any cause of action or claim that accrues or arises or any state of facts existing, at the time of or before such amendment, repeal, modification or adoption of an inconsistent provision (even in the case of a proceeding based on such a state of facts that is commenced after such time), and all rights to indemnification and advancement of Expenses granted herein or arising out of any act or omission shall vest at the time of the act or omission in question, regardless of when or if any proceeding with respect to such act or omission is commenced. The rights to indemnification and to advancement of expenses provided by, or granted pursuant to, this Section 5 shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributees of such person.

 

(ii)          If a claim for indemnification hereunder by a Director or Officer is not paid in full by the Corporation within sixty (60) days after receipt by the Corporation of a written claim for indemnification, such Director or Officer may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim, and if successful in whole or in part, such Director or Officer shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such indemnification under this Section 5 shall not be a defense to an action brought by a Director or Officer for recovery of the unpaid amount of an indemnification claim and shall not create a presumption that such indemnification is not permissible. The burden of proving that a Director or Officer is not entitled to indemnification shall be on the Corporation.

 

 

(iii)         In any suit brought by a Director or Officer to enforce a right to indemnification hereunder, it shall be a defense that such Director or Officer has not met any applicable standard for indemnification set forth in the DGCL.

 

(h)          Non-Exclusivity of Rights. The rights to indemnification and advancement of Expenses set forth in this Section 5 shall not be exclusive of any other right which any Director, Officer, or Non-Officer Employee may have or hereafter acquire under any statute, provision of the Certificate or these By-laws, agreement, vote of stockholders or Disinterested Directors or otherwise.

 

(i)           Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any Director, Officer or Non-Officer Employee against any liability of any character asserted against or incurred by the Corporation or any such Director, Officer or Non-Officer Employee, or arising out of any such person’s Corporate Status, whether or not the Corporation would have the power to indemnify such person against such liability under the DGCL or the provisions of this Section 5.

 

(j)           Other Indemnification. The Corporation’s obligation, if any, to indemnify or provide advancement of Expenses to any person under this Section 5 as a result of such person serving, at the request of the Corporation, as a director, partner, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount such person may collect as indemnification or advancement of Expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or enterprise (the “Primary Indemnitor”). Any indemnification or advancement of Expenses under this Section 5 owed by the Corporation as a result of a person serving, at the request of the Corporation, as a director, partner, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall only be in excess of, and shall be secondary to, the indemnification or advancement of Expenses available from the applicable Primary Indemnitor(s) and any applicable insurance policies.

 

6.           Miscellaneous Provisions

 

(a)          Fiscal Year. Except as otherwise determined by the Board of Directors, the fiscal year of the Corporation shall end on December 31 of each year.

 

(b)          Seal. The Board of Directors shall have power to adopt and alter the seal of the Corporation.

 

(c)          Execution of Instruments. Subject to any limitations which may be set forth in a resolution of the Board of Directors, all deeds, leases, transfers, contracts, bonds, notes and other obligations to be entered into by the Corporation in the ordinary course of its business without director action may be executed on behalf of the Corporation by, a President, or by any other officer, employee or agent of the Corporation as the Board of Directors may authorize.

 

(d)          Voting of Securities. Unless the Board of Directors otherwise provides, a President, any Vice President or the Treasurer may waive notice of and act on behalf of this Corporation, or appoint another person or persons to act as proxy or attorney in fact for this Corporation with or without discretionary power and/or power of substitution, at any meeting of stockholders or shareholders of any other corporation or organization, any of whose securities are held by this Corporation.

 

 

(e)          Resident Agent. The Board of Directors may appoint a resident agent upon whom legal process may be served in any action or proceeding against the Corporation.

 

(f)          Corporate Records. The original or attested copies of the Certificate of Incorporation, By-laws and records of all meetings of the incorporators, stockholders and the Board of Directors and the stock and transfer records, which shall contain the names of all stockholders, their record addresses and the amount of stock held by each, shall be kept at the principal office of the Corporation, at the office of its counsel, or at an office of its transfer agent.

 

(g)          Certificate of Incorporation. All references in these By-laws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the Corporation, as amended and in effect from time to time.

 

(h)          Amendments. These By-laws may be altered, amended or repealed, and new By-laws may be adopted, by the stockholders or by the Board of Directors; provided, that (a) the Board of Directors may not alter, amend or repeal any provision of these By-laws which by law, by the Certificate of Incorporation or by these By-laws requires action by the stockholders and (b) any alteration, amendment or repeal of these By-laws by the Board of Directors and any new By-law adopted by the Board of Directors may be altered, amended or repealed by the stockholders.

 

(i)           Waiver of Notice. Whenever notice is required to be given under any provision of these By-laws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting needs to be specified in any written waiver or any waiver by electronic transmission.

 

Adopted by the Board: November 15, 2017

 

Exhibit 4.1

 

 

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

THIS AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”), is made as of the 23^rd day of August, 2021, by and among Disc Medicine, Inc., a Delaware corporation (the “Company”), each of the investors listed on Schedule A hereto, each of which is referred to in this Agreement as an “Investor”, and any Investor that becomes a party to this Agreement in accordance with Section 6.9 hereof. The effectiveness of this Agreement will be conditioned upon the occurrence of the Closing (as defined in, and in accordance with, that certain Series B Preferred Stock Purchase Agreement, by and between the Company and the Investors, of even date herewith (the “Purchase Agreement”).

 

RECITALS

 

WHEREAS, certain of the Investors (the “Existing Investors”) hold shares of Series Seed Preferred Stock, Series A Preferred Stock and/or shares of Common Stock (as such terms are defined below) issued upon conversion thereof and possess registration rights, information rights, rights of first offer, and other rights pursuant to that certain Investors’ Rights Agreement dated as of September 13, 2019, by and among the Company and such Existing Investors (the “Prior Agreement”).

 

WHEREAS, the Company and certain of the Investors (the “Series B Investors”) are parties to the Purchase Agreement;

 

WHEREAS, in order to induce the Company to enter into the Purchase Agreement and to induce the Series B Investors to invest funds in the Company pursuant to the Purchase Agreement, the Investors and the Company hereby agree that this Agreement shall govern the rights of the Investors to cause the Company to register shares of Common Stock issuable to the Investors, to receive certain information from the Company, and to participate in future equity offerings by the Company, and shall govern certain other matters as set forth in this Agreement; and

 

WHEREAS, the Company and the Investors, including the Existing Investors, each hereby agrees that the Prior Agreement is hereby amended and restated in its entirety by this Agreement, effective as of the Closing.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1.

Definitions. For purposes of this Agreement:

 

1.1           “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, investment adviser, officer, director or trustee of such Person, or any venture capital fund or other investment fund or registered investment company, managed investment account or other fund now or hereafter existing that is controlled by one or more general partners, managing members or investment adviser of, or shares the same management company or investment adviser with, such Person. Notwithstanding the foregoing, where the term “Person” refers to Novo Holdings A/S, in lieu of the foregoing definition, the term “Affiliate” shall mean Novo Ventures (US) Inc. (together with Novo Holdings A/S, “Novo”), any partner, executive officer or director of Novo or any venture capital fund or other Person now or hereafter existing formed for the purpose of making investments in other Persons that is controlled by or under common control with Novo, and for the avoidance of doubt, shall not include any other affiliate of Novo.

 

 

1.2 “Access” means AI DMI LLC.

 

1.3 “Alexandria” means Alexandria Venture Investments, LLC.

 

1.4 “Arix” means Arix Bioscience Holdings Limited.

 

1.5 “Atlas” means Atlas Venture Fund X, L.P.

 

1.6 “Board of Directors” means the board of directors of the Company.

 

1.7           “Certificate of Incorporation” means the Company’s Second Amended and Restated Certificate of Incorporation, as amended and/or restated from time to time.

 

1.8           “Common Stock” means shares of the Company’s common stock, par value $0.0001 per share.

 

1.9         “Competitor” means a Person engaged, directly or indirectly (including through any partnership, limited liability company, corporation, joint venture or similar arrangement (whether now existing or formed hereafter)), in the research, development or commercialization of therapies directed towards the treatment of hematological disorders associated with dysregulated iron metabolism, but shall not include any financial investment firm or collective investment vehicle that, together with its Affiliates, holds less than twenty percent (20)% of the outstanding equity of any Competitor and does not, nor do any of its Affiliates, have a right to designate any members of the board of directors of any Competitor. Notwithstanding anything herein, neither Atlas, Access, OrbiMed, Arix, 5AM, Nantahala, Rock Springs, Four Pines, Alexandria, nor Novo (as defined hereinafter), nor any Affiliates of such Investors shall be deemed to be a Competitor.

 

1.10         “Damages” means any loss, damage, claim or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, claim or liability (or any action in respect thereof) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.

 

 

1.11          “Derivative Securities” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly), Common Stock, including options and warrants.

 

1.12          “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

1.13        “Excluded Registration” means (i) a registration relating to the sale or grant of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, equity incentive or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not permit substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.

 

1.14         “FOIA Party” means a Person that, in the reasonable determination of the Board of Directors, may be subject to, and thereby required to disclose non-public information furnished by or relating to the Company under, the Freedom of Information Act, 5 U.S.C. 552 (“FOIA”), any state public records access law, any state or other jurisdiction’s laws similar in intent or effect to FOIA, or any other similar statutory or regulatory requirement.

 

1.15          “Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

 

1.16          “Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits forward incorporation of substantial information by reference to other documents filed by the Company with the SEC.

 

1.17          “Four Pines” means Four Pines Master Fund LP.

 

1.18          “GAAP” means generally accepted accounting principles in the United States as in effect from time to time.

 

1.19           “Holder” means any holder of Registrable Securities who is a party to this Agreement.

 

1.20        “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including, adoptive relationships, of a natural person referred to herein.

 

1.21          “Initiating Holders” means, collectively, Holders who properly initiate a registration request under this Agreement.

 

 

1.22          “IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act.

 

1.23          “Major Investor” means any Investor that, individually or together with such Investor’s Affiliates, holds (i) at least 4,166,666 Registrable Securities issued or issuable upon conversion of Series A Preferred Stock or (ii) at least 2,083,333 Registrable Securities issued or issuable upon conversion of Series B Preferred Stock, in each case, as adjusted for any stock split, stock dividend, combination or other recapitalization or reclassification effected after the date hereof.

 

1.24          “Nantahala” means funds and separate accounts under the management of Nantahala Capital Management, LLC.

 

1.25         “New Securities” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

 

1.26          “OrbiMed” means OrbiMed Private Investments VIII, LP.

 

1.27          “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

 

1.28          “Preferred Director” means any director of the Company that the holders of record of the Series A Preferred Stock or Series B Preferred Stock, as applicable, are entitled to elect, exclusively and as a separate class, pursuant to the Certificate of Incorporation.

 

1.29          “Preferred Stock” means, collectively, shares of the Company’s Series Seed Preferred Stock, Series A Preferred Stock and Series B Preferred stock.

 

1.30          “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Preferred Stock; (ii) any Common Stock, or any Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the Company, acquired by the Investors after the date hereof; (iii) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clauses (i) and (ii) above; and (iv) any Common Stock acquired by an Investor pursuant to the Amended and Restated Right of First Refusal and Co-Sale Agreement dated as of the date hereof; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Subsection 6.1, and excluding for purposes of Section 2 any shares for which registration rights have terminated pursuant to Subsection 2.13 of this Agreement.

 

1.31          “Registrable Securities then Outstanding” means the number of shares determined by adding the number of shares of outstanding Common Stock that are Registrable Securities and the number of shares of Common Stock issuable (directly or indirectly) pursuant to then exercisable and/or convertible securities that are Registrable Securities.

 

 

1.32          “Requisite Holders” means the Investors holding at least a majority of the outstanding shares of Preferred Stock, voting or consenting together as a single class on an as- converted to Common Stock basis including at least one Specified Series B Holder (as such term is defined in the Certificate of Incorporation).

 

1.33          “Restricted Securities” means the securities of the Company required to be notated with the legend set forth in Subsection 2.12(b) hereof.

 

1.34

“Rock Springs” means Rock Springs Capital Master Fund LP.

 

1.35

“SEC” means the Securities and Exchange Commission.

 

1.36

“SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act. Securities Act.

 

1.37

“SEC Rule 145” means Rule 145 promulgated by the SEC under the

 

1.38

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

1.39          “Selling Expenses” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Subsection 2.6.

 

1.40          “Series A Preferred Stock” means shares of the Company’s Series A Preferred Stock, par value $0.0001 per share.

 

1.41          “Series B Preferred Stock” means shares of the Company’s Series B Preferred Stock, par value $0.0001 per share.

 

1.42          “Series Seed Preferred Stock” means shares of the Company’s Series Seed Preferred Stock, par value $0.0001 per share.

 

1.43

“5AM” means 5AM Opportunities II, L.P..

 

2.

Registration Rights. The Company covenants and agrees as follows:

 

2.1

Demand Registration.

 

(a)                Form S-1 Demand. If at any time after the earlier of (i) five (5) years after the date of this Agreement or (ii) one hundred eighty (180) days after the effective date of the registration statement for the IPO, the Company receives a request from Holders of at least 25% of Registrable Securities then outstanding that the Company file a Form S-1 registration statement with respect to the Registrable Securities then outstanding, having an anticipated aggregate offering price, net of Selling Expenses, of at least $5 million, then the Company shall (x) within ten (10) days after the date such request is given, give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and (y) as soon as practicable, and in any event within sixty (60) days after the date such request is given by the Initiating Holders, file a Form S-1 registration statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Subsections 2.1(c) and 2.3.

 

 

(b)               Form S-3 Demand. If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Holders of Registrable Securities then outstanding that the Company file a Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price, net of Selling Expenses, of at least $1 million, then the Company shall (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within forty-five (45) days after the date such request is given by the Initiating Holders, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty

 

(20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Subsections 2.1(c) and 2.3.

 

(c)                Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Subsection 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Board of Directors it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than sixty (60) days after the request of the Initiating Holders is given; provided, however, that the Company may not invoke this right more than twice in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other stockholder during such sixty (60) day period other than an Excluded Registration.

 

 

(d)               The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Subsection 2.1(a), (i) during the period that is sixty (60) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Company-initiated registration, provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (ii) after the Company has effected two registrations pursuant to Subsection 2.1(a); or (iii) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Subsection 2.1(b). The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Subsection 2.1(b) (i) during the period that is thirty (30) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective date of, a Company-initiated registration, provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or (ii) if the Company has effected two registrations pursuant to Subsection 2.1(b) within the twelve (12) month period immediately preceding the date of such request. A registration shall not be counted as “effected” for purposes of this Subsection 2.1(d) until such time as the applicable registration statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration, elect not to pay the registration expenses therefor, and forfeit their right to one demand registration statement pursuant to Subsection 2.6, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Subsection 2.1(d); provided, that if such withdrawal is during a period the Company has deferred taking action pursuant to Subsection 2.1(c), then the Initiating Holders may withdraw their request for registration and such registration will not be counted as “effected” for purposes of this Subsection 2.1(d).

 

2.2           Company Registration. If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than the Holders) any of its Common Stock under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give each Holder notice of such registration. Upon the request of each Holder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Subsection 2.3, cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Subsection 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Subsection 2.6.

 

2.3

Underwriting Requirements.

 

(a)                If, pursuant to Subsection 2.1, the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Subsection 2.1, and the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by the Company and shall be reasonably acceptable to a majority in interest of the Initiating Holders. In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Subsection 2.4(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting and reasonably satisfactory to the Holders holding a majority of the Registrable Securities participating in such offering; provided, however, that no Holder (or any of their assignees) shall be required to make any representations, warranties or indemnities except as they relate to such Holder’s ownership of shares and authority to enter into the underwriting agreement and to such Holder’s intended method of distribution, and the liability of such Holder shall be several and not joint, and limited to an amount equal to the net proceeds from the offering received by such Holder. Notwithstanding any other provision of this Subsection 2.3, if the managing underwriter(s) advise(s) the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided, however, that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares.

 

 

(b)               In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Subsection 2.2, the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering, or (ii) the number of Registrable Securities included in the offering be reduced below thirty percent (30%) of the total number of securities included in such offering, unless such offering is the IPO, in which case the selling Holders may be excluded further if the underwriters make the determination described above and no other stockholder’s securities are included in such offering. For purposes of the provision in this Subsection 2.3(b) concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

 

 

(c)               For purposes of Subsection 2.1, a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Subsection 2.3(a), fewer than fifty percent (50%) of the total number of Registrable Securities that Holders have requested to be included in such registration statement are actually included.

 

2.4           Obligations of the Company. Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

(a)               prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration of Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to an additional one hundred twenty (120) days, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;

 

(b)              prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

 

(c)               furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

 

(d)               use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

 

(e)               in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

 

(f)               use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

 

(g)               provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

 

(h)               promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

 

(i)                notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and

 

(j)                after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

 

In addition, the Company shall ensure that, at all times after any registration statement covering a public offering of securities of the Company under the Securities Act shall have become effective, its insider trading policy shall provide that the Company’s directors may implement a trading program under Rule 10b5-1 of the Exchange Act.

 

2.5           Furnish Information. It shall be a condition precedent to the obligations of the Company to file any registration statement pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.

 

 

2.6           Expenses of Registration. All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements, not to exceed $35,000, of one counsel for the selling Holders selected by the Holders of a majority of the Registrable Securities to be registered (“Selling Holder Counsel”), shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Subsection 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one registration pursuant to Subsections 2.1(a) or 2.1(b), as the case may be; provided further that if, at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Subsections 2.1(a) or 2.1(b). All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the Holders other than fees and disbursements of counsel to any Holder, other than the Selling Holder Counsel, which shall be borne solely by the Holder engaging such counsel pro rata on the basis of the number of Registrable Securities registered on their behalf.

 

2.7           Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

 

2.8           Indemnification. If any Registrable Securities are included in a registration statement under this Section 2:

 

(a)               To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, trustees, investment advisers, and stockholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Subsection 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information, regarding itself and the Registrable Securities held by it, furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration except to the extent such information was corrected in a subsequent writing prior to or concurrently with the sale of Registrable Securities to the Person asserting the claim.

 

 

(b)               To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information, regarding itself and the Registrable Securities held by it, furnished by or on behalf of such selling Holder expressly for use in connection with such registration which was not corrected in a subsequent writing prior to or concurrently with the sale of Registrable Securities to the Person asserting the claim; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Subsection 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Subsections 2.8(b) and 2.8(d) exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

 

(c)              Promptly after receipt by an indemnified party under this Subsection 2.8  of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Subsection 2.8, give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Subsection 2.8, to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Subsection 2.8.

 

 

(d)               To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either: (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Subsection 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Subsection 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Subsection 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Subsection 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Subsection 2.8(b), exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of willful misconduct or fraud by such Holder.

 

(e)               Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Subsection 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

 

2.9           Reports Under Exchange Act. With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

 

(a)               make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by the Company for the IPO;

 

(b)               use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and

 

 

(c)                furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies); and (ii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S-3 (at any time after the Company so qualifies to use such form).

 

2.10          Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Requisite Holders, enter into any agreement with any holder or prospective holder of any securities of the Company that would (i) provide to such holder or prospective holder the right to include securities in any registration on other than either a pro rata basis with respect to the Registrable Securities or on a subordinate basis after all Holders have had the opportunity to include in the registration and offering all shares of Registrable Securities that they wish to so include; or (ii) allow such holder or prospective holder to initiate a demand for registration of any securities held by such holder or prospective holder; provided that this limitation shall not apply to Registrable Securities acquired by any additional Investor that becomes a party to this Agreement in accordance with Subsection 6.9.

 

2.11          “Market Stand-off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the IPO, and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock held immediately before the effective date of the registration statement for such offering or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise. The foregoing provisions of this Subsection 2.11 shall apply only to the IPO, shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, or the transfer of any shares to any trust for the direct or indirect benefit of the Holder or the immediate family of the Holder, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, and shall be applicable to the Holders only if all officers and directors are subject to the same restrictions and the Company obtains a similar agreement from all stockholders individually owning more than one percent (1%) of the Company’s outstanding Common Stock (after giving effect to conversion into Common Stock of all outstanding Preferred Stock). In addition, this Subsection 2.11 shall not apply to shares of Common Stock acquired in the IPO or in the open market following the IPO.The underwriters in connection with such registration are intended third-party beneficiaries of this Subsection 2.11 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Subsection 2.11 or that are necessary to give further effect thereto. In the event that the Company or the managing underwriter waives or terminates any of the restrictions contained in this Subsection 2.11 or in a lock-up agreement with respect to the securities of any Holder, officer, director or greater than one-percent stockholder of the Company (in any such case, the “Released Securities”), the restrictions contained in this Subsection 2.11 and in any lock-up agreements executed by the Holders shall be waived or terminated, as applicable, to the same extent and with respect to the same percentage of securities of each Holder as the percentage of Released Securities represent with respect to the securities held by the applicable Holder, officer, director or greater than one-percent stockholder.

 

 

2.12         Restrictions on Transfer.

 

(a)           The Preferred Stock and the Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop- transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Preferred Stock and the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement. Notwithstanding the foregoing, the Company shall not require any transferee of shares pursuant to an effective registration statement or, following the IPO, SEC Rule 144, in each case, to be bound by the terms of this Agreement.

 

(b)           Each certificate, instrument, or book entry representing (i) the Preferred Stock, (ii) the Registrable Securities, and (iii) any other securities issued in respect of the securities referenced in clauses (i) and (ii), upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Subsection 2.12(c)) be notated with a legend substantially in the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

 

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Subsection 2.12.

 

 

(c)           The holder of such Restricted Securities, by acceptance of ownership thereof, agrees to comply in all respects with the provisions of this Section 2. Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer. Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company. The Company will not require such a legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144; or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder; provided that each transferee agrees in writing to be subject to the terms of this Subsection 2.12. Each certificate, instrument, or book entry representing the Restricted Securities transferred as above provided shall be notated with, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Subsection 2.12(b), except that such certificate instrument, or book entry shall not be notated with such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

 

2.13          Termination of Registration Rights. The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Subsections 2.1 or 2.2 shall terminate upon the earliest to occur of:

 

(a)           the closing of a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation, where the consideration received by the Investors is in the form of cash and/or publicly traded securities or where the Investors receive registration rights from the acquiring company or other successor comparable to those set forth in this Section 2;

 

(b)           such time after consummation of the IPO as Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such Holder’s shares without limitation during a three-month period without registration;

 

(c)

the fifth anniversary of the IPO.

 

 

3.

Information and Observer Rights.

 

3.1           Delivery of Financial Statements. The Company shall deliver to each Major Investor, provided that the Board of Directors has not reasonably determined that such Major Investor is a Competitor:

 

(a)           as soon as practicable, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, (i) a balance sheet as of the end of such year, (ii) statements of income and of cash flows for such year, and a comparison between (x)   the actual amounts as of and for such fiscal year and (y) the comparable amounts for the prior year and as included in the Budget (as defined in Subsection 3.1(d)) for such year, with an explanation of any material differences between such amounts and a schedule as to the sources and application of funds for such year, and (iii) a statement of stockholders’ equity as of the end of such year, all such financial statements audited and certified by independent public accountants of nationally or regionally recognized standing selected by the Company;

 

(b)           as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, unaudited statements of income and cash flows for such fiscal quarter, and an unaudited balance sheet and a statement of stockholders’ equity as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments; and (ii) not contain all notes thereto that may be required in accordance with GAAP);

 

(c)           as soon as practicable, but in any event within forty-five (45) days after the end of each quarter of each fiscal year of the Company, a statement showing the number of shares of each class and series of capital stock and securities convertible into or exercisable for shares of capital stock outstanding at the end of the period, the Common Stock issuable upon conversion or exercise of any outstanding securities convertible or exercisable for Common Stock and the exchange ratio or exercise price applicable thereto, and the number of shares of issued stock options and stock options not yet issued but reserved for issuance, if any, all in sufficient detail as to permit the Major Investors to calculate their respective percentage equity ownership in the Company, and certified by the chief financial officer or chief executive officer of the Company as being true, complete, and correct;

 

(d)           as soon as practicable, but in any event thirty (30) days before the end of each fiscal year, a budget and business plan for the next fiscal year (collectively, the “Budget”), approved by the Board of Directors (including at least a majority of the Preferred Directors) and prepared on a quarterly basis, including balance sheets, income statements, and statements of cash flow for such quarters and, promptly after prepared, any other budgets or revised budgets prepared by the Company;

 

(e)           such other information relating to the financial condition, business, prospects, or corporate affairs of the Company as any Major Investor may from time to time reasonably request; provided, however, that the Company shall not be obligated under this Subsection 3.1 to provide information (i) that the Company reasonably determines in good faith to be a trade secret; or (ii) the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

 

If, for any period, the Company has any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries.

 

Notwithstanding anything else in this Subsection 3.1 to the contrary, the Company may cease providing the information set forth in this Subsection 3.1 during the period starting with the date thirty (30) days before the Company’s good-faith estimate of the date of filing of a registration statement if it reasonably concludes it must do so to comply with the SEC rules applicable to such registration statement and related offering; provided that the Company’s covenants under this Subsection 3.1 shall be reinstated at such time as the Company is no longer actively employing its commercially reasonable efforts to cause such registration statement to become effective.

 

3.2           Inspection. The Company shall permit each Major Investor (provided that the Board of Directors has not reasonably determined that such Major Investor is a competitor of the Company), upon reasonable advance notice and at such Major Investor’s expense, to visit and inspect the Company’s properties; examine its books of account and records; and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company as may be reasonably requested by the Major Investor; provided, however, that the Company shall not be obligated pursuant to this Subsection 3.2 to provide access to any information that it reasonably and in good faith considers to be a trade secret or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

3.3           Termination of Information Rights. The covenants set forth in Sections 3.1 and 3.2 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, or (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon the closing of a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation, whichever event occurs first; provided, that, with respect to clause (iii), the covenants set forth in Section 3.1 shall only terminate if the consideration received by the Investors in such Deemed Liquidation Event is in the form of cash and/or publicly traded securities unless the Investors receive financial information from the acquiring company or other successor to the Company comparable to those set forth in Section 3.1.

 

3.4           Confidentiality. Each Investor agrees that such Investor will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Subsection 3.4 by such Investor), (b) is or has been independently developed or conceived by such Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to such Investor by a third party without, to such Investor’s knowledge, a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that an Investor may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company and to the extent necessary in connection with such Investor’s tax filings, financial reporting (including with the SEC) and accounting matters; (ii) to any prospective purchaser of any Registrable Securities from such Investor, provided such prospective purchaser is not a Competitor and such prospective purchaser agrees to be bound by the provisions of this Subsection 3.4; (iii) to any Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Investor in the ordinary course of business, provided that such Investor informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; or (iv) as may otherwise be required by law, regulation, rule, court order or subpoena, provided that such Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

 

 

3.5

Critical Technology Matters.

 

(a)              To the extent (i) any pre-existing products or services provided by the Company are re-categorized by the U.S. government as a critical technology within the meaning of Section 721 of the Defense Production Act of 1950, as amended, including all implementing regulations thereof (the “DPA”), or would reasonably be considered to constitute the design, fabrication, development, testing, production or manufacture of a critical technology after a re-categorization of selected technologies by the U.S. government, or (ii) after execution of the Purchase Agreement, the Company engages in any activity that could reasonably be considered to constitute the design, fabrication, development, testing, production or manufacture of a critical technology within the meaning of the DPA, the Company shall promptly notify the Investors of such change in the categorization of its products or services.

 

(b)               If and only if (i) the Committee on Foreign Investment in the United States or any member agency thereof acting in such capacity (“CFIUS”) requests or requires that any Investor or the Company file a notice or declaration with CFIUS pursuant to the DPA with respect to such Investor’s investment in the Company (the “Covered Transactions”) or (ii) such Investor or the Company determines that a filing with CFIUS with respect to the Covered Transactions is advisable or required by applicable law, then in either case, (i) or (ii): (x) the Company and each Investor shall, and shall cause its Affiliates to, cooperate with the other parties hereto and shall promptly file a CFIUS filing in the requested, required or advisable form in accordance with the DPA; (y) the Company and each Investor shall, and shall cause its Affiliates to, use reasonable best efforts to obtain, as applicable, the CFIUS Satisfied Condition (as defined below); and (z) the Company shall provide notice of clause (i) or (ii) to the Major Investors. For the avoidance of doubt, each such Investor shall have no obligation to accept or take any action, condition or restriction with respect to the Covered Transactions in order to achieve the CFIUS Satisfied Condition. The term “CFIUS Satisfied Condition” shall be achieved when (a) the Company and the filing Investor shall have received written notice from CFIUS stating that: (i) CFIUS has concluded that the Covered Transactions do not constitute a “covered transaction” subject to review under the DPA; or (ii) the assessment, review or investigation of the Covered Transactions under the DPA has concluded, and there are no unresolved national security concerns with respect to the Covered Transactions; (b) CFIUS has sent a report to the President of the United States requesting the President’s decision with respect to the Covered Transactions and either (i) the period under the DPA subsequent to the President’s receipt of the CFIUS report during which the President may announce his decision to take action to suspend, prohibit or place any limitations on the Covered Transactions has expired without any such action being taken and without that Presidential review having been suspended or (ii) the President of the United States has announced a decision not to take any action to suspend, prohibit or place any limitations on the Covered Transactions; or (c) at the discretion of such Investor, CFIUS has provided written notice that it is not able to complete action under the DPA with respect to the Covered Transactions on the basis of a CFIUS declaration, but CFIUS has not requested that the Company and the Investor submit a CFIUS notice and has not initiated a unilateral CFIUS review. For the avoidance of doubt, such Investor shall not have any obligation to accept or take any action, condition or restriction with respect to the Covered Transactions in order to achieve the CFIUS Satisfied Condition.

 

 

4.           Rights to Future Stock Issuances.

 

4.1              Right of First Offer. Subject to the terms and conditions of this Subsection 4.1   and applicable securities laws, if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to each Major Investor (provided that the Board of Directors has not reasonably determined that such Major Investor is a Competitor). A Major Investor shall be entitled to apportion the right of first offer hereby granted to it in such proportions as it deems appropriate, among (i) itself, (ii) its Affiliates and (iii) its beneficial interest holders, such as limited partners, members or any other Person having “beneficial ownership,” as such term is defined in Rule 13d-3 promulgated under the Exchange Act, of such Major Investor (“Investor Beneficial Owners”); provided that each such Affiliate or Investor Beneficial Owner (x) is not a Competitor or FOIA Party, unless such party’s purchase of New Securities is otherwise consented to by the Board of Directors, (y) agrees to enter into this Agreement and each of the Voting Agreement and Right of First Refusal and Co-Sale Agreement of even date herewith among the Company, the Investors and the other parties named therein, as an investor under each such agreement (provided that any Competitor or FOIA Party shall not be entitled to any rights as a Major Investor under Subsections 3.1, 3.2 and 4.1 hereof), and (z) agrees to purchase at least such number of New Securities as are allocable hereunder to the Major Investor holding the fewest number of Preferred Stock.

 

(a)               The Company shall give notice (the “Offer Notice”) to each Major Investor, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

 

(b)               By notification to the Company within twenty (20) days after the Offer Notice is given, each Major Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals the proportion that the Common Stock then held by such Major Investor (including all shares of Common Stock then issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock then held by such Major Investor, but excluding all other Derivative Securities) bears to the total Common Stock of the Company then outstanding (assuming full conversion and/or exercise, as applicable, of all Preferred Stock then outstanding, but excluding all other Derivative Securities and excluding shares available to grant under any equity incentive plan) (the “Pro Rata Portion”). At the expiration of such twenty (20) day period, the Company shall promptly notify each Major Investor that elects to purchase or acquire all the shares available to it (each, a “Fully Exercising Investor”) of any other Major Investor’s failure to do likewise. During the ten (10) day period commencing after the Company has given such notice, each Fully Exercising Investor may, by giving notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of the New Securities for which Major Investors were entitled to subscribe but that were not subscribed for by the Major Investors which is equal to the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of Preferred Stock then held by such Fully Exercising Investor bears to the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock then held by all Fully Exercising Investors who wish to purchase such unsubscribed shares, in each case excluding any other Derivative Securities. The closing of any sale pursuant to this Subsection 4.1(b) shall occur within the later of ninety (90) days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Subsection 4.1(c).

 

 

(c)                If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Subsection 4.1(b), the Company may, during the ninety (90) day period following the expiration of the periods provided in Subsection 4.1(b), offer and sell the remaining unsubscribed portion of such New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Major Investors in accordance with this Subsection 4.1.

 

(d)               The right of first offer in this Subsection 4.1 shall not be applicable to (i) Exempted Securities (as defined in the Certificate of Incorporation); (ii) shares of Common Stock issued in the IPO; and (iii) the issuance of shares of Series B Preferred Stock pursuant to the Purchase Agreement.

 

4.2           Termination. The covenants set forth in Subsection 4.1 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon the closing of a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation, whichever event occurs first.

 

5.

Additional Covenants.

 

5.1           Insurance. The Company shall use its commercially reasonable efforts to maintain, with financially sound and reputable insurers, Directors and Officers liability insurance in an aggregate amount of at least $3,000,000 and on terms and conditions satisfactory to the Board and reasonably acceptable to the Preferred Directors, and will use commercially reasonable efforts to cause such insurance policies to be maintained until such time as the Board of Directors (including the Preferred Directors) determines that such insurance should be discontinued.

 

 

5.2           Employee Agreements. The Company will cause each Person now or hereafter employed by it or by any subsidiary (or engaged by the Company or any subsidiary as a consultant/independent contractor) with access to confidential information and/or trade secrets to enter into a nondisclosure and proprietary rights assignment agreement; and each employee to enter into a one (1) year nonsolicitation agreement and, if permitted by applicable law and determined to be in the best interests of the Company by the Board of Directors of the Company (including a majority of the Preferred Directors), a one (1) year noncompetition agreement in a form acceptable to the Investors. In addition, the Company shall not amend, modify, terminate, waive or otherwise alter, in whole or in part, any of the above-reference agreements or any restricted stock agreement between the Company and any employee, without the without approval of the Board of Directors (including a majority of the Preferred Directors).

 

5.3           Employee Stock. Unless otherwise approved by the Board of Directors, including a majority of the Preferred Directors, all future employees and consultants of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing for (i) vesting of shares over a four (4) year period, with the first twenty-five percent (25%) of such shares vesting following twelve (12) months of continued employment or service, and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months, and (ii) a market stand-off provision substantially similar to that in Subsection 2.11. Without the prior approval by the Board of Directors, including a majority of the Preferred Directors, the Company shall not amend, modify, terminate, waive or otherwise alter, in whole or in part, any stock purchase, stock restriction or option agreement with any existing employee or service provider if such amendment would cause it to be inconsistent with this Subsection 5.3. In addition, unless otherwise approved by the Board of Directors, including a majority of the Preferred Directors, the Company shall retain (and not waive) a “right of first refusal” on employee transfers until the Company’s IPO and shall have the right to repurchase unvested shares at cost upon termination of employment of a holder of restricted stock.

 

5.4           Matters Requiring Investor Director Approval. So long as the holders of Series A Preferred Stock or Series B Preferred Stock are entitled to elect a Preferred Director, the Company hereby covenants and agrees with each of the Investors that it shall not, without approval of the Board of Directors, which approval must include the affirmative vote of a majority of the Preferred Directors (and, in the case of clauses (i) and (j) below, each of the Preferred Directors elected by the holders of Series B Preferred Stock):

 

(a)           make, or permit any subsidiary to make, any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership, or other entity unless it is wholly owned by the Company;

 

(b)           make, or permit any subsidiary to make, any loan or advance to any Person, including, without limitation, any employee or director of the Company or any subsidiary, except advances and similar expenditures in the ordinary course of business or under the terms of an employee stock or option plan approved by the Board of Directors;

 

 

(c)           guarantee, directly or indirectly, or permit any subsidiary to guarantee, directly or indirectly, any indebtedness except for trade accounts of the Company or any subsidiary arising in the ordinary course of business;

 

(d)           make any investment inconsistent with any investment policy approved by the Board of Directors;

 

(e)           change the principal business of the Company, enter new lines of business, or exit the current line of business;

 

(f)            sell, assign, license, pledge, or encumber material technology or intellectual property, other than licenses granted in the ordinary course of business;

 

(g)           establish or invest in any subsidiary or joint venture; acquire any corporation, partnership, or other entity (whether by stock or asset purchase, merger, consolidation or otherwise) or any equity or securities therein;

 

(h)           enter into any corporate strategic or sponsored research relationship involving the payment, contribution, or assignment by the Company or to the Company of money or assets greater than $250,000 and not otherwise contemplated by a Company’s then-current operating budget;

 

(i)            amend the Company’s Certificate of Incorporation or by-laws in a way that shall alter or change the powers, preferences or special rights of the Series B Preferred Stock as to affect them adversely; or

 

(j)

Increase the number of authorized shares of Series B Preferred Stock.

 

5.5           Board Matters. Unless otherwise determined by the vote of a majority of the directors then in office, the Board of Directors shall meet at least quarterly in accordance with an agreed-upon schedule. In addition, any one director may call a meeting of the Board of Directors upon thirty (30) days prior notice and the Bylaws shall so provide or be amended to so provide. The Company shall reimburse the nonemployee directors and observers appointed pursuant to the Transaction Agreements for all reasonable and documented out-of-pocket travel expenses incurred (consistent with the Company’s travel policy) in connection with attending meetings of the Board of Directors or committees thereof or in connection with any other activities that are required or requested by the Company. Each Preferred Director shall be entitled in such person’s discretion to serve as a member of any committee of the Board of Directors. Any committee of the Board of Directors shall consist of no less than three (3) members.

 

5.6           Successor Indemnification. If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger or the Company or any subsidiary of the Company sells or otherwise transfers all or substantially all of the assets of the Company, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s Bylaws, the Certificate of Incorporation, or elsewhere, as the case may be.

 

 

5.7           Indemnification Matters. The Company hereby acknowledges that one (1) or more of the directors nominated to serve on the Board of Directors by the Investors (each an “Investor Director”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of the Investors and certain of their Affiliates (collectively, the “Investor Indemnitors”). The Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations to any such Investor Director are primary and any obligation of the Investor Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Investor Director are secondary), (b) that it shall be required to advance the full amount of expenses incurred by such Investor Director and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of any such Investor Director to the extent legally permitted and as required by the Company’s Certificate of Incorporation or Bylaws of the Company (or any agreement between the Company and such Investor Director), without regard to any rights such Investor Director may have against the Investor Indemnitors, and, (c) that it irrevocably waives, relinquishes and releases the Investor Indemnitors from any and all claims against the Investor Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Investor Indemnitors on behalf of any such Investor Director with respect to any claim for which such Investor Director has sought indemnification from the Company shall affect the foregoing and the Investor Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Investor Director against the Company. The Investor Directors and the Investor Indemnitors are intended third-party beneficiaries of this Subsection 5.7 and shall have the right, power and authority to enforce the provisions of this Subsection 5.7 as though they were a party to this Agreement.

 

5.8              Right to Conduct Activities. The Company hereby agrees and acknowledges that each Investor (together with their respective Affiliates, including affiliated advisers and funds) invests in numerous portfolio companies, some of which may be deemed competitive with the Company’s business (as currently conducted or as currently proposed to be conducted). Nothing in this Agreement shall preclude or in any way restrict the Investors from holding, evaluating, selling or purchasing securities, including publicly traded securities, of a particular enterprise, or investing or participating in any particular enterprise whether or not such enterprise has products or services which compete with those of the Company; and the Company hereby agrees that, to the extent permitted under applicable law, such Investor shall not be liable to the Company for any claim arising out of, or based upon, (a) the investment by such Investor and such Affiliates in any Competitor, or (b) actions taken by any partner, officer or other representative of such Investor, including affiliated advisers and funds, to assist any such Competitor, whether or not such action was taken as a member of the board of directors of such Competitor or otherwise, and whether or not such action has a detrimental effect on the Company; provided, however, that the foregoing shall not relieve (i) any of the Investors from liability associated with the unauthorized disclosure of the Company’s confidential information obtained pursuant to this Agreement, or (ii) any director or officer of the Company from any liability associated with his or her fiduciary duties to the Company.

 

 

5.9           FCPA Compliance. The Company shall not, and shall not permit any of its subsidiaries and Affiliates or any of its or their respective directors, officers, managers, employees, independent contractors, representatives or agents (collectively, “Representatives”) to, promise, authorize or make any payment to, or otherwise contribute any item of value to, directly or indirectly, any non-U.S. government official, in each case, in violation of the U.S. Foreign Corrupt Practices Act (“FCPA”) or any other applicable anti-bribery or anti-corruption law. The Company shall, and shall cause each of its subsidiaries and Affiliates to, cease all of its or their respective activities, as well as remediate any actions taken by the Company, its subsidiaries or Affiliates or any of its or their respective Representatives in violation of the FCPA or any other applicable anti- bribery or anti-corruption law. The Company shall maintain systems or internal controls (including, but not limited to, accounting systems, purchasing systems and billing systems) necessary to ensure compliance with the FCPA or any other applicable anti-bribery or anti- corruption law.

 

5.10         Restrictions on Publicity. The Company shall not use the name of Novo or its Affiliates, Access or its Affiliates, 5AM or its Affiliates, Rock Springs or its Affiliates, Nantahala or its Affiliates or refer to any of the above, directly or indirectly, in connection with such Person’s relationship, agreements or arrangements with the Company in any advertisement, press release, professional or trade publication, marketing materials or otherwise to the general public or in any other manner, except (i) as may be required by law, (ii) on a confidential basis to potential financing sources, including lenders, investors, investment bankers or acquirors but only as to the fact of such Person’s equity investment in the Company and documentation relating thereto, (iii) on a confidential basis to the Company’s lawyers, contractors, accountants and other advisors who have a need to have access and knowledge of such information, or (iv) with such Person’s, prior written consent, which consent may be withheld in its sole discretion; provided that (y)   the parties anticipate that there will be a mutually-agreed press release announcing the closing of the transactions contemplated in the Purchase Agreement and (z) following the public announcement contemplated in clause (i), the Company may confirm that such Person is an investor in the Company (but not the amount or terms thereof) in a form of disclosure that has been previously approved by such Person.

 

5.11         Expenses of Counsel. In the event of a transaction which is a Sale of the Company (as defined in the Voting Agreement of even date herewith among the Company, the Investors and the other parties named therein), the reasonable fees and disbursements, not to exceed $50,000 in the aggregate, of one counsel for the Major Investors (“Investor Counsel”) in their capacities as stockholders, shall be borne and paid by the Company. At the outset of considering a transaction which, if consummated would constitute a Sale of the Company, the Company shall obtain the ability to share with the Investor Counsel (and such counsel's clients) and shall share the confidential information (including, without limitation, the initial and all subsequent drafts of memoranda of understanding, letters of intent and other transaction documents and related noncompete, employment, consulting and other compensation agreements and plans) pertaining to and memorializing any of the transactions which, individually or when aggregated with others would constitute the Sale of the Company. The Company shall be obligated to share (and cause the Company's counsel and investment bankers to share) such materials when distributed to the Company's executives and/or any one or more of the other parties to such transaction(s). In the event that Investor Counsel deems it appropriate, in its reasonable discretion, to enter into a joint defense agreement or other arrangement to enhance the ability of the parties to protect their communications and other reviewed materials under the attorney client privilege, the Company shall, and shall direct its counsel to, execute and deliver to Investor Counsel and its clients such an agreement in form and substance reasonably acceptable to Investor Counsel. In the event that one or more of the other party or parties to such transactions require the clients of Investor Counsel to enter into a confidentiality agreement and/or joint defense agreement in order to receive such information, then the Company shall share whatever information can be shared without entry into such agreement and shall, at the same time, in good faith work expeditiously to enable Investor Counsel and its clients to negotiate and enter into the appropriate agreement(s) without undue burden to the clients of Investor Counsel.

 

 

5.12        Termination of Covenants. The covenants set forth in this Section 5, except for Subsections 5.6 and 5.7 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation, whichever event occurs first.

 

6.

Miscellaneous.

 

6.1          Successors and Assigns. The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; or (iii) after such transfer, holds at least 100,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations); provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Subsection 2.11. For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided further that all transferees who would not qualify individually for assignment of rights shall, as a condition to the applicable transfer, establish a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

6.2           Governing Law. This Agreement shall be governed by the General Corporation Law of the State of Delaware, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Delaware.

 

6.3           Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

6.4           Titles and Subtitles. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

 

6.5

Notices.

 

(a)                All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (i) personal delivery to the party to be notified; (ii) when sent, if sent by electronic mail during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their addresses as set forth on Schedule A hereto, or to such email address or address as subsequently modified by written notice given in accordance with this Subsection 6.5. If notice is given to the Company, it shall be sent to Disc Medicine, Inc., 150 Cambridgepark Drive, Suite 103, Cambridge, MA 02140, Attention: Chief Executive Officer; and a copy (which shall not constitute notice) shall also be sent to Goodwin Procter LLP, 100 Northern Avenue, Boston, MA 02210; Attn: William D. Collins, Esq. (which shall not constitute notice); and if notice is given to the Investors, a copy (which shall not constitute notice) shall also be given to each Investor’s counsel as set forth on Schedule A hereof.

 

(b)               Consent to Electronic Notice. Each Investor consents to the delivery of any stockholder notice pursuant to the Delaware General Corporation Law (the “DGCL”), as amended or superseded from time to time, by electronic transmission pursuant to Section 232 of the DGCL (or any successor thereto) at the electronic mail address as on the books of the Company. Each Investor agrees to promptly notify the Company of any change in such stockholder’s electronic mail address, and that failure to do so shall not affect the foregoing.

 

 

6.6           Amendments and Waivers. Any term of this Agreement may be amended, modified or terminated and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the Requisite Holders; provided that the Company may in its sole discretion waive compliance with Subsection 2.12(c) (and the Company’s failure to object promptly in writing after notification of a proposed assignment allegedly in violation of Subsection 2.12(c) shall be deemed to be a waiver); and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. Notwithstanding the foregoing, (a) this Agreement may not be amended, modified or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, modification, termination, or waiver applies to all Investors in the same fashion (it being agreed that a waiver of the provisions of Section 4 with respect to a particular transaction shall be deemed to apply to all Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Investors may nonetheless, by agreement with the Company, purchase securities in such transaction, subject to compliance with the below paragraph of this Subsection 6.6), (b) Subsections 3.1, 3.2 and any other section of this Agreement applicable to the Major Investors (including this clause (b) of this Subsection 6.6) may not be amended, modified, terminated or waived without the written consent of the holders of at least a majority of the Registrable Securities then outstanding and held by the Major Investors (including at least one Specified Series B Holder), (c) Subsections 3.5, 5.10, 6.11, this clause (c) of this Subsection 6.6 and the definition of “Affiliate” as it pertains to Novo may not be amended, modified or terminated and the observance of any term thereof may not be waived without the written consent of Novo, (d) Subsection 1.5 and this clause (d) of this Subsection 6.6 may not be amended, modified or terminated and the observance of any term thereof may not be waived without the written consent of Atlas, (e) Subsections 1.2, 5.10 and this clause (e) of this Subsection 6.6 may not be amended, modified or terminated and the observance of any term thereof may not be waived without the written consent of Access, (f) Subsection 1.26 and this clause (f) of this Subsection 6 may not be amended, modified or terminated and the observance of any term thereof may not be waived without the written consent of OrbiMed, (g) Subsections 1.24, 5.10 and this clause (g) of this Subsection 6.6 may not be amended, modified or terminated and the observance of any term thereof may not be waived without the written consent of Nantahala, (h) Section 5.10 and this clause (h) may not be amended, modified, or terminated and the observance of any term thereof may not be waived without the written consent of Rock Springs (with respect to Rock Springs only) or Four Pines (with respect to Four Pines only), and (i) Sections 1.9 and this clause (i) may not be amended, modified, or terminated and the observance of any term thereof may not be waived without the written consent of Novo (with respect to Novo only), Atlas (with respect to Atlas only), Access (with respect to Access only), Arix (with respect to Arix only), OrbiMed (with respect to OrbiMed only), 5AM (with respect to 5AM only), Rock Springs (with respect to Rock Springs only), Four Pines (with respect to Four Pines only), Nantahala (with respect to Nantahala only), Alexandria (with respect to Alexandria only). Any amendment, modification, termination or waiver of Subsection 5.7, 5.8 or 6.13 will not apply to any particular Investor unless such Investor’s written consent to such amendment, modification, termination or waiver is obtained. Notwithstanding the foregoing, Schedule A hereto may be amended by the Company from time to time to add transferees of any Registrable Securities in compliance with the terms of this Agreement without the consent of the other parties; and Schedule A hereto may also be amended by the Company after the date of this Agreement without the consent of the other parties to add information regarding any additional Investor who becomes a party to this Agreement in accordance with Subsection 6.9. The Company shall give prompt notice of any amendment, modification or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, modification, termination, or waiver. Any amendment, modification, termination, or waiver effected in accordance with this Subsection 6.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

 

 

If the right of first offer provided in Section 4 with respect to a particular transaction is waived pursuant to this Section 6.6 (the “Waiver”), and any Major Investor who consented to the Waiver (the “Purchasing Investor”) nonetheless, by agreement with the Company, purchases securities in such transaction, then each other Major Investor shall be given the same opportunity to participate in such transaction within thirty (30) days after the initial closing of such transaction up to an amount not less than a proportion of its Pro Rata Portion in such transaction, which proportion (the “Actual Proportion”) is determined by dividing (x) the actual amount of securities being purchased by the Purchasing Investor in such transaction by (y) the Purchasing Investor’s Pro Rata Portion in such transaction. For the avoidance of doubt, if there are at least two existing Purchasing Investors (other than the Major Investor exercising its rights hereunder) participating in such transaction and using different Actual Proportions, then the highest Actual Proportion applicable to any of these Investors shall apply in determining the amount of securities a Major Investor is entitled to purchase in such transaction. This paragraph may not be waived with respect to a particular transaction without the consent of each Major Investor.

 

6.7           Severability. In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

 

6.8           Aggregation of Stock. All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

 

6.9         Additional Investors. Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of the Company’s Preferred Stock after the date hereof, any purchaser of such shares of Preferred Stock may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, and thereafter shall be deemed an “Investor” for all purposes hereunder. No action or consent by the Investors shall be required for such joinder to this Agreement by such additional Investor, so long as such additional Investor has agreed in writing to be bound by all of the obligations as an “Investor” hereunder.

 

6.10         Entire Agreement. This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and, upon the effectiveness of this Agreement in accordance with the first paragraph herein, any other written or oral agreement relating to the subject matter hereof existing between the parties, including the Prior Agreement, is expressly canceled.

 

 

6.11          Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of the State of Delaware and to the jurisdiction of the federal courts of the State of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of the State of Delaware or the federal courts of the State of Delaware and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

 

WAIVER OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION AGREEMENTS (AS DEFINED IN THE PURCHASE AGREEMENT), THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL- ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

6.12          Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

 

6.13         Limitation of Liability; Freedom to Operate Affiliates. The total liability, in the aggregate, of each Investor and its respective Affiliates, officers, directors, employees and agents, for any and all claims, losses, costs or damages, including attorneys’ and accountants’ fees and expenses and costs of any nature whatsoever or claims or expenses resulting from or in any way related to this Agreement from any cause or causes shall be several and not joint with the other Investors and shall not exceed (for each such Investor) the total purchase price paid to the Company by such Investor for any and all shares of Series A Preferred Stock such Investor purchased under that certain Series A Preferred Stock Purchase Agreement, dated as of September 13, 2019, and/or Series B Preferred Stock such Investor purchased under the Purchase Agreement. It is intended that this limitation apply to any and all liability or cause of action however alleged or arising, unless otherwise prohibited by law. Nothing in this Agreement or the Transaction Agreements shall restrict the Investors’ freedom to operate any of their respective affiliates (including any such affiliate that is a potential competitor of the Company).

 

6.14         Further Assurances. At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

 

[Remainder of page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	COMPANY:
	DISC MEDICINE, INC.
	By:	/s/ John Quisel
	Name: John Quisel
	Title: Chief Executive Officer

 

[Signature Page to Amended and Restated Investors’ Rights Agreement]

 

 

Exhibit 10.1

 

 

DISC MEDICINE, INC.

 

2017 STOCK OPTION AND GRANT PLAN

 

SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS

 

The name of the plan is the Disc Medicine, Inc. 2017 Stock Option and Grant Plan (the “Plan”). The purpose of the Plan is to encourage and enable the officers, employees, directors, Consultants and other key persons of Disc Medicine, Inc., a Delaware corporation (including any successor entity, the “Company”) and its Subsidiaries, upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business, to acquire a proprietary interest in the Company.

 

The following terms shall be defined as set forth below:

 

“Affiliate” of any Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with the first mentioned Person. A Person shall be deemed to control another Person if such first Person possesses directly or indirectly the power to direct, or cause the direction of, the management and policies of the second Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Award” or “Awards,” except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, Unrestricted Stock Awards, Restricted Stock Units or any combination of the foregoing.

 

“Award Agreement” means a written or electronic agreement setting forth the terms and provisions applicable to an Award granted under the Plan. Each Award Agreement may contain terms and conditions in addition to those set forth in the Plan; provided, however, in the event of any conflict in the terms of the Plan and the Award Agreement, the terms of the Plan shall govern.

 

“Board” means the Board of Directors of the Company.

 

“Cause” shall have the meaning as set forth in the Award Agreement(s). In the case that any Award Agreement does not contain a definition of “Cause,” it shall mean (i) the grantee’s dishonest statements or acts with respect to the Company or any Affiliate of the Company, or any current or prospective customers, suppliers vendors or other third parties with which such entity does business; (ii) the grantee’s commission of (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) the grantee’s failure to perform his assigned duties and responsibilities to the reasonable satisfaction of the Company which failure continues, in the reasonable judgment of the Company, after written notice given to the grantee by the Company; (iv) the grantee’s gross negligence, willful misconduct or insubordination with respect to the Company or any Affiliate of the Company; or (v) the grantee’s material violation of any provision of any agreement(s) between the grantee and the Company relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions.

 

 

“Chief Executive Officer” means the Chief Executive Officer of the Company or, if there is no Chief Executive Officer, then the President of the Company.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.

 

“Committee” means the Committee of the Board referred to in Section 2.

 

“Consultant” means any natural person that provides bona fide services to the Company (including a Subsidiary), and such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.

 

“Disability” means “disability” as defined in Section 422(c) of the Code.

 

“Effective Date” means the date on which the Plan is adopted as set forth on the final page of the Plan.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

 

“Fair Market Value” of the Stock on any given date means the fair market value of the Stock determined in good faith by the Committee based on the reasonable application of a reasonable valuation method not inconsistent with Section 409A of the Code. If the Stock is admitted to trade on a national securities exchange, the determination shall be made by reference to the closing price reported on such exchange. If there is no closing price for such date, the determination shall be made by reference to the last date preceding such date for which there is a closing price. If the date for which Fair Market Value is determined is the first day when trading prices for the Stock are reported on a national securities exchange, the Fair Market Value shall be the “Price to the Public” (or equivalent) set forth on the cover page for the final prospectus relating to the Company’s Initial Public Offering.

 

“Good Reason” shall have the meaning as set forth in the Award Agreement(s). In the case that any Award Agreement does not contain a definition of “Good Reason,” it shall mean (i) a material diminution in the grantee’s base salary except for across-the-board salary reductions similarly affecting all or substantially all similarly situated employees of the Company or (ii) a change of more than 50 miles in the geographic location at which the grantee provides services to the Company, so long as the grantee provides at least 90 days notice to the Company following the initial occurrence of any such event and the Company fails to cure such event within 30 days thereafter.

 

“Grant Date” means the date that the Committee designates in its approval of an Award in accordance with applicable law as the date on which the Award is granted, which date may not precede the date of such Committee approval.

 

“Holder” means, with respect to an Award or any Shares, the Person holding such Award or Shares, including the initial recipient of the Award or any Permitted Transferee.

 

 

“Incentive Stock Option” means any Stock Option designated and qualified as an “incentive stock option” as defined in Section 422 of the Code.

 

“Initial Public Offering” means the consummation of the first firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act covering the offer and sale by the Company of its equity securities, as a result of or following which the Stock shall be publicly held.

 

“Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.

 

“Option” or “Stock Option” means any option to purchase shares of Stock granted pursuant to Section 5.

 

“Permitted Transferees” shall mean any of the following to whom a Holder may transfer Shares hereunder (as set forth in Section 9(a)(ii)(A)): the Holder’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Holder’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent of the beneficial interest, a foundation in which these persons control the management of assets, and any other entity in which these persons own more than fifty percent of the voting interests; provided, however, that any such trust does not require or permit distribution of any Shares during the term of the Award Agreement unless subject to its terms. Upon the death of the Holder, the term Permitted Transferees shall also include such deceased Holder’s estate, executors, administrators, personal representatives, heirs, legatees and distributees, as the case may be.

 

“Person” shall mean any individual, corporation, partnership (limited or general), limited liability company, limited liability partnership, association, trust, joint venture, unincorporated organization or any similar entity.

 

“Restricted Stock Award” means Awards granted pursuant to Section 6 and “Restricted Stock” means Shares issued pursuant to such Awards.

 

“Restricted Stock Unit” means an Award of phantom stock units to a grantee, which may be settled in cash or Shares as determined by the Committee, pursuant to Section 8.

 

“Sale Event” means the consummation of (i) the dissolution or liquidation of the Company, (ii) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (iii) a merger, reorganization or consolidation pursuant to which the holders of the Company’s outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting power of the surviving or resulting entity (or its ultimate parent, if applicable), (iv) the acquisition of all or a majority of the outstanding voting stock of the Company in a single transaction or a series of related transactions by a Person or group of Persons, or (v) any other acquisition of the business of the Company, as determined by the Board; provided, however, that the Company’s Initial Public Offering, any subsequent public offering or another capital raising event, or a merger effected solely to change the Company’s domicile shall not constitute a “Sale Event.”

 

 

“Section 409A” means Section 409A of the Code and the regulations and other guidance promulgated thereunder.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.

 

“Service Relationship” means any relationship as a full-time employee, part-time employee, director or other key person (including Consultants) of the Company or any Subsidiary or any successor entity (e.g., a Service Relationship shall be deemed to continue without interruption in the event an individual’s status changes from full-time employee to part- time employee or Consultant).

 

“Shares” means shares of Stock.

 

“Stock” means the Common Stock, par value $0.0001 per share, of the Company. “Subsidiary” means any corporation or other entity (other than the Company) in which the Company has more than a 50 percent interest, either directly or indirectly.

 

“Ten Percent Owner” means an employee who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent of the Company or any Subsidiary.

 

“Termination Event” means the termination of the Award recipient’s Service Relationship with the Company and its Subsidiaries for any reason whatsoever, regardless of the circumstances thereof, and including, without limitation, upon death, disability, retirement, discharge or resignation for any reason, whether voluntarily or involuntarily. The following shall not constitute a Termination Event: (i) a transfer to the service of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another Subsidiary or (ii) an approved leave of absence for military service or sickness, or for any other purpose approved by the Committee, if the individual’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing.

 

“Unrestricted Stock Award” means any Award granted pursuant to Section 7 and “Unrestricted Stock” means Shares issued pursuant to such Awards.

 

SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS

 

(a)         Administration of Plan. The Plan shall be administered by the Board, or at the discretion of the Board, by a committee of the Board, comprised of not less than two directors. All references herein to the “Committee” shall be deemed to refer to the group then responsible for administration of the Plan at the relevant time (i.e., either the Board of Directors or a committee or committees of the Board, as applicable).

 

 

(b)         Powers of Committee. The Committee shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority: 

 

(i)         to select the individuals to whom Awards may from time to time be granted;

 

(ii)         to determine the time or times of grant, and the amount, if any, of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, Unrestricted Stock Awards, Restricted Stock Units, or any combination of the foregoing, granted to any one or more grantees;

 

(iii)        to determine the number of Shares to be covered by any Award and, subject to the provisions of the Plan, the price, exercise price, conversion ratio or other price relating thereto;

 

(iv)        to determine and, subject to Section 12, to modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve the form of Award Agreements;

 

(v)         to accelerate at any time the exercisability or vesting of all or any portion of any Award;

 

(vi)        to impose any limitations on Awards, including limitations on transfers, repurchase provisions and the like, and to exercise repurchase rights or obligations;

 

(vii)       subject to Section 5(a)(ii) and any restrictions imposed by Section 409A, to extend at any time the period in which Stock Options may be exercised; and

 

(viii)      at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including Award Agreements); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan.

 

All decisions and interpretations of the Committee shall be binding on all persons, including the Company and all Holders.

 

(c)           Award Agreement. Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions and limitations for each Award.

 

(d)           Indemnification. Neither the Board nor the Committee, nor any member of either or any delegate thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and the Committee (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under the Company’s governing documents, including its certificate of incorporation or bylaws, or any directors’ and officers’ liability insurance coverage which may be in effect from time to time and/or any indemnification agreement between such individual and the Company.

 

 

(e)                  Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and any Subsidiary operate or have employees or other individuals eligible for Awards, the Committee, in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries, if any, shall be covered by the Plan; (ii) determine which individuals, if any, outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Committee determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to the Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitation contained in Section 3(a) hereof; and (v) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals.

 

SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS AND OTHER TRANSACTIONS; SUBSTITUTION

 

(a)           Stock Issuable. The maximum number of Shares reserved and available for issuance under the Plan shall be 710,045 Shares, subject to adjustment as provided in Section 3(b). For purposes of this limitation, the Shares underlying any Awards that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) and Shares that are withheld upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding shall be added back to the Shares available for issuance under the Plan. Subject to such overall limitations, Shares may be issued up to such maximum number pursuant to any type or types of Award, and no more than 7,100,450 Shares may be issued pursuant to Incentive Stock Options. The Shares available for issuance under the Plan may be authorized but unissued Shares or Shares reacquired by the Company. Beginning on the date that the Company becomes subject to Section 162(m) of the Code, Options with respect to no more than 710,045 Shares shall be granted to any one individual in any calendar year period.

 

(b)           Changes in Stock. Subject to Section 3(c) hereof, if, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Company’s capital stock, the outstanding Shares are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional Shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such Shares or other securities, in each case, without the receipt of consideration by the Company, or, if, as a result of any merger or consolidation, or sale of all or substantially all of the assets of the Company, the outstanding Shares are converted into or exchanged for other securities of the Company or any successor entity (or a parent or subsidiary thereof), the Committee shall make an appropriate and proportionate adjustment in (i) the maximum number of Shares reserved for issuance under the Plan, (ii) the number and kind of Shares or other securities subject to any then outstanding Awards under the Plan, (iii) the repurchase price, if any, per Share subject to each outstanding Award, and (iv) the exercise price for each Share subject to any then outstanding Stock Options under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Stock Options) as to which such Stock Options remain exercisable. The Committee shall in any event make such adjustments as may be required by Section 25102(o) of the California Corporation Code and the rules and regulations promulgated thereunder. The adjustment by the Committee shall be final, binding and conclusive. No fractional Shares shall be issued under the Plan resulting from any such adjustment, but the Committee in its discretion may make a cash payment in lieu of fractional shares.

 

 

(c)

Sale Events.

 

(i)

Options.

 

(A)                In the case of and subject to the consummation of a Sale Event, the Plan and all outstanding Options issued hereunder shall terminate upon the effective time of any such Sale Event unless assumed or continued by the successor entity, or new stock options or other awards of the successor entity or parent thereof are substituted therefor, with an equitable or proportionate adjustment as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree (after taking into account any acceleration hereunder and/or pursuant to the terms of any Award Agreement).

 

(B)                In the event of the termination of the Plan and all outstanding Options issued hereunder pursuant to Section 3(c), each Holder of Options shall be permitted, within a period of time prior to the consummation of the Sale Event as specified by the Committee, to exercise all such Options which are then exercisable or will become exercisable as of the effective time of the Sale Event; provided, however, that the exercise of Options not exercisable prior to the Sale Event shall be subject to the consummation of the Sale Event.

 

(C)                Notwithstanding anything to the contrary in Section 3(c)(i)(A), in the event of a Sale Event, the Company shall have the right, but not the obligation, to make or provide for a cash payment to the Holders of Options, without any consent of the Holders, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the value as determined by the Committee of the consideration payable per share of Stock pursuant to the Sale Event (the “Sale Price”) times the number of Shares subject to outstanding Options being cancelled (to the extent then vested and exercisable, including by reason of acceleration in connection with such Sale Event, at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding vested and exercisable Options.

 

(ii)

Restricted Stock and Restricted Stock Unit Awards.

 

(A)                In the case of and subject to the consummation of a Sale Event, all unvested Restricted Stock and unvested Restricted Stock Unit Awards (other than those becoming vested as a result of the Sale Event) issued hereunder shall be forfeited immediately prior to the effective time of any such Sale Event unless assumed or continued by the successor entity, or awards of the successor entity or parent thereof are substituted therefor, with an equitable or proportionate adjustment as to the number and kind of shares subject to such awards as such parties shall agree (after taking into account any acceleration hereunder and/or pursuant to the terms of any Award Agreement).

 

 

(B)                In the event of the forfeiture of Restricted Stock pursuant to Section 3(c)(ii)(A), such Restricted Stock shall be repurchased from the Holder thereof at a price per share equal to the original per share purchase price paid by the Holder (subject to adjustment as provided in Section 3(b)) for such Shares.

 

(C)                Notwithstanding anything to the contrary in Section 3(c)(ii)(A), in the event of a Sale Event, the Company shall have the right, but not the obligation, to make or provide for a cash payment to the Holders of Restricted Stock or Restricted Stock Unit Awards, without consent of the Holders, in exchange for the cancellation thereof, in an amount equal to the Sale Price times the number of Shares subject to such Awards, to be paid at the time of such Sale Event or upon the later vesting of such Awards.

 

SECTION 4. ELIGIBILITY

 

Grantees under the Plan will be such full or part-time officers and other employees, directors, Consultants and key persons of the Company and any Subsidiary who are selected from time to time by the Committee in its sole discretion; provided, however, that Awards shall be granted only to those individuals described in Rule 701(c) of the Securities Act.

 

SECTION 5. STOCK OPTIONS

 

Upon the grant of a Stock Option, the Company and the grantee shall enter into an Award Agreement. The terms and conditions of each such Award Agreement shall be determined by the Committee, and such terms and conditions may differ among individual Awards and grantees.

 

Stock Options granted under the Plan may be either Incentive Stock Options or Non- Qualified Stock Options. Incentive Stock Options may be granted only to employees of the Company or any Subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f) of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.

 

(a)           Terms of Stock Options. The Committee in its discretion may grant Stock Options to those individuals who meet the eligibility requirements of Section 4. Stock Options shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable.

 

(i)            Exercise Price. The exercise price per share for the Shares covered by a Stock Option shall be determined by the Committee at the time of grant but shall not be less than 100 percent of the Fair Market Value on the Grant Date. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the exercise price per share for the Shares covered by such Incentive Stock Option shall not be less than 110 percent of the Fair Market Value on the Grant Date.

 

 

(ii)           Option Term. The term of each Stock Option shall be fixed by the Committee, but no Stock Option shall be exercisable more than ten years from the Grant Date. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the term of such Stock Option shall be no more than five years from the Grant Date.

 

(iii)          Exercisability; Rights of a Stockholder. Stock Options shall become exercisable and/or vested at such time or times, whether or not in installments, as shall be determined by the Committee at or after the Grant Date. The Award Agreement may permit a grantee to exercise all or a portion of a Stock Option immediately at grant; provided that the Shares issued upon such exercise shall be subject to restrictions and a vesting schedule identical to the vesting schedule of the related Stock Option, such Shares shall be deemed to be Restricted Stock for purposes of the Plan, and the optionee may be required to enter into an additional or new Award Agreement as a condition to exercise of such Stock Option. An optionee shall have the rights of a stockholder only as to Shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options. An optionee shall not be deemed to have acquired any Shares unless and until a Stock Option shall have been exercised pursuant to the terms of the Award Agreement and this Plan and the optionee’s name has been entered on the books of the Company as a stockholder.

 

(iv)          Method of Exercise. Stock Options may be exercised by an optionee in whole or in part, by the optionee giving written or electronic notice of exercise to the Company, specifying the number of Shares to be purchased. Payment of the purchase price may be made by one or more of the following methods (or any combination thereof) to the extent provided in the Award Agreement:

 

(A)                In cash, by certified or bank check, by wire transfer of immediately available funds, or other instrument acceptable to the Committee;

 

(B)                If permitted by the Committee, by the optionee delivering to the Company a promissory note, if the Board has expressly authorized the loan of funds to the optionee for the purpose of enabling or assisting the optionee to effect the exercise of his or her Stock Option; provided, that at least so much of the exercise price as represents the par value of the Stock shall be paid in cash if required by state law;

 

(C)                If permitted by the Committee and the Initial Public Offering has occurred (or the Stock otherwise becomes publicly-traded), through the delivery (or attestation to the ownership) of Shares that have been purchased by the optionee on the open market or that are beneficially owned by the optionee and are not then subject to restrictions under any Company plan. To the extent required to avoid variable accounting treatment under ASC 718 or other applicable accounting rules, such surrendered Shares if originally purchased from the Company shall have been owned by the optionee for at least six months. Such surrendered Shares shall be valued at Fair Market Value on the exercise date;

 

 

(D)                If permitted by the Committee and the Initial Public Offering has occurred (or the Stock otherwise becomes publicly-traded), by the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of such payment procedure; or

 

(E)                 If permitted by the Committee, and only with respect to Stock Options that are not Incentive Stock Options, by a “net exercise” arrangement pursuant to which the Company will reduce the number of Shares issuable upon exercise by the largest whole number of Shares with a Fair Market Value that does not exceed the aggregate exercise price.

 

Payment instruments will be received subject to collection. No certificates for Shares so purchased will be issued to the optionee or, with respect to uncertificated Stock, no transfer to the optionee on the records of the Company will take place, until the Company has completed all steps it has deemed necessary to satisfy legal requirements relating to the issuance and sale of the Shares, which steps may include, without limitation, (i) receipt of a representation from the optionee at the time of exercise of the Option that the optionee is purchasing the Shares for the optionee’s own account and not with a view to any sale or distribution of the Shares or other representations relating to compliance with applicable law governing the issuance of securities, (ii) the legending of the certificate (or notation on any book entry) representing the Shares to evidence the foregoing restrictions, and (iii) obtaining from optionee payment or provision for all withholding taxes due as a result of the exercise of the Option. The delivery of certificates representing the shares of Stock (or the transfer to the optionee on the records of the Company with respect to uncertificated Stock) to be purchased pursuant to the exercise of a Stock Option will be contingent upon (A) receipt from the optionee (or a purchaser acting in his or her stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such Shares and the fulfillment of any other requirements contained in the Award Agreement or applicable provisions of laws and (B) if required by the Company, the optionee shall have entered into any stockholders agreements or other agreements with the Company and/or certain other of the Company’s stockholders relating to the Stock. In the event an optionee chooses to pay the purchase price by previously-owned Shares through the attestation method, the number of Shares transferred to the optionee upon the exercise of the Stock Option shall be net of the number of Shares attested to.

 

(b)                 Annual Limit on Incentive Stock Options. To the extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the Grant Date) of the Shares with respect to which Incentive Stock Options granted under the Plan and any other plan of the Company or its parent and any Subsidiary that become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000 or such other limit as may be in effect from time to time under Section 422 of the Code. To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.

 

 

SECTION 6. RESTRICTED STOCK AWARDS

 

(a)                  Nature of Restricted Stock Awards. The Committee may, in its sole discretion, grant (or sell at par value or such other purchase price determined by the Committee) to an eligible individual under Section 4 hereof a Restricted Stock Award under the Plan. The Committee shall determine the restrictions and conditions applicable to each Restricted Stock Award at the time of grant. Conditions may be based on continuing employment (or other Service Relationship), achievement of pre-established performance goals and objectives and/or such other criteria as the Committee may determine. Upon the grant of a Restricted Stock Award, the Company and the grantee shall enter into an Award Agreement. The terms and conditions of each such Award Agreement shall be determined by the Committee, and such terms and conditions may differ among individual Awards and grantees.

 

(b)                 Rights as a Stockholder. Upon the grant of the Restricted Stock Award and payment of any applicable purchase price, a grantee of Restricted Stock shall be considered the record owner of and shall be entitled to vote the Restricted Stock if, and to the extent, such Shares are entitled to voting rights, subject to such conditions contained in the Award Agreement. The grantee shall be entitled to receive all dividends and any other distributions declared on the Shares; provided, however, that the Company is under no duty to declare any such dividends or to make any such distribution. Unless the Committee shall otherwise determine, certificates evidencing the Restricted Stock shall remain in the possession of the Company until such Restricted Stock is vested as provided in subsection (d) below of this Section, and the grantee shall be required, as a condition of the grant, to deliver to the Company a stock power endorsed in blank and such other instruments of transfer as the Committee may prescribe.

 

(c)                  Restrictions. Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the Award Agreement. Except as may otherwise be provided by the Committee either in the Award Agreement or, subject to Section 12 below, in writing after the Award Agreement is issued, if a grantee’s Service Relationship with the Company and any Subsidiary terminates, the Company or its assigns shall have the right, as may be specified in the relevant instrument, to repurchase some or all of the Shares subject to the Award at such purchase price as is set forth in the Award Agreement.

 

(d)                 Vesting of Restricted Stock. The Committee at the time of grant shall specify in the Award Agreement the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the substantial risk of forfeiture imposed shall lapse and the Restricted Stock shall become vested, subject to such further rights of the Company or its assigns as may be specified in the Award Agreement.

 

SECTION 7. UNRESTRICTED STOCK AWARDS

 

The Committee may, in its sole discretion, grant (or sell at par value or such other purchase price determined by the Committee) to an eligible person under Section 4 hereof an Unrestricted Stock Award under the Plan. Unrestricted Stock Awards may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to such grantee.

 

 

SECTION 8. RESTRICTED STOCK UNITS

 

(a)           Nature of Restricted Stock Units. The Committee may, in its sole discretion, grant to an eligible person under Section 4 hereof Restricted Stock Units under the Plan. The Committee shall determine the restrictions and conditions applicable to each Restricted Stock Unit at the time of grant. Vesting conditions may be based on continuing employment (or other Service Relationship), achievement of pre-established performance goals and objectives and/or other such criteria as the Committee may determine. Upon the grant of Restricted Stock Units, the grantee and the Company shall enter into an Award Agreement. The terms and conditions of each such Award Agreement shall be determined by the Committee and may differ among individual Awards and grantees. On or promptly following the vesting date or dates applicable to any Restricted Stock Unit, but in no event later than March 15 of the year following the year in which such vesting occurs, such Restricted Stock Unit(s) shall be settled in the form of cash or shares of Stock, as specified in the Award Agreement. Restricted Stock Units may not be sold, assigned, transferred, pledged, or otherwise encumbered or disposed of.

 

(b)           Rights as a Stockholder. A grantee shall have the rights of a stockholder only as to Shares, if any, acquired upon settlement of Restricted Stock Units. A grantee shall not be deemed to have acquired any such Shares unless and until the Restricted Stock Units shall have been settled in Shares pursuant to the terms of the Plan and the Award Agreement, the Company shall have issued and delivered a certificate representing the Shares to the grantee (or transferred on the records of the Company with respect to uncertificated stock), and the grantee’s name has been entered in the books of the Company as a stockholder.

 

(c)          Termination. Except as may otherwise be provided by the Committee either in the Award Agreement or in writing after the Award Agreement is issued, a grantee’s right in all Restricted Stock Units that have not vested shall automatically terminate upon the grantee’s cessation of Service Relationship with the Company and any Subsidiary for any reason.

 

SECTION 9. TRANSFER RESTRICTIONS; COMPANY RIGHT OF FIRST REFUSAL; COMPANY REPURCHASE RIGHTS

 

(a)

Restrictions on Transfer.

 

(i)                   Non-Transferability of Stock Options. Stock Options and, prior to exercise, the Shares issuable upon exercise of such Stock Option, shall not be transferable by the optionee otherwise than by will, or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the optionee’s lifetime, only by the optionee, or by the optionee’s legal representative or guardian in the event of the optionee’s incapacity. Notwithstanding the foregoing, the Committee, in its sole discretion, may provide in the Award Agreement regarding a given Stock Option that the optionee may transfer by gift, without consideration for the transfer, his or her Non-Qualified Stock Options to his or her family members (as defined in Rule 701 of the Securities Act), to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners (to the extent such trusts or partnerships are considered “family members” for purposes of Rule 701 of the Securities Act), provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Award Agreement, including the execution of a stock power upon the issuance of Shares. Stock Options, and the Shares issuable upon exercise of such Stock Options, shall be restricted as to any pledge, hypothecation, or other transfer, including any short position, any “put equivalent position” (as defined in the Exchange Act) or any “call equivalent position” (as defined in the Exchange Act) prior to exercise.

 

 

(ii)           Shares. No Shares shall be sold, assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of or encumbered, whether voluntarily or by operation of law, unless (i) the transfer is in compliance with the terms of the applicable Award Agreement, all applicable securities laws (including, without limitation, the Securities Act), and with the terms and conditions of this Section 9, (ii) the transfer does not cause the Company to become subject to the reporting requirements of the Exchange Act, and (iii)      the transferee consents in writing to be bound by the provisions of the Plan and the Award Agreement, including this Section 9. In connection with any proposed transfer, the Committee may require the transferor to provide at the transferor’s own expense an opinion of counsel to the transferor, satisfactory to the Committee, that such transfer is in compliance with all foreign, federal and state securities laws (including, without limitation, the Securities Act). Any attempted transfer of Shares not in accordance with the terms and conditions of this Section 9 shall be null and void, and the Company shall not reflect on its records any change in record ownership of any Shares as a result of any such transfer, shall otherwise refuse to recognize any such transfer and shall not in any way give effect to any such transfer of Shares. The Company shall be entitled to seek protective orders, injunctive relief and other remedies available at law or in equity including, without limitation, seeking specific performance or the rescission of any transfer not made in strict compliance with the provisions of this Section 9. Subject to the foregoing general provisions, and unless otherwise provided in the applicable Award Agreement, Shares may be transferred pursuant to the following specific terms and conditions (provided that with respect to any transfer of Restricted Stock, all vesting and forfeiture provisions shall continue to apply with respect to the original recipient):

 

(A)                Transfers to Permitted Transferees. The Holder may transfer any or all of the Shares to one or more Permitted Transferees; provided, however, that following such transfer, such Shares shall continue to be subject to the terms of this Plan (including this Section 9) and such Permitted Transferee(s) shall, as a condition to any such transfer, deliver a written acknowledgment to that effect to the Company and shall deliver a stock power to the Company with respect to the Shares. Notwithstanding the foregoing, the Holder may not transfer any of the Shares to a Person whom the Company reasonably determines is a direct competitor or a potential competitor of the Company or any of its Subsidiaries.

 

(B)                Transfers Upon Death. Upon the death of the Holder, any Shares then held by the Holder at the time of such death and any Shares acquired after the Holder’s death by the Holder’s legal representative shall be subject to the provisions of this Plan, and the Holder’s estate, executors, administrators, personal representatives, heirs, legatees and distributees shall be obligated to convey such Shares to the Company or its assigns under the terms contemplated by the Plan and the Award Agreement.

 

 

(b)                 Right of First Refusal. In the event that a Holder desires at any time to sell or otherwise transfer all or any part of his or her Shares (other than shares of Restricted Stock which by their terms are not transferrable), the Holder first shall give written notice to the Company of the Holder’s intention to make such transfer. Such notice shall state the number of Shares that the Holder proposes to sell (the “Offered Shares”), the price and the terms at which the proposed sale is to be made and the name and address of the proposed transferee. At any time within 30 days after the receipt of such notice by the Company, the Company or its assigns may elect to purchase all or any portion of the Offered Shares at the price and on the terms offered by the proposed transferee and specified in the notice. The Company or its assigns shall exercise this right by mailing or delivering written notice to the Holder within the foregoing 30- day period. If the Company or its assigns elect to exercise its purchase rights under this Section 9(b), the closing for such purchase shall, in any event, take place within 45 days after the receipt by the Company of the initial notice from the Holder. In the event that the Company or its assigns do not elect to exercise such purchase right, or in the event that the Company or its assigns do not pay the full purchase price within such 45-day period, the Holder shall be required to pay a transaction processing fee of $10,000 to the Company (unless waived by the Committee) and then may, within 60 days thereafter, sell the Offered Shares to the proposed transferee and at the same price and on the same terms as specified in the Holder’s notice. Any Shares not sold to the proposed transferee shall remain subject to the Plan. If the Holder is a party to any stockholders agreements or other agreements with the Company and/or certain other of the Company’s stockholders relating to the Shares, (i) the transferring Holder shall comply with the requirements of such stockholders agreements or other agreements relating to any proposed transfer of the Offered Shares, and (ii) any proposed transferee that purchases Offered Shares shall enter into such stockholders agreements or other agreements with the Company and/or certain of the Company’s stockholders relating to the Offered Shares on the same terms and in the same capacity as the transferring Holder.

 

(c)

Company’s Right of Repurchase.

 

(i)                   Right of Repurchase for Unvested Shares Issued Upon the Exercise of an Option. Upon a Termination Event, the Company or its assigns shall have the right and option to repurchase from a Holder of Shares acquired upon exercise of a Stock Option which are still subject to a risk of forfeiture as of the Termination Event. Such repurchase rights may be exercised by the Company within the later of (A) six months following the date of such Termination Event or (B) seven months after the acquisition of Shares upon exercise of a Stock Option. The repurchase price shall be equal to the lower of the original per share price paid by the Holder, subject to adjustment as provided in Section 3(b) of the Plan, or the current Fair Market Value of such Shares as of the date the Company elects to exercise its repurchase rights.

 

(ii)                 Right of Repurchase With Respect to Restricted Stock. Upon a Termination Event, the Company or its assigns shall have the right and option to repurchase from a Holder of Shares received pursuant to a Restricted Stock Award any Shares that are still subject to a risk of forfeiture as of the Termination Event. Such repurchase right may be exercised by the Company within six months following the date of such Termination Event. The repurchase price shall be the lower of the original per share purchase price paid by the Holder, subject to adjustment as provided in Section 3(b) of the Plan, or the current Fair Market Value of such Shares as of the date the Company elects to exercise its repurchase rights.

 

 

(iii)                Procedure. Any repurchase right of the Company shall be exercised by the Company or its assigns by giving the Holder written notice on or before the last day of the repurchase period of its intention to exercise such repurchase right. Upon such notification, the Holder shall promptly surrender to the Company, free and clear of any liens or encumbrances, any certificates representing the Shares being purchased, together with a duly executed stock power for the transfer of such Shares to the Company or the Company’s assignee or assignees. Upon the Company’s or its assignee’s receipt of the certificates from the Holder, the Company or its assignee or assignees shall deliver to him, her or them a check for the applicable repurchase price; provided, however, that the Company may pay the repurchase price by offsetting and canceling any indebtedness then owed by the Holder to the Company.

 

(d)           Drag Along Right. In the event the holders of a majority of the Company’s equity securities then outstanding (the “Majority Shareholders”) determine to enter into a Sale Event in a bona fide negotiated transaction (a “Sale”), with any non-Affiliate of the Company or any majority shareholder (in each case, the “Buyer”), a Holder of Shares, including any Permitted Transferee, shall be obligated to and shall upon the written request of the Majority Shareholders: (a)    sell, transfer and deliver, or cause to be sold, transferred and delivered, to the Buyer, his or her Shares (including for this purpose all of such Holder’s Shares that presently or as a result of any such transaction may be acquired upon the exercise of an Option (following the payment of the exercise price therefor)) on substantially the same terms applicable to the Majority Shareholders (with appropriate adjustments to reflect the conversion of convertible securities, the redemption of redeemable securities and the exercise of exercisable securities as well as the relative preferences and priorities of preferred stock); and (b) execute and deliver such instruments of conveyance and transfer and take such other action, including voting such Shares in favor of any Sale proposed by the Majority Shareholders and executing any purchase agreements, merger agreements, indemnity agreements, escrow agreements or related documents as the Majority Shareholders or the Buyer may reasonably require in order to carry out the terms and provisions of this Section 9(d).

 

(e)

Escrow Arrangement.

 

(i)          Escrow. In order to carry out the provisions of this Section 9 of this Plan more effectively, the Company shall hold any Shares issued pursuant to Awards granted under the Plan in escrow together with separate stock powers executed by the Holder in blank for transfer. The Company shall not dispose of the Shares except as otherwise provided in this Plan. In the event of any repurchase by the Company (or any of its assigns), the Company is hereby authorized by the Holder, as the Holder’s attorney-in-fact, to date and complete the stock powers necessary for the transfer of the Shares being purchased and to transfer such Shares in accordance with the terms hereof. At such time as any Shares are no longer subject to the Company’s repurchase and first refusal rights, the Company shall, at the written request of the Holder, deliver to the Holder a certificate representing such Shares with the balance of the Shares to be held in escrow pursuant to this Section.

 

 

(ii)         Remedy. Without limitation of any other provision of this Plan or other rights, in the event that a Holder or any other Person is required to sell a Holder’s Shares pursuant to the provisions of Sections 9(b) or (c) hereof and in the further event that he or she refuses or for any reason fails to deliver to the Company or its designated purchaser of such Shares the certificate or certificates evidencing such Shares together with a related stock power, the Company or such designated purchaser may deposit the applicable purchase price for such Shares with a bank designated by the Company, or with the Company’s independent public accounting firm, as agent or trustee, or in escrow, for such Holder or other Person, to be held by such bank or accounting firm for the benefit of and for delivery to him, her, them or it, and/or, in its discretion, pay such purchase price by offsetting any indebtedness then owed by such Holder as provided above. Upon any such deposit and/or offset by the Company or its designated purchaser of such amount and upon notice to the Person who was required to sell the Shares to be sold pursuant to the provisions of Sections 9(b) or (c), such Shares shall at such time be deemed to have been sold, assigned, transferred and conveyed to such purchaser, such Holder shall have no further rights thereto (other than the right to withdraw the payment thereof held in escrow, if applicable), and the Company shall record such transfer in its stock transfer book or in any appropriate manner.

 

(f)            Lockup Provision. If requested by the Company, a Holder will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the Company’s initial public offering (the “IPO”) and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (l80) days), or such other period as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (1) the publication or other distribution of research reports; and (2) analyst recommendations and opinions, including, but not limited to, the restrictions contained in FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto), (a) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock held immediately prior to the effectiveness of the registration statement for the IPO; or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the capital stock, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of capital stock or other securities, in cash or otherwise. The foregoing provisions of this Section 9(f) shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, and shall only be applicable to the Holder if all officers, directors and holders of more than one percent (1%) of the outstanding Common Stock (after giving effect to the conversion into Common Stock of all outstanding Preferred Stock) enter into similar agreements. The underwriters in connection with the IPO are intended third party beneficiaries of this Section 9(f) and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in the IPO that are consistent with this Section 9(f) or that are necessary to give further effect thereto.

 

(g)           Adjustments for Changes in Capital Structure. If, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Common Stock, the outstanding Shares are increased or decreased or are exchanged for a different number or kind of securities of the Company, the restrictions contained in this Section 9 shall apply with equal force to additional and/or substitute securities, if any, received by Holder in exchange for, or by virtue of his or her ownership of, Shares.

 

 

(h)           Termination. The terms and provisions of Section 9(b) and Section 9(c) (except for the Company’s right to repurchase Shares still subject to a risk of forfeiture upon a Termination Event) shall terminate upon the closing of the Company’s Initial Public Offering or upon consummation of any Sale Event, in either case as a result of which Shares are registered under Section 12 of the Exchange Act and publicly-traded on any national security exchange.

 

SECTION 10. TAX WITHHOLDING

 

(a)           Payment by Grantee. Each grantee shall, no later than the date as of which the value of an Award or of any Shares or other amounts received thereunder first becomes includable in the gross income of the grantee for income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld by the Company with respect to such income. The Company and any Subsidiary shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee. The Company’s obligation to deliver stock certificates (or evidence of book entry) to any grantee is subject to and conditioned on any such tax withholding obligations being satisfied by the grantee.

 

(b)           Payment in Stock. The Company’s minimum required tax withholding obligation may be satisfied, in whole or in part, by the Company withholding from Shares to be issued pursuant to an Award a number of Shares having an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the minimum withholding amount due.

 

SECTION 11. SECTION 409A AWARDS.

 

To the extent that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a “409A Award”), the Award shall be subject to such additional rules and requirements as may be specified by the Committee from time to time. In this regard, if any amount under a 409A Award is payable upon a “separation from service” (within the meaning of Section 409A) to a grantee who is considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. The Company makes no representation or warranty and shall have no liability to any grantee under the Plan or any other Person with respect to any penalties or taxes under Section 409A that are, or may be, imposed with respect to any Award.

 

SECTION 12. AMENDMENTS AND TERMINATION

 

The Board may, at any time, amend or discontinue the Plan and the Committee may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the consent of the holder of the Award. The Committee may exercise its discretion to reduce the exercise price of outstanding Stock Options or effect repricing through cancellation of outstanding Stock Options and by granting such holders new Awards in replacement of the cancelled Stock Options. To the extent determined by the Committee to be required either by the Code to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code or otherwise, Plan amendments shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders. Nothing in this Section 12 shall limit the Board’s or Committee’s authority to take any action permitted pursuant to Section 3(c). The Board reserves the right to amend the Plan and/or the terms of any outstanding Stock Options to the extent reasonably necessary to comply with the requirements of the exemption pursuant to paragraph (f)(4) of Rule 12h-1 of the Exchange Act.

 

 

SECTION 13. STATUS OF PLAN

 

With respect to the portion of any Award that has not been exercised and any payments in cash, Stock or other consideration not received by a grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Committee shall otherwise expressly so determine in connection with any Award.

 

SECTION 14. GENERAL PROVISIONS

 

(a)            No Distribution; Compliance with Legal Requirements. The Committee may require each person acquiring Shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to distribution thereof. No Shares shall be issued pursuant to an Award until all applicable securities law and other legal and stock exchange or similar requirements have been satisfied. The Committee may require the placing of such stop-orders and restrictive legends on certificates for Stock and Awards as it deems appropriate.

 

(b)           Delivery of Stock Certificates. Stock certificates to grantees under the Plan shall be deemed delivered for all purposes when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company; provided that stock certificates to be held in escrow pursuant to Section 9 of the Plan shall be deemed delivered when the Company shall have recorded the issuance in its records. Uncertificated Stock shall be deemed delivered for all purposes when the Company or a stock transfer agent of the Company shall have given to the grantee by electronic mail (with proof of receipt) or by United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic “book entry” records).

 

(c)           No Employment Rights. The adoption of the Plan and the grant of Awards do not confer upon any Person any right to continued employment or Service Relationship with the Company or any Subsidiary.

 

(d)           Trading Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to the Company’s insider trading policy-related restrictions, terms and conditions as may be established by the Committee, or in accordance with policies set by the Committee, from time to time.

 

 

(e)           Designation of Beneficiary. Each grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Award on or after the grantee’s death or receive any payment under any Award payable on or after the grantee’s death. Any such designation shall be on a form provided for that purpose by the Committee and shall not be effective until received by the Committee. If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee’s estate.

 

(f)            Legend. Any certificate(s) representing the Shares shall carry substantially the following legend (and with respect to uncertificated Stock, the book entries evidencing such shares shall contain the following notation):

 

The transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions (including repurchase and restrictions against transfers) contained in the Disc Medicine, Inc. 2017 Stock Option and Grant Plan and any agreements entered into thereunder by and between the company and the holder of this certificate (a copy of which is available at the offices of the company for examination).

 

(g)           Information to Holders of Options. In the event the Company is relying on the exemption from the registration requirements of Section 12(g) of the Exchange Act contained in paragraph (f)(1) of Rule 12h-1 of the Exchange Act, the Company shall provide the information described in Rule 701(e)(3), (4) and (5) of the Securities Act to all holders of Options in accordance with the requirements thereunder. The foregoing notwithstanding, the Company shall not be required to provide such information unless the optionholder has agreed in writing, on a form prescribed by the Company, to keep such information confidential.

 

SECTION 15. EFFECTIVE DATE OF PLAN

 

The Plan shall become effective upon adoption by the Board and shall be approved by stockholders in accordance with applicable state law and the Company’s articles of incorporation and bylaws within 12 months thereafter. If the stockholders fail to approve the Plan within 12 months after its adoption by the Board of Directors, then any Awards granted or sold under the Plan shall be rescinded and no additional grants or sales shall thereafter be made under the Plan. Subject to such approval by stockholders and to the requirement that no Shares may be issued hereunder prior to such approval, Stock Options and other Awards may be granted hereunder on and after adoption of the Plan by the Board. No grants of Stock Options and other Awards may be made hereunder after the tenth anniversary of the date the Plan is adopted by the Board or the date the Plan is approved by the Company’s stockholders, whichever is earlier.

 

 

SECTION 16. GOVERNING LAW

 

This Plan, all Awards and any controversy arising out of or relating to this Plan and all Awards shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts, without regard to conflict of law principles that would result in the application of any law other than the law of the Commonwealth of Massachusetts.

 

DATE ADOPTED BY THE BOARD OF DIRECTORS:

November 15, 2017

 

DATE APPROVED BY THE STOCKHOLDERS:

November 27, 2017

 

 

AMENDMENT NO. 1 TO THE

DISC MEDICINE, INC.

2017 STOCK OPTION AND GRANT PLAN

 

The Disc Medicine, Inc. 2017 Stock Option and Grant Plan (the “Plan”) is hereby amended as follows:

 

1.

Section 3(a) of the Plan is hereby amended and restated in its entirety as follows:

 

“(a) Stock Issuable. The maximum number of Shares reserved and available for issuance under the Plan shall be 937,136 Shares, subject to adjustment as provided in Section 3(b). For purposes of this limitation, the Shares underlying any Awards that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) and Shares that are withheld upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding shall be added back to the Shares available for issuance under the Plan. Subject to such overall limitations, Shares may be issued up to such maximum number pursuant to any type or types of Award, and no more than 9,371,360 Shares may be issued pursuant to Incentive Stock Options. The Shares available for issuance under the Plan may be authorized but unissued Shares or Shares reacquired by the Company. Beginning on the date that the Company becomes subject to Section 162(m) of the Code, Options with respect to no more than 9,371,360 Shares shall be granted to any one individual in any calendar year period.”

 

2.

All other terms and conditions of the Plan shall remain in full force and effect.

 

ADOPTED BY BOARD OF DIRECTORS:

April 30, 2019

 

ADOPTED BY STOCKHOLDERS:

April 30, 2019

 

 

AMENDMENT NO. 2

TO THE 

DISC MEDICINE, INC.

2017 STOCK OPTION AND GRANT PLAN

 

The Disc Medicine, Inc. 2017 Stock Option and Grant Plan (the “Plan”) is hereby amended as follows:

 

1.

Section 3(a) of the Plan is hereby amended and restated in its entirety as follows:

 

“(a) Stock Issuable. The maximum number of Shares reserved and available for issuance under the Plan shall be 7,562,358 Shares, subject to adjustment as provided in Section 3(b). For purposes of this limitation, the Shares underlying any Awards that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) and Shares that are withheld upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding shall be added back to the Shares available for issuance under the Plan. Subject to such overall limitations, Shares may be issued up to such maximum number pursuant to any type or types of Award, and no more than 75,623,580 Shares may be issued pursuant to Incentive Stock Options. The Shares available for issuance under the Plan may be authorized but unissued Shares or Shares reacquired by the Company. Beginning on the date that the Company becomes subject to Section 162(m) of the Code, Options with respect to no more than 7,562,358 Shares shall be granted to any one individual in any calendar year period.”

 

2.

All other terms and conditions of the Plan shall remain in full force and effect.

 

ADOPTED BY BOARD OF DIRECTORS:

September 12, 2019

 

ADOPTED BY STOCKHOLDERS:

September 12, 2019

 

 

AMENDMENT NO. 3

TO THE

DISC MEDICINE, INC. 

2017 STOCK OPTION AND GRANT PLAN

 

The Disc Medicine, Inc. 2017 Stock Option and Grant Plan (the “Plan”) is hereby amended as follows:

 

1.

Section 3(a) of the Plan is hereby amended and restated in its entirety as follows:

 

“(a) Stock Issuable. The maximum number of Shares reserved and available for issuance under the Plan shall be 9,724,496 Shares, subject to adjustment as provided in Section 3(b). For purposes of this limitation, the Shares underlying any Awards that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) and Shares that are withheld upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding shall be added back to the Shares available for issuance under the Plan. Subject to such overall limitations, Shares may be issued up to such maximum number pursuant to any type or types of Award, and no more than 50,000,000 Shares may be issued pursuant to Incentive Stock Options. The Shares available for issuance under the Plan may be authorized but unissued Shares or Shares reacquired by the Company. Beginning on the date that the Company becomes subject to Section 162(m) of the Code, Options with respect to no more than 50,000,000 Shares shall be granted to any one individual in any calendar year period.”

 

2.

All other terms and conditions of the Plan shall remain in full force and effect.

 

ADOPTED BY BOARD OF DIRECTORS:

October 23, 2020

 

ADOPTED BY STOCKHOLDERS:

October 26, 2020

 

 

AMENDMENT NO. 4

TO THE 

DISC MEDICINE, INC. 

2017 STOCK OPTION AND GRANT PLAN

 

The Disc Medicine, Inc. 2017 Stock Option and Grant Plan (the “Plan”) is hereby amended as follows:

 

1.

Section 3(a) of the Plan is hereby amended and restated in its entirety as follows:

 

“(a) Stock Issuable. The maximum number of Shares reserved and available for

 

issuance under the Plan shall be 16,216,325 Shares, subject to adjustment as provided in Section 3(b). For purposes of this limitation, the Shares underlying any Awards that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) and Shares that are withheld upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding shall be added back to the Shares available for issuance under the Plan. Subject to such overall limitations, Shares may be issued up to such maximum number pursuant to any type or types of Award, and no more than 50,000,000 Shares may be issued pursuant to Incentive Stock Options. The Shares available for issuance under the Plan may be authorized but unissued Shares or Shares reacquired by the Company. Beginning on the date that the Company becomes subject to Section 162(m) of the Code, Options with respect to no more than 50,000,000 Shares shall be granted to any one individual in any calendar year period.”

 

2.

All other terms and conditions of the Plan shall remain in full force and effect.

 

ADOPTED BY BOARD OF DIRECTORS:

August 23, 2021

 

ADOPTED BY STOCKHOLDERS:

August 23, 2021

 

 

INCENTIVE STOCK OPTION GRANT NOTICE

UNDER THE DISC MEDICINE, INC.
2017 STOCK OPTION AND GRANT PLAN

 

Pursuant to the Disc Medicine, Inc. 2017 Stock Option and Grant Plan (the “Plan”), Disc Medicine, Inc. a Delaware corporation (together with any successor, the “Company”), has granted to the individual named below, an option (the “Stock Option”) to purchase on or prior to the Expiration Date, or such earlier date as is specified herein, all or any part of the number of shares of Common Stock, par value $0.0001 per share (“Common Stock”), of the Company indicated below (the “Shares”), at the Option Exercise Price per share, subject to the terms and conditions set forth in this Incentive Stock Option Grant Notice (the “Grant Notice”), the attached Incentive Stock Option Agreement (the “Agreement”) and the Plan. This Stock Option is intended to qualify as an “incentive stock option” as defined in Section 422(b) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”). To the extent that any portion of the Stock Option does not so qualify, it shall be deemed a non-qualified stock option.

 

Name of Optionee:	__________________ (the “Optionee”)
No. of Shares:	__________ Shares of Common Stock
Grant Date:	__________________
Vesting Commencement Date:	__________________ (the “Vesting Commencement Date”)
Expiration Date:	__________________ (the “Expiration Date”)
Option Exercise Price/Share:	$_________________ (the “Option Exercise Price”)
Vesting Schedule:	[25] percent of the Shares shall vest and become exercisable on the first anniversary of the Vesting Commencement Date; provided that the Optionee continues to have a Service Relationship with the Company at such time.   Thereafter, the remaining [75] percent of the Shares shall vest and become exercisable in [36] equal monthly installments following the first anniversary of the Vesting Commencement Date, provided the Optionee continues to have a Service Relationship with the Company on each vesting date.  Notwithstanding anything in the Agreement to the contrary, in the case of a Sale Event, this Stock Option and the Shares shall be treated as provided in Section 3(c) of the Plan[ provided; however INSERT ANY ACCELERATED VESTING PROVISION HERE].

 

Attachments: Incentive Stock Option Agreement, 2017 Stock Option and Grant Plan

 

 

INCENTIVE STOCK OPTION AGREEMENT
UNDER THE DISC MEDICINE, INC.
2017 STOCK OPTION AND GRANT PLAN

 

All capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Grant Notice and the Plan.

 

1.             Vesting, Exercisability and Termination.

 

(a)           No portion of this Stock Option may be exercised until such portion shall have vested and become exercisable.

 

(b)           Except as set forth below, and subject to the determination of the Committee in its sole discretion to accelerate the vesting schedule hereunder, this Stock Option shall be vested and exercisable on the respective dates indicated below:

 

(i)                 This Stock Option shall initially be unvested and unexercisable.

 

(ii)               This Stock Option shall vest and become exercisable in accordance with the Vesting Schedule set forth in the Grant Notice.

 

(c)           Termination. Except as may otherwise be provided by the Committee, if the Optionee’s Service Relationship is terminated, the period within which to exercise this Stock Option will be subject to earlier termination as set forth below (and if not exercised within such period, shall thereafter terminate subject, in each case, to Section 3(c) of the Plan):

 

(i)                 Termination Due to Death or Disability. If the Optionee’s Service Relationship terminates by reason of such Optionee’s death or Disability, this Stock Option may be exercised, to the extent exercisable on the date of such termination, by the Optionee, the Optionee’s legal representative or legatee for a period of 12 months from the date of death or Disability or until the Expiration Date, if earlier.

 

(ii)               Other Termination. If the Optionee’s Service Relationship terminates for any reason other than death or Disability, and unless otherwise determined by the Committee, this Stock Option may be exercised, to the extent exercisable on the date of termination, for a period of 90 days from the date of termination or until the Expiration Date, if earlier; provided however, if the Optionee’s Service Relationship is terminated for Cause, this Stock Option shall terminate immediately upon the date of such termination.

 

For purposes hereof, the Committee’s determination of the reason for termination of the Optionee’s Service Relationship shall be conclusive and binding on the Optionee and his or her representatives or legatees. Any portion of this Stock Option that is not vested and exercisable on the date of termination of the Service Relationship shall terminate immediately and be null and void.

 

 

(d)           It is understood and intended that this Stock Option is intended to qualify as an “incentive stock option” as defined in Section 422 of the Code to the extent permitted under applicable law. Accordingly, the Optionee understands that in order to obtain the benefits of an incentive stock option under Section 422 of the Code, no sale or other disposition may be made of Shares for which incentive stock option treatment is desired within the one-year period beginning on the day after the day of the transfer of such Shares to him or her, nor within the two-year period beginning on the day after Grant Date of this Stock Option and further that this Stock Option must be exercised within three months after termination of employment as an employee (or 12 months in the case of death or disability) to qualify as an incentive stock option. If the Optionee disposes (whether by sale, gift, transfer or otherwise) of any such Shares within either of these periods, he or she will notify the Company within 30 days after such disposition. The Optionee also agrees to provide the Company with any information concerning any such dispositions required by the Company for tax purposes. Further, to the extent this Stock Option and any other incentive stock options of the Optionee having an aggregate Fair Market Value in excess of $100,000 (determined as of the Grant Date) first become exercisable in any year, such options will not qualify as incentive stock options.

 

2.             Exercise of Stock Option.

 

(a)           The Optionee may exercise this Stock Option only in the following manner: Prior to the Expiration Date, the Optionee may deliver a Stock Option exercise notice (an “Exercise Notice”) in the form of Appendix A hereto indicating his or her election to purchase some or all of the Shares with respect to which this Stock Option is then exercisable. Such notice shall specify the number of Shares to be purchased. Payment of the purchase price may be made by one or more of the methods described in Section 5 of the Plan, subject to the limitations contained in such Section of the Plan, including the requirement that the Committee specifically approve in advance certain payment methods.

 

(b)           Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be exercisable after the Expiration Date.

 

3.             Incorporation of Plan. Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms and conditions of the Plan.

 

4.             Transferability of Stock Option. This Stock Option is personal to the Optionee and is not transferable by the Optionee in any manner other than by will or by the laws of descent and distribution. The Stock Option may be exercised during the Optionee’s lifetime only by the Optionee (or by the Optionee’s guardian or personal representative in the event of the Optionee’s incapacity). The Optionee may elect to designate a beneficiary by providing written notice of the name of such beneficiary to the Company, and may revoke or change such designation at any time by filing written notice of revocation or change with the Company; such beneficiary may exercise the Optionee’s Stock Option in the event of the Optionee’s death to the extent provided herein. If the Optionee does not designate a beneficiary, or if the designated beneficiary predeceases the Optionee, the legal representative of the Optionee may exercise this Stock Option to the extent provided herein in the event of the Optionee’s death.

 

 

5.             Restrictions on Transfer of Shares. The Shares acquired upon exercise of the Stock Option shall be subject to certain transfer restrictions and other limitations including, without limitation, the provisions contained in Section 9 of the Plan.

 

6.             Miscellaneous Provisions.

 

(a)           Equitable Relief. The parties hereto agree and declare that legal remedies may be inadequate to enforce the provisions of this Agreement and that equitable relief, including specific performance and injunctive relief, may be used to enforce the provisions of this Agreement.

 

(b)          Adjustments for Changes in Capital Structure. If, as a result of any reorganization, recapitalization, reincorporation, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Common Stock, the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of securities of the Company, the restrictions contained in this Agreement shall apply with equal force to additional and/or substitute securities, if any, received by the Optionee in exchange for, or by virtue of his or her ownership of, this Stock Option or Shares acquired pursuant thereto.

 

(c)           Change and Modifications. This Agreement may not be orally changed, modified or terminated, nor shall any oral waiver of any of its terms be effective. This Agreement may be changed, modified or terminated only by an agreement in writing signed by the Company and the Optionee.

 

(d)          Governing Law. This Agreement shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal laws of Commonwealth of Massachusetts, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Commonwealth of Massachusetts.

 

(e)          Headings. The headings are intended only for convenience in finding the subject matter and do not constitute part of the text of this Agreement and shall not be considered in the interpretation of this Agreement.

 

(f)           Saving Clause. If any provision(s) of this Agreement shall be determined to be illegal or unenforceable, such determination shall in no manner affect the legality or enforceability of any other provision hereof.

 

(g)          Notices. All notices, requests, consents and other communications shall be in writing and be deemed given when delivered personally, by telex or facsimile transmission or when received if mailed by first class registered or certified mail, postage prepaid. Notices to the Company or the Optionee shall be addressed as set forth underneath their signatures below, or to such other address or addresses as may have been furnished by such party in writing to the other.

 

(h)          Benefit and Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their respective successors, assigns, and legal representatives. The Company has the right to assign this Agreement, and such assignee shall become entitled to all the rights of the Company hereunder to the extent of such assignment.

 

 

(i)           Counterparts. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.

 

(j)            Integration. This Agreement constitutes the entire agreement between the parties with respect to this Stock Option and supersedes all prior agreements and discussions between the parties concerning such subject matter, including but not limited to, any written or oral offer letter or consulting or service agreement between the parties that provides for the issuance of equity in the Company.

 

7.             Dispute Resolution.

 

(a)           Except as provided below, any dispute arising out of or relating to the Plan or this Stock Option, this Agreement, or the breach, termination or validity of the Plan, this Stock Option or this Agreement, shall be finally settled by binding arbitration conducted expeditiously in accordance with the J.A.M.S./Endispute Comprehensive Arbitration Rules and Procedures (the “J.A.M.S. Rules”). The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. Sections 1 16, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration shall be Boston, Massachusetts.

 

(b)           The arbitration shall commence within 60 days of the date on which a written demand for arbitration is filed by any party hereto. In connection with the arbitration proceeding, the arbitrator shall have the power to order the production of documents by each party and any third-party witnesses. In addition, each party may take up to three depositions as of right, and the arbitrator may in his or her discretion allow additional depositions upon good cause shown by the moving party. However, the arbitrator shall not have the power to order the answering of interrogatories or the response to requests for admission. In connection with any arbitration, each party to the arbitration shall provide to the other, no later than seven business days before the date of the arbitration, the identity of all persons that may testify at the arbitration and a copy of all documents that may be introduced at the arbitration or considered or used by a party’s witness or expert. The arbitrator’s decision and award shall be made and delivered within six months of the selection of the arbitrator. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or finding of liability. The arbitrator shall not have power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocably waives any claim to such damages.

 

(c)           The Company, the Optionee, each party to the Agreement and any other holder of Shares issued pursuant to this Agreement (each, a “Party”) covenants and agrees that such party will participate in the arbitration in good faith. This Section 7 applies equally to requests for temporary, preliminary or permanent injunctive relief, except that in the case of temporary or preliminary injunctive relief any party may proceed in court without prior arbitration for the limited purpose of avoiding immediate and irreparable harm.

 

 

(d)               Each Party (i) hereby irrevocably submits to the jurisdiction of any United States District Court of competent jurisdiction for the purpose of enforcing the award or decision in any such proceeding, (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above named courts, that its property is exempt or immune from attachment or execution (except as protected by applicable law), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court, and (iii) hereby waives and agrees not to seek any review by any court of any other jurisdiction which may be called upon to grant an enforcement of the judgment of any such court. Each Party hereby consents to service of process by registered mail at the address to which notices are to be given. Each Party agrees that its, his or her submission to jurisdiction and its, his or her consent to service of process by mail is made for the express benefit of each other Party. Final judgment against any Party in any such action, suit or proceeding may be enforced in other jurisdictions by suit, action or proceeding on the judgment, or in any other manner provided by or pursuant to the laws of such other jurisdiction.

 

[SIGNATURE PAGE FOLLOWS]

 

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned as of the date first above written.

 

	DISC MEDICINE, INC.
	By:
		Name:
		Title:
	Address:

 

The undersigned hereby acknowledges receiving and reviewing a copy of the Plan, including, without limitation, Section 9 thereof, and understands that this Stock Option is subject to the terms of the Plan and of this Agreement. This Agreement is hereby accepted, and the terms and conditions of the Plan, the Grant Notice and this Agreement, SPECIFICALLY INCLUDING THE ARBITRATION PROVISIONS SET FORTH IN SECTION 7 OF THIS AGREEMENT, are hereby agreed to, by the undersigned as of the date first above written.

 

	OPTIONEE:
	Name:
	Address:

 

 

[SPOUSE’S CONSENT¹ 

I acknowledge that I have read the 

foregoing Incentive Stock Option Agreement 

and understand the contents thereof.

 

____________________________________]

 

¹ A spouse’s consent is recommended only if the Optionee’s state of residence is one of the following community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

 

 

	DESIGNATED BENEFICIARY:
	Beneficiary’s Address:

 

 

Appendix A

 

STOCK OPTION EXERCISE NOTICE

 

DISC MEDICINE, INC.

 

Attention: [____________________] 

____________________________ 

____________________________

 

Pursuant to the terms of the grant notice and stock option agreement between the undersigned and Disc Medicine, Inc. (the “Company”) dated __________ (the “Agreement”) under the Disc Medicine, Inc. 2017 Stock Option and Grant Plan, I, [Insert Name] ________________, hereby [Circle One] partially/fully exercise such option by including herein payment in the amount of $______ representing Disc Medicine, Inc. the purchase price for [Fill in number of Shares] _______ Shares. I have chosen the following form(s) of payment:

 

[ ]            1.             Cash 

[ ]            2.             Certified or bank check payable to Disc Medicine, Inc. 

[ ]

3.

Other (as referenced in the Agreement and described in the Plan (please describe)) _____________________________________________________.

 

In connection with my exercise of the option as set forth above, I hereby represent and warrant to the Company as follows:

 

(i)            I am purchasing the Shares for my own account for investment only, and not for resale or with a view to the distribution thereof.

 

(ii)           I have had such an opportunity as I have deemed adequate to obtain from the Company such information as is necessary to permit me to evaluate the merits and risks of my investment in the Company and have consulted with my own advisers with respect to my investment in the Company.

 

(iii)          I have sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the Shares and to make an informed investment decision with respect to such purchase.

 

(iv)          I can afford a complete loss of the value of the Shares and am able to bear the economic risk of holding such Shares for an indefinite period of time.

 

(v)           I understand that the Shares may not be registered under the Securities Act of 1933 (it being understood that the Shares are being issued and sold in reliance on the exemption provided in Rule 701 thereunder) or any applicable state securities or “blue sky” laws and may not be sold or otherwise transferred or disposed of in the absence of an effective registration statement under the Securities Act of 1933 and under any applicable state securities or “blue sky” laws (or exemptions from the registration requirement thereof). I further acknowledge that certificates representing Shares will bear restrictive legends reflecting the foregoing and/or that book entries for uncertificated Shares will include similar restrictive notations.

 

 

(vi)          I have read and understand the Plan and acknowledge and agree that the Shares are subject to all of the relevant terms of the Plan, including without limitation, the transfer restrictions set forth in Section 9 of the Plan.

 

(vii)         I understand and agree that the Company has a right of first refusal with respect to the Shares pursuant to Section 9(b) of the Plan.

 

(viii)        I understand and agree that the Company has certain repurchase rights with respect to the Shares pursuant to Section 9(c) of the Plan.

 

(ix)           I understand and agree that I may not sell or otherwise transfer or dispose of the Shares for a period of time following the effective date of a public offering by the Company as described in Section 9(f) of the Plan.

 

	Sincerely yours,
	Name:
	Address:
	Date:

 

 

NON-QUALIFIED STOCK OPTION GRANT NOTICE

UNDER THE DISC MEDICINE, INC.
2017 STOCK OPTION AND GRANT PLAN

 

Pursuant to the Disc Medicine, Inc. 2017 Stock Option and Grant Plan (the “Plan”), Disc Medicine, Inc. a Delaware corporation (together with any successor, the “Company”), has granted to the individual named below, an option (the “Stock Option”) to purchase on or prior to the Expiration Date, or such earlier date as is specified herein, all or any part of the number of shares of Common Stock, par value $0.0001 per share (“Common Stock”), of the Company indicated below (the “Shares”), at the Option Exercise Price per share, subject to the terms and conditions set forth in this Non-Qualified Stock Option Grant Notice (the “Grant Notice”), the attached Non-Qualified Stock Option Agreement (the “Agreement”) and the Plan. This Stock Option is not intended to qualify as an “incentive stock option” as defined in Section 422(b) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”).

 

Name of Optionee:	__________________ (the “Optionee”)
No. of Shares:	__________ Shares of Common Stock
Grant Date:	__________________
Vesting Commencement Date:	__________________ (the “Vesting Commencement Date”)
Expiration Date:	__________________ (the “Expiration Date”)
Option Exercise Price/Share:	$_________________ (the “Option Exercise Price”)
Vesting Schedule:	[25] percent of the Shares shall vest and become exercisable on the first anniversary of the Vesting Commencement Date; provided that the Optionee continues to have a Service Relationship with the Company at such time.   Thereafter, the remaining [75] percent of the Shares shall vest and become exercisable in [36] equal monthly installments following the first anniversary of the Vesting Commencement Date, provided the Optionee continues to have a Service Relationship with the Company on each vesting date.  Notwithstanding anything in the Agreement to the contrary, in the case of a Sale Event, this Stock Option and the Shares shall be treated as provided in Section 3(c) of the Plan[ provided; however INSERT ANY ACCELERATED VESTING PROVISION HERE].

 

Attachments: Non-Qualified Stock Option Agreement, 2017 Stock Option and Grant Plan

 

 

NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER THE DISC MEDICINE, INC.
2017 STOCK OPTION AND GRANT PLAN

 

All capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Grant Notice and the Plan.

 

1.             Vesting, Exercisability and Termination.

 

(a)           No portion of this Stock Option may be exercised until such portion shall have vested and become exercisable.

 

(b)           Except as set forth below, and subject to the determination of the Committee in its sole discretion to accelerate the vesting schedule hereunder, this Stock Option shall be vested and exercisable on the respective dates indicated below:

 

(i)         This Stock Option shall initially be unvested and unexercisable.

 

(ii)        This Stock Option shall vest and become exercisable in accordance with the Vesting Schedule set forth in the Grant Notice.

 

(c)           Termination. Except as may otherwise be provided by the Committee, if the Optionee’s Service Relationship is terminated, the period within which to exercise this Stock Option will be subject to earlier termination as set forth below (and if not exercised within such period, shall thereafter terminate subject, in each case, to Section 3(c) of the Plan):

 

(i)         Termination Due to Death or Disability. If the Optionee’s Service Relationship terminates by reason of such Optionee’s death or Disability, this Stock Option may be exercised, to the extent exercisable on the date of such termination, by the Optionee, the Optionee’s legal representative or legatee for a period of 12 months from the date of death or Disability or until the Expiration Date, if earlier.

 

(ii)        Other Termination. If the Optionee’s Service Relationship terminates for any reason other than death or Disability, and unless otherwise determined by the Committee, this Stock Option may be exercised, to the extent exercisable on the date of termination, for a period of 90 days from the date of termination or until the Expiration Date, if earlier; provided however, if the Optionee’s Service Relationship is terminated for Cause, this Stock Option shall terminate immediately upon the date of such termination.

 

For purposes hereof, the Committee’s determination of the reason for termination of the Optionee’s Service Relationship shall be conclusive and binding on the Optionee and his or her representatives or legatees and any Permitted Transferee. Any portion of this Stock Option that is not vested and exercisable on the date of termination of the Service Relationship shall terminate immediately and be null and void.

 

 

2.             Exercise of Stock Option.

 

(a)           The Optionee may exercise this Stock Option only in the following manner: Prior to the Expiration Date, the Optionee may deliver a Stock Option exercise notice (an “Exercise Notice”) in the form of Appendix A hereto indicating his or her election to purchase some or all of the Shares with respect to which this Stock Option is then exercisable. Such notice shall specify the number of Shares to be purchased. Payment of the purchase price may be made by one or more of the methods described in Section 5 of the Plan, subject to the limitations contained in such Section of the Plan, including the requirement that the Committee specifically approve in advance certain payment methods.

 

(b)           Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be exercisable after the Expiration Date.

 

3.             Incorporation of Plan. Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms and conditions of the Plan.

 

4.             Transferability of Stock Option. This Stock Option is personal to the Optionee and is not transferable by the Optionee in any manner other than by will or by the laws of descent and distribution. The Stock Option may be exercised during the Optionee’s lifetime only by the Optionee (or by the Optionee’s guardian or personal representative in the event of the Optionee’s incapacity). The Optionee may elect to designate a beneficiary by providing written notice of the name of such beneficiary to the Company, and may revoke or change such designation at any time by filing written notice of revocation or change with the Company; such beneficiary may exercise the Optionee’s Stock Option in the event of the Optionee’s death to the extent provided herein. If the Optionee does not designate a beneficiary, or if the designated beneficiary predeceases the Optionee, the legal representative of the Optionee may exercise this Stock Option to the extent provided herein in the event of the Optionee’s death.

 

5.             Restrictions on Transfer of Shares. The Shares acquired upon exercise of the Stock Option shall be subject to certain transfer restrictions and other limitations including, without limitation, the provisions contained in Section 9 of the Plan.

 

6.             Miscellaneous Provisions.

 

(a)           Equitable Relief. The parties hereto agree and declare that legal remedies may be inadequate to enforce the provisions of this Agreement and that equitable relief, including specific performance and injunctive relief, may be used to enforce the provisions of this Agreement.

 

(b)           Adjustments for Changes in Capital Structure. If, as a result of any reorganization, recapitalization, reincorporation, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Common Stock, the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of securities of the Company, the restrictions contained in this Agreement shall apply with equal force to additional and/or substitute securities, if any, received by the Optionee in exchange for, or by virtue of his or her ownership of, this Stock Option or Shares acquired pursuant thereto.

 

 

(c)           Change and Modifications. This Agreement may not be orally changed, modified or terminated, nor shall any oral waiver of any of its terms be effective. This Agreement may be changed, modified or terminated only by an agreement in writing signed by the Company and the Optionee.

 

(d)           Governing Law. This Agreement shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts, without regard to conflict of law principles that would result in the application of any law other than the law of the Commonwealth of Massachusetts.

 

(e)           Headings. The headings are intended only for convenience in finding the subject matter and do not constitute part of the text of this Agreement and shall not be considered in the interpretation of this Agreement.

 

(f)            Saving Clause. If any provision(s) of this Agreement shall be determined to be illegal or unenforceable, such determination shall in no manner affect the legality or enforceability of any other provision hereof.

 

(g)           Notices. All notices, requests, consents and other communications shall be in writing and be deemed given when delivered personally, by telex or facsimile transmission or when received if mailed by first class registered or certified mail, postage prepaid. Notices to the Company or the Optionee shall be addressed as set forth underneath their signatures below, or to such other address or addresses as may have been furnished by such party in writing to the other.

 

(h)           Benefit and Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their respective successors, assigns, and legal representatives. The Company has the right to assign this Agreement, and such assignee shall become entitled to all the rights of the Company hereunder to the extent of such assignment.

 

(i)            Counterparts. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.

 

(j)            Integration. This Agreement constitutes the entire agreement between the parties with respect to this Stock Option and supersedes all prior agreements and discussions between the parties concerning such subject matter, including but not limited to, any written or oral offer letter or consulting or service agreement between the parties that provides for the issuance of equity in the Company.

 

7.             Dispute Resolution.

 

(a)           Except as provided below, any dispute arising out of or relating to the Plan or this Stock Option, this Agreement, or the breach, termination or validity of the Plan, this Stock Option or this Agreement, shall be finally settled by binding arbitration conducted expeditiously in accordance with the J.A.M.S./Endispute Comprehensive Arbitration Rules and Procedures (the “J.A.M.S. Rules”). The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration shall be Boston, Massachusetts.

 

 

(b)           The arbitration shall commence within 60 days of the date on which a written demand for arbitration is filed by any party hereto. In connection with the arbitration proceeding, the arbitrator shall have the power to order the production of documents by each party and any third-party witnesses. In addition, each party may take up to three depositions as of right, and the arbitrator may in his or her discretion allow additional depositions upon good cause shown by the moving party. However, the arbitrator shall not have the power to order the answering of interrogatories or the response to requests for admission. In connection with any arbitration, each party to the arbitration shall provide to the other, no later than seven business days before the date of the arbitration, the identity of all persons that may testify at the arbitration and a copy of all documents that may be introduced at the arbitration or considered or used by a party’s witness or expert. The arbitrator’s decision and award shall be made and delivered within six months of the selection of the arbitrator. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or finding of liability. The arbitrator shall not have power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocably waives any claim to such damages.

 

(c)           The Company, the Optionee, each party to the Agreement and any other holder of Shares issued pursuant to this Agreement (each, a “Party”) covenants and agrees that such party will participate in the arbitration in good faith. This Section 7 applies equally to requests for temporary, preliminary or permanent injunctive relief, except that in the case of temporary or preliminary injunctive relief any party may proceed in court without prior arbitration for the limited purpose of avoiding immediate and irreparable harm.

 

(d)           Each Party (i) hereby irrevocably submits to the jurisdiction of any United States District Court of competent jurisdiction for the purpose of enforcing the award or decision in any such proceeding, (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above named courts, that its property is exempt or immune from attachment or execution (except as protected by applicable law), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court, and (iii) hereby waives and agrees not to seek any review by any court of any other jurisdiction which may be called upon to grant an enforcement of the judgment of any such court. Each Party hereby consents to service of process by registered mail at the address to which notices are to be given. Each Party agrees that its, his or her submission to jurisdiction and its, his or her consent to service of process by mail is made for the express benefit of each other Party. Final judgment against any Party in any such action, suit or proceeding may be enforced in other jurisdictions by suit, action or proceeding on the judgment, or in any other manner provided by or pursuant to the laws of such other jurisdiction.

 

[SIGNATURE PAGE FOLLOWS]

 

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned as of the date first above written.

 

	DISC MEDICINE, INC.
	By:
		Name:
		Title:
	Address:

The undersigned hereby acknowledges receiving and reviewing a copy of the Plan, including, without limitation, Section 9 thereof, and understands that this Stock Option is subject to the terms of the Plan and of this Agreement. This Agreement is hereby accepted, and the terms and conditions of the Plan, the Grant Notice and this Agreement, SPECIFICALLY INCLUDING THE ARBITRATION PROVISIONS SET FORTH IN SECTION 7 OF THIS AGREEMENT, are hereby agreed to, by the undersigned as of the date first above written.

 

	OPTIONEE:
	Name:
	Address:

 

[SPOUSE’S CONSENT¹ 

I acknowledge that I have read the 

foregoing Non-Qualified Stock Option Agreement 

and understand the contents thereof.

 

____________________________________]

 

¹ A spouse’s consent is recommended only if the Optionee’s state of residence is one of the following community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

 

 

	DESIGNATED BENEFICIARY:
	Beneficiary’s Address:

 

 

Appendix A

 

STOCK OPTION EXERCISE NOTICE

 

DISC MEDICINE, INC. 

Attention: [____________________] 

____________________________ 

____________________________

 

Pursuant to the terms of the grant notice and stock option agreement between the undersigned and Disc Medicine, Inc. (the “Company”) dated __________ (the “Agreement”) under the Disc Medicine, Inc.2017 Stock Option and Grant Plan, I, [Insert Name] ________________, hereby [Circle One] partially/fully exercise such option by including herein payment in the amount of $______ representing the purchase price for [Fill in number of Shares] _______ Shares. I have chosen the following form(s) of payment:

 

[ ]           1.             Cash 

[ ]           2.             Certified or bank check payable to Disc Medicine, Inc. 

[ ]

3.

Other (as referenced in the Agreement and described in the Plan (please describe)) _____________________________________________________.

 

In connection with my exercise of the option as set forth above, I hereby represent and warrant to the Company as follows:

 

(i)            I am purchasing the Shares for my own account for investment only, and not for resale or with a view to the distribution thereof.

 

(ii)           I have had such an opportunity as I have deemed adequate to obtain from the Company such information as is necessary to permit me to evaluate the merits and risks of my investment in the Company and have consulted with my own advisers with respect to my investment in the Company.

 

(iii)          I have sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the Shares and to make an informed investment decision with respect to such purchase.

 

(iv)          I can afford a complete loss of the value of the Shares and am able to bear the economic risk of holding such Shares for an indefinite period of time.

 

(v)           I understand that the Shares may not be registered under the Securities Act of 1933 (it being understood that the Shares are being issued and sold in reliance on the exemption provided in Rule 701 thereunder) or any applicable state securities or “blue sky” laws and may not be sold or otherwise transferred or disposed of in the absence of an effective registration statement under the Securities Act of 1933 and under any applicable state securities or “blue sky” laws (or exemptions from the registration requirement thereof). I further acknowledge that certificates representing Shares will bear restrictive legends reflecting the foregoing and/or that book entries for uncertificated Shares will include similar restrictive notations.

 

 

(vi)          I have read and understand the Plan and acknowledge and agree that the Shares are subject to all of the relevant terms of the Plan, including without limitation, the transfer restrictions set forth in Section 9 of the Plan.

 

(vii)         I understand and agree that the Company has a right of first refusal with respect to the Shares pursuant to Section 9(b) of the Plan.

 

(viii)        I understand and agree that the Company has certain repurchase rights with respect to the Shares pursuant to Section 9(c) of the Plan.

 

(ix)           I understand and agree that I may not sell or otherwise transfer or dispose of the Shares for a period of time following the effective date of a public offering by the Company as described in Section 9(f) of the Plan.

 

	Sincerely yours,
	Name:
	Address:
	Date:

 

 

Restricted Stock AWARD NOTICE
under the Disc Medicine, Inc.
2017 Stock Option and Grant Plan

 

Pursuant to the Disc Medicine, Inc. 2017 Stock Option and Grant Plan (the “Plan”), Disc Medicine, Inc., a Delaware corporation (together with any successor, the “Company”), hereby grants, sells and issues to the individual named below, the Shares at the Per Share Purchase Price, subject to the terms and conditions set forth in this Restricted Stock Award Notice (the “Award Notice”), the attached Restricted Stock Agreement (the “Agreement”) and the Plan. The Grantee agrees to the provisions set forth herein and acknowledges that each such provision is a material condition of the Company’s agreement to issue and sell the Shares to him or her. The Company hereby acknowledges receipt of $[_______] in full payment for the Shares. All references to share prices and amounts herein shall be equitably adjusted to reflect stock splits, stock dividends, recapitalizations, mergers, reorganizations and similar changes affecting the capital stock of the Company, and any shares of capital stock of the Company received on or in respect of Shares in connection with any such event (including any shares of capital stock or any right, option or warrant to receive the same or any security convertible into or exchangeable for any such shares or received upon conversion of any such shares) shall be subject to this Agreement on the same basis and extent at the relevant time as the Shares in respect of which they were issued, and shall be deemed Shares as if and to the same extent they were issued at the date hereof.

 

Name of Grantee:	_________________ (the “Grantee”)
No. of Shares:	_________ Shares of Common Stock (the “Shares”)
Grant Date:	____________ __, ____
Date of Purchase of Shares:	____________ __, ____
Vesting Commencement Date:	____________ __, ____ (the “Vesting Commencement Date”)
Per Share Purchase Price:	$________ (the “Per Share Purchase Price”)

 

Vesting Schedule:

[25] percent of the Shares shall vest on the [first] anniversary of the Vesting Commencement Date; provided that the Grantee continues to have a Service Relationship with the Company at such time.  Thereafter, the remaining [75] percent of the Shares shall vest in [36] equal monthly installments following the first anniversary of the Vesting Commencement Date, provided the Grantee continues to have a Service Relationship with the Company at such time.  Notwithstanding anything in the Agreement to the contrary in the case of a Sale Event, the Shares of Restricted Stock shall be treated as provided in Section 3(c) of the Plan [provided; however INSERT ANY ACCELERATED VESTING PROVISION HERE].

 

Attachments: Restricted Stock Agreement, 2017 Stock Option and Grant Plan

 

 

 

Restricted Stock Agreement
under the Disc Medicine, Inc.
2017 Stock Option and Grant Plan

 

All capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Award Notice and the Plan.

 

1.             Purchase and Sale of Shares; Vesting; Investment Representations.

 

(a)           Purchase and Sale. The Company hereby sells to the Grantee, and the Grantee hereby purchases from the Company, the number of Shares set forth in the Award Notice for the Per Share Purchase Price.

 

(b)           Vesting. Initially, all of the Shares are non-transferable and subject to a substantial risk of forfeiture and are Shares of Restricted Stock. The risk of forfeiture shall lapse with respect to the Shares on the respective dates indicated on the Vesting Schedule set forth in the Award Notice.

 

(c)           Investment Representations. In connection with the purchase and sale of the Shares contemplated by Section 1(a) above, the Grantee hereby represents and warrants to the Company as follows:

 

(i)        The Grantee is purchasing the Shares for the Grantee’s own account for investment only, and not for resale or with a view to the distribution thereof.

 

(ii)       The Grantee has had such an opportunity as he or she has deemed adequate to obtain from the Company such information as is necessary to permit him or her to evaluate the merits and risks of the Grantee’s investment in the Company and has consulted with the Grantee’s own advisers with respect to the Grantee’s investment in the Company.

 

(iii)      The Grantee has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the Shares and to make an informed investment decision with respect to such purchase.

 

(iv)      The Grantee can afford a complete loss of the value of the Shares and is able to bear the economic risk of holding such Shares for an indefinite period.

 

(v)       The Grantee understands that the Shares are not registered under the Act (it being understood that the Shares are being issued and sold in reliance on the exemption provided in Rule 701 thereunder) or any applicable state securities or “blue sky” laws and may not be sold or otherwise transferred or disposed of in the absence of an effective registration statement under the Act and under any applicable state securities or “blue sky” laws (or exemptions from the registration requirements thereof). The Grantee further acknowledges that certificates representing the Shares will bear restrictive legends reflecting the foregoing and/or that book entries for uncertificated Shares will include similar restrictive notations.

 

 

(vi)      The Grantee has read and understands the Plan and acknowledges and agrees that the Shares are subject to all of the relevant terms of the Plan, including without limitation, the transfer restrictions set forth in Section 9 of the Plan.

 

(vii)     The Grantee understands and agrees that the Company has a right of first refusal with respect to the Shares pursuant to Section 9(b) of the Plan.

 

(viii)    The Grantee understands and agree that the Company has certain repurchase rights with respect to the Shares pursuant to Section 9(c) of the Plan.

 

(ix)       The Grantee understands and agrees that the Grantee may not sell or otherwise transfer or dispose of the Shares for a period of time following the effective date of a public offering by the Company as described in Section 9(f) of the Plan.

 

2.             Repurchase Right. Upon a Termination Event, the Company shall have the right to repurchase Shares of Restricted Stock that are unvested as of the date of such Termination Event as set forth in Section 9(c) of the Plan.

 

3.             Restrictions on Transfer of Shares. The Shares (whether or not vested) shall be subject to certain transfer restrictions and other limitations including, without limitation, the provisions contained in Section 9 of the Plan

 

4.             Incorporation of Plan. Notwithstanding anything herein to the contrary, this Restricted Stock Award shall be subject to and governed by all the terms and conditions of the Plan.

 

5.             Miscellaneous Provisions.

 

(a)           Record Owner; Dividends. The Grantee and any Permitted Transferees, during the duration of this Agreement, shall be considered the record owners of and shall be entitled to vote the Shares if and to the extent the Shares are entitled to voting rights. The Grantee and any Permitted Transferees shall be entitled to receive all dividends and any other distributions declared on the Shares; provided, however, that the Company is under no duty to declare any such dividends or to make any such distribution.

 

(b)           Section 83(b) Election. The Grantee shall consult with the Grantee’s tax advisor to determine whether it would be appropriate for the Grantee to make an election under Section 83(b) of the Code with respect to this Award. Any such election must be filed with the Internal Revenue Service within 30 days of the date of this Award. If the Grantee makes an election under Section 83(b) of the Code, the Grantee shall give prompt notice to the Company (and provide a copy of such election to the Company).

 

(c)           Equitable Relief. The parties hereto agree and declare that legal remedies may be inadequate to enforce the provisions of this Agreement and that equitable relief, including specific performance and injunctive relief, may be used to enforce the provisions of this Agreement.

 

 

(d)           Change and Modifications. This Agreement may not be orally changed, modified or terminated, nor shall any oral waiver of any of its terms be effective. This Agreement may be changed, modified or terminated only by an agreement in writing signed by the Company and the Grantee.

 

(e)           Governing Law. This Agreement shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts, without regard to conflict of law principles that would result in the application of any law other than the law of the Commonwealth of Massachusetts.

 

(f)            Headings. The headings are intended only for convenience in finding the subject matter and do not constitute part of the text of this Agreement and shall not be considered in the interpretation of this Agreement.

 

(g)           Saving Clause. If any provision(s) of this Agreement shall be determined to be illegal or unenforceable, such determination shall in no manner affect the legality or enforceability of any other provision hereof.

 

(h)           Notices. All notices, requests, consents and other communications shall be in writing and be deemed given when delivered personally, by telex or facsimile transmission or when received if mailed by first class registered or certified mail, postage prepaid. Notices to the Company or the Grantee shall be addressed as set forth underneath their signatures below, or to such other address or addresses as may have been furnished by such party in writing to the other.

 

(i)            Benefit and Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their respective successors, assigns, and legal representatives. The Company has the right to assign this Agreement, and such assignee shall become entitled to all the rights of the Company hereunder to the extent of such assignment.

 

(j)            Counterparts. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.

 

(k)           Integration. This Agreement constitutes the entire agreement between the parties with respect to this Award and supersedes all prior agreements and discussions between the parties concerning such subject matter, including but not limited to, any written or oral offer letter or consulting or service agreement between the parties that provides for the issuance of equity in the Company.

 

 

6.             Dispute Resolution.

 

(a)           Except as provided below, any dispute arising out of or relating to the Plan or the Shares, this Agreement, or the breach, termination or validity of the Plan, the Shares or this Agreement, shall be finally settled by binding arbitration conducted expeditiously in accordance with the J.A.M.S./Endispute Comprehensive Arbitration Rules and Procedures (the “J.A.M.S. Rules”). The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. Sections 1 - 16, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration shall be Boston, Massachusetts.

 

(b)           The arbitration shall commence within 60 days of the date on which a written demand for arbitration is filed by any party hereto. In connection with the arbitration proceeding, the arbitrator shall have the power to order the production of documents by each party and any third-party witnesses. In addition, each party may take up to three depositions as of right, and the arbitrator may in his or her discretion allow additional depositions upon good cause shown by the moving party. However, the arbitrator shall not have the power to order the answering of interrogatories or the response to requests for admission. In connection with any arbitration, each party to the arbitration shall provide to the other, no later than seven business days before the date of the arbitration, the identity of all persons that may testify at the arbitration and a copy of all documents that may be introduced at the arbitration or considered or used by a party’s witness or expert. The arbitrator’s decision and award shall be made and delivered within six months of the selection of the arbitrator. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or finding of liability. The arbitrator shall not have power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocably waives any claim to such damages.

 

(c)           The Company, the Grantee, each party to the Agreement and any other holder of Shares issued pursuant to this Agreement (each, a “Party”) covenants and agrees that such party will participate in the arbitration in good faith. This Section 6 applies equally to requests for temporary, preliminary or permanent injunctive relief, except that in the case of temporary or preliminary injunctive relief any party may proceed in court without prior arbitration for the limited purpose of avoiding immediate and irreparable harm.

 

(d)           Each Party (i) hereby irrevocably submits to the jurisdiction of any United States District Court of competent jurisdiction for the purpose of enforcing the award or decision in any such proceeding, (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above named courts, that its property is exempt or immune from attachment or execution (except as protected by applicable law), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court, and (iii) hereby waives and agrees not to seek any review by any court of any other jurisdiction which may be called upon to grant an enforcement of the judgment of any such court. Each Party hereby consents to service of process by registered mail at the address to which notices are to be given. Each Party agrees that its, his or her submission to jurisdiction and its, his or her consent to service of process by mail is made for the express benefit of each other Party. Final judgment against any Party in any such action, suit or proceeding may be enforced in other jurisdictions by suit, action or proceeding on the judgment, or in any other manner provided by or pursuant to the laws of such other jurisdiction.

 

[SIGNATURE PAGE FOLLOWS]

 

 

The foregoing Restricted Stock Agreement is hereby accepted and the terms and conditions thereof are hereby agreed to by the undersigned as of the date of purchase of Shares above written.

 

	DISC MEDICINE, INC.
	By:
		Name:
		Title:
	Address:

 

The undersigned hereby acknowledges receiving and reviewing a copy of the Plan, including, without limitation, Section 9 thereof and understands that the Shares granted hereby are subject to the terms of the Plan and of this Agreement. This Agreement is hereby accepted, and the terms and conditions of the Plan, the Award Notice and this Agreement, SPECIFICALLY INCLUDING THE ARBITRATION PROVISIONS SET FORTH IN SECTION 6 OF THIS AGREEMENT, are hereby agreed to, by the undersigned as of the date first above written.

 

	GRANTEE
	Name:
	Address:

 

 

[SPOUSE’S CONSENT¹ 

I acknowledge that I have read the 

foregoing Restricted Stock Agreement 

and understand the contents thereof. 

 

____________________________________]

 

 

¹ A spouse’s consent is required only if the Grantee’s state of residence is one of the following community property states: Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington and Wisconsin.

8

 

Exhibit 10.2

 

Certain identified information has been excluded from this exhibit because it is both not material and is the type that the registrant treats as private or confidential. Information that was omitted has been noted in this document with a placeholder identified by the mark “[***]”.

 

Confidential

 

License Agreement

 

This Agreement is entered into with effect as of the Effective Date (as defined below)

 

by and between

 

F. Hoffmann-La Roche Ltd
with an office and place of business at Grenzacherstrasse 124, 4070 Basel, Switzerland (“Roche Basel”)

 

and

 

Hoffmann-La Roche Inc.
with an office and place of business at 150 Clove Road, Suite 8, Little Falls, New Jersey 07424, U.S.A. (“Roche US”; Roche Basel and Roche US together referred to as “Roche”), on the one hand

 

and

 

Disc Medicine, Inc.
with an office and place of business at 150 Cambridge Park Drive, Suite 103, Cambridge, Massachusetts 02140, U.S.A. (and all of its Affiliates “Company”), on the other hand.

 

 

Table of Contents

 

1.        Definitions	1
1.1   Affiliate	1
1.2   Agreement	1
1.3   Agreement Term	1
1.4   Applicable Law	1
1.5   Calendar Quarter	1
1.6   Calendar Year	2
1.7   Change of Control	2
1.8   Change of Control Group	2
1.9   Combination Product	2
1.10   Commercially Reasonable Efforts	2
1.11   Company Know-How	3
1.12   Company Patent Rights	3
1.13   Completion	3
1.14   Compound	3
1.15   Confidential Information	3
1.16   Continuation Election Notice	4
1.17   Control	4
1.18   Cover	4
1.19   Data Room	4
1.20   Development Plan	4
1.21   Effective Date	4
1.22   Exclusivity Agreement	4
1.23   EU	4
1.24   Expert	5
1.25   FDA	5
1.26   FDCA	5
1.27   Field	5
1.28   Filing	5
1.29   First Commercial Sale	5
1.30   GAAP	5
1.31   Generic Product	5
1.32   Handle	5
1.33   IFRS	5
1.34   IND	5
1.35   Indication	6
1.36   Initiation	6
1.37   Insolvency Event	6
1.38   Invention	6
1.39   IPO	6
1.40   Joint Know-How	6
1.41   Joint Patent Rights	6
1.42   Know-How	6
1.43   Major EU Countries	7
1.44   NDA	7
1.45   Net Proceeds	7
1.46   Net Sales	8
1.47   Non-Disclosure Agreement	8
1.48   Partner	8
1.49   Partner Agreement	8

 

 

1.50   Party	9
1.51   Patent Rights	9
1.52   Phase III Study	9
1.53   Product	9
1.54   Regulatory Approval	9
1.55   Regulatory Authority	9
1.56   Regulatory Exclusivity	9
1.57   Roche Know-How	10
1.58   Roche Patent Rights	10
1.59   Royalty Term	10
1.60   Strategic Transaction	10
1.61   Sublicensees	10
1.62   Territory	10
1.63   Third Party	10
1.64   US	10
1.65   US$	10
1.66   Valid Claim	10
1.67   Additional Definitions	11
2.         Grant of License	12
2.1   Exclusive License	12
2.2   Non-exclusive License	12
2.3   Right to Sublicense	12
2.4   Right to enter into Partner Agreements	12
2.5   Sub-Contractors	13
2.6   Retained Rights	14
3.        Right of First Negotiation	14
3.1   Roche Exclusive Right of First Negotiation	14
3.2   Due Diligence	14
3.3   Negotiation Process	16
4.        Alliance Managers and Technology Transfer	16
4.1   Alliance Managers	16
4.2   Roche Know-How Transfer	16
4.3   Roche Material Transfer	16
4.4   Regulatory Filings	17
4.5   No Further Obligations	17
5.        Diligence	17
6.        Development	17
6.1   Responsibility	17
6.2   Development Plan	17
6.3   Reporting	18
7.        Supply	18
7.1   Clinical and Non-Clinical Supply of Product	18
7.2   Commercial Supply of Product	18
8.       Regulatory	18
8.1   Responsibility	18
8.2   Informed Consent Forms	18
8.3   Pharmacovigilance Agreement	18
9.       Commercialization	18
9.1   Responsibility	18
9.2   Reporting and Updates	19
10.      Payment	19

 

 

10.1   Upfront Payment	19
10.2   Development Event Payments	19
10.3   Sales Based Events	20
10.4   Royalty Payments	20
10.5   Combination Product	21
10.6   Expert Committee	21
10.7   No Valid Claim	21
10.8   Generic Product	21
10.9   Third Party Payments	21
10.10   Strategic Transaction	22
10.11   IPO	22
11.      Accounting and Reporting	22
11.1   Timing of Payments	22
11.2   Late Payment	22
11.3   Method of Payment	23
11.4   Currency Conversion	23
11.5   Reporting	23
12.      Taxes	23
13.      Auditing	24
13.1   Roche Right to Audit	24
13.2   Audit Reports	24
13.3   Over-or Underpayment	24
14.      Intellectual Property	24
14.1   Ownership of Inventions and Know-How	24
14.2   German Statute on Employee’s Inventions	25
14.3   Prosecution of Roche Patent Rights	25
14.4   Prosecution of Company Patent Rights and Joint Patent Rights	25
14.5   CREATE Act	25
14.6   Patent Coordination Team	25
14.7   Unified Patent Court (Europe)	25
14.8   Abandonment of Patent Rights	26
14.9   Infringement	26
14.10   Defense	27
14.11   Common Interest Disclosures	28
14.12   Hatch-Waxman	28
14.13   Patent Term Extensions	28
15.      Representations and Warranties (Garantien)	29
15.1   Mutual representations and warranties	29
15.2   Roche Representations and Warranties	29
15.3   Limitations	30
15.4   Disclaimer	30
16.      Indemnification	30
16.1   Roche indemnification	30
16.2   Company indemnification	31
16.3   Procedure	31
17.      Liability	31
17.1   Disclaimer	31
17.2   Limitation of Liability	31
18.      Obligation Not to Disclose Confidential Information	32
18.1   Non-Use and Non-Disclosure	32
18.2   Permitted Disclosure	32

 

 

18.3   Press Releases	33
18.4   Publications	33
18.5   Commercial Considerations	33
19.       Term and Termination	34
19.1   Commencement and Term	34
19.2   Termination	34
19.3   Consequences of Termination	35
19.4   Obligations Related to Ongoing Activities	36
19.5   Obligations Related to Manufacturing	37
19.6   Direct License	37
19.7   Royalty and Payment Obligations	37
19.8   Survival	37
20.      Bankruptcy	37
21.      Miscellaneous	38
21.1   Entire Agreement	38
21.2   Written Form	38
21.3   Governing Law	38
21.4   Disputes	38
21.5   Arbitration	38
21.6   Arbitrators	39
21.7   Decisions; Timing of Decisions	39
21.8   Insurance	40
21.9   Assignment	40
21.10   Debarment	40
21.11   Independent Contractor	40
21.12   Unenforceable Provisions and Severability	40
21.13   Waiver	41
21.14   Appendices	41
21.15   Interpretation	41
21.16   Invoices	41
21.17   Notice	42

 

License Agreement

 

WHEREAS, Roche has discovered and has conducted certain research and development related to, and possesses certain proprietary intellectual property with respect to a certain orally administered small molecule [***] that selectively inhibits the Glycine Transporter 1 (GlyT1) including [***] (each a “Compound” as further defined below); and

 

WHEREAS, Company desires to obtain, and Roche is willing to grant to Company an exclusive, royalty-bearing license under Roche Know-How and Roche Patent Rights (each as defined below) to develop, manufacture, commercialize and otherwise exploit Compounds and Products in the Field in the Territory (terms as defined below), subject to the terms and conditions hereof; and

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, do hereby agree as follows:

 

1.

Definitions

As used in this Agreement, the following terms, whether used in the singular or plural, shall have the following meanings:

 

1.1

Affiliate

The term “Affiliate” shall mean any individual, corporation, association or other business entity that directly or indirectly controls, is controlled by, or is under common control with the Party in question. As used in this definition of “Affiliate,” the term “control” shall mean the direct or indirect ownership of more than fifty percent (>50%) of the stock having the right to vote for directors thereof or the ability to otherwise control the management of the corporation or other business entity whether through the ownership of voting securities, by contract, resolution, regulation or otherwise. [***]

 

1.2

Agreement

The term “Agreement” shall mean this document including any and all appendices and amendments to it, as may be added or amended from time to time in accordance with the provisions of this Agreement.

 

1.3

Agreement Term

The term “Agreement Term” shall mean the period of time commencing on the Effective Date and, unless this Agreement is terminated sooner as provided in Article 19, ending on the date of the expiry of the last to expire Royalty Term.

 

1.4

Applicable Law

The term “Applicable Law” shall mean any law, statute, ordinance, code, rule or regulation that has been enacted by a government authority (including any Regulatory Authority) and is in force as of the Effective Date or comes into force during the Agreement Term, in each case to the extent that the same are applicable to the performance by the Parties of their respective obligations under this Agreement. For clarity, the term Applicable Law shall include GLP, GCP, and GMP and their foreign equivalents.

 

1.5

Calendar Quarter

The term “Calendar Quarter” shall mean each period of three (3) consecutive calendar months, ending March 31, June 30, September 30, and December 31, except for the first Calendar Quarter of the Agreement Term which shall begin on the Effective Date and end on the first to occur of March 31, June 30, September 30, and December 31 after the Effective Date, and the last Calendar Quarter of the Agreement Term which shall end on the last day of the Agreement Term.

 

 

1.6

Calendar Year

The term “Calendar Year” shall mean the period of time beginning on January 1 and ending December 31, except for the first Calendar Year of the Agreement Term which shall begin on the Effective Date and end on December 31 of the year in which the Effective Date occurs, and the last Calendar Year of the Agreement Term which shall end on the last day of the Agreement Term.

 

1.7

Change of Control

The term “Change of Control” shall mean, with respect to a Party: (a) the acquisition by one or more Third Parties of beneficial ownership of fifty percent (50%) or more of the then outstanding capital stock or voting power of such Party, other than acquisitions by employee benefit plans sponsored or maintained by such Party; (b) the consummation of a business combination involving such Party, unless, following such business combination, the stockholders of such Party that owned directly or indirectly more than fifty percent (50%) of the then outstanding capital stock or voting power of the entity immediately prior to such business combination beneficially own directly or indirectly more than fifty percent (50%) of the then outstanding capital stock or voting power of the entity resulting from such business combination or the ultimate parent entity of such entity; or (c) the sale of all or substantially all of such Party’s assets or business relating to the subject matter of the Agreement. Notwithstanding the foregoing, the consummation of an IPO or any other bona fide financing by Company shall not be deemed a Change of Control of Company.

 

1.8

Change of Control Group

The term “Change of Control Group” shall mean with respect to a Party, the person or entity, or group of persons or entities, that is the acquirer of, or a successor to, such Party in connection with a Change of Control, together with Affiliates of such persons or entities that are not Affiliates of such Party immediately prior to the completion of such Change of Control of such Party.

 

1.9

Combination Product

The term “Combination Product” shall mean

 

(i)            a single pharmaceutical formulation containing as its active pharmaceutical ingredients both a Compound and one or more other therapeutically or prophylactically active pharmaceutical ingredients (an “Other Component”), or

 

(ii)           a combination therapy or prophylactic comprised of a Compound and one or more Other Components, priced and sold in a single package containing such multiple products or packaged separately but sold together for a single price,

 

in each case, including all dosage forms, formulations, presentations, line extensions, and package configurations. All references to Product in this Agreement shall include Combination Product.

 

1.10

Commercially Reasonable Efforts

The term “Commercially Reasonable Efforts” shall mean [***].

 

 

1.11

Company Know-How

The term “Company Know-How” shall mean the Know-How (other than Joint Know-How) that Company Controls at the Effective Date and during the Agreement Term that is necessary for the development, manufacture, commercialization or other exploitation of the Compounds and Products.

 

1.12

Company Patent Rights

The term “Company Patent Rights” shall mean the Patent Rights (other than Joint Patent Rights) that Company Controls at the Effective Date and during the Agreement Term that Cover the development, manufacture, commercialization or other exploitation of the Compounds and Products.

 

1.13

Completion

The term “Completion” shall mean, with respect to a Phase III Study, the date of the last scheduled visit for the last study subject.

 

1.14

Compound

The term “Compound” shall mean small molecule [***] that selectively inhibits the Glycine Transporter 1 (GlyT1) including [***] covered by Roche Patent Rights or [***].

 

1.15

Confidential Information

The term “Confidential Information” shall mean the terms of this Agreement and any and all information, data or know-how (including Know-How), whether technical or non-technical, oral or written, that is disclosed by one Party or its Affiliates (“Disclosing Party”) to the other Party or its Affiliates (“Receiving Party”). Confidential Information shall not include any information, data or know-how that:

 

(i)            was generally available to the public at the time of disclosure, or information that becomes available to the public after disclosure by the Disclosing Party other than through fault (whether by action or inaction) of the Receiving Party or its Affiliates,

 

(ii)           can be evidenced by written records to have been already known to the Receiving Party or its Affiliates prior to its receipt from the Disclosing Party,

 

(iii)          is obtained at any time lawfully from a Third Party under circumstances permitting its use or disclosure,

 

(iv)          is developed independently by the Receiving Party or its Affiliates as evidenced by written records other than through knowledge of Confidential Information, or

 

(v)           is approved in writing by the Disclosing Party for release by the Receiving Party.

 

The terms of this Agreement shall be considered Confidential Information of both Parties with each Party being considered the Receiving Party with respect to such Confidential Information. During the Agreement Term, all Confidential Information regarding the Compounds and Products shall be considered Confidential Information of Company. Except as set forth in the preceding sentence, all information disclosed by a Party under the Non-Disclosure Agreement shall be the Confidential Information of the Party disclosing such information.

 

 

1.16

Continuation Election Notice

The term “Continuation Election Notice” shall mean the notice Roche provides to Company under Section 19.3.2.

 

1.17

Control

The term “Control” shall mean (as an adjective or as a verb including conjugations and variations such as “Controls” “Controlled” or “Controlling”) (a) with respect to Patent Rights or Know-How, the possession by a Party of the ability to grant a license or sublicense of such Patent Rights or Know-How without violating the terms of any agreement or arrangement between such Party and any other party and (b) with respect to proprietary materials, the possession by a Party of the ability to supply such proprietary materials to the other Party as provided herein without violating the terms of any agreement or arrangement between such Party and any other party; provided, however, that any intellectual property right that is owned or licensed by an acquirer of a Party or any Affiliate of such acquirer (excluding any Affiliate that was an Affiliate of the relevant Party prior to a Change of Control and became an Affiliate of such acquirer as a result of such Change of Control) will not be deemed to be Controlled by such Party for purposes of this Agreement unless and only to the extent such intellectual property right is used in connection with the development, manufacture, commercialization or other exploitation of a Compound or Product following such Change of Control.

 

1.18

Cover

The term “Cover” shall mean (as an adjective or as a verb including conjugations and variations such as “Covered,” “Coverage” or “Covering”) that the developing, making, using, offering for sale, promoting, selling, exporting or importing of a given compound, formulation or product would infringe a Valid Claim included in a particular Patent Right in the absence of a license under, or ownership of, such Patent Right. The determination of whether a compound, formulation, process or product is Covered by a particular Valid Claim shall be made on a country-by-country basis.

 

1.19

Data Room

The term “Data Room” shall mean the electronic due diligence data room containing all material data and information relevant to the Compounds and Products that are the subject of the applicable Major Market Agreement or Change of Control, including Company Patent Rights, Joint Patent Rights, clinical data, regulatory correspondence, and Chemistry, Manufacturing, and Controls (“CMC”) data.

 

1.20

Development Plan

The term “Development Plan” shall mean the plan for the development of the Products as set forth in Section 6.2, as may be amended in accordance with the terms of this Agreement.

 

1.21

Effective Date

The term “Effective Date” shall mean May 7, 2021.

 

1.22

Exclusivity Agreement

The term “Exclusivity Agreement” shall mean the exclusivity agreement between Roche and Company effective March 9, 2021.

 

1.23

EU

The term “EU” shall mean the organization of member states known as the European Union, as its membership may be altered from time to time, and any successor thereto, and all of its then current member countries. Notwithstanding the foregoing, the term EU shall in any event include the United Kingdom.

 

 

1.24

Expert

The term “Expert” shall mean a person with no less than [***] of pharmaceutical industry experience and expertise having occupied at least one senior position within a large pharmaceutical company relating to product commercialization or licensing, but excluding any current or former employee or consultant of either Party. Such person shall be fluent in the English language.

 

1.25

FDA

The term “FDA” shall mean the Food and Drug Administration of the US or any successor agency thereto, or its foreign equivalent, e.g., the European Medicines Agency in the EU, the Pharmaceuticals and Medical Devices Agency in Japan, and the National Medical Products Administration in China.

 

1.26

FDCA

The term “FDCA” shall mean the Food, Drug and Cosmetics Act, as amended, and the rules and regulations promulgated thereunder.

 

1.27

Field

The term “Field” shall mean all prophylactic and therapeutic uses in all Indications, excluding diagnostic uses.

 

1.28

Filing

The term “Filing” shall mean the filing of an NDA to the FDA.

 

1.29

First Commercial Sale

The term “First Commercial Sale” shall mean [***].

 

1.30

GAAP

The term “GAAP” shall mean Generally Accepted Accounting Principles.

 

1.31

Generic Product

The term “Generic Product” shall mean, with respect to a Product, a pharmaceutical composition, preparation, or other product that (i) in the US, is approved under 21 U.S.C. 355(j) and has an “AB” rating with respect to such Product (or the equivalent of such statute if amended), or (ii) in countries of the EU, is authorized to be placed on the market in accordance with Article 10(1)(a)(iii) of Directive 2001/83/EC (or the equivalent of such statute if amended), or (iii) in countries of the Territory other than countries of the EU or the US, (x) [***] and (y) [***].

 

1.32

Handle

The term “Handle” shall mean with respect to Patent Rights preparing, filing, prosecuting (including interference and opposition proceedings) and maintaining (including payment of maintenance fees and annuities and overseeing interferences, proceedings, reissue applications and proceedings, re-examination applications and proceedings, post-grant reviews, inter partes reviews, derivation proceedings and opposition proceedings).

 

1.33

IFRS

The term “IFRS” shall mean International Financial Reporting Standards.

 

1.34

IND

The term “IND” shall mean an Investigational New Drug application as defined in the FDCA and applicable regulations promulgated by the FDA, or the equivalent application to the equivalent agency in any other country or group of countries, the filing of which is necessary to commence clinical testing of a Product in humans.

 

 

1.35

Indication

The term “Indication” shall mean a disease (i) for which the Product is indicated for treatment, prevention, mitigation, cure or relief, and (ii) that is described in the Product label as required by the Regulatory Approval granted by the applicable Regulatory Authority. For the avoidance of doubt, erythropoietic protoporphyria (EPP) and X-linked protoporphyria (XLPP) shall together be deemed a single Indication.

 

1.36

Initiation

The term “Initiation” shall mean the date the [***] is dosed with the Product [***].

 

1.37

Insolvency Event

The term “Insolvency Event” shall mean circumstances under which a Party (i) has a receiver or similar officer appointed by a court of competent jurisdiction or governmental authority over all or a material part of its assets or undertaking; (ii) passes a resolution for winding-up (other than a winding-up for the purpose of, or in connection with, any solvent amalgamation or reconstruction) or a court makes an order to that effect or a court makes an order for administration (or any equivalent order in any jurisdiction); (iii) enters into any composition or arrangement with its creditors (other than relating to a solvent restructuring); (iv) ceases to carry on business; or (v) is unable to pay its debts as they become due in the ordinary course of business.

 

1.38

Invention

The term “Invention” shall mean an invention that is conceived or reduced to practice in connection with any activity carried out pursuant to this Agreement. Under this definition, an Invention may be made by employees of Company solely or jointly with a Third Party (a “Company Invention”), by employees of Roche solely or jointly with a Third Party (a “Roche Invention”), or jointly by employees of Company and Roche with or without a Third Party (a “Joint Invention”). Inventorship of any Invention will be determined in accordance with U.S. patent law.

 

1.39

IPO

The term “IPO” shall mean, with respect to Company, Company’s (i) first underwritten public offering of its common stock under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, or, with respect to any non-US public offering, under any foreign equivalent ,or (ii) a “reverse merger” of Company prior to its first underwritten public offering with a Third Party publicly traded company or a subsidiary of such Third Party publicly traded company or any merger with a special purpose acquisition company or a subsidiary of such special purpose acquisition company.

 

1.40

Joint Know-How

The term “Joint Know-How” shall mean Know-How that is made jointly by the Parties or their Affiliates in connection with any activity carried out pursuant to this Agreement, including all Joint Inventions.

 

1.41

Joint Patent Rights

The term “Joint Patent Rights” shall mean all Patent Rights Covering any Joint Know-How.

 

1.42

Know-How

The term “Know-How” shall mean data, knowledge and information, including materials, samples, chemical manufacturing data, toxicological data, pharmacological data, preclinical data, proprietary assays related to the Compound, platforms, formulations, specifications, quality control testing data, any of which are necessary for the research, manufacture, development or commercialization of Compounds or Products.

 

 

1.43

Major EU Countries

The term “Major EU Countries” shall mean France, Germany, Italy, Spain and the United Kingdom.

 

1.44

NDA

The term “NDA” shall mean a new drug application, including all necessary documents, data, and other information concerning a Product, required for Regulatory Approval of the Product as a pharmaceutical product by the FDA or an equivalent application to the equivalent agency in any other country or group of countries (e.g., the marketing authorization application (MAA) in the EU).

 

1.45

Net Proceeds

The term “Net Proceeds” shall mean:

 

(i)         In the case of a Strategic Transaction that is a Partner Agreement, the aggregate proceeds as and when received by Company or its Affiliates in consideration for the transfer of rights to the Compound and Product to the Partner under such Partner Agreement, including any upfront payments, event based milestone payments, royalty payments (subject to the proviso below) and all other monetary and non-monetary consideration (with non-monetary consideration being valued at the fair market value thereof, but excluding the value of customary rights, obligations and grant-backs (including grant-back licenses to improvements to Company’s technology)), directly or indirectly from the Partner under such Partner Agreement, minus the transaction costs; provided however that excluded from any such proceeds are all of the following: [***]. To the extent any Partner Agreement involves the license or other transfer of rights to compounds or products in addition to the license or transfer of rights to the Compound or Product, “Net Proceeds” with respect to such Partner Agreement shall be the portion of the payments listed above that is attributable to the value of the Compound or Product and not such other compounds or products.

 

(ii)        In the case of a Change of Control of Company that is a Strategic Transaction, the total consideration as and when received by Company, minus the transaction costs, as consideration for the Change of Control (prior to the calculation of the Strategic Transaction Revenues), to the extent attributable to the value of the Compounds and Products and not any Additional Assets, and shall include: (a) cash; (b) equity securities (which, if of the same class as securities that are publicly traded, will be valued in accordance with the valuation methodology set forth in the definitive agreement for the Change of Control transaction or, if not so specified, at the average of the last closing market price thereof [***] prior to the public announcement of the Change of Control, and, if not so publicly traded, as valued by the Board of Directors of Company in good faith); (c) the value of assumed, “cashed out” or substituted options, warrants or other rights to acquire equity securities (net of exercise prices); and (d) any interest-bearing indebtedness for borrowed money of Company that is (i) assumed by an acquiring party or remains outstanding at the time of closing of the Change of Control (less all cash and cash equivalents of Company at the time of closing of the Change of Control) or (ii) decreased, repaid or extinguished in connection with the Change of Control; provided, however that excluded from any such proceeds are all of the following: [***].

 

 

1.46

Net Sales

The term “Net Sales” shall mean, for a Product in a particular period, the amount of gross sales of a Product in the Territory invoiced by Company or its Affiliates that are sublicensed under this Agreement or Sublicensee (excluding third party distributors) to Third Parties, as reduced by the following deductions taken by the applicable Company, Affiliate that is sublicensed under this Agreement, or Sublicensee in accordance with the then currently used IFRS or GAAP, as applicable, to the extent actually allowed or incurred with respect to such sales: [***].

 

For purposes of determining Net Sales, a Product shall be deemed to be sold when invoiced, and a “sale” shall not include transfers or dispositions of such Product for pre-clinical or clinical purposes or as samples or to an Affiliate that is sublicensed under this Agreement or a Sublicensee unless such Affiliate or Sublicensee is the end-user of such Product.

 

In the case of any Combination Product sold in a given country in the Territory, Net Sales of the Combination Product in such country will be calculated by multiplying actual Net Sales of such Combination Product in such country [***].

 

If, on a country-by-country basis, the Compound is sold separately as a stand-alone Product in a country, but the Other Components in the Combination Product are not sold separately in such country, then Net Sales of the Combination Product for such country will be calculated [***].

 

If, on a country-by-country basis, the Compound in the Combination Product is not sold separately as a stand-alone Product in such country, but the Other Components included in the Product are sold separately in such country, then Net Sales of the Combination Product for such country will be calculated [***].

 

If neither the Compound nor the Other Components are sold separately in a given country, then the Relative Commercial Value of the Compound shall be determined in accordance with Section 10.5.

 

Company’s or any of its Affiliates’ transfer of any Product to an Affiliate shall not result in any Net Sales, unless such Product is consumed by such Affiliate in the course of its commercial activities.

 

1.47

Non-Disclosure Agreement

The term “Non-Disclosure Agreement” shall mean the non-disclosure agreement between F. Hoffmann-La Roche Ltd and Company effective July 8, 2020.

 

1.48

Partner

The term “Partner” shall mean a Third Party with which Company will enter or has entered a Partner Agreement.

 

1.49

Partner Agreement

The term “Partner Agreement” shall mean any agreement between Company and a Third Party granting rights to develop and commercialize one or more Compounds or one or more Products in the Field in the Territory or any portion thereof (including a sub-license or option to sublicense agreement with a Third Party regarding the rights granted hereunder to Company (e.g., an agreement under which payments for future or preferential rights are granted) or an assignment of this Agreement to a Third Party in whole or in part, subject to the other terms and conditions of this Agreement), but in all cases excluding: (a) any sub-contract entered into pursuant to Section 2.5 and (b) any Change of Control transaction. The term Partner Agreement shall include all amendments to such Partner Agreement.

 

 

1.50

Party

The term “Party” shall mean Roche or Company, as the case may be, and “Parties” shall mean Company and Roche, collectively.

 

1.51

Patent Rights

The term “Patent Rights” shall mean all rights under any patent or patent application, certificate of inventions, application for certificate of invention or priority patent filing in any country of the Territory or under any international convention or treaty, including any patents issuing on such patent application, and further including any substitution, extension or supplementary protection certificate, reissue, re-examination, renewal, division, continuation or continuation-in-part of any of the foregoing.

 

1.52

Phase III Study

The term “Phase III Study” shall mean a human clinical trial that is prospectively designed to demonstrate statistically whether a product is safe and effective for use in humans in a manner sufficient to obtain Regulatory Approval to market such product in patients having the disease or condition being studied as described in 21 C.F.R. § 312.21(c) (FDCA), as amended from time to time, and the foreign equivalent thereof. For clarity, a human clinical trial that at the time of Initiation (or any later expansion of patient enrollment, if applicable) is expected to be the basis for Regulatory Approval of a Product shall be considered a Phase III Study.

 

1.53

Product

The term “Product” shall mean any product, including any Combination Product, containing a Compound as pharmaceutically active agent, regardless of their finished forms, formulations, modes of administration, presentations or dosages.

 

1.54

Regulatory Approval

The term “Regulatory Approval” shall mean any approvals, licenses, registrations or authorizations by a Regulatory Authority, in each case, necessary for the promotion or sale of a Product in the Field in a regulatory jurisdiction in the Territory, including, where applicable in the EU, reimbursement or pricing approvals in at least one of the Major EU Countries subject to such Regulatory Authority.

 

1.55

Regulatory Authority

The term “Regulatory Authority” shall mean any national, supranational (e.g., the European Commission, the Council of the European Union, the European Medicines Agency), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity including the FDA, in each country involved in the granting of Regulatory Approval.

 

1.56

Regulatory Exclusivity

The term “Regulatory Exclusivity” means any exclusive marketing rights or data exclusivity rights conferred by any governmental authority under Applicable Law with respect to a Product in a country or jurisdiction in the Territory that prevent Third Parties from selling such Product in such country or jurisdiction, other than a Patent Right, including orphan drug exclusivity, pediatric exclusivity, rights conferred in the US under the FD&C Act, in the EU under Directive 2001/83/EC, or rights similar thereto in other countries or regulatory jurisdictions in the Territory.

 

 

1.57

Roche Know-How

The term “Roche Know-How” shall mean the Know-How contained in the documents listed in Appendix 1.57 of this Agreement, and any Know-How transferred to Company pursuant to Section 4.4 or 4.5.

 

1.58

Roche Patent Rights

The term “Roche Patent Rights” shall mean the Patent Rights listed in Appendix 1.58.

 

1.59

Royalty Term

The term “Royalty Term” shall mean, with respect to a Product and for a given country, the period of time commencing on the date of First Commercial Sale of such Product in such country and ending on the later of the date that is (a) twelve (12) years after the date of the First Commercial Sale of such Product in such country, (b) the expiration of the last to expire Valid Claim within the Roche Patent Rights or Joint Patent Rights in such country Covering the use, manufacture, import, offering for sale, or sale of the Product in the manufacturing or selling country, or (c) expiration of the last to expire Regulatory Exclusivity conferred by the applicable Regulatory Authority in such country for such Product.

 

1.60

Strategic Transaction

The term “Strategic Transaction” shall mean, with respect to Company, (i) any Change of Control of Company, or (ii) the execution of a Partner Agreement.

 

1.61

Sublicensees

The term “Sublicensees” shall mean any Third Party to which Company has sublicensed rights granted Company under this Agreement, but shall exclude any subcontractor described in Section 2.5.

 

1.62

Territory

The term “Territory” shall mean all countries of the world.

 

1.63

Third Party

The term “Third Party” shall mean a person or entity other than (i) Company or any of its Affiliates or (ii) Roche or any of its Affiliates.

 

1.64

US

The term “US” shall mean the United States of America and its territories and possessions.

 

1.65

US$

The term “US$” shall mean US dollars.

 

1.66

Valid Claim

The term “Valid Claim” shall mean a claim contained in any (i) unexpired, in force and issued Roche Patent Right or Joint Patent Right that has not been disclaimed, revoked or held invalid by a final non-appealable decision of a court of competent jurisdiction or government agency or (ii) pending application that is included in the Roche Patent Rights in any country of the Territory that has been pending for fewer than [***] from the earliest date to which such application claims priority.

 

 

1.67

Additional Definitions

Each of the following definitions is set forth in the Section of this Agreement indicated below:

 

Definition	Section
Accounting Period	11.1
Additional Assets	10.10.3
Alliance Manager	4.1
Bankruptcy Code	20
Breaching Party	19.2.1
CMC	1.19
Company Indemnitees	16.1
Company Invention	1.38
Company Notice	3.1
Decision Period	14.7
Definitive Agreement	3.3
Disclosing Party	1.15
Escalation Notice	21.4
Exclusive Right of First Negotiation	3.1
Expert Committee	10.6
GMP Materials	4.3
Governing Law	21.3
H-W Suit Notice	14.12
Indemnified Losses	16.1
Indemnifying Party	16.3
Initiating Party	14.7
Joint Invention	1.38
Major Market Agreement	3.1
Negotiation Period	3.3
Non-Breaching Party	19.2.1
Other Component	1.9
Patent Term Extensions	14.13
Payment Currency	11.3
Peremptory Notice Period	19.2.1
Publishing Notice	18.4
Receiving Party	1.15
Register	14.7
Relative Commercial Value	10.5
Respective Major Market(s)	3.3
Review Notice	3.2
Review Period	3.2
Roche Indemnitees	16.2
Roche Invention	1.38
ROFN Exercise Notice	3.2
ROFN Window	3.1
Settlement	14.7
SPCs	14.13
Strategic Transaction Revenues	10.10.1
Suit Notice	14.9
Term Sheet	3.3
Transfer	4.4
Transition Period	19.6

 

 

2.

Grant of License

 

2.1

Exclusive License

Roche hereby grants to Company an exclusive (subject to Section 2.6 below, even as to Roche), sublicensable (subject to Sections 2.4 and 2.5 and Article 3) worldwide right and license under Roche Patent Rights, Roche Know-How and Roche’s interest in Joint Patent Rights and Joint Know-How, to research, have researched, develop, have developed, register, have registered, use, have used, make, have made, import, have imported, export, have exported, market, have marketed, distribute, have distributed, offer for sale, have offered for sale, sell and have sold Compounds and Products in the Field in the Territory. No license is granted by Roche to Company for any other purpose; Company shall not use Roche Know-How other than for the licensed activities; and, Roche retains the right to use Roche Know-How, including data contained therein, for all other purposes.

 

2.2

Non-exclusive License

Company hereby grants to Roche a non-exclusive, perpetual, worldwide, royalty-free license under Company Patent Rights and Company Know-How, in each case, solely to the extent such Company Patent Rights or Company Know-How are necessary or useful to exploit Compounds and Products outside the Field in the Territory, to research, have researched, develop, have developed, register, have registered, use, have used, make, have made, import, have imported, export, have exported, market, have marketed, distribute, have distributed, offer for sale, have offered for sale, sell and have sold Compound and Products outside the Field in the Territory.

 

2.3

Right to Sublicense

Company shall have the right to grant written sublicenses under its rights granted under Section 2.1 (a) to its Affiliates or (b) to Third Parties with Roche’s prior written consent in accordance with Section 2.4. If Company grants such a sublicense, then Company shall ensure that all terms and conditions of this Agreement that are applicable to a sublicensee shall apply to all such Affiliates or Third Parties to the same extent as they apply to Company for all purposes. Company assumes full responsibility for the performance of all obligations and observance of all terms so imposed on such Affiliates or Third Parties and shall itself account to Roche for all payments due under this Agreement by reason of such sublicense. Subject to the rest of this Section 2.3, Company may fulfill any of its obligations or responsibilities under this Agreement through Affiliates that have been sublicensed under this Agreement or Sublicensees.

 

2.4

Right to enter into Partner Agreements

Subject to Roche’s rights under Article 3, Company shall have the right to enter into a Partner Agreement with one (1) or more Partners under its rights granted under Section 2.1. Company will be responsible for managing the entire process with the Partner including scientific due diligence and negotiations.

 

If Company grants such rights to the Partner(s), then Company shall ensure that the Partner(s) comply with all of the applicable terms and conditions of this Agreement to the same extent as they apply to Company for all applicable purposes. Company shall remain liable to Roche for the performance of all obligations and observance of all terms so imposed on a Partner under such Partner Agreement(s) and shall itself account to Roche for all payments due under this Agreement.

 

 

Prior to entering into a Partner Agreement, Company shall provide Roche with notice of the identity of the proposed partner and the type of transaction contemplated (e.g., sale of Company, sale of the Compounds and Products or sublicense, including the territories that are to be sublicensed). Following execution of a Partner Agreement, Company will provide Roche with such Partner Agreement, which may be redacted with respect to any terms not necessary for Roche to ensure compliance with the terms of this Agreement. Any sublicense of the rights granted hereunder to be included in a Partner Agreement shall be subject to Roche’s prior written approval of the Partner, such approval not to be unreasonably withheld, conditioned or delayed; provided that Roche shall not withhold, condition or delay its approval unless Roche reasonably believes that the potential Partner (a) does not have substantially similar compliance standards as Company or (b) does not have, and is not reasonably likely to obtain, the financial means or the capabilities to perform the obligations under this Agreement to the same extent as Company. If Roche withholds, conditions or delays its approval, then Roche shall provide the reasoning of such withholding, conditioning or delay of approval to Company. If, after good faith negotiations [***], the Parties cannot settle any dispute as to whether Roche has unreasonably withheld, conditioned or delayed its approval of the Partner or the terms of the Partner Agreement, then the dispute shall be initially referred to the executive officers of the Parties in accordance with Section 21.4. Should the Parties’ executive officers fail to agree [***], then, notwithstanding Section 21.5, the dispute shall be settled by arbitration under the procedures of Sections 21.5-21.7.

 

Any Partner Agreement shall include the right to disclose a redacted copy of the Partner Agreement and the Partner’s confidential information to Roche as necessary for Roche to ensure compliance with the terms of this Agreement.

 

The Partners of Company shall have the right to further sub-license rights to their Affiliates as provided in Section 2.3, and to sub-license rights to develop and commercialize the Compounds or Products to a Third Party with Roche’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed, in accordance with the terms of and process described in this Section 2.4 (applied mutatis mutandis to such further sub-license in place of a Partner Agreement).

 

As a general principle, a Partner Agreement shall not be structured with the intent to avoid payments to Roche otherwise due to Roche under this Agreement.

 

For example: Company shall not enter into a Partner Agreement that allocates certain payments to a product other than a Product, where such payments are materially inconsistent with the relative values of the Product and such other product and the rights granted with respect to each such product, for the purpose of avoiding payments to Roche under this Agreement.

 

2.5

Sub-Contractors

Company, together with its Affiliates that have been sublicensed under this Agreement and Sublicensees, has the right, without the consent of Roche, to sub-contract work performed under this Agreement, which right shall include the right to grant a sublicense of the rights granted hereunder to the extent necessary for such subcontractor to fulfill its obligations in compliance with this Agreement. Any sub-contract agreement shall include the right to disclose (i) a copy of such sub-contract agreement and confidential information disclosed thereunder (which will be Company’s Confidential Information hereunder) to Roche and (ii) the right to assign the agreement to Roche upon Roche’s having obtained rights to the Compound and Product either as a result of the exercise of its Right of First Negotiation pursuant to Article 3 or upon termination of this Agreement, including the right to transfer of the ownership of data, information and results arising therefrom to Roche to the same extent as to Company.

 

 

2.6

Retained Rights

Notwithstanding anything in this Agreement, Roche shall retain the right to use the Compounds and Roche Know-How for internal non-clinical research purposes (e.g., as a reference model) alone or in collaboration with a Third Party for Compound data mining purposes; provided, however that Roche shall not disclose to any Third Party or publish or present any results of such research, in each case, pertaining specifically to any Compound except where a Compound is mentioned as part of a general discussion, without Company’s prior written consent (not to be unreasonably withheld, conditioned or delayed).

 

3.

Right of First Negotiation

 

3.1

Roche Exclusive Right of First Negotiation

Roche shall have an exclusive right to negotiate a license or a purchase of all Compounds and Products as set forth in this Article 3 (“Exclusive Right of First Negotiation”). If Company (i)(a) within [***] from the Effective Date or (b) until the Completion of the first Phase III Study of a Product, whichever is later, intends to enter into a Partner Agreement granting rights in the US, China or one or more Major EU Countries (a “Major Market Agreement”), [***] shall promptly inform Roche in writing of such intention, in each situation prior to exchanging a term sheet (the “Company Notice”).

 

3.2

Due Diligence

 

[***]

 

If Company intends to enter into a Major Market Agreement, then Roche shall have the right to exercise its rights hereunder for the respective country, region or entire Territory, as the case may be. Notwithstanding anything contrary herein, if Company intends to enter into a Partner Agreement granting rights in any of the Major EU Countries, then Roche shall have the right to exercise its rights hereunder for the entire EU. If the ROFN Exercise Notice indicates that Roche is not interested in exercising its rights or Roche does not provide an Exercise Notice before the end of the Review Period, then Roche shall be deemed to have waived its rights as to the countries or regions that are the subject of the Company Notice, and Company shall have, subject to the terms set forth herein, the right to enter into the Major Market Agreement with a Third Party.

 

3.3

Negotiation Process

This Section 3.3 will apply if Company notifies Roche in the Company Notice that it intends (a) to enter into a Major Market Agreement or (b) [***].

 

If Company intends to enter into a Partner Agreement, then the Parties will negotiate in good faith the terms and conditions under which Company would grant to Roche the rights to Compounds and Products with regard to the respective countries, regions or in the entire Territory (as applicable, the “Respective Major Market(s)”), and the terms and conditions under which the following would occur:

 

(i)            all rights and licenses granted by Roche to Company under this Agreement would terminate with regard to the Respective Major Market(s) and Company would return all such rights and licenses to Roche, except for the license to Company to use, have used, make, have made, import and export Compounds and Products in the Respective Major Market(s) solely for the purpose of seeking Regulatory Approval for and commercializing Compounds and Products outside of the Respective Major Market(s); and

 

 

(ii)           Company would grant to Roche an exclusive (even as to Company), sub-licensable license under the Company Patent Rights and Company Know-How in the Respective Major Market(s) to develop, have developed, make, have made, use, have used, manufacture, have manufactured, import, have imported, offer for sale and have offered for sale, sell and have sold Compounds and Products in the Field in the Respective Major Market(s), except that Company would retain the right under the Company Patent Rights and Company Know-How to use, have used, make, have made, import and export Compounds and Products in the Respective Major Market(s) solely for the purpose of seeking Regulatory Approval for and commercializing Compounds and Products outside of the Respective Major Market(s).

 

[***].

 

Together with the ROFN Exercise Notice, Roche shall provide Company a written offer for the terms and conditions upon which Company would revert back to Roche the rights to the Compounds and Products with regard to the Respective Major Market(s) or Roche would acquire Company, as applicable. Such offer shall have the form of a draft term sheet. After Company’s receipt of the first draft term sheet the Parties shall have up to [***] to exclusively and in good faith negotiate the terms and conditions of a final term sheet (the “Term Sheet”).

 

Upon finalization of the Term Sheet, the Parties shall have a further period of up to [***] to exclusively and in good faith negotiate and finalize the respective definitive agreement(s) (the “Definitive Agreement”).

 

The term “Negotiation Period” shall mean the period of time commencing on the date of Roche’s ROFN Exercise Notice and ending either (1) [***] after such ROFN Exercise Notice in the case where the Parties fail to execute an agreed upon Term Sheet during such period; or (2) [***] after execution of an agreed upon Term Sheet if the Parties fail to enter into the Definitive Agreement within such [***] period.

 

If (A) Roche declines to access the Data Room during the Review Period, (B) Roche during the Negotiation Period confirms in writing to Company that it is not interested in having the rights to the Compounds and the Products revert back to it as described above in this Section 3.3 or to acquire Company or (C) the Parties, after good faith discussions during the relevant part of the Negotiation Period, cannot agree on the Term Sheet or fail to enter into the Definitive Agreement, then Company shall be free [***] or (y) enter into a Partner Agreement with a Third Party with regard to the Respective Major Market(s) (but subject to Roche’s prior consent as provided in Section 2.4), subject to the last sentence of this Section 3.3.

 

Notwithstanding the foregoing, if the Parties have failed to agree on a Term Sheet or the Definitive Agreement during the applicable Negotiation Period, then Company shall be free to start negotiations and enter into a Partner Agreement with respect to the Respective Major Market(s) [***], provided that during the [***] period after the end of the applicable Negotiation Period with Roche, Company shall not enter into a Partner Agreement with regard to the Respective Major Market(s) [***].

 

If Company does not enter into a Partner Agreement for the Respective Major Market(s) [***], in each case, during the [***] period after the end of the applicable Negotiation Period with Roche, but continues the development and commercialization of the Compounds and Products with regard to the Respective Major Market(s), then this Section 3.3 shall apply mutatis mutandis, if Company after such [***] period intends again to enter into a Major Market Agreement with regard to the same country(ies) [***].

 

 

4.

Alliance Managers and Technology Transfer

 

4.1

Alliance Managers

Each Party shall designate an “Alliance Manager” [***] after the Effective Date. The Alliance Managers shall facilitate the transfer to Company of the Roche Know-How and GMP Materials and communication between the Parties and are the primary points of contact between the Parties with respect to all matters arising under this Agreement, including informational requests from Company to Roche during the Agreement Term. Each Party may change its Alliance Manager from time to time in its sole discretion upon written notice to the other Party.

 

4.2

Roche Know-How Transfer

Promptly, but not later [***] after the Effective Date, Roche shall transfer to Company the Roche Know-How at no additional cost to Company. Such Roche Know-How transfer shall occur electronically promptly after the Effective Date by granting Company download rights to the electronic database for a period of [***] from first date such access is made available to Company.

 

Roche shall provide written or verbal answers to reasonable questions (e.g., after accessing and re-assessing the data provided by Roche in the data room, questions that cannot be answered, or open items that cannot be resolved) relating to the Compounds or Products. Such efforts are limited to a maximum of [***] of Roche personnel free of charge and provided that Roche still has access to personnel with relevant expertise. Subject to availability of such expertise, if Company desires any additional assistance beyond the [***], then Company may request such additional assistance from Roche, and Roche shall use reasonable efforts to provide any such additional assistance to Company. Such additional assistance shall be reimbursed to Roche at Roche’s standard commercial rate applicable at that time. Such obligation by Roche under this Section 4.2 shall not exceed [***] commencing on the Effective Date.

 

4.3

Roche Material Transfer

Promptly, but no later [***] after the Effective Date, Company will inform Roche of the shipping address to which the GMP Materials shall be transferred. Upon such confirmation of address and ability to receive the GMP Materials, Roche shall [***] transfer to the Company in [***] related to the Products that was manufactured under GMP conditions (“GMP Materials”), whether or not currently qualified, that is in its or its Affiliates’ possession at the Effective Date, together with all existing certificates of analyses and release documentation therefor. A listing of the GMP Materials to be transferred by Roche to Company and used solely for non-clinical or clinical development, is provided in Appendix 4.3. Roche shall have no obligation to retest or certify any GMP Materials and PROVIDES SUCH GMP MATERIALS WITHOUT ANY WARRANTY WHATSOEVER. Company shall pay to Roche [***] upon delivery of the GMP Materials. Company shall be solely responsible for and pay all transfer or shipment related costs, e.g., direct shipment cost, import or value-added tax, etc.

 

4.4

Regulatory Filings

Roche shall take such actions as reasonably necessary to transfer copies and ownership of (i) any IND related to the Product and (ii) all other filings and correspondence with or to and from any Regulatory Authority with respect to the Compounds or Products ((i) and (ii) collectively, the “Transfer”), and shall take such actions as may be necessary to inform Regulatory Authorities of this Transfer. For the avoidance of doubt, Company shall be obligated to accept the Transfer of any such IND immediately after receiving the respective written notice from a Regulatory Authority. Company and Roche shall determine the effective date of the Transfer and coordinate the notification of such Transfer to the Regulatory Authority. All of the activities contemplated by this Section 4.4 shall be conducted by Roche at no cost to Company.

 

 

Roche hereby grants to Company, its Affiliates that have been sublicensed under this Agreement and Sublicensees, at no additional cost to Company, a right of reference to all regulatory submissions filed by Roche or its Affiliates in the Territory related to the Compound or any Product, including the manufacture thereof, for the purpose of seeking, obtaining and maintaining Regulatory Approvals for, and the manufacture and commercialization of, Products in the Field in the Territory. Roche shall take all actions reasonably requested by Company to enable Company, its Affiliates that have been sublicensed under this Agreement and Sublicensees to exercise such right of reference.

 

Roche shall transfer to Company all relevant historical clinical and non-clinical data (including safety information on serious adverse events, which shall be provided in CIOMS format and safety information on non-serious adverse events, which shall be provided in English Line Listing format unless both Parties agree to an alternative agreeable format) at no additional charge to Company [***] after Company confirms the location to where the data shall be transferred. Clinical and non-clinical data that are easily retrievable will be transferred no later [***] after both parties have mutually agreed upon the format and the location for the clinical data to be transferred.

 

4.5

No Further Obligations

Roche shall have no obligation to transfer any Know-How, materials, regulatory filings or to provide technical support other than expressly stated in this Article 4; provided, however, that if Roche discovers after the Effective Date that any Know-How, material or regulatory filing that is Controlled by Roche or its Affiliates, which is readily accessible and is material and necessary to the exercise of the rights granted to Company under this Agreement has not been transferred to Company, then Roche will use reasonable efforts to transfer such Know-How, material or regulatory filing to Company, subject to [***] limit on additional assistance as set forth in Section 4.2 or such additional assistance being reimbursed by Company to Roche at Roche’s standard commercial rate applicable at that time.

 

5.

Diligence

Company shall use [***] to develop, seek Regulatory Approval, and, on a country-by-country basis where Regulatory Approval has been obtained, commercialize at least [***] in the Field in each such country of the Territory.

 

6.

Development

 

6.1

Responsibility

Company shall be solely and exclusively responsible at its own expense for the non-clinical and clinical development of the Product in the Field in the Territory.

 

6.2

Development Plan

Company will conduct the development of the Compounds and Products in the Field in the Territory in accordance with a written plan (“Development Plan”). Company shall send to Roche the Development Plan promptly after its finalization and within [***] after the Effective Date, and thereafter Company shall annually send to Roche a then-current version of the Development Plan at the end of December of each Calendar Year for so long as there is a Product in development by Company, or more often as Company may determine to amend the Development Plan.

 

 

6.3

Reporting

Until the First Commercial Sale of a Product, Company shall submit to Roche together with the Development Plan, an annual report describing the development progress of the Products by Company, its Affiliates and Sublicensees, including an update of key regulatory activities for the Products in the US, Major EU Countries, Japan and China. Company shall send such annual report at the end of December of each Calendar Year until the First Commercial Sale of a Product.

 

7.

Supply

 

7.1

Clinical and Non-Clinical Supply of Product

Company shall be solely and exclusively responsible at its own expense for the manufacture and supply of clinical and non-clinical supplies of the Product, either by itself, or through a Third Party.

 

7.2

Commercial Supply of Product

Company shall be solely and exclusively responsible at its own expense for the commercial manufacture and commercial supply of Product for sale in the Territory, either by itself, or through a Third Party.

 

8.

Regulatory

 

8.1

Responsibility

Except as provided in Section 4.4, Company shall be solely and exclusively responsible at its own expense for all regulatory affairs related to Products in the Field in the Territory, including the preparation, filing and maintaining of applications for Regulatory Approval, as well as any or all Regulatory Approvals required to develop, have developed, make, have made, use, have used, import, have imported, sell and have sold Compounds and Products. Company shall be solely and exclusively responsible for pursuing, compiling and submitting all regulatory filing documentation, and for interacting with regulatory agencies, for Compounds and Products in all countries in the Territory. Company shall own and file in its own discretion all regulatory filings and Regulatory Approvals for the Compound and Product in all countries of the Territory.

 

8.2

Informed Consent Forms

Any Informed Consent forms with study subjects under any clinical study run by or on behalf of Company or any of its Partners containing the Product shall include the right to transfer samples, data and information from such study to Roche in the event the Agreement is terminated or rights otherwise revert to Roche.

 

8.3

Pharmacovigilance Agreement

The Parties do not as of the Effective Date believe that a Pharmacovigilance Agreement will be necessary, but if the Parties agree after the Effective Date of this Agreement that such agreement is applicable, Company and Roche shall negotiate in good faith and enter into a Pharmacovigilance Agreement in accordance with all Applicable Laws which sets forth, among other things, the responsibilities and obligations of the Parties with respect to the procedures and timeframes for compliance with all Applicable Laws (and each of the Party’s policies) pertaining to safety reporting and their related activities, with respect to the Products under this Agreement.

 

9.

Commercialization

 

9.1

Responsibility

Company shall be solely and exclusively responsible at its own expense, for the marketing, promotion, sale and distribution of the Products in the Territory.

 

 

9.2

Reporting and Updates

After the First Commercial Sale of a Product and until the expiry of the Agreement Term, Company shall inform Roche in an annual report summarizing the material commercialization activities undertaken for the Products in the Field in the Territory by Company, its Affiliates and Sublicensees in the preceding year. The first such annual report shall be provided on the first anniversary of the First Commercial Sale of the first Product. Each subsequent annual report shall be provided on subsequent anniversaries of the First Commercial Sale. In addition, upon the reasonable request of Roche not more than twice per Calendar Year, Company shall provide an update, in writing or through a meeting (face to face/ tele-presence/videoconference or telephone).

 

10.

Payment

 

10.1

Upfront Payment

Within [***] after the Effective Date, Company shall pay to Roche four million US dollars (US$4,000,000). The upfront payment of four million five hundred thousand US dollars (US$4,500,000) comprises the sum of (a) the payment of four million US dollars (US$4,000,000) mandated in the first sentence of this Section 10.1 and (b) the credit of five hundred thousand US dollars (US$500,000) carried over from the Exclusivity Agreement. These payments shall be non- refundable.

 

10.2

Development Event Payments

Company shall pay to Roche up to a total of eighty-five million US dollars (US$85,000,000) in relation to the first achievement of each of the development events set forth below in this Section 10.2 with respect to the first Product that achieves such events. The development event payments under this Section 10.2 shall be paid by Company according to the following schedule of development events and shall be non-refundable.

 

Development Event	1st Indication	2nd Indication
	US Dollars (in millions)
[***]	[***]	[***]

 

Each development event payment shall be paid only once the first time a Product reaches the applicable triggering event, regardless of the number of times such events are reached by a Product.

 

If a given Product does not undergo a Phase III Study but instead receives a Regulatory Approval, then the Initiation of Phase III Study event payment shall be paid when such Product first receives Regulatory Approval. Moreover, for clarity, if an Indication is pursued and then terminated, then the next Indication shall be considered the 1^st Indication for development events subsequent to any development events that have already been achieved with respect to the 1^st Indication such that Company shall not be required to repay any previously achieved development event payments with respect to such Indication.

 

Moreover, for clarity, if an Indication is pursued and then terminated, then the next Indication shall be considered the 1^st Indication for development events subsequent to any development events that have already been achieved with respect to the 1^st Indication such that Company shall pay future development event payments at the 1^st Indication rate regardless of whether the Initiation of the first Phase III Study development event payment was made at the 2^nd Indication rate since the 2^nd Indication would become the 1^st Indication subsequent to the Initiation of the first Phase III Study development event. The next Indication thereafter would be the 2^nd Indication and payment would begin with the Regulatory Approval in the US, Regulatory Approval in the EU or Regulatory Approval in the first of China or Japan development event payment, as applicable, since the Initiation of first Phase III Study development event payment for the 2^nd Indication would have already been paid.

 

 

Upon reaching a development event, Company shall timely notify Roche and the applicable development event payment shall be paid by Company to Roche [***] from receipt of an invoice from Roche following occurrence of the applicable event.

 

10.3

Sales Based Events

Company shall pay to Roche up to a total of one hundred twenty million US dollars (US$120,000,000) based on the first achievement aggregate Calendar Year Net Sales of Product(s) in the Territory, as set forth below:

 

Net Sales Threshold	US Dollars (in millions)
Total Calendar Year Net Sales in the Territory of Product(s) exceed [***]	[***]
Total Calendar Year Net Sales in the Territory of Product(s) [***]	[***]
Total Calendar Year Net Sales in the Territory of Product(s) [***]	[***]
Total Calendar Year Net Sales in the Territory of Product(s) [***]	[***]
TOTAL	[***]

 

Each of the sales based event payments shall be paid no more than once during the Agreement Term, at first occurrence of the event for aggregate Net Sales of all Products in the Territory first reaching the respective Net Sales threshold, and shall be non-refundable and non-creditable. Upon reaching sales based events, Company shall notify Roche timely (but in no event longer than [***] after the event occurs) and sales based events payments shall be paid by Company to Roche within [***] after the end of the Calendar Year in which the applicable Net Sales threshold was achieved.

 

10.4

Royalty Payments

 

10.4.1

Royalty Term

Royalties shall be payable by Company on Net Sales of Products on a Product-by-Product and country-by-country basis until the expiry of the Royalty Term for the applicable Product in the applicable country. Thereafter, the licenses with respect to such Product in such country shall be fully paid up and non-exclusive.

 

10.4.2

Royalty Rates

Subject to Section 10.11, the following royalty rates shall apply to the respective tiers of aggregate Calendar Year Net Sales of all Product(s) in the Territory, on an incremental basis, as follows:

 

Tier of Calendar Year Net Sales in million US$	Percent (%) of Net Sales
[***]	[***]

 

 

For example, if Net Sales of Product(s) in the Territory, for a given Calendar Year, are [***], then royalties owed to Roche on such Net Sales of Product(s) for that Calendar Year shall equal [***] calculated as follows: [***]

 

10.5

Combination Product

If neither the Compound nor the Other Components in a particular Combination Product are sold separately in a given country, then the Parties will negotiate in good faith and agree to an appropriate adjustment to Net Sales in such country that takes into account the medical contribution to the Combination Product of, and all other factors reasonably relevant to the relative commercial value of, the Compound, on the one hand, and all of the Other Components collectively, on the other hand (the “Relative Commercial Value”). If, after such good faith negotiations not to exceed [***], the Parties cannot agree to an appropriate adjustment, then the dispute shall be initially referred to the executive officers of the Parties in accordance with Section Article 121.4. Should the Parties fail to agree within [***] of such referral, the Relative Commercial Value shall be determined by an Expert Committee under the procedures of Section 10.6.

 

10.6

Expert Committee

If the Parties are unable to agree on the Relative Commercial Value under Section 10.5, then Roche will select one (1) individual who would qualify as an Expert, Company will select (1) individual who would qualify as an Expert, and those two (2) individuals shall select one (1) individual who would qualify as an Expert and who shall be chairman of a committee of the three Experts (the “Expert Committee”), each with a single deciding vote. The Expert Committee will promptly hold a meeting to review the issue under review, at which it will consider memoranda submitted by each Party at least [***] before the meeting, as well as reasonable presentations that each Party may present at the meeting. The determination of the Expert Committee as to the issue under review will be binding on both Parties. The Parties will share equally in the costs of the Expert Committee. The Expert Committee may not decide on issues outside the scope mandated under terms of this Agreement.

 

10.7

No Valid Claim

If, for a given Product in a given country within the Territory, no Valid Claim Covers such Product in such country, then the royalty payments for such country shall be reduced by [***].

 

10.8

Generic Product

If, for a given Product, after the entry of one or more Generic Products in a country, (i) in any Calendar Quarter at any time after entry of such Generic Product(s) there has been a decline of the Net Sales of the applicable Product in such country greater [***] of the level of the Net Sales of such Product achieved on average of the four (4) Calendar Quarters immediately prior to such entry and (ii) at such time there is no Valid Claim that Covers such Product in such country, then the royalty payments due to Roche for such Product in such country shall be reduced by [***].

 

10.9

Third Party Payments

Company shall be solely responsible for and pay or have paid the entire consideration owed to any Third Party in relation to Third Party intellectual property rights necessary or useful to make, use or sell Compounds and Products with no right to offset.

 

 

10.10

Strategic Transaction

 

[***]

 

10.11

IPO

Subject to the terms of this Section 10.11 and any approvals, notices or filings required under Applicable Law, if the Company completes an IPO during the Agreement Term, then Roche or its Affiliate(s) (“Roche Equityholder”) will be issued a number of shares of the Company’s capital stock (or the common stock of any successor to the Company in the IPO) equal to [***] of the outstanding shares of common stock of the Company (or such successor) as of immediately after the completion of the IPO (the “Roche Shares”). [***].

 

In connection with Company’s issuance of Roche Shares to Roche Equityholder, Roche shall cause Roche Equityholder to enter into a customary stock subscription agreement in the form provided to Roche by Company.

 

In addition, Roche will not, and will cause Roche Equityholder not to, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by Company of shares of its equity for the IPO, and ending on the date specified by Company and the managing underwriter (such period not to [***] in the case of the IPO, or such other period as may be requested by Company or an underwriter to accommodate applicable regulatory restrictions, (a) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for common stock held immediately before the effective date of the registration statement for such offering or issued pursuant to this Section 10.11 or (a) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, in each case, whether any such transaction described in clause (i) or (ii) is to be settled by delivery of common stock or other securities, in cash, or otherwise. The foregoing provisions of this Section 10.11. The underwriters in connection with such registration are intended third-party beneficiaries of this Section 10.11 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Roche further agrees to cause Roche Equityholder to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 10.11 or that are necessary to give further effect thereto.

 

11.

Accounting and Reporting

 

11.1

Timing of Payments

Company shall calculate royalties on Net Sales quarterly as of March 31, June 30, September 30 and December 31 (each being the last day of an “Accounting Period”) and shall pay royalties on Net Sales within [***] after the end of each Accounting Period in which such Net Sales occur.

 

11.2

Late Payment

Any payment under this Agreement that is not paid on or before the date such payment is due shall bear interest, to the extent permitted by Applicable Law, at [***] above the average one-month Euro Interbank Offered Rate (EURIBOR), as reported by Reuters from time to time, calculated on the number of days such payment is overdue.

 

 

11.3

Method of Payment

Royalties on Net Sales and all other amounts payable by Company hereunder shall be paid by Company in US Dollars (the “Payment Currency”) to account(s) designated by Roche.

 

11.4

Currency Conversion

When calculating the Net Sales of any royalty-bearing Product that occur in currencies other than the Payment Currency, Company shall convert the amount of such sales in local currency (the “Reporting Currency”) into the Payment Currency using Company’s then-current internal foreign currency translation actually used on a consistent basis in preparing its audited financial statements.

 

11.5

Reporting

(1)          With each payment pursuant to Section 10.4, Company shall provide Roche in writing for the relevant Calendar Quarter on a Product-by-Product basis the following information:

 

(i)           Invoice sales in Reporting Currency on a country-by-country basis; 

(ii)          Net Sales in Reporting Currency on a country-by-country basis; 

(iii)          adjustments made pursuant to Sections 10.5 and 10.6 on a country-by-country basis; 

(iv)          Net Sales in Reporting Currency after adjustments made pursuant to Sections 10.5 and 10.6 in Reporting Currency; 

(v)           royalty rate pursuant to Section 10.4.2 and adjustments made pursuant to Sections 10.7 - 10.9 on a country-by-country basis; and (vi) total royalty payable in the Payment Currency. 

 

(2)          With each payment pursuant to Section 10.10, Company shall provide Roche in writing for the relevant Calendar Quarter the amount of any transaction costs, if applicable, and the following information: 

 

(i)           Net Proceeds in local currency and Payment Currency; 

(ii)          previously received Net Proceeds in Payment Currency; 

(iii)          aggregate Net Proceeds received in Payment Currency; 

(iv)          total Strategic Transaction Revenues in Payment Currency; 

(v)           Strategic Transaction Revenues that have been paid in Payment Currency; and 

(vi)          Strategic Transaction Revenues payable in Payment Currency.

 

12.

Taxes

Roche shall pay all sales, turnover, income, revenue, value added, and other taxes levied on account of any payments accruing or made to Roche under this Agreement. If provision is made in law or regulation of any country for withholding of taxes of any type, levies or other charges with respect to any royalty or other amounts payable under this Agreement to Roche, then Company shall promptly pay such tax, levy or charge for and on behalf of Roche to the proper governmental authority, and shall promptly furnish Roche with receipt of payment. Company shall be entitled to deduct any such tax, levy or charge actually paid from royalty or other payment due to Roche or be promptly reimbursed by Roche if no further payments are due to Roche. Each Party agrees to reasonably assist the other Party in claiming exemption from such deductions or withholdings under double taxation or similar agreement or treaty from time to time in force and in minimizing the amount required to be so withheld or deducted.

 

 

13.

Auditing

 

13.1

Roche Right to Audit

Company shall keep, and shall require its Affiliates and Sublicensees to keep, full, true and accurate books of account containing all particulars that may be necessary for the purpose of calculating all Net Sales, royalties, Net Proceeds, and Strategic Transaction Revenues payable under this Agreement. Such books of accounts shall be kept at their principal place of business. At the expense of Roche, Roche has the right to appoint one of the major public accountant firms to perform, on behalf of Roche an audit of such books and records of Company and its Affiliates and Sublicensees, that are deemed necessary by the major public accountant firm to report on (i) Net Sales of Product, royalty calculations, Net Proceeds calculations, and Strategic Transaction Revenues calculations for the period(s) requested by Roche and the (ii) the correctness of any financial report or payments made under this Agreement.

 

Upon timely request and at least [***] prior written notice from Roche, such audit shall be conducted in the countries specifically requested by Roche, during regular business hours in such a manner as to not unnecessarily interfere with Company’s or its Affiliates’ or Sublicensees’ normal business activities, and shall be limited to results in [***] prior to audit notification.

 

Such audit shall not be performed more frequently than once per Calendar Year nor more frequently than once with respect to records covering any specific period of time. All information, data documents and abstracts herein referred to shall be used only for the purpose of calculating all Net Sales, royalties, Net Proceeds, and Strategic Transaction Revenues payable under this Agreement, shall be treated as Company’s Confidential Information subject to the obligations of this Agreement and need neither be retained more than [***] after completion of an audit hereof, if an audit has been requested; nor more than [***] from the end of the Calendar Year to which each shall pertain; nor more than [***] after the date of termination of this Agreement.

 

13.2

Audit Reports

The auditors shall only state factual findings in the audit reports and shall not interpret the agreement. The final audit report shall be shared with Company at the same time it is shared with Roche.

 

13.3

Over-or Underpayment

If the audit reveals an overpayment, then Roche shall reimburse Company for the amount of the overpayment within [***] after the date of the final audit report. If the audit reveals an underpayment, then Company shall make up such underpayment with the next royalty payment or other payment, if no further royalty payments or other payments are owed to Roche, then Company shall reimburse Roche for the amount of the underpayment within [***] after the date of the final audit report. Company shall pay for the audit costs if the underpayment of Company exceeds [***] of the aggregate amount of royalty payments or other payments owed with regard to the royalty statements or other payments subject of the audit. Section 11.2 (Late Payment) shall apply to this Section 13.3 and Roche shall otherwise pay for the audit costs.

 

14.

Intellectual Property

 

14.1

Ownership of Inventions and Know-How

Company shall own all Company Inventions. Both Parties shall own jointly all Joint Inventions. Roche shall own all Roche Inventions. Company and Roche each shall require all of its employees to assign all inventions related to Products made by them to Roche and/or Company, as the case may be. The determination of inventorship for Inventions shall be in accordance with US inventorship laws.

 

 

Subject to the licenses granted under this Agreement, each Party shall be free to exploit Joint Inventions, Joint Patent Rights and Joint Know-How without the consent of, or any duty to account to, the other Party.

 

Except as specifically set forth herein, this Agreement shall not be construed as (i) giving any of the Parties any license, right, title, interest in or ownership to the Confidential Information; (ii) granting any license or right under any intellectual property rights; or (iii) representing any commitment by either Party to enter into any additional agreement, by implication or otherwise.

 

14.2

German Statute on Employee’s Inventions

If the German Statute on Employees’ Inventions applies, e.g. if an Invention is made by an employee of a Party or its Affiliate which is organized under German Law, each Party agrees to claim the unlimited right in and to any Invention conceived, reduced to practice, developed, made or created in the performance of, or as a result of, any research by employees of said Party or its Affiliate. For the avoidance of doubt, said Party or its Affiliate is responsible, at its own expense and discretion, for fulfilling the obligations towards their employees under the German Statute on Employee’s Inventions.

 

14.3

Prosecution of Roche Patent Rights

Roche shall, at its own expense and discretion, Handle all Roche Patent Rights. Company shall have the right to, at its own expense and discretion, Handle all Patent Rights other than Roche Patent Rights. Roche shall consult with Company as to the Handling of Roche Patent Rights. Roche may assign the Handling of the Roche Patent Rights to Company to be Handled by Company at own expense and discretion, provided however that such Patent Rights shall still be deemed Roche Patent Rights for the purpose of calculating the royalties under this Agreement.

 

Roche shall inform Company on a regular basis on the status of Roche Patent Rights.

 

14.4

Prosecution of Company Patent Rights and Joint Patent Rights

Company has the sole right, but not the obligation, to, at its own expense and discretion, Handle all Company Patent Rights and, at its own expense but in consultation with Roche, all Joint Patent Rights. Company shall inform Roche on a regular basis on the status of Company Patent Rights and Joint Patent Rights.

 

14.5

CREATE Act

It is the intention of the Parties that this Agreement is a “joint research agreement” as that phrase is defined in 35 USC §103(c)(3).

 

14.6

Patent Coordination Team

Where the Parties need to consult with each other on the Handling of Roche Patent Rights or Joint Patent Rights, the Parties shall establish a patent coordination team and shall adopt procedures for interacting on patent matters.

 

14.7

Unified Patent Court (Europe)

At any time prior to the end of the “transitional period” as such term is used in Article 83 of the Agreement on a Unified Patent Court between the participating Member States of the European Union, for a given relevant EU Roche Patent Right, Roche shall consult Company prior to requesting in writing that Company either (a) opt out from the exclusive competence of the Unified Patent Court or (b) if applicable, withdraw a previously-registered opt-out, and Company shall notify the Registry, and take such other action as may be necessary to effect the opt-out or opt-out withdrawal (“Register”). Company shall Register within [***] of receipt of Roche’s written request, or such other time parameters specified by Roche.

 

 

14.8

Abandonment of Patent Rights

Unless dealt with under Section 14.3, should Roche decide that it does not desire to Handle any Roche Patent Right, then it shall promptly advise Company thereof and cease any payments relating to the Handling of such Roche Patent Right after [***] following such advice, but Roche will not otherwise cease or abandon the Handling of any Roche Patent Right. At the written request of Company, Roche shall, [***] assign such patent in such country or countries in the Territory to Company, and Company may thereafter Handle the same in Company’s name [***], to the extent that Company desires to do so. All Roche Patent Rights so assigned from Roche to Company shall continue to be treated as Roche Patent Rights for purposes of determining the Royalty Term.

 

Should Company decide that it does not desire to Handle a Joint Patent Right, then it shall promptly advise Roche thereof. At the written request of Roche, Company shall then, at no cost to Company, assign such patent in such country or countries in the Territory to Roche, and Roche may thereafter Handle the same at Roche’s own cost, to the extent that Roche’s desires to do so.

 

14.9

Infringement

Each Party shall promptly provide written notice to the other Party during the Agreement Term of any (a) known infringement or suspected infringement by a Third Party of any Roche Patent Rights, Company Patent Rights or Joint Patent Rights, or (b) known or suspected unauthorized use or misappropriation by a Third Party of any Roche Know-How, Company Know-How or Joint Know-How, and shall provide the other Party with all evidence in its possession supporting such infringement or unauthorized use or misappropriation.

 

Subject to Section 14.12, within [***] after Company provides or receives such written notice (“Decision Period”), Company, in its sole discretion, shall decide whether or not to initiate such suit or action in the Territory and shall notify Roche in writing of its decision in writing (“Suit Notice”).

 

If Company decides to bring a suit or take action, once Company provides Suit Notice, Company may promptly commence such suit or take such action. In the event that Company (i) does not in writing advise Roche within the Decision Period that Company will commence suit or take action, or (ii) fails to commence suit or take action within [***] after providing Suit Notice, Roche shall thereafter have the right to commence suit or take action in the Territory and shall provide written notice to Company of any such suit commenced or action taken by Roche.

 

Upon written request, the Party bringing suit or taking action (“Initiating Party”) shall keep the other Party informed of the status of any such suit or action and shall provide the other Party with copies, to the extent the Initiating Party is lawfully permitted to do so, of all substantive documents or communications filed in such suit or action. The Initiating Party shall have the sole and exclusive right to select counsel for any such suit or action.

 

 

The Initiating Party shall, except as provided below, pay all expenses of the suit or action, including the Initiating Party’s attorneys’ fees and court costs and damages owed to Third Parties. Any damages, settlement fees or other consideration received as a result of such suit or action shall be allocated as follows:

 

(a)

First, to reimburse the Initiating Party for its costs and, if any remains, to the other Party for any advisory counsel fees and costs; and

 

(b)

Second, the balance, if any, shall be allocated (i) if the Company is the Initiating Party, to Company and treated as Net Sales, and (ii) if Roche is the Initiating Party, [***] to Roche and [***] to the Company.

 

If the Initiating Party believes it reasonably necessary, upon written request the other Party shall join as a party to the suit or action, but shall be under no obligation to participate, except to the extent that such participation is required as the result of its being a named party to the suit or action. Alternatively, at the Initiating Party’s request, the other Party will bring the suit or action in the other Party’s name, if the Initiating Party reasonably believes that the Initiating Party does not have standing to bring the suit or action, and in such event, the Initiating Party will still control the suit or action as provided above. The Initiating Party and the other Party shall then jointly agree in good faith on the strategy on how to bring suit or action. At the Initiating Party’s written request, the other Party shall offer reasonable assistance to the Initiating Party in connection therewith at no charge to the Initiating Party except for reimbursement of reasonable out-of-pocket expenses incurred by the other Party in rendering such assistance. The other Party shall have the right to participate and be represented in any such suit or action by its own counsel at its own expense.

 

The Initiating Party may settle, enter into a consent judgment or otherwise voluntarily dispose of the suit or action (“Settlement”) without the written consent of the other Party (not to be unreasonably withheld, conditioned or delayed) but only if such Settlement would not require the other Party to admit liability, make any payments or agree to forego any rights or impair any Patent Rights Controlled by such Party or its Affiliates; provided that if Company is the Initiating Party, then no such consent from Roche will be required to grant a sublicense.

 

For any Company Patent Rights or Company Know-How, Company, in its sole discretion, shall decide whether or not to initiate such suit or action in the Territory. Company shall have full discretion as to how it wishes to handle such suit and may reach Settlement and retain all damages, settlement fees or other consideration under any terms and conditions it desires and retain whatever. Only if a Settlement could adversely affect Roche shall the written consent of Roche be required, which consent shall not be unreasonably withheld.

 

14.10

Defense

Subject to Section 16, if a Third Party asserts that Patent Rights owned by or licensed to it are infringed by the development, manufacture, use, importation, offer for sale or sale of Products, or that its trade secrets were misappropriated in connection with such activity, then Company shall have the exclusive right and responsibility to resolve any such claim, whether by obtaining a license from such Third Party, by defending against such Third Party’s claims or otherwise, and shall be solely responsible for the defense of any such action, any and all costs incurred in connection with such action (including attorneys’ and expert fees) and all liabilities incurred in connection therewith. Notwithstanding the above, Company shall not enter into any settlement of any such claim without the prior written consent of Roche if such settlement would require Roche to be subject to an injunction or to make any monetary payment to Company or any Third Party, or admit any wrongful conduct by Roche or its Affiliates, or would limit or restrict the claims of or admit any invalidity or unenforceability of any of the Patent Rights Controlled by Roche, or have any impact on activities outside the Field.

 

 

14.11

Common Interest Disclosures

With regard to any information or opinions disclosed pursuant to this Agreement by one Party to each other regarding intellectual property or technology owned by Third Parties, the Parties agree that they have a common legal interest in determining whether, and to what extent, Third Party intellectual property rights may affect Compounds or Products, and have a further common legal interest in defending against any actual or prospective Third Party claims based on allegations of misuse or infringement of intellectual property rights relating to the Compounds or Products. Accordingly, the Parties agree that all such information and materials obtained by Company and Roche from each other will be used solely for purposes of the Parties’ common legal interests with respect to the conduct of the Agreement. All information and materials will be treated as protected by the attorney-client privilege, the work product privilege, and any other privilege or immunity that may otherwise be applicable. By sharing any such information and materials, neither Party intends to waive or limit any privilege or immunity that may apply to the shared information and materials. Neither Party shall have the authority to waive any privilege or immunity on behalf of the other Party without such other Party’s prior written consent, nor shall the waiver of privilege or immunity resulting from the conduct of one Party be deemed to apply against any other Party.

 

Company is responsible to perform due diligence and to secure its own freedom to operate study or opinion in connection with the use, sale, offer for sale and importation of the Compounds and Products from outside counsel of Company’s choice.

 

14.12

Hatch-Waxman

Notwithstanding anything herein to the contrary, should a Party receive a certification for a Product pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law 98-417, known as the Hatch-Waxman Act), as amended, or its equivalent in a country other than the US, then such Party shall immediately, but in no event later than [***] after such receipt, provide the other Party with a copy of such certification. Company shall have [***] from date on which it receives or provides a copy of such certification to provide written notice to Roche (“H-W Suit Notice”) whether Company will bring suit, at its expense, [***] period from the date of such certification. Should such [***] period expire without Company bringing suit or providing such H-W Suit Notice, then Roche shall be free to immediately bring suit in its name.

 

14.13

Patent Term Extensions

Company shall have the sole right to seek and obtain all available patent term extensions, adjustments or restorations, or supplementary protection certificates (“SPCs”, and together with patent term extensions, adjustments and restorations, “Patent Term Extensions”) for Compounds and Products. Roche shall execute such authorizations and other documents and take such other actions as may be reasonably requested by Company to obtain such Patent Term Extensions, including designating Company as its agent for such purpose as provided in 35 U.S.C. Section 156. All filings (if any) for such Patent Term Extensions for Patent Rights shall be made by Company after consultation with Roche; provided that in the event that Company elects not to file for a Patent Term Extension, Company shall (a) promptly inform Roche of its intention not to file and (b) grant to Roche the right to file for such Patent Term Extension. Each Party shall execute such authorizations and other documents and take such other actions as may be reasonably requested by the other Party to obtain such extensions. The Parties shall consult and cooperate with each other in gaining patent term restorations, extensions and/or SPCs wherever applicable to such Roche Patent Rights. Each Party shall bear its own expenses in connection with Patent Term Extensions and patent term restoration.

 

 

15.

Representations and Warranties (Garantien)

 

15.1

Mutual representations and warranties

Each Party represents and warrants (garantiert) to the other within the meaning of section 311 para. (1) German Civil Code that, as of the Effective Date: (a) it is duly organized and validly existing under the laws of its jurisdiction of incorporation or formation, and has full corporate or other power and authority to enter into this Agreement and to carry out the provisions hereof; (b) it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person or persons executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate or partnership action; and (c) this Agreement is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

15.2

Roche Representations and Warranties

Roche represents and warrants (garantiert) to Company within the meaning of section 311 para. (1) German Civil Code that, as of the Effective Date:

 

(i)            Roche has the full right, power and authority to grant the licenses and other rights purported to be granted to Company under this Agreement, without the consent of, or requirement to make any payments to, any Third Party;

 

(ii)           Roche is not a party to any legal action, suit or proceeding relating to any Compound or Product, and Roche is not aware of any investigations, inquiries, actions, or other proceedings pending before or threatened by any Regulatory Authority or other governmental authority in the Territory with respect to any Compound or Product, and neither Roche nor its Affiliates has received notice threatening any such investigation, inquiry, action, or other proceeding;

 

(iii)          there are no pending or, to the best of Roche’s knowledge, threatened adverse actions, suits or proceedings against Roche involving the Compounds, Products or Roche Know-How or Roche Patent Rights;

 

(iv)         Roche has not received written or oral notice from any Third Party claiming that the manufacture, use or sale of Compound or Product infringes any Patent Right of any Third Party;

 

(v)          Roche is not aware of any issued Patent Right that would be infringed by the manufacture, use, or sale of the Compounds in the Field in the Territory;

 

(vi)         Roche is not aware of any Third Party that is infringing, misappropriating, or otherwise violating any Roche Patent Rights or Roche Know-How in the Field in the Territory;

 

(vii)        Roche has Control of all the Roche Patent Rights and Roche Know-How;

 

(viii)       Roche and its Affiliates have taken commercially reasonable measures consistent with Roche’s typical practices to protect the secrecy, confidentiality, and value of all Roche Know-How (including requiring all employees, agents, and independent contractors to execute binding and enforceable agreements requiring all such employees, agents, and independent contractors to maintain the confidentiality of such Roche Know-How) and Roche is not aware of (a) any Roche Know-How being used, disclosed to, or discovered by any Third Party except pursuant to such confidentiality agreements and (b) any breach by any party to such confidentiality agreements;

 

 

(ix)         Roche and its Affiliates, employees, agents, and independent contractors have conducted all development of all Compounds and Products in accordance with Applicable Law, including conducting all clinical studies with respect to the Compounds and Products in accordance with Applicable Law;

 

(x)          Roche is not aware of any facts or circumstances which are not publicly available and would (a) form a reasonable basis for rendering any of the Roche Patent Rights invalid or unenforceable or (b) prevent a pending application for a Roche Patent Right from issuing; and

 

(xi)         Roche does not Control any Patent Rights or Know-How, other than those licensed under this Agreement, that are necessary for the making, having made, using, selling, offering for sale or importing of the compounds [***] as manufactured using the process set forth in the Roche Know-How.

 

15.3

Limitations

Except as provided in Section 15.2, Roche makes no representation or warranty that all intellectual property rights necessary for Company to make, have made, use, sell, offer for sale and import the Compound or the Product in the Territory have been granted to Company under Article 2. Roche did not perform an exhaustive and final search for Third Party Patent Rights or an evaluation thereof for Compound and technologies relevant under this Agreement. Roche will not keep Company updated about further searches or analyses of Third Party Patent Rights nor will it keep Company updated about any further developments of any Third Party rights or steps taken or intended to be taken by Company with regard to such Third Party rights.

 

15.4

Disclaimer

Except as expressly set forth herein and elsewhere in this Agreement, THE INTELLECTUAL PROPERTY RIGHTS PROVIDED BY EACH PARTY HEREUNDER ARE PROVIDED “AS IS” AND EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES.

 

16.

Indemnification

 

16.1

Roche indemnification

Roche shall indemnify and defend Company and its Affiliates and third respective officers, directors, employees, consultants and agents (“Company Indemnitees”) from and against any and all losses, damages, liabilities, expenses and costs, including reasonable legal expense and attorneys’ fees (“Indemnified Losses”), to which any such Company Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any Third Party to the extent such Indemnified Losses arise out of or relate to (a) the breach by Roche of any obligation, representation, warranty, covenant or agreement made by it under this Agreement, (b) the development, manufacture, use, handling, storage, sale or other disposition of the Compounds or any Products by Roche or any of its Affiliates or (c) the negligence or willful misconduct of any Roche Indemnitees, except in each case ((a) - (c)), to the extent such Indemnified Losses result from the negligence or willful misconduct of any Company Indemnitee or Company’s breach of this Agreement (including any item subject to indemnification by Company under Section 16.2).

 

 

16.2

Company indemnification

Company shall indemnify, and defend Roche and its Affiliates and its respective officers, directors, employees, consultants and agents (“Roche Indemnitees”) from and against any and all Indemnified Losses, to which any such Roche Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any Third Party to the extent such Indemnified Losses arise out of (a) the breach by Company of any obligation, representation, warranty, covenant or agreement made by it under this Agreement, or (b) the development, manufacture, use, handling, storage, sale or other disposition of the Compounds or any Products by Company or any of its Affiliates or Partners, except in each case (a) and (b) to the extent such Indemnified Losses result from the negligence or willful misconduct of any Roche Indemnitee or Roche’s breach of this Agreement (including any item subject to indemnification by Roche under Section 16.1).

 

16.3

Procedure

In the event any Company Indemnitee or Roche Indemnitee (as the case may be) seeks indemnification under Section 16.1 or 16.2, it shall inform the other Party (the “Indemnifying Party”) of a claim as soon as reasonably practicable after it receives notice of the claim, shall permit the Indemnifying Party to assume direction and control of the defense of the claim (including the right to settle the claim solely for monetary consideration), and shall cooperate as requested (at the expense of the Indemnifying Party) in the defense of the claim, provided that the Indemnifying Party shall not settle any such claim without the prior written consent of any affected Roche Indemnitee or Company Indemnitee (as the case may be), if such settlement contains any admission of fault of such Company Indemnitee or Roche Indemnitee (as the case may be).

 

17.

Liability

 

17.1

Disclaimer

THE FOREGOING REPRESENTATIONS AND WARRANTIES ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES NOT EXPRESSLY SET FORTH HEREIN. COMPANY AND ROCHE DISCLAIM ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO EACH OF THEIR RESEARCH, DEVELOPMENT AND COMMERCIALIZATION EFFORTS HEREUNDER, INCLUDING WHETHER THE PRODUCTS CAN BE SUCCESSFULLY DEVELOPED OR MARKETED, THE ACCURACY, PERFORMANCE, UTILITY, RELIABILITY, TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WHATSOEVER OF THE PRODUCTS.

 

17.2

Limitation of Liability

Except for a Party’s breach of Section 18 or its obligations under Section 16, NEITHER PARTY SHALL BE LIABLE FOR INDIRECT DAMAGES (INDIREKTE SCHADEN) AND CONSEQUENTIAL DAMAGES (FOLGESCHADEN), NAMELY DAMAGES WHICH (A) DO NOT ARISE DIRECTLY THROUGH THE BREACH OF THE CONTRACTUAL DUTY BUT RATHER ONLY THROUGH THE OCCURRENCE OF A FURTHER INDIRECT CAUSAL EVENT, OR (B) ARE NOT FORESEEABLE FOR THE PARTIES AT THE DATE OF THE CONCLUSION OF THE AGREEMENT ACCORDING TO THE COURSE OF EVENTS WHICH IS TYPICALLY TO BE EXPECTED, INCLUDING LOST REVENUES OR PROFITS (ENTGANGENER GEWINN), IRRESPECTIVE OF THE LEGAL BASIS FOR SUCH CLAIMS. THIS LIMITATION OF LIABILITY SHALL NOT APPLY IN THE EVENT OF DAMAGES CAUSED BY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE DAMAGING PARTY.

 

 

18.

Obligation Not to Disclose Confidential Information

 

18.1

Non-Use and Non-Disclosure

During the Agreement Term and for [***] thereafter, a Party receiving Confidential Information (“Receiving Party”) shall (a) treat Confidential Information provided by Disclosing Party as it would treat its own information of a similar nature, (b) take all reasonable precautions not to disclose such Confidential Information to Third Parties, without the Disclosing Party’s prior written consent, and (c) not use such Confidential Information other than for fulfilling its obligations or exercising its rights under this Agreement.

 

18.2

Permitted Disclosure

Each Party may disclose Confidential Information of the other Party as expressly permitted by this Agreement or if and to the extent such disclosure is reasonably necessary in the following instances:

 

(i)            filing or prosecuting Patent Rights as permitted by this Agreement;

 

(ii)           prosecuting or defending litigation as permitted by this Agreement;

 

(iii)          complying with applicable court orders or governmental regulations; and

 

(iv)         disclosure to (a) Affiliates, (b) Company and potential or actual subcontractors, Partners, assignees and Change of Control counterparties, (c) Third Parties in connection with due diligence or similar investigations by such Third Parties and (d) disclosure to potential Third Party investors or financial institutions or advisors, provided that, in each case, that any such Third Party agrees to be bound by obligations of confidentiality and non-use, such obligations of confidentiality to contain a confidentiality period of at least [***] or another commercially reasonable period of time but not less than [***], except for disclosures of financial deal terms to Third Party investors or financial institutions in connection with due diligence or similar investigations, in which case, the confidentiality period pertaining to this information will be no less than [***].

 

Notwithstanding the foregoing, in the event a Party is required to make a disclosure of the other Party’s Confidential Information pursuant to Sections 18.2(ii) or 18.2(iii), then it will, except where impracticable, give reasonable advance notice to the other party of such disclosure and use efforts to secure confidential treatment of such information at least as diligently as such Party would use to protect its own confidential information, but in no event less than reasonable efforts. In any event, the Parties agree to take all reasonable action to avoid disclosure of Confidential Information hereunder. The Parties will consult with each other on the provisions of this Agreement to be redacted in any filings made by the parties with the Securities and Exchange Commission (or any other relevant agency or body related to a regulated stock exchange) or as otherwise required by Applicable Law.

 

 

18.3

Press Releases

Company may issue a press release announcing the existence and selected key non-financial terms of this Agreement that is mutually agreed by the Parties (the “Initial Press Release”) and is in a form substantially similar to the template attached as Appendix 18.3. Thereafter, both Parties may desire or be required to issue subsequent press releases relating to the Agreement or activities hereunder. The Parties agree to consult with each other reasonably and in good faith with respect to the text and timing of such subsequent press releases prior to the issuance thereof, provided that a Party may not unreasonably withhold or delay consent to such subsequent releases, and that either Party may issue such subsequent press releases as it determines, based on advice of counsel, are reasonably necessary to comply with laws or regulations or for appropriate market disclosure. In addition, following the Initial Press Release announcing this Agreement, either party shall be free to disclose, without the other party’s prior written consent, the existence of this Agreement, the fact that Company has taken a license from Roche to the Compounds and Products for development and commercialization in the Field, and those terms of the Agreement that have already been publicly disclosed in accordance herewith.

 

18.4

Publications

During the Agreement Term, the following restrictions shall apply with respect to disclosure by Company of Confidential Information relating to the Compounds and Products in any publication or presentation:

 

Company shall provide Roche with a copy of any proposed publication or presentation at least [***] (or at least [***] in the case of oral presentations) prior to submission for publication so as to provide Roche with an opportunity to recommend any changes it reasonably believes are necessary to continue to maintain the confidentiality of Roche Confidential Information in accordance with the requirements of this Agreement. The incorporation of such recommended changes shall not be unreasonably refused; and if Roche notifies (“Publishing Notice”) Company in writing, within [***] after receipt of the copy of the proposed publication or presentation (or at least [***] in the case of oral presentations), that such publication or presentation in its reasonable judgment (a) contains an invention, solely or jointly conceived or reduced to practice by Roche, for which Roche reasonably desires to obtain patent protection or (b) could be expected to have a material adverse effect on the commercial value of any Confidential Information disclosed by Roche to Company, Company shall prevent such publication or delay such publication for a mutually agreeable period of time. In the case of inventions, a delay shall be for a period reasonably sufficient to permit the timely preparation and filing of a patent application(s) on such invention, and in no event less [***] from the date of the Publishing Notice.

 

18.5

Commercial Considerations

Nothing in this Agreement shall prevent Company or its Affiliates from disclosing Confidential Information of Roche to (i) Regulatory Authorities to the extent required or desirable to secure Regulatory Approval for the development, manufacture or sale of Products in the Territory, (ii) Third Parties acting on behalf of Company, to the extent necessary for the development, manufacture or sale of Products in the Territory, (iii) Third Parties to the extent necessary to market any Product in the Territory, (iv) Third Parties to the extent necessary in connection with a prospective or actual Partner Agreement, (v) Third Parties to the extent necessary to otherwise carry out its obligations or exercise its rights under this Agreement, (vi) with a prospective or actual financing, investment in or Change of Control of Company, provided that any such disclosures are subject to confidentiality obligations at least as onerous as those set forth in this Agreement or (vii) Third Parties in connection with any IPO of Company, to the extent Company deems such disclosure necessary.

 

The Receiving Party may disclose Confidential Information of the Disclosing Party to the extent that such Confidential Information is required to be disclosed by the Receiving Party to comply with Applicable Law, to defend or prosecute litigation or to comply with governmental regulations or applicable regulations of a stock exchange, provided that the Receiving Party provides prior written notice of such disclosure to the Disclosing Party and, to the extent practicable, takes reasonable and lawful actions to minimize the degree of such disclosure and to ensure such disclosed Confidential Information is treated confidentially.

 

 

19.

Term and Termination

 

19.1

Commencement and Term

This Agreement shall commence on the Effective Date and continue for the Agreement Term, unless terminated in accordance with Section 19.2.

 

19.2

Termination

 

Unless otherwise expressly set forth in this Section 19.2, neither Party is entitled to terminate this Agreement. The right of both Parties to terminate this Agreement for cause with immediate effect (außerordentliche Kündigung) in accordance with section 314 German Civil Code shall be unaffected.

 

19.2.1

Termination for Breach

A Party (“Non-Breaching Party”) shall have the right, without prejudice to any other remedies available to the Non-Breaching Party, to terminate this Agreement in its entirety in the event the other Party (“Breaching Party”) is in material breach of this Agreement which material breach is not cured as described in this Section 19.2.1. The Non-Breaching Party shall provide written notice to the Breaching Party, which notice shall identify the material breach. The Breaching Party shall have a period of [***] after such written notice is provided (“Peremptory Notice Period”) to cure such breach.

 

If the Breaching Party has a bona fide dispute as to whether such material breach occurred or has been cured, then it will so notify the Non-Breaching Party together with an explanation for the basis of its dispute, and the expiration of the Peremptory Notice Period shall be tolled until such dispute is resolved pursuant to Section 21.4. Upon the senior executives’ determination of material breach or failure to cure, the Breaching Party may have the remainder of the Peremptory Notice Period to cure such material breach, unless the Peremptory Cure Period is extended pursuant to the senior executives’ determination, in which case the Breaching Party will have such extended period to cure such material breach.

 

If a material breach is not cured within the Peremptory Notice Period (or such extended period), then the Non-Breaching Party may terminate this Agreement with immediate effect by sending a written notice of termination to the Breaching Party.

 

19.2.2

Termination for Insolvency Event

A Party shall have the right to terminate this Agreement in its entirety, if the other Party incurs an Insolvency Event; provided, however, in the case of any involuntary bankruptcy proceeding, such right to terminate shall only become effective if the Party that incurs the Insolvency Event consents to the involuntary bankruptcy or such proceeding is not dismissed within [***] after the filing thereof.

 

19.2.3

Termination by Company without a Cause

Company shall have the right to terminate this Agreement at any time in its entirety or on a Product-by-Product basis upon [***] prior written notice before First Commercial Sale of a Product or upon [***] prior written notice after the First Commercial Sale of a Product. The effective date of termination under this Section 19.2.3 shall be the date six (6) months (or [***] as the case may be) after Company provides such written notice to Roche.

 

 

19.3

Consequences of Termination

 

19.3.1

Termination by Company for Breach by Roche or Roche Insolvency

Upon any termination by Company for breach by Roche or Roche Insolvency, in accordance with Section 19.2.1 or Section 19.2.2, as applicable, the rights and licenses granted by one Party to the other Party under this Agreement shall terminate in their entirety on the effective date of termination.

 

19.3.2

Termination by Company without Cause, Termination by Roche for Breach by Company, Company Insolvency or Company Debarment

Upon any termination by Company without Cause, Termination by Roche for Breach by Company, Company Insolvency or Company Debarment in accordance with Section 19.2.1, 19.2.2, or 19.2.3, as applicable, the rights and licenses granted by Roche to Company under this Agreement shall terminate in their entirety, or on a Product-by-Product basis, as applicable, on the effective date of termination.

 

If Roche desires to continue development or commercialization of Product(s), then Roche shall give a Continuation Election Notice to Company within [***] of receipt of Company’s notice of termination without cause. If Company receives such a timely Continuation Election Notice, and to the extent reasonably requested by Roche:

 

(i)            After the date of notice of termination Company shall, to the extent Company has the right to do so, transfer to Roche all regulatory filings and approvals, all final pre-clinical, non-clinical and clinical study reports and clinical study protocols, trademarks, and all data, including clinical data, materials and information, in Company’s possession and Control, that are (a) solely related to Product(s) and (b) necessary or useful for Roche to continue to develop and commercialize the Product(s).

 

(ii)           To the extent permitted thereunder, Company shall assign all clinical study agreements, pre-clinical and non-clinical study agreements and CMC study agreements, in each case, solely related to the Products, free of charge;

 

(iii)          Roche shall, upon transfer, have the right to disclose such filings, approvals and data transferred by Company to Roche to (a) governmental agencies to the extent required or desirable to secure government approval for the development, manufacture or sale of Product(s); (b) Third Parties acting on behalf of Roche or its Affiliates for the development, manufacture, or sale of Product(s), or (c) Third Parties to the extent reasonably necessary to market Product(s).

 

 

(iv)         Roche shall have a worldwide, exclusive, sublicensable, transferable license under the Company Patent Rights, Company Know-How and Company’s interest in the Joint Patent Rights, in each case, in existence as of the effective date of termination, to research, develop, manufacture, have manufactured, use, offer to sell, sell, promote, export and import the applicable Compounds and Products in the Field in the Territory. In consideration of the license rights granted to Roche pursuant to this Section 19.3.2(iv), Roche shall (a) either (1) reimburse Company for all payments owed to Third Parties under agreements with such Third Parties pursuant to which Company acquired or licensed rights to intellectual property included in the Company Know-How or Company Patents that arise out of the exercise of the license granted to Roche pursuant to this Section 19.3.2(iv), provide to Company all reports required under any such agreements to be provided to such Third Parties and comply with all other terms under such agreements applicable to a licensee or sublicensee thereunder that have been disclosed to Roche or (2) (A) with respect to any such agreements between Company and a Third Party pursuant to which Company licensed rights solely related to Compounds and/or Products, instruct Company to terminate such agreements, or (B) with respect to any such agreements between Company and a Third Party pursuant to which Company licensed rights related to Compounds and/or Products and any other compound or product, elect not to receive a sublicense under any such agreement, in which case Roche shall not be obligated to reimburse Company for any amounts under any such agreement, and (b) pay to Company a royalty at the applicable rate set forth in the table below [***] after the First Commercial Sale of the Product on a country-by-country basis, and the provisions of Sections 1.46, 10.5, 10.6, 10.7, 10.8, and 11 shall apply mutatis mutandis with respect to such payments. For example, if the Product is transferred to Roche pursuant to this Section 19.3.2(iv) after [***] following the First Commercial Sale of the Product in the US, then Roche shall pay to Company a royalty in the US for [***].

 

Effective Date of Termination	Percent (%) of Net Sales
[***]	[***]

 

19.4

Obligations Related to Ongoing Activities

If Roche does not provide timely Continuation Election Notice, then Company (i) shall have the right to cancel all cancellable ongoing obligations and (ii) shall complete all non-cancellable obligations at its own expense.

 

If Roche provides such timely Continuation Election Notice, then from the date of notice of termination until the effective date of termination, Company shall continue activities ongoing as of the date of notice of termination at its own expense.

 

After the effective date of termination, Company shall not have any obligation to perform or complete any activities or to make any payments for performing or completing any activities under this Agreement, except as expressly stated herein.

 

Notwithstanding the foregoing, in case of termination by Roche under Sections 19.2.1, 19.2.2, or 21.10 or by Company under Section 19.2.3, upon the request of Roche, Company shall complete any studies related to the Product(s) that are being conducted under its IND for the Product(s) and are ongoing as of the effective date of termination; provided that

 

(i)            both Company and Roche in their reasonable judgment have concluded that completing any such clinical studies does not present an unreasonable risk to patient safety;

 

(ii)           Roche agrees to reimburse Company for all of its development costs that arise after the effective date of termination in completing such studies; and

 

(iii)          Roche shall assume control over, and responsibility for, such studies as soon as reasonably practicable.

 

 

19.5

Obligations Related to Manufacturing

If (i) Roche has provided Company a timely Continuation Election Notice, and (ii) Product is then being manufactured, then, upon the request of Roche, Company shall use reasonable efforts to manufacture and supply (or have manufactured or supplied, as the case may be) Product to Roche for a period that shall not exceed [***] from the effective date of the termination of this Agreement at a price to be agreed by the Parties in good faith. Roche shall use reasonable efforts to take over the manufacturing as soon as possible after the effective date of termination.

 

19.6

Direct License

Irrespective of anything to the contrary in this Agreement, any existing, permitted sublicense granted to a Sublicensee shall, upon the written request of any Sublicensee within [***] following the effective date of termination, remain in full force and effect [***] from the effective date of termination of this Agreement (“Transition Period”), provided that such Sublicensee is not then in breach of its sublicense agreement, and in the case of termination by Roche for material breach by Company, that such Sublicensee did not cause the material breach that gave rise to the termination by Roche. During such Transition Period, Roche shall cooperate with such Sublicensee to enter into a direct license agreement, whereby such Sublicensee agrees in writing to be bound to Roche under the same terms and conditions of this Agreement. Notwithstanding the foregoing, any sublicense granted by Company under Section 2.3 of this Agreement to its Affiliates shall terminate upon effective date of the termination of this Agreement.

 

19.7

Royalty and Payment Obligations

Expiration or termination of this Agreement (or any provision hereof) for any reason shall be without prejudice to any right that shall have accrued to the benefit of a Party prior to such expiration or termination, including damages arising from any breach under this Agreement. Termination of this Agreement by a Party, for any reason, shall not release Company from any obligation to pay royalties or make any other payments to Roche that are due and payable or accrued prior to the effective date of termination.

 

19.8

Survival

Article 1 (Definitions), Article 16 (Indemnification), Article 18 (Obligation Not to Disclose Confidential Information), Article 19 (Term and Termination), Article 20 (Bankruptcy), Article 21 (Miscellaneous) and Sections 11.3 (Method of Payment), 11.4 (Currency Conversion), 14.1 (Ownership of Inventions and Know-How), 14.2 (German Statute on Employee’s Inventions) and 17.2 (Limitation of Liability) shall survive any expiration or termination of this Agreement for any reason.

 

20.

Bankruptcy

All licenses (and to the extent applicable rights) granted under or pursuant to this Agreement by Roche to Company are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11, US Code (the “Bankruptcy Code”) licenses of rights to “intellectual property” as defined under Section 101(60) of the Bankruptcy Code. Unless Company elects to terminate this Agreement, the Parties agree that following a Roche Insolvency Event, Company, as a licensee or sublicensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code, subject to the continued performance of its obligations under this Agreement. Each Party acknowledges and agrees that “embodiments” of intellectual property within the meaning of Section 365(n) include laboratory notebooks, cell lines, product samples and inventory, research studies and data, all Regulatory Approvals (and all applications for Regulatory Approval) and rights of reference therein, the Roche Patent Rights and Roche Know-How and all information related thereto. If (x) a case under the Bankruptcy Code is commenced by or against Roche, (y) this Agreement is rejected as provided in the Bankruptcy Code, and (z) Company elects to retain its rights hereunder as provided in Bankruptcy Code, Roche (in any capacity, including debtor-in-possession) and its successors and assigns (including a trustee) will:

 

(i)            provide Company with all such intellectual property (including all embodiments thereof) held by Roche and such successors and assigns, or otherwise available to them, immediately upon Company’s written request. Whenever Roche or any of its successors or assigns provides to Company any of the intellectual property licensed hereunder (or any embodiment thereof) pursuant to this Section 20(i), Company will have the right to perform Roche’s obligations hereunder with respect to such intellectual property, but neither such provision nor such performance by Company will release Roche from liability resulting from rejection of the license or the failure to perform such obligations; and

 

 

(ii)           not interfere with Company’s rights under this Agreement, or any agreement supplemental hereto, to such intellectual property (including such embodiments), including any right to obtain such intellectual property (or such embodiments) from another entity, to the extent provided in Bankruptcy Code.

 

21.

Miscellaneous

 

21.1

Entire Agreement

This Agreement is the entire agreement between the Parties with respect to the subject matter herein, and supersedes any and all prior agreements, understandings, negotiations or correspondence between the Parties respecting the subject matter hereof, whether written or verbal. The Parties agree that the Non-Disclosure Agreement and Exclusivity Agreement are hereby terminated in their entirety.

 

21.2

Written Form

Unless otherwise expressly set forth in this Agreement, any provision of this Agreement may be amended or waived only if such amendment or waiver is effected by written instrument executed by all Parties and explicitly refers to this Agreement. This requirement also applies to any amendment or waiver of this Section 21.2 itself.

 

21.3

Governing Law

This Agreement shall be governed by and construed in accordance with the laws of Germany, without reference to its conflict of laws principles, and shall not be governed by the United Nations Convention of International Contracts on the Sale of Goods (the Vienna Convention) (“Governing Law”).

 

21.4

Disputes

Unless otherwise set forth in this Agreement, in the event of any dispute in connection with this Agreement, such dispute shall be, by written notice (“Escalation Notice”) referred to the respective executive officers of the Parties designated below or their designees, for good faith negotiations attempting to resolve the dispute. The designated executive officers are as follows:

 

For Company: CEO
For Roche:       Head of Roche Partnering

 

21.5

Arbitration

Should the executive officers of the Parties fail to agree pursuant to Section 21.4 within [***] after such dispute has first been referred to them, then except for any dispute subject to Sections 10.5 or 10.6, it shall be finally settled by arbitration in accordance with the commercial arbitration rules of the International Chamber of Commerce (ICC) in force at the time when initiating the arbitration. The tribunal shall consist of three arbitrators, all of whom shall be neutral and independent of the Parties and their Affiliates (the “Arbitral Tribunal”) and selected in accordance with Section 21.6. The expedited procedure provisions set forth in Article 30 and Appendix VI of the ICC rules shall not apply. The place of arbitration shall be Frankfurt, Germany. The language of the arbitration shall be English. Documents submitted in the arbitration (the originals of which are not in English) shall be submitted together with an English translation.

 

 

21.6

Arbitrators

 

Each Party shall nominate one arbitrator. Should the claimant fail to nominate an arbitrator in the request for arbitration within [***] of being requested to do so, or if the respondent should fail to nominate an arbitrator in its answer to the request for arbitration [***] of being requested to do so, the other Party shall request the ICC Court to make such nomination.

 

The arbitrators nominated by the Parties shall, within [***] from the nomination of the arbitrator nominated in the answer to the request for arbitration, and after consultation with the Parties, agree and appoint a third arbitrator, who will act as a chairman of the Arbitral Tribunal. Should such procedure not result in an appointment within the [***] time limit, either Party shall be free to request the ICC Court to appoint the third arbitrator.

 

Where there is more than one claimant or more than one respondent, the multiple claimants or respondents shall jointly nominate one arbitrator.

 

If any Party-nominated arbitrator or the third arbitrator resigns or ceases to be able to act, a replacement shall be appointed in accordance with the arrangements provided for in this clause.

 

21.7

Decisions; Timing of Decisions

The Arbitral Tribunal shall render a written opinion setting forth findings of fact and conclusions of law with the reason therefor stated, and shall endeavor to render such opinion within no later than [***] from the date on which the Arbitral Tribunal was appointed to the dispute. A transcript of the evidence adduced at the arbitration hearing shall be made and, upon request, shall be made available to each Party.

 

The time periods set forth in the ICC Arbitration Rules shall be followed; provided however that the arbitrators may modify such time periods as reasonably necessary to render a written opinion in accordance with this Section 21.7.

 

The Arbitral Tribunal is empowered to award any remedy allowed by law, including money damages, prejudgment interest and attorneys’ fees, and to grant final, complete, interim, or interlocutory relief, including injunctive relief.

 

The arbitration provisions of this Agreement do not preclude either Party seeking conservatory or interim measures from any court of competent jurisdiction including the courts having jurisdiction by reason of either Party’s domicile. Conservatory or interim measures sought by either Party in any one or more jurisdictions shall not preclude the Arbitral Tribunal granting conservatory or interim measures. Conservatory or interim measures sought by either Party before the Arbitral Tribunal shall not preclude any court of competent jurisdiction granting conservatory or interim measures.

 

Any arbitration proceeding hereunder shall be confidential and the arbitrators shall issue appropriate protective orders to safeguard each Party’s Confidential Information. Except as required by Applicable Law, neither Party shall make (or instruct the arbitrators to make) any public announcement with respect to the proceedings or decision of the arbitrators without prior written consent of the other Party. The existence of any dispute submitted to arbitration, and the award, shall be kept in confidence by the Parties and the arbitrators, except as required in connection with the enforcement of such award or as otherwise required by Applicable Law.

 

 

Notwithstanding anything to the contrary in this Agreement, any and all issues regarding the scope, construction, validity or enforceability of any Patent Rights shall be determined in a court of competent jurisdiction under the local patent laws of the jurisdictions having issued the Patent Rights in question.

 

Notwithstanding anything to the contrary in this Agreement, any and all issues regarding a breach or alleged breach of a Party’s obligations under Article 18 (Obligation Not to Disclose Confidential Information) shall be determined in a court of competent jurisdiction under the Governing Law set forth in Section 21.3.

 

21.8

Insurance

Company shall purchase and maintain throughout the Agreement Term insurance or indemnity protection that is co-equal with its indemnity obligations. This shall include broad form commercial general liability insurance (including product liability). The limit of liability for such coverage shall be no less than [***] per claim/occurrence in the aggregate. Company shall also maintain workers’ compensation insurance if it has any US employees.

 

21.9

Assignment

Company shall not assign its rights or obligations under this Agreement absent the prior written consent of Roche, except that each Party may assign this Agreement without such consent to any of its Affiliates or, subject to the terms and conditions of this Agreement, in the context of a merger, acquisition, sale or other transaction involving all or substantially all of the assets of Company, in which case Company in its sole discretion may assign its rights and obligations under this Agreement. Any permitted assignment shall be binding on the successors of Company.

 

21.10

Debarment

Each Party represents and warrants to the other Party that it has never been debarred under 21 U.S.C. §335a, disqualified under 21 C.F.R. §312.70 or §812.119, sanctioned by a Federal Health Care Program (as defined in 42 U.S.C §1320 a-7b(f)), including the federal Medicare or a state Medicaid program, or debarred, suspended, excluded or otherwise declared ineligible from any other similar Federal or state agency or program. In the event that a Party receives notice of debarment, suspension, sanction, exclusion, ineligibility or disqualification under the above-referenced statutes, such Party shall immediately notify the other Party in writing.

 

21.11

Independent Contractor

No employee or representative of either Party shall have any authority to bind or obligate the other Party to this Agreement for any sum or in any manner whatsoever or to create or impose any contractual or other liability on the other Party without said Party’s prior written approval. For all purposes, and notwithstanding any other provision of this Agreement to the contrary, Company legal relationship to Roche under this Agreement shall be that of independent contractor.

 

21.12

Unenforceable Provisions and Severability

If any of the provisions of this Agreement are held to be void or unenforceable in whole or in part or if this Agreement contains an omission, then such omission shall be remedied or such void or unenforceable provisions shall be replaced, respectively, by valid and enforceable provisions that will achieve, within the framework of what is legally permissible, as far as possible the economic business intentions of the Parties according to the sense and purpose of this Agreement. However the remainder of this Agreement will remain in full force and effect, provided that the material interests of the Parties are not affected, i.e. the Parties would presumably have concluded this Agreement without the void or unenforceable provisions or omission, if they had considered the matter at the outset.

 

 

21.13

Waiver

The failure by either Party to require strict performance or observance of any obligation, term, provision or condition under this Agreement will neither constitute a waiver thereof nor affect in any way the right of the respective Party to require such performance or observance. The waiver by either Party of a breach of any obligation, term, provision or condition hereunder shall not constitute a waiver of any subsequent breach thereof or of any other obligation, term, provision or condition.

 

21.14

Appendices

All Appendices to this Agreement shall form an integral part to this Agreement.

 

21.15

Interpretation

Except where the context expressly requires otherwise, (i) the use of any gender herein shall be deemed to encompass references to either or both genders, and the use of the singular shall be deemed to include the plural (and vice versa), (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii) the word “will” shall be construed to have the same meaning and effect as the word “shall”, (iv) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (v) any reference herein to any Party or Third Party or person shall be construed to include the Party’s or Third Party’s or person’s successors and assigns, (vi) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (vii) all references herein to Articles, Sections or Appendices shall be construed to refer to Articles, Sections or Appendices of this Agreement, and references to this Agreement include all Appendices hereto, (viii) the word “notice” means notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (ix) provisions that require that a Party, the Parties or any Committee hereunder “agree”, “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding instant messaging), (x) references to any specific law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor law, rule or regulation thereof, and (xi) the term “or” shall be interpreted in the inclusive sense commonly associated with the term “and/or.”

 

21.16

Invoices

All invoices that are required or permitted hereunder shall be in writing and sent by Roche to Company at the following address or other address as Company may later provide:

 

John Quisel, CEO (jquisel@discmedicine.com) with a copy to AP@discmedicine.com

 

 

21.17

Notice

All notices that are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by nationally recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

if to Company, to:	Disc Medicine, Inc. 150 Cambridge Park Drive, Suite 103 Cambridge, Massachusetts 02140, U.S.A. Attention:  John Quisel, CEO Telephone:  [***]
With a copy to:	Ropes & Gray LLP Prudential Tower 800 Boylston Street Boston, Massachusetts 02199, U.S.A. Attention:  Marc A. Rubenstein Telephone:  [***]
if to Roche, to:	F. Hoffmann-La Roche Ltd Grenzacherstrasse 124 4070 Basel Switzerland Attn:  Legal Department Facsimile No.:  [***]
and:	Hoffmann-La Roche Inc. 150 Clove Road, Suite 8 Little Falls New Jersey 07424, U.S.A. Attn. Corporate Secretary Facsimile No.:  [***]

 

or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the Parties have entered into this Agreement as of Effective Date.

 

	Disc Medicine, Inc.
	/s/ John Quisel
	Name: John Quisel
	Title: President and Chief Executive Officer

 

	F. Hoffmann-La Roche Ltd
	/s/ Vikas Kabra		/s/ Barbara Shroeder
	Name: Vikas Kabra		Name: Barbara Shroeder
	Title: Global Head Transactions		Title: Authorized Signatory

  

	Hoffmann-La Roche Inc.
	/s/ John Parise
	Name: John Parise
	Title: Authorized Signatory

 

 

Appendix 1.57

 

Roche Know-How

 

All Know-How embodied in the documents referenced in the bitopertin data room index, the first and last pages of which are shown.

 

 

Appendix 1.57 - Roche Know-How

 

[***]

 

 

Appendix 1.58

 

Roche Patent Rights

 

Status: March 2021

 

[***]

 

 

Appendix 4.3

 

GMP Materials

 

[***]

 

 

Appendix 18.3
Initial Press Release Template

 

Disc Medicine Expands Hematology Pipeline with Worldwide Licensing Agreement for Bitopertin, a First-in-Class Modulator of Heme Synthesis

 

Clinical-Stage Program is Positioned to Enter Phase 2 Study in Erythropoietic Protoporphyria (EPP)

 

Cambridge, MA., [DATE] - Disc Medicine, Inc. announced today that it has entered into an exclusive worldwide licensing agreement with F. Hoffmann-La Roche Ltd for the development and commercialization of bitopertin, an orally administered GlyT1 inhibitor with demonstrated effects on the heme biosynthesis pathway. Disc Medicine intends to develop bitopertin as a treatment for hematologic diseases, initially for erythropoietic porphyrias (EP), a family of rare, debilitating and potentially life-threatening disorders caused by dysregulated heme biosynthesis in developing red blood cells.

 

“This collaboration is a major milestone in establishing Disc Medicine as a leader in hematology and enables us to target heme synthesis, a fundamental biological pathway of red blood cells that is highly complementary to our existing programs in iron homeostasis,” said John Quisel, JD, PhD, President and Chief Executive Officer of Disc Medicine. “Importantly, the well-established clinical safety profile of bitopertin will allow us to move rapidly into patient studies of several serious, hematologic diseases.”

 

Under the terms of the agreement, Disc Medicine will obtain exclusive, global rights to and be responsible for all development, manufacturing, and commercialization of bitopertin and related back up compounds. Roche will receive an upfront payment from Disc Medicine and potential development, regulatory, and commercial milestones totaling in excess of $200 million. Roche is also eligible to receive tiered royalties based on net revenues, at a rate ranging from the high single digits to high teens, and a proportion of proceeds from future transactions related to bitopertin. Disc will engage with regulatory authorities to initiate patient studies in early 2022.

 

About Erythropoietic Porphyrias

 

Erythropoietic porphyrias (EPs) are a family of ultra-rare, debilitating and potentially life-threatening diseases caused by mutations that affect the heme synthesis pathway. This results in the toxic accumulation of porphyrins that are activated when patients are exposed to sunlight and cause oxidative damage to surrounding tissues. EPs are characterized by severe cutaneous sensitivity that manifests as attacks of intense, burning pain, associated with blistering, edema and disfigurement that often persist. Patients also develop gastrointestinal complications from accumulation of porphyrins, including gallstones and liver failure in 5-20% of patients. There is no approved disease-modifying therapy and the only cure is hematopoietic stem cell transplant. The current approach to patient care involves taking extreme measures to avoid daylight, such as restricting outdoor activities to nighttime or using protective clothing and opaque shields, and management of pain. The first signs typically manifest in early childhood and are lifelong, having a major impact on the well-being, psychosocial development and daily lives of patients and their caregivers. Erythropoietic porphyrias comprise three subtypes: Erythropoietic protoporphyria (EPP), X-linked protoporphyria (XLPP), and Congenital Erythropoietic Porphyria (CEP).

 

 

About Bitopertin

 

Bitopertin is a clinical-stage, orally administered small molecule inhibitor of glycine transporter 1 (GlyT1). Glycine is an essential precursor for heme biosynthesis and GlyT1 is required to maintain adequate levels of intracellular glycine in developing erythrocytes. As a modulator of heme synthesis, bitopertin has the potential to provide benefit for a range of disorders caused by imbalances in the production of heme and its pathway intermediates. Bitopertin has been evaluated in over 4,000 healthy volunteers and patients in over 30 clinical trials across multiple indications, including several Phase 2 and 3 trials in psychiatric disorders and in a rare blood cell disorder and has a well-defined safety profile. Although CNS efficacy was not established in these studies, bitopertin demonstrated marked effects on heme synthesis. Moreover, in preclinical studies conducted by Disc Medicine, inhibition of GlyT1 by bitopertin was shown to decrease levels of the metabolites that are the underlying cause of EP. Bitopertin is an experimental agent and is not approved for use as a therapy in any jurisdiction worldwide.

 

About Disc Medicine

 

Disc Medicine is a biopharmaceutical company dedicated to transforming the lives of patients with hematologic disorders. We are building a unique portfolio of innovative, first-in-class therapeutic candidates that affect fundamental pathways of red blood cell biology. We are committed to developing treatments that empower and bring hope to the many patients who suffer from hematologic diseases. For more information, please visit www.discmedicine.com.

 

Exhibit 10.3

 

Certain identified information has been excluded from this exhibit because it is both not material and is the type that the registrant treats as private or confidential. Information that was omitted has been noted in this document with a placeholder identified by the mark “[***]”.

 

LICENSE AGREEMENT

 

between

 

ABBVIE DEUTSCHLAND GMBH & CO. KG

 

and

 

DISC MEDICINE, INC.

 

Dated as of September 13, 2019

TABLE OF CONTENTS

 

Article 1	DEFINITIONS	1
Article 2	GRANT OF RIGHTS	8
2.1	Grants to Licensee	8
2.2	Sublicenses	9
2.3	Third Party Agreements	9
2.4	No Other Rights Granted	9
Article 3	DEVELOPMENT, REGULATORY AND COMMERCIALIZATION ACTIVITIES	10
3.1	Development	10
3.2	Regulatory Matters	10
3.3	Records; Reports; Alliance Manager	11
3.4	Commercialization	11
3.5	Supply of Licensed Compounds	12
3.6	Subcontracting	12
3.7	Know-How Transfer	13
3.8	Non-Compete	13
Article 4	PAYMENTS AND RECORDS	13
4.1	Upfront Payment	13
4.2	Development Milestones	13
4.3	Commercialization Milestones	14
4.4	Sales-Based Milestones	14
4.5	Royalties	14
4.6	Withholding Taxes	15
4.7	Indirect Taxes	15
4.8	Interest on Late Payments	15
4.9	Financial Records	16
4.10	Audit	16
4.11	Audit Dispute	16
4.12	Confidentiality	16
4.13	No Other Compensation	16
Article 5	INTELLECTUAL PROPERTY	17
5.1	Ownership of Intellectual Property	17
5.2	Maintenance and Prosecution of Patents	17
5.3	Enforcement of Patents	19

 

5.4	Infringement Claims by Third Parties	20
5.5	Invalidity or Unenforceability Defenses or Actions	20
5.6	Inventor’s Remuneration	20
5.7	AbbVie Technology	20
Article 6	PHARMACOVIGILANCE	21
6.1	Pharmacovigilance Activities	21
Article 7	CONFIDENTIALITY AND NON-DISCLOSURE	21
7.1	Confidentiality Obligations	21
7.2	Permitted Disclosures	22
7.3	Securities Filings and other Disclosures Required by Law	22
7.4	Use of Name	23
7.5	Public Announcements	23
7.6	Publications	23
7.7	Trade Secrets	24
7.8	Return of Confidential Information	24
7.9	Survival	24
Article 8	REPRESENTATIONS AND WARRANTIES	24
8.1	Mutual Representations and Warranties	24
8.2	Additional Representations and Warranties of AbbVie	25
8.3	Additional Representations and Warranties of Licensee	25
8.4	DISCLAIMER	26
Article 9	INDEMNITY	27
9.1	Indemnification of AbbVie	27
9.2	Indemnification of Licensee	27
9.3	Notice of Claim	27
9.4	Control of Defense	27
9.5	Special, Indirect, and Other Losses	29
9.6	Insurance	29
Article 10	TERM AND TERMINATION	30
10.1	Term	30
10.2	Termination for Material Breach	30
10.3	Additional Termination by AbbVie and Licensee	30
10.4	Termination for Bankruptcy, Insolvency or Similar Event	31
10.5	Termination in Entirety	31
10.6	Transition Assistance	32

 

10.7	Remedies	33
10.8	Accrued Rights; Surviving Obligations	33
Article 11	MISCELLANEOUS	33
11.1	Force Majeure	33
11.2	Export Control	33
11.3	Assignment	34
11.4	Severability	34
11.5	Governing Law, Jurisdiction and Service	34
11.6	Dispute Resolution	34
11.7	Notices	35
11.8	Entire Agreement; Amendments	36
11.9	Waiver and Non-Exclusion of Remedies	36
11.10	English Language	36
11.11	No Benefit to Third Parties	36
11.12	Further Assurance	36
11.13	Relationship of the Parties	36
11.14	Performance by Affiliates and Sublicensees	37
11.15	Counterparts; Facsimile Execution	37
11.16	References	37
11.17	Construction	37

 

SCHEDULES

 

Schedule 1.3	AbbVie Know-How
Schedule 1.4	AbbVie Patents
Schedule 1.54	Licensed Compounds
Schedule 3.5.1	Assignment of Existing Inventory
Schedule 7.5	Form of Press Release
Schedule 11.6.2	ADR Procedures

LICENSE AGREEMENT

 

This License Agreement (the “Agreement”) is made and entered into effective as of September 13, 2019 (the “Effective Date”) by and between AbbVie Deutschland GmbH & Co. KG (“AbbVie”), and Disc Medicine, Inc., a Delaware corporation (“Licensee”). AbbVie and Licensee are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, AbbVie controls certain intellectual property rights with respect to the Licensed Compounds (as defined herein) and Licensed Products (as defined herein) in the Territory (as defined herein); and WHEREAS, AbbVie wishes to grant to Licensee, and Licensee wishes to take, a license under such intellectual property rights to develop and commercialize Licensed Compounds and Licensed Products in the Territory, in each case in accordance with the terms and conditions set forth below.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises and conditions hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, do hereby agree as follows:

 

Article 1
DEFINITIONS

 

Unless otherwise specifically provided herein, the following terms shall have the following meanings:

 

1.1.        “AbbVie” has the meaning set forth in the preamble hereto.

 

1.2.        “AbbVie Indemnitees” has the meaning set forth in Section 9.1.

 

1.3.        “AbbVie Know-How” means all Information Controlled by AbbVie or any of its Affiliates as of the Effective Date that is not generally known and is necessary for the Development, Manufacture, or Commercialization of a Licensed Compound or Licensed Product [***] as listed in Schedule 1.3.

 

1.4.        “AbbVie Patents” means: (a) the Patents set forth in Schedule 1.4 that are Controlled by AbbVie or any of its Affiliates as of the Effective Date, as well as any Patents issuing therefrom; (b) all Patent applications filed after the Effective Date, as well as any Patents issuing therefrom, that directly claim priority to any of the Patents in the foregoing clause (a); and (c) all Patent term extensions, supplementary protection certificates, or equivalent rights relating to clauses (a) and (b), by or on behalf of the Parties under this Agreement.

 

1.5.        [***]

 

1.6.        “Accounting Standards” with respect to a Party means that such Party shall maintain records and books of accounts in accordance with United States Generally Accepted Accounting Principles.

 

1.8.        “Affiliate” means, with respect to a Party, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Party. For purposes of this definition, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” means (a) the possession, directly or indirectly, of the power to direct the management or policies of a business entity, whether through the ownership of voting securities, by contract relating to voting rights or corporate governance, or otherwise; or (b) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities or other ownership interest of a business entity (or, with respect to a limited partnership or other similar entity, its general partner or controlling entity). For purposes of this Agreement, Atlas Venture, its Affiliates and its and their respective portfolio companies shall not be deemed to be an Affiliate of Licensee or any of Licensee’s Affiliates.

 

1.9.        “Agreement” has the meaning set forth in the preamble hereto.

 

1.10.       “Alliance Manager” has the meaning set forth in Section 3.3.3.

 

1.11.       “Applicable Law” means federal, state, local, national and supra-national laws, statutes, rules, and regulations, including any rules, regulations or other requirements of the Regulatory Authorities, major national securities exchanges or major securities listing organizations, that may be in effect from time to time during the Term and applicable to a particular activity or country or other jurisdiction hereunder.

 

1.12.       “Audit Arbitrator” has the meaning set forth in Section 4.11.

 

1.13.       “Authorized Sublicense” has the meaning set forth in Section 2.2.1.

 

1.14.       “Breaching Party” has the meaning set forth in Section 10.2.1.

 

1.15.       “Business Day” means a day other than a Saturday or Sunday on which banking institutions in New York, New York are open for business.

 

1.16.       “Calendar Quarter” means each successive period of three (3) calendar months commencing on January 1, April 1, July 1 and October 1.

 

1.17.       “Calendar Year” means each successive period of twelve (12) calendar months commencing on January 1 and ending on December 31.

 

1.18.       “Combination Product” means a Licensed Product that is: (a) sold in the form of a combination that contains or comprises one or more Other Active Ingredients (whether co-formulated or co-packaged or otherwise sold for a single price) other than a Licensed Compound in the Licensed Product; (b) sold for a single price together with any (i) delivery device or component therefor, (ii) diagnostic product, process, service, or therapy, or (iii) product, process, service, or therapy other than the Licensed Product; or (c) defined as a “combination product” by the FDA pursuant to 21 C.F.R. §3.2(e) or its foreign equivalent.

 

1.19.       “Commercialization” means any and all activities directed to the preparation for sale of, offering for sale of, or sale of a Licensed Compound or Licensed Product, including activities related to marketing, promoting, distributing, and importing such Licensed Compound or Licensed Product, and interacting with Regulatory Authorities regarding any of the foregoing. For clarity, Commercialization does not include Manufacturing. When used as a verb, “to Commercialize” and “Commercializing” means to engage in Commercialization, and “Commercialized” has a corresponding meaning.

 

1.20.       “Commercially Reasonable Efforts” means [***].

 

1.21.       “Confidential Information” means any technical, business, or other information or data provided orally, visually, in writing or other form by or on behalf of one Party to the other Party in connection with this Agreement, whether prior to, on, or after the Effective Date, including information relating to the terms of this Agreement, a Licensed Compound or any Licensed Product, any Exploitation of a Licensed Compound or any Licensed Product, any Information with respect thereto developed by or on behalf of the disclosing Party or its Affiliates (including AbbVie Know-How and Reversion Technology, as applicable), or the scientific, regulatory or business affairs or other activities of either Party.

 

1.22.       “Control” means, with respect to any item of Information, material, Patent, or other intellectual property right existing on or after the Effective Date or during the Term, possession of the right, whether directly or indirectly, and whether by ownership, (sub)license or otherwise (other than by operation of the license and other grants in Section 2.1 (but not assignment)), to grant a license, sublicense or other right to or under such Information, material, Patent, or other intellectual property right as provided for herein without violating the terms of any agreement or other arrangement with any Third Party in existence as of the time such Party would be required hereunder to grant such (sub)license or rights or triggering any payment obligation to a Third Party. Notwithstanding the foregoing, no Information, material, Patents or other intellectual property rights will be “Controlled” by a Party hereunder if such Information, material, Patents or other intellectual property rights are owned or in-licensed by a Third Party that becomes an Affiliate of such Party after the Effective Date as a result of such Party (a) acquiring such Third Party or a portion of the business of such Third Party or (b) being acquired by such Third Party (in each case, whether by merger, stock purchase or purchase of assets).

 

1.23.       “Convicted Individual” or “Convicted Entity” has the meaning set forth in Section 8.3.3(d).

 

1.24.       “CREATE Act” has the meaning set forth in Section 5.2.6.

 

1.25.       “Debarred Entity” has the meaning set forth in Section 8.3.3(b).

 

1.26.       “Debarred Individual” has the meaning set forth in Section 8.3.3(a).

 

1.27.       “Default Notice” has the meaning set forth in Section 10.2.1.

 

1.28.       “Development” means all activities related to research, pre-clinical and other non- clinical testing, test method development and stability testing, toxicology, formulation, process development, manufacturing scale-up, qualification and validation, quality assurance/quality control, clinical studies, statistical analysis and report writing, the preparation and submission of Drug Approval Applications, regulatory affairs with respect to the foregoing and all other activities necessary or reasonably useful or otherwise requested or required by a Regulatory Authority as a condition or in support of obtaining or maintaining a Regulatory Approval. When used as a verb, “Develop” means to engage in Development.

 

1.29.       “Dispute” has the meaning set forth in Section 11.6.

 

1.30.       “Dollars” or “$” means United States Dollars.

 

1.31.       “Drug Approval Application” means a New Drug Application or Biologics License Application as defined in the FFDCA, or any corresponding foreign application in the Territory.

 

1.32.       “Effective Date” has the meaning set forth in the preamble hereto.

 

1.33.       “EMA” means the European Medicines Agency and any successor agency or authority having substantially the same function.

 

1.34.       “European Union” means the economic, scientific, and political organization of member states of the European Union as it is constituted as of the Effective Date or from time to time, and any successor thereto.

 

1.35.       “Excluded Field” means [***].

 

1.36.       “Excluded Individual” or “Excluded Entity” has the meaning set forth in Section 8.3.3(c).

 

1.37.       “Exploit” or “Exploitation” means to make, have made, import, use, sell, or offer for sale, including to research, Develop, Commercialize, register, Manufacture, have Manufactured, hold, or keep (whether for disposal or otherwise), have used, export, transport, distribute, promote, market, or have sold or otherwise dispose of.

 

1.38.       “FDA” means the United States Food and Drug Administration and any successor agency or authority having substantially the same function.

 

1.39.       “FDA’s Disqualified/Restricted List” has the meaning set forth in Section 

 

1.40.       “FFDCA” means the United States Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §301 et seq., as amended from time to time, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions, and modifications thereto).

 

1.41.       “Field” means all human and non-human diagnostic, prophylactic, and therapeutic uses, other than uses in the Excluded Field.

 

1.42.       “First Commercial Sale” means [***].

 

1.43.       “FTE” means the equivalent of the work of [***] (consisting of [***] per Calendar Year).

 

1.44.       “Improvement” means improved antibodies containing derivatives or modifications of, or enhancements to, an antibody Controlled by AbbVie or its Affiliates and set forth on Schedule 1.54 which improved antibodies specifically target RGMc as their primary mode of action, including all fragments thereof that specifically bind the RGMc target.

 

1.45.       “Improvement Patent” means any Patent claiming any Improvement to a Licensed Compound that is conceived, discovered, developed, or otherwise made by or on behalf of Licensee, its Affiliates or Sublicensees.

 

1.46.       “IND” means an application filed with a Regulatory Authority for authorization to commence human clinical studies, including (a) an Investigational New Drug Application as defined in the FFDCA or any successor application or procedure filed with the FDA, (b) any clinical trial application or other equivalent of a United States IND in other countries or regulatory jurisdictions, and (c) all supplements, amendments, variations, extensions and renewals thereof that may be filed with respect to the foregoing.

 

1.47.       “Indemnification Claim Notice” has the meaning set forth in Section 9.3.

 

1.48.       “Indirect Taxes” has the meaning set forth in Section 4.7.

 

1.49.       “Indemnified Party” has the meaning set forth in Section 9.3.

 

1.50.       “Information” means all technical and scientific information, trade secrets, methods, processes, practices, formulae, specifications, data and results, including study designs and protocols; assays; and biological methodology; in each case to the extent confidential, proprietary, patented or patentable, in written or electronic form.

 

1.51.       “Joint IP” has the meaning set forth in Section 5.1.

 

1.52.       “Joint Patent” has the meaning set forth in Section 5.1.

 

1.53.       “LIBOR” means the London Interbank Offered Rate for deposits in United States Dollars having a maturity of one month published by the British Bankers’ Association, as adjusted from time to time on the first London Business Day of each month.

 

1.54.       “Licensed Compounds” means: (a) all of the antibodies Controlled by AbbVie or its Affiliates and set forth on Schedule 1.54 [***].

 

1.55.       “Licensed Product” means any pharmaceutical product comprising or containing (a) any Licensed Compound or (b) an antibody or other compound that is covered by a claim of a Joint Patent [***] (a) and (b), alone or in combination with one or more other active ingredients (“Other Active Ingredients”), in any and all forms, in current and future delivery systems, dosage forms and strengths, and formulations, including any improvements thereto.

 

1.56.       “Licensee” has the meaning set forth in the preamble hereto.

 

1.57.       “Licensee Indemnitees” has the meaning set forth in Section 9.2.

 

1.58.       “Licensee Prosecuted Infringement” has the meaning set forth in Section 5.3.1.

 

1.59.       “Losses” has the meaning set forth in Section 9.1.

 

1.60.       “Major Market” means [***].

 

1.61.       “Manufacture” and “Manufacturing” means all activities related to the production, manufacture, processing, purifying, formulating, filling, finishing, packaging, labeling, shipping, and holding of a Licensed Compound, any Licensed Product, or any intermediate thereof, including process development, process qualification and validation, scale-up, pre-clinical, clinical and commercial manufacture and analytic development, product characterization, stability testing, quality assurance, and quality control. For clarity, Manufacturing does not include Commercialization.

 

1.62.       “Net Sales” means [***].

 

Net Sales shall not include [***] in similar quantities.

 

Net Sales for any Combination Product will be calculated on a country-by-country basis by multiplying actual Net Sales of such Combination Product [***]. If such Licensed Product is [***].

 

Subject to the above, Net Sales shall be calculated in accordance with the standard internal policies and procedures of Licensee, its Affiliates, or Sublicensees, which must be in accordance with Accounting Standards.

 

1.63.       “Non-Breaching Party” has the meaning set forth in Section 10.2.1.

 

1.64.       “Other Active Ingredients” has the meaning set forth in Section 1.55.

 

1.65.       “Party” and “Parties” has the meaning set forth in the preamble hereto.

 

1.66.       “Patent Challenge” has the meaning set forth in Section 10.3.1.

 

1.67.       “Patents” means (a) all national, regional and international patents and patent applications, including provisional patent applications; (b) all patent applications filed either from such patents, patent applications or provisional applications or from an application claiming priority from either of these, including divisionals, continuations, continuations-in-part, provisionals, converted provisionals and continued prosecution applications; (c) any and all patents that have issued or in the future issue from the foregoing patent applications ((a) and (b)), including utility models, petty patents and design patents and certificates of invention; (d) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions (including any patent term adjustments, patent term extensions, supplementary protection certificates and the like) of the foregoing patents or patent applications ((a), (b), and (c)); and (e) any similar rights, including so-called pipeline protection or any importation, revalidation, confirmation or introduction patent or registration patent or patent of additions to any of such foregoing patent applications and patents.

 

1.68.       “Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government.

 

1.69.       “Phase II Trial” means a human clinical trial of a Licensed Product conducted in any country in the Territory (whether a standalone trial or a stage of a “Phase I/II” clinical trial described in the protocol as the “Phase II portion”, or a stage of a “Phase II/III” clinical trial described in the protocol as the “Phase II portion”) the principal purpose of which is to evaluate the clinical efficacy, safety, pharmacodynamics or biological activity of such product in patients with the disease or condition under study, as further described in 21 CFR § 312.21(b), as amended, or a similar clinical study in a country other than the United States, and is prospectively designed to generate sufficient data that may permit commencement of Phase III Trial, or that would otherwise satisfy the requirements of 21 C.F.R. § 312.21(b), as amended, or its foreign equivalent.

 

1.70.       “Phase III Trial” means a human clinical trial of a Licensed Product (whether a standalone trial or a stage of a “Phase II/III” clinical trial described in the protocol as the “Phase III portion”) on a sufficient number of subjects in an indicated patient population that is designed to establish that a Licensed Product is safe and efficacious for its intended use and to determine the benefit/risk relationship, warnings, precautions, and adverse reactions that are associated with such product in the dosage range to be prescribed, which trial is intended to support Regulatory Approval of such Licensed Product, including the trials referred to in 21 C.F.R. § 312.21(c), as amended, or its foreign equivalent.

 

1.71.       “Product Infringement” has the meaning set forth in Section 5.3.1.

 

1.72.       “Product Trademarks” means the Trademarks to be used by Licensee or its Affiliates or its or their respective Sublicensees for the Commercialization of Licensed Products in the Territory and any registrations thereof or any pending applications relating thereto in the Territory (excluding, in any event, any trademarks, service marks, names or logos that include any corporate name or logo of the Parties or their Affiliates or Sublicensees).

 

1.73.       “Regulatory Approval” means, with respect to a country or other jurisdiction in the Territory, any and all approvals (including Drug Approval Applications), licenses, registrations, or authorizations of any Regulatory Authority necessary to commercially distribute, sell, or market a Licensed Compound or Licensed Product in such country or other jurisdiction, including, where applicable, (a) pricing or reimbursement approval in such country or other jurisdiction, (b) pre- and post-approval marketing authorizations (including any prerequisite Manufacturing approval or authorization related thereto), and (c) labeling approval.

 

1.74.       “Regulatory Authority” means any applicable supra-national, federal, national, regional, state, provincial, or local governmental or regulatory agencies, departments, bureaus, commissions, councils, or other government entities (e.g., the FDA and EMA) regulating or otherwise exercising authority with respect to activities contemplated in this Agreement, including the Exploitation of a Licensed Compound or Licensed Product in the Territory.

 

1.75.       “Regulatory Documentation” means all (a) INDs and IND applications, Drug Approval Applications, Regulatory Approvals and (b) correspondence and reports submitted to or received from Regulatory Authorities (including minutes and official contact reports relating to any communications with any Regulatory Authority) and adverse event files, in each case ((a) and (b)) relating solely to any Reversion Product.

 

1.76.       “Regulatory Exclusivity” means with respect to a Licensed Product in a country or other jurisdiction in the Territory, any additional market protection, other than Patent protection, granted by a Regulatory Authority for such Licensed Product in such country or other jurisdiction which confers an exclusive Commercialization period during which Licensee or its Affiliates or Sublicensees can exclusively market and sell such Licensed Product in such country or other jurisdiction through such regulatory exclusivity right.

 

1.77.       “Reversion License” has the meaning set forth in Section 10.5.2.

 

1.78.       “Reversion Product” means all Licensed Products in the form that each such Licensed Product exists as of the effective date of termination of this Agreement (but excluding any Other Active Ingredients or other components in any Combination Products).

 

1.79.       “Reversion Technology” means any Patents or Know-How Controlled by Licensee or any of its Affiliates that (a) claim (with respect to Patents) or specifically relate to (with respect to Know-How) any Reversion Product or its composition of matter or method of use, (b) are incorporated into any such Reversion Product, or (c) are otherwise reasonably necessary or have been used to Exploit any Reversion Product, in each case, as such Patents or Know-How exist and are incorporated into any such Reversion Product, in each case, as such Patents or Know-How exist as of the effective date of such termination of this Agreement (but including, for clarity, any other Patents that directly claim priority to any such Patents).

 

1.80.       “RGMa” means Repulsive Guidance Molecule A, and refers to a glycosylphosphatidylinositol-anchored glycoprotein that exists in both membrane-bound and soluble forms. [***].

 

1.81.       “RGMc” means membrane-associated or soluble protein involved in iron overload known as Repulsive Guidance Molecule C [***].

 

1.82.       “Royalty Term” means, with respect to each Licensed Product and each country or other jurisdiction in the Territory, the period beginning on the date of the First Commercial Sale of such Licensed Product in such country or other jurisdiction, and ending on the latest to occur of (a) the latest to occur of (i) the expiration of the last-to-expire [***] Patent that includes a Valid Claim that covers such Licensed Product or the Exploitation thereof in such country or other jurisdiction, or (ii) the expiration of the last-to-expire [***] Patent in such country or other jurisdiction; (b) the expiration of Regulatory Exclusivity in such country or other jurisdiction for such Licensed Product, and (c) [***] the First Commercial Sale of the first Licensed Product in such country or other jurisdiction.

 

1.83.       “Sanctioned Party List” has the meaning set forth in Section 8.3.4.

 

1.84.       “Senior Officer” means, with respect to AbbVie, its Vice President of Discovery or his or her designee, and with respect to Licensee, its Chief Executive Officer.

 

1.85.       [***].

 

1.86.       “Sublicensee” means an Affiliate or Third Party that is granted a sublicense by Licensee under the grants in Section 2.1 as provided in Section 2.2.

 

1.87.       “Term” has the meaning set forth in Section 10.1.1.

 

1.88.       “Territory” means the entire world.

 

1.89.       “Third Party” means any Person other than AbbVie, Licensee and their respective Affiliates.

 

1.90.       “Third Party Claims” has the meaning set forth in Section 9.1.

 

1.91.       “Trademark” means any word, name, symbol, color, designation or device or any combination thereof that functions as a source identifier, including any trademark, trade dress, brand mark, service mark, trade name, brand name, logo or business symbol, whether or not registered.

 

1.92.       “United States” or “U.S.” means the United States of America and its territories and possessions (including the District of Columbia and Puerto Rico).

 

1.93.       “Valid Claim” means [***].

 

Article 2
GRANT OF RIGHTS

 

2.1              Grants to Licensee. Subject to Section 2.4, Section 5.2.1, Section 5.2.2, and the other terms and conditions of this Agreement, AbbVie hereby grants to Licensee an exclusive (including with regard to AbbVie and its Affiliates) license, with the right to grant sublicenses in accordance with Section 2.2, under the AbbVie Know-How, AbbVie Patents and AbbVie’s interest in the Joint IP, to Exploit the Licensed Compounds and Licensed Products in the Field in the Territory.

 

2.2         Sublicenses.

 

2.2.1.      Right to Grant Sublicenses. Licensee shall have the right to grant sublicenses through multiple tiers, under the licenses granted in Section 2.1 to its Affiliates and other Third Parties; provided that any such sublicenses shall be subject to AbbVie’s prior written consent for other Third Parties only (and not Affiliates) if such Third Party is not an Authorized Sublicensee (for which no consent is required), which consent shall not be unreasonably withheld, delayed (subject to this Section 2.2.1) or conditioned, and such consent or election to not provide consent shall in no event be delayed beyond [***] after written notice of such request has been received by AbbVie; provided for clarity, in the event that AbbVie fails to provide either its consent or election to not provide consent prior to the expiration of such [***], AbbVie will be deemed to have given its consent to sublicensing by Licensee as required by this Section 2.2.1. Licensee shall cause each Sublicensee to comply with the applicable terms and conditions of this Agreement. Licensee hereby guarantees the performance of its Affiliates and permitted Sublicensees that are sublicensed as permitted herein, and the grant of any such sublicense shall not relieve Licensee of its obligations under this Agreement, except to the extent they are satisfactorily performed by such Sublicensee. Any such permitted sublicenses shall be consistent with and expressly made subject to the terms and conditions of this Agreement. A copy of any sublicense agreement executed by Licensee (which may be redacted for terms that are not relevant to show compliance with this Agreement) shall be provided to AbbVie within [***] after its execution. As used herein, an “Authorized Sublicense” shall mean a pharmaceutical or biopharmaceutical company that in the year prior to the date of the sublicense agreement (a) had revenues of at least [***] and (b) had a research and development budget during such year that was [***].

 

2.2.2.      Termination of Sublicenses. In the event of termination of this Agreement, any sublicense granted by Licensee pursuant to this Section 2.2 shall automatically be deemed to terminate.

 

2.3         Third Party Agreements.

 

2.3.1.      Neither Licensee nor any of its Affiliates shall enter into any agreement with a Third Party Sublicensee that is relevant to the Licensed Compounds or Licensed Products without including in such agreement a perpetual license to Licensee and its Affiliates, with the right to sublicense, under any Improvement Patents or Reversion Technology arising under such agreement and that are owned or controlled by such Sublicensee.

 

2.3.2.      Neither Licensee nor any of its Affiliates shall enter into any agreement with a Third Party subcontractor that is relevant to the Licensed Compounds or Licensed Products without including in such agreement an obligation to assign ownership of, or a perpetual, sublicenseable license to, Licensee and its Affiliates Information and Patents that are created, conceived or discovered by such Third Party subcontractor in the performance of such agreement and that relates to the Exploitation of Licensed Compounds or Licensed Products; provided, however, that (i) with respect to an academic institution, university or non-profit institution, Licensee or its Affiliate may enter into such agreement on customary terms (i.e., at a minimum such agreement shall have an option to negotiate or obtain a license), and (ii) such obligation shall not apply to any improvements to the proprietary core or platform technology owned or in-licensed by any such Third Party subcontractor unless such improvements are necessary for the Exploitation of Licensed Compounds or Licensed Products.

 

2.4         No Other Rights Granted. Except as expressly provided herein, neither Party grants any other right or license, including any rights or licenses to any Patents (or any corresponding worldwide family member), any Information, any corporate names, Trademarks or logos owned or used by such Party or any of its Affiliates, or any other Patent or intellectual property rights not otherwise expressly granted herein, whether by estoppel, implication or otherwise. Notwithstanding anything to the contrary, AbbVie grants no right or license with respect to Other Active Ingredients owned or controlled by AbbVie or its Affiliates.

 

Article 3
DEVELOPMENT, REGULATORY AND COMMERCIALIZATION ACTIVITIES

 

3.1         Development.

 

3.1.1.      Ongoing Development. The Parties acknowledge and agree that additional Development will be required to obtain Regulatory Approvals for the Licensed Compounds or Licensed Products in the Territory. After the Effective Date, Licensee shall be solely responsible, in its sole discretion, for Development of the Licensed Compounds and the Licensed Products in the Territory.

 

3.1.2.      Diligence. Licensee (itself or through its Affiliates or Sublicensees) shall use Commercially Reasonable Efforts to Develop and seek Regulatory Approvals for at least [***] Licensed Compound or Licensed Product in each of the Major Markets.

 

3.1.3.      Development Costs. Licensee shall be solely responsible for all costs and expenses in connection with the Development of, and seeking, obtaining and maintaining Regulatory Approvals for, the Licensed Compounds and Licensed Products.

 

3.1.4.      Applicable Law. Licensee shall, and shall cause its Affiliates to, comply with all Applicable Law with respect to the Development of Licensed Compounds and Licensed Products.

 

3.2         Regulatory Matters.

 

3.2.1.      Regulatory Activities.

 

(a)            As between the Parties, Licensee shall have the sole responsibility, at its expense, for preparing, obtaining, and maintaining Drug Approval Applications (including the setting of the overall regulatory strategy therefor), other Regulatory Approvals and other submissions, and for conducting communications with the Regulatory Authorities, for Licensed Compounds or Licensed Products in the Territory (which shall include filings of or with respect to INDs and other filings or communications with the Regulatory Authorities). All Regulatory Approvals relating to the Licensed Compounds or Licensed Products with respect to the Territory shall be owned by, and shall be the sole property and held in the name of, Licensee or its Affiliate or Sublicensee or their respective designees.

 

(b)            Licensee shall notify the AbbVie Alliance Manager promptly (but in no event later than forty-eight (48) hours) following its determination that any event, incident, or circumstance has occurred that may result in the need for a recall, market suspension, or market withdrawal of a Licensed Compound or Licensed Product in the Territory, and shall include in such notice the reasoning behind such determination, and any supporting facts. Licensee (or its Affiliate or Sublicensee) shall have the right to make the final determination whether to voluntarily implement any such recall, market suspension, or market withdrawal in the Territory; provided that prior to any implementation of such a recall, market suspension, or market withdrawal, Licensee shall consult with AbbVie and shall consider AbbVie’s comments in good faith. If a recall, market suspension, or market withdrawal of a Licensed Compound or Licensed Product is mandated by a Regulatory Authority in the Territory, Licensee (or its Affiliate or Sublicensee or their respective designees) shall initiate such a recall, market suspension, or market withdrawal of in compliance with Applicable Law. For all recalls, market suspensions, or market withdrawals undertaken pursuant to this Section 3.2.1(b), Licensee (or its Affiliate or Sublicensee or their respective designees) shall be solely responsible for the execution and all costs thereof.

 

3.3         Records; Reports; Alliance Manager.

 

3.3.1.      Records. Licensee shall maintain records in sufficient detail and in good scientific manner appropriate for Patent and regulatory purposes, and in compliance with Applicable Law, which shall be materially complete and accurate and shall properly reflect all work done and results achieved in the performance of its Development, Manufacture and Commercialization activities by or on behalf of Licensee with respect to the Licensed Compound or Licensed Product. Such records shall be retained by Licensee for at least [***] after the termination of this Agreement, or for such longer period as may be required by Applicable Law.

 

3.3.2.      Development Reports. At least twice per [***], Licensee shall provide the AbbVie Alliance Manager with a written report summarizing (a) the results and progress of Development activities it has performed, or caused to be performed, since the preceding report, (b) its Development activities in process, (c) the future activities it expects to initiate during the then-current Calendar Year, including timelines related thereto, (d) updates regarding regulatory matters, including an update of all Drug Approval Applications filed, in each case on a country by country basis, (e) the then-current annual Development budget and (f) such other information as AbbVie may reasonably request relating to the Development in order to enable AbbVie to assess Licensee’s compliance with its Development obligations under this Agreement respect to the Licensed Compounds and Licensed Products.

 

3.3.3.      Alliance Manager. Within [***] following the Effective Date, each Party will appoint (and notify the other Party of the identity of) an alliance manager (each an “Alliance Manager”). Each Party may replace its Alliance Manager at any time by written notice to the other Party. The Alliance Managers will serve as the primary contact point between the Parties for the purpose of providing each Party with information on the progress of the Development and Commercialization of each Licensed Compound and Licensed Product (including, with respect to the AbbVie Alliance Manager, the recipient of the various reports required to be delivered by Licensee pursuant to this ARTICLE 3) and facilitating the flow of information and otherwise facilitating communication between the Parties.

 

3.4         Commercialization.

 

3.4.1.      In General. Licensee (itself or through its Affiliates or Sublicensees) shall be solely responsible for Commercialization of the Licensed Products throughout the Territory at Licensee’s own cost and expense.

 

3.4.2.      Diligence. Licensee (itself or through its Affiliates or Sublicensees) shall use Commercially Reasonable Efforts to (a) Commercialize at least [***] Licensed Product in each of the Major Markets, and (b) maximize Net Sales in each of the Major Markets. If at any time AbbVie has a reasonable basis to believe that Licensee is in material breach of its obligations under this Section 3.4.2, then AbbVie may so notify Licensee in writing, specifying the basis for its belief, and, without limitation to any other right or remedy available to AbbVie hereunder, at AbbVie’s request, the Parties shall meet within [***] after such notice to discuss in good faith AbbVie’s concerns and Licensee’s Commercialization plans with respect to a Licensed Product.

 

3.4.3.      Statements and Compliance with Applicable Law. Licensee shall, and shall cause its Affiliates to, comply with all Applicable Law with respect to the Commercialization and Manufacturing of Licensed Compounds and Licensed Products. Licensee shall avoid, and shall cause its Affiliates, employees, representatives, agents, Sublicensees and distributors to avoid, taking, or failing to take, any actions that Licensee knows or reasonably should know would jeopardize the goodwill or reputation of AbbVie or the Licensed Products or any Trademark associated therewith. Without limitation to the foregoing, Licensee shall in all material respects conform its practices and procedures relating to the Commercialization of the Licensed Products and educating the medical community in the Territory with respect to the Licensed Products to any applicable industry association regulations and policies, as the same may be amended from time to time, and Applicable Law.

 

3.4.4.      Booking of Sales; Distribution. Licensee shall invoice and book sales, establish all terms of sale (including pricing and discounts) and warehousing, and distribute the Licensed Products in the Territory and perform or cause to be performed all related services. Licensee shall handle all returns, recalls, or withdrawals, order processing, invoicing, collection, distribution, and inventory management with respect to the Licensed Products in the Territory.

 

3.4.5.      Commercialization Reports. Commencing upon filing a Drug Approval Application for a Licensed Product, Licensee shall provide to the AbbVie Alliance Manager, at least [***] per [***], a report summarizing (a) the Commercialization activities it or its Affiliates or Sublicensees has performed, or caused to be performed, during the applicable reporting period and on a Calendar Year-to-date basis for Licensed Products in the Territory; (b) its Commercialization activities in process and the future activities it expects to initiate during the then-current Calendar Year, including timelines related thereto; (c) a non-binding twenty-four month sales forecast on a regional basis for Net Sales for Licensed Products in the Territory; and (d) such other information as AbbVie may reasonably requested relating to the Commercialization of the Licensed Products in order to enable AbbVie to assess Licensee’s compliance with its Commercialization obligations under this Agreement respect to the Licensed Compounds and Licensed Products.

 

3.5         Supply of Licensed Compounds.

 

3.5.1.      Assignment of Existing Inventory. AbbVie hereby assigns to Licensee all of its right, title, and interest in and to its current inventory of the research grade materials and supporting materials of the Licensed Compounds that are (a) in the possession and Control of AbbVie or any of its Affiliates, (b) existing as of the Effective Date and (c) listed on Schedule 3.5.1. Promptly following the Effective Date, AbbVie shall deliver or have delivered such inventory to Licensee, at Licensee’s sole cost and expense EXW AbbVie’s warehouse (Incoterms 2010) at a facility reasonably agreed by the Parties. Any reimbursement to AbbVie for the cost to transport the assigned inventory to Licensee shall be made within [***] after notice from AbbVie of the amount to be reimbursed. LICENSEE HEREBY ACKNOWLEDGES THAT ANY INVENTORY DELIVERED PURSUANT TO THIS AGREEMENT ARE UNDERSTOOD TO BE EXPERIMENTAL IN NATURE. ABBVIE MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE INVENTORY AND IS PROVIDING THE INVENTORY “AS-IS”. ABBVIE DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. LICENSEE ACKNOWLEDGES AND AGREES THAT THE LICENSED COMPOUND HAS NOT RECEIVED REGULATORY APPROVAL AND LICENSEE SHALL NOT SELL OR OTHERWISE USE THE INVENTORY OF LICENSED COMPOUND EXCEPT AS PERMITTED BY APPLICABLE LAW.

 

3.5.2.      Supply of Licensed Compounds and Licensed Product. Except for the existing inventory, Licensee shall have the sole responsibility for, at its expense, Manufacturing (or having Manufactured) and supplying Licensed Compounds and Licensed Products for research, Development and Commercialization purposes in the Territory.

 

3.6         Subcontracting. Licensee (or its Affiliates or Sublicensees) may subcontract with a Third Party to perform any or all of its obligations hereunder, provided that (a) no such permitted subcontracting shall relieve Licensee of any liability or obligation hereunder except to the extent satisfactorily performed by such subcontractor, and (b) the agreement pursuant to which Licensee engages any Third Party subcontractor must (i) be consistent in all material respects with this Agreement, and (ii) contain terms obligating such subcontractor to comply with the confidentiality, intellectual property, and all other relevant provisions of this Agreement.

 

3.7         Know-How Transfer.

 

3.7.1.      AbbVie shall reasonably assist in the transfer of the AbbVie Know-How to Licensee for a period of [***] following the Effective Date; provided that AbbVie shall not be required to utilize more than [***] for such transfer (unless mutually agreed in writing by the Parties). Following completion of such transfer (or reaching such hour threshold), AbbVie shall have no further obligations with respect to the Licensed Compounds or Licensed Products except as expressly set forth herein.

 

3.7.2.      If, after the [***] period provided for in Section 3.7.1, Licensee requires consulting support in connection with the transfer of the AbbVie Know-How, then, upon Licensee’s reasonable request, AbbVie will make its personnel reasonably available to Licensee to provide such consulting support for an additional period of up to [***]. Licensee shall reimburse AbbVie for the cost of personnel providing such support at a rate of [***] (or portion thereof) within [***] of invoicing by AbbVie.

 

3.7.3.      The assistance and consulting support under Sections 3.7.1 and 3.7.2 shall be rendered by AbbVie without the requirement that AbbVie personnel visit the site of Licensee’s facilities or any Third Party contractors, unless AbbVie and Licensee agree in writing otherwise, in which case Licensee shall reimburse AbbVie its reasonable direct and indirect expenses in making such visits. The Parties shall generally communicate by means of telephone, email and video conference, as they may deem appropriate under the circumstances, in the fulfilment of their responsibilities under this Section 3.7.

 

3.7.4.      Licensee will use all documents and files relating to the AbbVie Know-How only for purposes of exercising its rights and licenses with respect to Licensed Compounds and Licensed Products in accordance with the terms and conditions of this Agreement and Applicable Law and for no other purpose.

 

3.8         Non-Compete.

 

3.8.1.      During the Term, AbbVie shall not, and shall cause its Affiliates not to (a) enter into any agreement or other arrangement with any Third Party pursuant to which it grants such Third Party any license or other rights to Exploit any Licensed Compounds or Licensed Products in the Excluded Field, or (b) directly or indirectly, Exploit any Licensed Compounds or Licensed Products in the Excluded Field.

 

Article 4
PAYMENTS AND RECORDS

 

4.1         Upfront Payment. In partial consideration of the rights granted by AbbVie to Licensee hereunder:

 

4.1.1.      Licensee shall pay AbbVie [***] within [***] after the Effective Date; and

 

4.1.2.      [***]

 

4.2         Development Milestones. In partial consideration of the rights granted by AbbVie to Licensee hereunder, on a Licensed Product-by-Licensed Product basis, Licensee shall pay to AbbVie milestone payments within [***] after the first achievement of each of the following milestones for each Licensed Product, calculated as follows: [***].

 

The milestone payments in this Section 4.2 are payable [***] upon the first achievement of the applicable milestone for each Licensed Product.

 

4.3         Commercialization Milestones. In partial consideration of the rights granted by AbbVie to Licensee hereunder, on a Licensed Product-by-Licensed Product basis, Licensee shall pay to AbbVie milestone payments within [***] after the first achievement of each of the following milestones for each Licensed Product, calculated as follows: [***]

 

The milestone payments in this Section 4.3 are payable [***] upon the first achievement of the applicable milestone for each Licensed Product.

 

4.4         Sales-Based Milestones. In partial consideration of the rights granted by AbbVie to Licensee hereunder, Licensee shall pay to AbbVie milestone payments within [***] after the first achievement of each of the following milestones, calculated as follows: [***].

 

If, in a given Calendar Year more than one of the above Net Sales thresholds is exceeded, Licensee shall pay to AbbVie a separate milestone with respect to each threshold that is exceeded in such Calendar Year.

 

4.5         Royalties.

 

4.5.1.      Royalty Rates.

 

(a)            In further consideration of the rights granted by AbbVie to Licensee hereunder, subject to the terms of this Section 4.5, on a Licensed Product by Licensed Product basis, and on a country by country basis, commencing upon the First Commercial Sale of a Licensed Product in the Territory and continuing for the applicable Royalty Term for such Licensed Product, Licensee shall pay to AbbVie a royalty equal to [***].

 

(b)            If during the Royalty Term for a given Licensed Product, such Licensed Product is Exploited in a country or other jurisdiction and there is no Valid Claim of an AbbVie Patent, Improvement Patent or Joint Patent that claims or covers such Licensed Product in such country or other jurisdiction, the royalty rate set forth in Section 4.5.1(a) with respect to such country or other jurisdiction, shall be reduced to [***] of the royalty rate set forth in Section 4.5.1(a) solely with respect to Net Sales of such Licensed Product in such country or other jurisdiction.

 

4.5.2.      Royalty Term. Licensee shall have no obligation to pay any royalty with respect to Net Sales of any Licensed Product in any country or other jurisdiction on or after the date on which the Royalty Term for such Licensed Product in such country or other jurisdiction has expired. For purposes of clarity, [***].

 

4.5.3.      Royalty Payments and Reports. Licensee shall calculate all amounts payable to AbbVie pursuant to this Section 4.5 at the end of each Calendar Quarter, which amounts shall be converted to Dollars, in accordance Section 4.5.3. Licensee shall pay to AbbVie the royalty amounts due with respect to a given Calendar Quarter within [***] after the end of such Calendar Quarter. Each payment of royalties due to AbbVie shall be accompanied by a statement, certified by an executive officer of Licensee as accurate to the best of its ability and in accordance with Accounting Standards, setting forth (a) the amount of gross sales and Net Sales of each Licensed Product in each country or other jurisdiction in the Territory during the applicable Calendar Quarter (including such amounts expressed in local currency and as converted to Dollars), (b) a calculation of the amount of royalty payment due on such Net Sales for such Calendar Quarter, and (c) the amount of aggregate worldwide Net Sales of each Licensed Product for the Calendar Year. Without limiting the generality of the foregoing, Licensee shall require its Affiliates and Sublicensees to account for its Net Sales and to provide such reports with respect thereto as if such sales were made by Licensee.

 

4.5.4.      Mode of Payment; Offsets. All undisputed payments to either Party under this Agreement shall be made by deposit of Dollars in the requisite amount to such bank account as the receiving Party may from time to time designate by notice in writing to the paying Party. For the purpose of calculating any sums due under, or otherwise reimbursable pursuant to, this Agreement (including the calculation of Net Sales expressed in currencies other than Dollars), a Party shall convert any amount expressed in a foreign currency into Dollar equivalents using its, its Affiliate’s or Sublicensee’s standard conversion methodology consistent with Accounting Standards. Licensee shall have no right to offset, set off or deduct any amounts from or against the amounts due to AbbVie hereunder. All payments to a Party (or such Party’s Affiliates or designees) under this Agreement will be irrevocable, non-refundable and non-creditable.

 

4.6         Withholding Taxes. Where any sum due to be paid to either Party hereunder is subject to any withholding or similar tax, the Parties shall use their commercially reasonable efforts to do all such acts and things and to sign all such documents as will enable them to take advantage of any applicable double taxation agreement or treaty. If there is no applicable double taxation agreement or treaty, or if an applicable double taxation agreement or treaty reduces but does not eliminate such withholding or similar tax, the payor shall remit such withholding or similar tax to the appropriate government authority, deduct the amount paid from the amount due to payee and secure and send to payee the best available evidence of the payment of such withholding or similar tax. Any such amounts deducted by the payor in respect of such withholding or similar tax shall be treated as having been paid by the payor for purposes of this Agreement. If withholding or similar taxes are paid to a government authority, each Party will provide the other such assistance as is reasonably required to obtain a refund of the withheld or similar taxes or obtain a credit with respect to such taxes paid.

 

4.7         Indirect Taxes. All payments are exclusive of value added taxes, sales taxes, consumption taxes and other similar taxes (the “Indirect Taxes”). If any Indirect Taxes are chargeable in respect of any payments, the paying Party shall pay such Indirect Taxes at the applicable rate in respect of such payments following receipt, where applicable, of an Indirect Taxes invoice in the appropriate form issued by the receiving Party in respect of those payments. The Parties shall issue invoices for all amounts payable under this Agreement consistent with Indirect Tax requirements and irrespective of whether the sums may be netted for settlement purposes. If the Indirect Taxes originally paid or otherwise borne by the paying Party are in whole or in part subsequently determined not to have been chargeable, all necessary steps will be taken by the receiving Party to receive a refund of these undue Indirect Taxes from the applicable governmental authority or other fiscal authority and any amount of undue Indirect Taxes repaid by such authority to the receiving Party will be transferred to the paying Party [***] of receipt. If a government authority retroactively determines that a payment made by the paying Party to the receiving Party pursuant to this Agreement should have been subject to Indirect Taxes, and the receiving Party is required to remit such Indirect Taxes to the government authority, including any interest and penalties imposed thereon the receiving Party will have the right (a) to invoice the paying Party for such amount (which shall be payable by the paying Party within [***] of its receipt of such invoice) or (b) to pursue reimbursement of the amount by any other available remedy.

 

4.8         Interest on Late Payments. If any payment due to either Party under this Agreement is not paid when due, then, without limiting any rights or remedies of the receiving Party, such paying Party shall pay interest thereon (before and after any judgment) [***] (but with interest accruing on a daily basis) of [***] (or any successor rate), such interest to run from the date on which payment of such sum became due until payment thereof in full together with such interest.

 

4.9         Financial Records. Licensee shall, and shall cause its Affiliates to, keep complete and accurate books and records pertaining to Net Sales of Licensed Products, in sufficient detail to calculate all amounts payable hereunder and to verify compliance with its payment obligations under this Agreement. Such books and records shall be retained by Licensee and its Affiliates until the later of (a) [***] to which such books and records pertain, and (b) the expiration of the applicable tax statute of limitations (or any extensions thereof), or for such longer period as may be required by Applicable Law.

 

4.10       Audit. Subject to the other terms of this Section 4.10, at the request of AbbVie, Licensee shall, and shall cause its Affiliates to, permit an independent, nationally-recognized certified public accountant designated by AbbVie and reasonably acceptable to Licensee, at reasonable times and upon reasonable notice, to audit the books and records maintained pursuant to Section 4.9 to ensure the accuracy of all reports and payments made hereunder; provided, that, such audit right shall not apply to records beyond [***] from the end of the Calendar Quarter to which they pertain and no record may be audited more than [***]. The accountant shall report to AbbVie only whether the particular amount being audited was accurate, and if not, the amount of any discrepancy. Except as provided below, the cost of this audit shall be borne by AbbVie, unless the audit reveals a variance of more than [***] from the reported amounts, in which case Licensee shall bear the reasonable, documented out-of-pocket cost of the audit. Unless disputed pursuant to Section 4.11 below, if such audit concludes that (a) additional amounts were owed by Licensee, Licensee shall pay the additional amounts, with interest from the date originally due as provided in Section 4.8, or (b) excess payments were made by Licensee, AbbVie shall reimburse such excess payments, in either case ((a) or (b)), within [***] after the date on which such audit is completed by AbbVie.

 

4.11       Audit Dispute. In the event of a dispute with respect to any audit under Section 4.10, AbbVie and Licensee shall work in good faith to resolve the disagreement. If the Parties are unable to reach a mutually acceptable resolution of any such dispute within [***], the dispute shall be submitted for resolution to a certified public accounting firm jointly selected by each Party’s accountants or to such other Person as the Parties shall mutually agree (the “Audit Arbitrator”). The decision of the Audit Arbitrator shall be final and the costs of such arbitration as well as the initial audit shall be borne between the Parties in such manner as the Audit Arbitrator shall determine. Not later than [***] after such decision and in accordance with such decision, Licensee shall pay the additional amounts, with interest from the date originally due as provided in Section 4.9, or AbbVie shall reimburse the excess payments, as applicable.

 

4.12       Confidentiality. AbbVie shall treat all information subject to review under this ARTICLE 4 in accordance with the confidentiality provisions of ARTICLE 7 and the Parties shall cause the Audit Arbitrator to enter into a reasonably acceptable confidentiality agreement with Licensee obligating such firm to retain all such financial information in confidence pursuant to such confidentiality agreement.

 

4.13       No Other Compensation. [***] each Party hereby agrees that the terms of this Agreement fully define all consideration, compensation and benefits, monetary or otherwise, to be paid, granted or delivered by one Party to the other Party in connection with the transactions contemplated herein. Neither Party previously has paid or entered into any other commitment to pay, whether orally or in writing, any of the other Party’s employees, directly or indirectly, any consideration, compensation or benefits, monetary or otherwise, in connection with the transaction contemplated herein.

 

Article 5
INTELLECTUAL PROPERTY

 

5.1         Ownership of Intellectual Property.

 

5.1.1.      Ownership of Technology. Each Party shall own and retain all right, title, and interest in and to any and all: (a) Information and inventions that are conceived, discovered, developed, or otherwise made by or on behalf of such Party (or its Affiliates or Sublicensees) under or in connection with this Agreement, whether or not patented or patentable, and any and all Patents and other intellectual property rights with respect thereto and (b) other Information, inventions, Patents, and other intellectual property rights that are owned or otherwise Controlled (other than pursuant to the license grant set forth in Section 2.1) by such Party, its Affiliates or its licensees or Sublicensees. Subject to Section 5.2.2, AbbVie and Licensee shall jointly own any Information and inventions that are conceived, discovered, developed, or otherwise made jointly by or on behalf of AbbVie or its Affiliates, on the one hand, and Licensee, or its Affiliates or Sublicensees on the other hand, under or in connection with this Agreement, whether or not patented or patentable (“Joint IP”). Subject to Section 5.2.2, AbbVie’s interest in any such Joint IP shall be included in the license granted under Section 2.1. For clarity, after the Effective Date, AbbVie shall remain the sole owner of the AbbVie Patents.

 

5.1.2.      United States Law. The determination of whether Information and inventions are conceived, discovered, developed, or otherwise made by a Party for the purpose of allocating proprietary rights (including Patent, copyright or other intellectual property rights) therein, shall, for purposes of this Agreement, be made in accordance with Applicable Law in the United States irrespective of where such conception, discovery, development or making occurs.

 

5.1.3.      Joint IP. Each Party will have an [***] interest in and to the Joint IP. Each Party will exercise its ownership rights in and to such Joint IP, including the right to license and sublicense or otherwise to exploit, transfer, or encumber its ownership interest, without an accounting or obligation to, or consent required from, the other Party, but subject to the licenses hereunder and the other terms and conditions of this Agreement. At the reasonable written request of a Party, the other Party will in writing grant such consents and confirm that no such accounting is required to effect the foregoing regarding Joint IP (but subject to the license granted under Section 2.1).

 

5.1.4.      Ownership of Corporate Names. Each Party shall retain all right, title and interest in and to any corporate names, Trademarks and logos owned or otherwise used by such Party or any of its Affiliates.

 

5.2         Maintenance and Prosecution of Patents.

 

5.2.1.      Patent Prosecution and Maintenance of AbbVie Patents. Subject to the remainder of this Section 5.2.1, Licensee shall, at its sole cost and expense, prepare, file, prosecute, and maintain all of the AbbVie Patents in the Territory. Licensee shall have the right to use outside counsel of its choice in connection with such activities; provided that any such counsel shall be reasonably acceptable to AbbVie. Licensee shall keep AbbVie reasonably informed with regard to the preparation, filing, prosecution, and maintenance of all AbbVie Patents and shall provide AbbVie with copies of any proposed patent filings at least [***] prior to any proposed filing. AbbVie shall have an opportunity to review and comment upon patent prosecution and filing decisions prior to the submission of filing and correspondences to the patent authorities, and Licensee shall consider AbbVie’s comments in good faith. If Licensee decides not to prepare, file, prosecute, or maintain an AbbVie Patent in a country or other jurisdiction in the Territory, Licensee shall provide [***] prior written notice to AbbVie of such intention, and AbbVie shall thereupon have the option, in its sole discretion, to assume the control and direction of the preparation, filing, prosecution, and maintenance of such AbbVie Patent at its expense in such country or other jurisdiction. In such event, Licensee shall promptly provide AbbVie with the appropriate documents for transfer of responsibility for filing, prosecution and maintenance of such AbbVie Patent to AbbVie or its designee and shall reasonably cooperate with AbbVie or its designee as provided under Section 5.2.4.

 

5.2.2.      Patent Prosecution and Maintenance of Joint Patents. Subject to the remainder of this Section 5.2.2, Licensee shall, at its sole cost and expense, prepare, file, prosecute, and maintain all of the Patents within the Joint IP (“Joint Patents”) in the Territory. Licensee shall have the right to use outside counsel of its choice in connection with such activities; provided that any such counsel shall be reasonably acceptable to AbbVie. Licensee shall keep AbbVie reasonably informed with regard to the preparation, filing, prosecution, and maintenance of all Joint Patents and shall provide AbbVie with copies of any proposed patent filings at least [***] prior to any proposed filing. AbbVie shall have an opportunity to review and comment upon patent prosecution and filing decisions prior to the submission of filing and correspondences to the patent authorities, and Licensee shall consider AbbVie’s comments in good faith. If Licensee decides not to prepare, file, prosecute, or maintain a Joint Patent in a country or other jurisdiction in the Territory Licensee shall provide [***] prior written notice to AbbVie of such intention, and AbbVie shall thereupon have the option, in its sole discretion, to continue the preparation, filing, prosecution, and maintenance of such Joint Patent at its expense in such country or other jurisdiction. In such an event, Licensee shall promptly provide AbbVie with the appropriate documents for transfer of responsibility for filing, prosecution and maintenance of such Joint Patent to AbbVie or its designee and shall reasonably cooperate with AbbVie or its designee as provided under Section 5.2.4.

 

5.2.3.      Patent Prosecution and Maintenance of Licensee Patents. Licensee shall prepare, file, prosecute, and maintain all of the Licensee Patents (including any Improvement Patents) at its own cost and expense, in its own discretion. At least [***] prior to Licensee filing any Licensee Patent (including any Improvement Patents), Licensee shall provide copies of any such proposed filings to AbbVie and consider in good faith any comments provided by AbbVie. In addition, upon filing such applications, Licensee shall promptly report the Licensee Patent ((including any Improvement Patents) filed to AbbVie. AbbVie shall maintain the Licensee Patents (including any Improvement Patents) provided to AbbVie as confidential until the Licensee Patent is published.

 

5.2.4.      Cooperation. The Parties agree to reasonably cooperate in the preparation, filing, prosecution, and maintenance of the AbbVie Patents and Joint Patents in the Territory under this Agreement.

 

5.2.5.      Patent Term Extension and Supplementary Protection Certificate. Licensee shall have the right to make decisions regarding patent term extensions, including supplementary protection certificates and any other extensions that are now or become available in the future, wherever applicable, for AbbVie Patents and Joint Patents that cover Licensed Compounds or Licensed Products in the Territory. Licensee shall consult with AbbVie prior to such decisions and shall consider AbbVie’s comments in good faith. Licensee shall have the primary responsibility of applying for any extension or supplementary protection certificate with respect to such Patents in the Territory at its cost and expense. AbbVie shall provide reasonable assistance, as requested by and at the sole cost of Licensee, including by taking such action as patent holder as is required under any Applicable Law to obtain such extension or supplementary protection certificate.

 

5.2.6.      CREATE Act. Notwithstanding anything to the contrary in this ARTICLE 5, neither Party shall have the right to make an election under the Cooperative Research and Technology Enhancement Act of 2004, 35 U.S.C. 103(c)(2)-(c)(3) (the “CREATE Act”) when exercising its rights under this ARTICLE 5 without the prior written consent of the other Party. With respect to any such permitted election, the Parties shall coordinate their activities with respect to any submissions, filings, or other activities in support thereof. The Parties acknowledge and agree that this Agreement is a “joint research agreement” as defined in the CREATE Act.

 

5.2.7.      Patent Listings. Licensee shall have the sole right to make all filings with Regulatory Authorities in the Territory with respect to AbbVie Patents and Joint Patents that cover Licensed Compounds and Licensed Products as required or allowed in the Territory.

 

5.3         Enforcement of Patents.

 

5.3.1.      Enforcement of AbbVie Patents and Joint Patents. Each Party shall promptly notify the other Party in writing of any alleged or threatened infringement of the AbbVie Patents or Joint Patents by a Third Party in the Territory of which such Party becomes aware (including alleged or threatened infringement based on the Development, [***], or an application to market a generic product in the Territory) (the “Product Infringement”). Licensee shall have the first right, but not the obligation, to institute, prosecute and control any claim, suit or proceeding with respect to any Product Infringement of any AbbVie Patent or Joint Patent in the Territory (the “Licensee Prosecuted Infringements”) at its sole expense and [***] shall retain control of the prosecution of such claim, suit or proceeding. If [***] prosecutes any Licensee Prosecuted Infringement, [***] shall have the right to join as a party to such claim, suit, or proceeding in the Territory and participate with its own counsel at its own expense; provided that [***] shall retain control of the prosecution of such claim, suit, or proceeding. If [***] does not take commercially reasonable steps to prosecute a Licensee Prosecuted Infringement (a) within [***] following the first notice provided above with respect to the Licensee Prosecuted Infringement, or (b) [***] before the time limit, if any, set forth in appropriate laws and regulations for filing of such actions, whichever comes first, then [***] may then (but shall have no obligation to) prosecute the Product Infringement of an AbbVie Patent or Joint Patent in the Territory at its own expense and [***] shall retain control of such prosecution. [***] shall keep [***] updated as to the steps it intends to take to prosecute a Licensee Prosecuted Infringement and shall otherwise provide [***] with any information reasonably requested by [***]. For clarity, [***] shall have the exclusive right to enforce AbbVie Patents for any infringement that is not a Product Infringement.

 

5.3.2.      Cooperation. The Parties agree to cooperate fully in any infringement action pursuant to this Section 5.3. If a Party brings such an action, then the other Party shall, if necessary, either furnish a power of attorney solely for such purpose, join in, or be named as a necessary party to, such action. Unless otherwise set forth herein, the Party entitled to bring any patent infringement litigation in accordance with this Section 5.3 shall have the right to settle such claim; provided that neither Party shall have the right to settle any patent infringement litigation under this Section 5.3 in a manner that has a material adverse effect or meaningfully diminishes the rights or interests of the other Party, or in a manner that imposes any costs or liability on, or involves any admission of fault by, the other Party, without the express written consent of such other Party, such consent not to be unreasonably withheld, conditioned or delayed. The Party commencing the litigation shall provide the other Party with copies of all pleadings and other documents filed with the court and shall consider reasonable input from the other Party during the course of the proceedings.

 

5.3.3.      Recovery. Except as otherwise agreed by the Parties in connection with a cost sharing arrangement, any recovery realized as a result of such litigation described in Section 5.3.1 (whether by way of settlement or otherwise) shall be first allocated to reimburse the Parties for their costs and expenses in making such recovery (which amounts shall be allocated pro rata if insufficient to cover the totality of such expenses). Any remainder after such reimbursement is made shall be retained by the Party that has exercised its right to bring the enforcement action; provided, however, that any award or settlement (whether by judgment or otherwise) shall be deemed to be “Net Sales” hereunder.

 

5.4         Infringement Claims by Third Parties. If the Manufacture, Commercialization, or use of a Licensed Compound or Licensed Product in the Territory pursuant to this Agreement results in, or may result in, any claim, suit, or proceeding by a Third Party alleging patent infringement by Licensee (or its Affiliates or Sublicensees), Licensee shall promptly notify AbbVie thereof in writing. [***] (or its Affiliates or Sublicensees) shall defend any action which names [***] which claims the infringement, after the Effective Date, of any Third Party’s Patent through the making, using, selling, offer for sale or importing of a Licensed Compound or Licensed Product. If necessary and at Licensee’s expense, AbbVie will assist and cooperate with Licensee in any such defense. Licensee will bear all costs and expenses (including attorneys’ fees) and pay all damages and settlement amounts arising out of or in connection with any such action. Each Party shall keep the other Party reasonably informed of all material developments in connection with any such claim, suit, or proceeding. Each Party agrees to provide the other Party with copies of all pleadings filed in such action and to allow the other Party reasonable opportunity to participate in the defense of the claims. Neither Party may enter into any settlement that affects the other Party’s rights or interests without such Party’s written consent, which consent will not be unreasonably conditioned, withheld or delayed.

 

5.5         Invalidity or Unenforceability Defenses or Actions.

 

5.5.1.      Notice. Each Party shall promptly notify the other Party in writing of any alleged or threatened assertion of invalidity or unenforceability of any of the AbbVie Patents or Joint Patents (or any corresponding worldwide family members in the Territory) by a Third Party, in each case in the Territory and of which such Party becomes aware.

 

5.5.2.      AbbVie Patents and Joint Patents. Licensee shall have the first right, but not the obligation, at its sole discretion, to defend and control the defense of the validity and enforceability of the AbbVie Patents and Joint Patents at its own expense in the Territory. AbbVie may participate in any such claim, suit, or proceeding in the Territory with counsel of its choice at its own expense; provided that Licensee shall retain control of the defense in such claim, suit, or proceeding. If Licensee elects not to defend or control the defense of any such AbbVie Patents or Joint Patent in a suit brought in the Territory, or otherwise fails to initiate and maintain the defense of any such claim, suit, or proceeding, then AbbVie may conduct and control the defense of any such claim, suit, or proceeding of such AbbVie Patents or Joint Patent at its own expense.

 

5.5.3.      Cooperation. Each Party shall assist and cooperate with the other Party as such other Party may reasonably request from time to time in connection with its activities set forth in this Section 5.5, including by being joined as a party plaintiff in such action or proceeding, providing access to relevant documents and other evidence, and making its and its Affiliates’ employees, subcontractors, agents and consultants available at reasonable business hours and for reasonable periods of time. In connection with any such defense or claim or counterclaim, the controlling Party shall consider in good faith any comments from the other Party and shall keep the other Party reasonably informed of any steps taken, and shall provide copies of all documents filed, in connection with such defense, claim, or counterclaim. In connection with the activities set forth in this Section 5.5, each Party shall consult with the other as to the strategy for the defense of the AbbVie Patents or Joint Patents.

 

5.6         Inventor’s Remuneration. Licensee shall be solely responsible for any remuneration that may be owed to Licensee’s inventors under any applicable inventor remuneration laws. AbbVie shall be solely responsible for any remuneration that may owed to AbbVie’s inventors under any applicable inventor remuneration laws.

 

5.7         AbbVie Technology. Notwithstanding any provision in this Agreement to the contrary, AbbVie shall have the right to transfer or assign ownership of any AbbVie Know-How, AbbVie Patents or AbbVie’s interest in Joint IP as long as any such transfer or assignment is made expressly subject to the rights and licenses granted to Licensee under this Agreement.

 

Article 6
PHARMACOVIGILANCE

 

6.1         Pharmacovigilance Activities. AbbVie shall have no ongoing pharmacovigilance obligations with respect to Licensed Compounds or Licensed Products. Licensee shall assume all pharmacovigilance activities and obligations for the Licensed Compounds and Licensed Products as of the Effective Date.

 

Article 7
CONFIDENTIALITY AND NON-DISCLOSURE

 

7.1         Confidentiality Obligations. At all times during the Term and for a period of [***] following termination or expiration of this Agreement, each Party shall, and shall cause its Affiliates, and such Party’s and its Affiliates’ officers, directors, employees and agents to, keep confidential and not publish or otherwise disclose to a Third Party and not use, directly or indirectly, for any purpose, any Confidential Information furnished or otherwise made known to it, directly or indirectly, by the other Party under this Agreement [***], except to the extent such disclosure or use is expressly permitted by the terms of this Agreement or is necessary for the performance of, or the exercise of such Party’s rights under, this Agreement. [***]. Notwithstanding the foregoing, but to the extent the receiving Party can demonstrate by documentation or other competent proof, the confidentiality and non-use obligations under this Section 7.1 with respect to any Confidential Information shall not include any information that:

 

7.1.1.      has been published by a Third Party or is or hereafter becomes part of the public domain by public use, publication, general knowledge or the like through no wrongful act, fault or negligence on the part of the receiving Party;

 

7.1.2.      has been in the receiving Party’s possession prior to disclosure by the disclosing Party (as can be shown by competent written evidence) without any obligation of confidentiality with respect to such information;

 

7.1.3.      is subsequently received by the receiving Party from a Third Party without restriction and without breach of any agreement between such Third Party and the disclosing Party; or

 

7.1.4.      has been independently developed by or for the receiving Party without reference to, or use or disclosure of the disclosing Party’s Confidential Information, as evidenced by such Party’s internal records documenting such independent development.

 

Specific aspects or details of Confidential Information shall not be deemed to be within the public domain or in the possession of the receiving Party merely because the Confidential Information is embraced by more general information in the public domain or in the possession of the receiving Party. Further, any combination of Confidential Information shall not be considered in the public domain or in the possession of the receiving Party merely because individual elements of such Confidential Information are in the public domain or in the possession of the receiving Party unless the combination and its principles are in the public domain or in the possession of the receiving Party.

 

7.2         Permitted Disclosures. Each Party may disclose Confidential Information to the extent that such disclosure is:

 

7.2.1.      in the reasonable opinion of the receiving Party’s legal counsel, required to be disclosed pursuant to law, regulation or made in response to a valid order of a court of competent jurisdiction or other supra-national, federal, national, regional, state, provincial and local governmental or regulatory body of competent jurisdiction, including by reason of filing with securities regulators; provided, however, that the receiving Party shall first have given prompt written notice (and to the extent possible, at least [***] notice) to the disclosing Party and given the disclosing Party a reasonable opportunity to take whatever action it deems necessary to protect its Confidential Information (for example, to quash such order or to obtain a protective order or confidential treatment requiring that the Confidential Information and documents that are the subject of such order be held in confidence by such court or regulatory body or, if disclosed, be used only for the purposes for which the order was issued). If no protective order or other remedy is obtained, or the disclosing Party waives compliance with the terms of this Agreement, receiving Party shall furnish only that portion of Confidential Information which receiving Party is advised by counsel is legally required to be disclosed;

 

7.2.2.      made by or on behalf of the receiving Party to the Regulatory Authorities as required in connection with any filing, application or request for Regulatory Approval in accordance with the terms of this Agreement; provided, however, that reasonable measures shall be taken to assure confidential treatment of such information to the extent practicable and consistent with Applicable Law;

 

7.2.3.      made by or on behalf of the receiving Party to a patent authority as may be reasonably necessary or useful for purposes of obtaining, defending or enforcing a Patent in accordance with the terms of this Agreement; provided, however, that reasonable measures shall be taken to assure confidential treatment of such information, to the extent such protection is available;

 

7.2.4.      made to its or its Affiliates’ financial and legal advisors who have a need to know such disclosing Party’s Confidential Information and are either under professional codes of conduct giving rise to expectations of confidentiality and non-use or under written agreements of confidentiality and non-use, in each case, at least as restrictive as those set forth in this Agreement; provided that the receiving Party shall remain responsible for any failure by such financial and legal advisors, to treat such Confidential Information as required under this ARTICLE 7; or

 

7.2.5.      made by the receiving Party or its Affiliates or Sublicensees to its or their (a) advisors, consultants, vendors, service providers, or contractors, (b) existing or prospective collaboration partners, licensees, sublicensees, lenders, investors, or acquirers, or (c) in connection with the performance of its obligations or exercise of its rights as contemplated by this Agreement, or to potential or actual investors or acquirers as may be necessary or useful in connection with their evaluation of such potential or actual investment or acquisition; provided, however, that such Persons shall be subject to obligations of confidentiality and non-use with respect to such Confidential Information substantially similar to the obligations of confidentiality and non-use of the receiving Party pursuant to this ARTICLE 7.

 

7.3         Securities Filings and other Disclosures Required by Law. Each Party acknowledges and agrees that the other Party may submit this Agreement to the SEC or any national securities exchange in any jurisdiction (collectively, the “Securities Regulators”), or to other Persons as may be required by Applicable Law, and if a Party does submit this Agreement to any Securities Regulators, or other Persons as may be required by Applicable Law, such Party agrees to consult with the other Party with respect to the preparation and submission of a confidential treatment request for this Agreement. Notwithstanding the foregoing, if a Party or its counsel concludes it is required by Applicable Law or any Securities Regulator to make a disclosure of the terms of this Agreement in a filing or other submission as required by Applicable Law or any Securities Regulator, and (a) such Party has provided copies of the disclosure to the other Party reasonably in advance of such filing or other disclosure under the circumstances, (b) such Party has promptly notified the other Party in writing of such requirement and any respective timing constraints, and (c) such Party has given the other Party a reasonable time under the circumstances from the date of notice by such Party of the required disclosure to comment upon and request confidential treatment for such disclosure, then such Party will have the right to make such disclosure at the time and in the manner reasonably determined by its counsel to be required by Applicable Law or any Securities Regulator. Notwithstanding the foregoing, it is hereby understood and agreed that if a Party seeks to make a disclosure as required by Applicable Law or any Securities Regulator as set forth in this Section 7.3, and the other Party provides comments within the respective time periods or constraints specified herein or within the respective notice, the Party seeking to make such disclosure or its counsel, as the case may be, will in good faith consider incorporating such comments.

 

7.4         Use of Name. Except as expressly provided herein, neither Party nor its Affiliates shall mention or otherwise use the name, logo, or Trademark of the other Party or any of its Affiliates (or any abbreviation or adaptation thereof) in any publication, press release, marketing and promotional material, or other form of publicity without the prior written approval of such other Party in each instance. The restrictions imposed by this Section 7.3 shall not prohibit either Party from making any disclosure identifying the other Party that, in the opinion of the disclosing Party’s counsel, is required by Applicable Law or any Securities Regulator; provided such Party shall submit the proposed disclosure identifying the other Party in writing to the other Party as far in advance as reasonably practicable so as to provide a reasonable opportunity to comment thereon.

 

7.5         Public Announcements. Except for the form of public disclosure as set forth in Schedule 7.5, neither Party shall issue any public announcement, press release, or other public disclosure regarding this Agreement or its subject matter without the other Party’s prior written consent, except for any such disclosure that is, in the opinion of the disclosing Party’s counsel, required by Applicable Law or any Securities Regulator. The contents of any press release or other public statement that has been reviewed and approved by AbbVie may be re-released by Licensee without a requirement for re-approval; provided, however, that such re-release does not substantially change or expand the previously issued content.

 

7.6         Publications. In the event that Licensee or its Affiliates desire to publish or present any information that contains the Confidential Information of AbbVie with respect to any Licensed Compound or Licensed Product or contains Information relating to the RGMa mechanism of action, Licensee will submit to AbbVie for review any proposed academic, scientific and medical publication or academic, scientific and medical public presentation related to any Licensed Compound or Licensed Product. AbbVie will review such publication or presentation for purposes of determining whether any portion of the proposed publication or presentation contains AbbVie’s Confidential Information. Licensee will submit written copies of such proposed publication or presentation to AbbVie no later than [***] before submission for publication or presentation (or [***] in advance in the case of an abstract). AbbVie will provide its comments with respect to such publications and presentations within [***] after its receipt of such written copy (or [***] in the case of an abstract). If requested by AbbVie, Licensee will redact AbbVie’s Confidential Information from any such proposed publication or presentation. Notwithstanding the foregoing, the contents of any publication or presentation that has been reviewed and approved by AbbVie may be re-released by Licensee without a requirement for re-approval; provided, however, that such re-release does not substantially change or expand the previously issued content. During the Term, AbbVie will not make any academic, scientific or medical publication or academic, scientific or medical public presentation related to any Licensed Compound or Licensed Product or any activities conducted pursuant to this Agreement. Any publication shall include recognition of the contributions of the other Party according to standard practice for assigning scientific credit, either through authorship or acknowledgement, as may be appropriate.

 

7.7         Trade Secrets. Licensee acknowledges that AbbVie may transfer trade secrets to Licensee in connection with this Agreement. Licensee shall take all steps necessary to maintain such information as a trade secret for an indefinite period, notwithstanding Section 7.1. No trade secret information of AbbVie may be transferred to a Third Party until Licensee has entered into a confidentiality agreement at least as restrictive as the confidentiality terms of this Agreement, and which shall contain provisions protecting the confidentiality of trade secrets indefinitely. In addition, Licensee shall take steps reasonably necessary to ensure that such Third Party maintains such information as a trade secret. Such trade secrets may only be used by Licensee or such Third Party as expressly set forth in this Agreement.

 

7.8         Return of Confidential Information. Upon the effective date of the termination of this Agreement for any reason, either Party may request in writing, and the other Party shall either, with respect to Confidential Information to which such first Party does not retain rights under the surviving provisions of this Agreement: (a) promptly destroy all copies of such Confidential Information in the possession of the other Party and confirm such destruction in writing to the requesting Party; or (b) promptly deliver to the requesting Party, at the other Party’s expense, all copies of such Confidential Information in the possession of the other Party; provided, however, the other Party shall be permitted to retain one (1) copy of such Confidential Information for the sole purpose of performing any continuing obligations hereunder or for archival purposes. Notwithstanding the foregoing, such other Party also shall be permitted to retain such additional copies of or any computer records or files containing such Confidential Information that have been created solely by such Party’s automatic archiving and back-up procedures, to the extent created and retained in a manner consistent with such other Party’s standard archiving and back-up procedures, but not for any other use or purpose.

 

7.9         Survival. All Confidential Information shall continue to be subject to the terms of this Agreement for the applicable periods set forth in this ARTICLE 7 regardless of the termination or expiration of this Agreement.

 

Article 8
REPRESENTATIONS AND WARRANTIES

 

8.1         Mutual Representations and Warranties. AbbVie and Licensee each represents and warrants to the other, as of the Effective Date, and covenants, as follows:

 

8.1.1.      Organization. It is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization, and has all requisite power and authority, corporate or otherwise, to execute, deliver, and perform this Agreement.

 

8.1.2.      Authorization. The execution and delivery of this Agreement and the performance by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action, and do not violate (a) such Party’s charter documents, bylaws, or other organizational documents, (b) in any material respect, any agreement, instrument, or contractual obligation to which such Party is bound, (c) any requirement of any Applicable Law, or (d) any order, writ, judgment, injunction, decree, determination, or award of any court or governmental agency presently in effect applicable to such Party.

 

8.1.3.      Binding Agreement. This Agreement is a legal, valid, and binding obligation of such Party enforceable against it in accordance with its terms and conditions, subject to the effects of bankruptcy, insolvency, or other laws of general application affecting the enforcement of creditor rights, judicial principles affecting the availability of specific performance, and general principles of equity (whether enforceability is considered a proceeding at law or equity).

 

8.1.4.      No Inconsistent Obligation. It is not under any obligation, contractual or otherwise, to any Person that conflicts with or is inconsistent in any material respect with the terms of this Agreement, or that would impede the diligent and complete fulfillment of its obligations hereunder.

 

8.2         Additional Representations and Warranties of AbbVie. AbbVie further represents and warrants to Licensee, as of the Effective Date, as follows:

 

8.2.1.      AbbVie or one of its Affiliates Controls the AbbVie Know-How and AbbVie Patents and has the right to grant the licenses specified herein.

 

8.2.2.      To AbbVie’s knowledge, there is no pending litigation or patent office proceeding, or litigation or patent office proceeding that has been threatened in writing, and AbbVie has not received any written claim or demand alleging, that the AbbVie Patents are invalid or unenforceable.

 

8.2.3.      To AbbVie’s knowledge, there is no pending litigation, or litigation that has been threatened in writing, that the research, Development, manufacture or Commercialization of any of the Licensed Compounds or Licensed Products infringes or misappropriates the Patents, Information or other intellectual property rights of any Third Party.

 

8.2.4.      To AbbVie’s knowledge, there is no lien or security interest on any of the AbbVie Know-How or AbbVie Patents.

 

8.3         Additional Representations and Warranties of Licensee. Licensee further represents and warrants to AbbVie, as of the Effective Date, and covenants, as follows:

 

8.3.1.      Licensee (a) has conducted its own investigation and analysis of (i) the Patents and other proprietary rights of Third Parties as such rights relate to the Exploitation of the Licensed Compounds and Licensed Products and (ii) the potential infringement thereof, (b) understands the complexity and uncertainties associated with possible claims of infringement of Patents or other proprietary rights of Third Parties, particularly those relating to pharmaceutical products, and (c) acknowledges and agrees that it is solely responsible for the risks of such claims. Licensee acknowledges and agrees that it has received access to the information relating to the AbbVie Patents, AbbVie Know-How, Licensed Compounds and Licensed Products that Licensee deemed necessary to conduct and complete its due diligence related to the transactions contemplated by this Agreement, and Licensee warrants that it has diligently reviewed all such information. Licensee has no knowledge of any breach of any representation or warranty of AbbVie made hereunder, including pursuant to Section 8.1 and Section 8.2.

 

8.3.2.      Licensee and its Affiliates (a) are solvent, (b) have sufficient financial resources to conduct its business in the ordinary course, meet all of its debts and financial obligations, and have no reasonable basis on which to expect that its operations may be impaired by financial instability or insolvency, and (c) shall take no actions during the Term of this Agreement that would materially impair its financial ability to meet its obligations hereunder, including but not limited to payments to shareholders in the form of dividends, equity redemptions or otherwise if such payments would materially impair its financial ability to meet its obligations hereunder, or otherwise materially impairing its ability to meet its debts and financial obligations in the ordinary course.

 

8.3.3.      Licensee and its Affiliates have not ever been, are not currently, nor are they the subject of a proceeding that could lead to it or its Affiliates becoming a Debarred Entity, Excluded Entity or Convicted Entity and it and its Affiliates will not use in any capacity, in connection with the obligations to be performed under this Agreement, any person who is a Debarred Individual, Excluded Individual or a Convicted Individual. Licensee further covenants that if, during the Term, it or its Affiliates become a Debarred Entity, Excluded Entity or Convicted Entity, or listed on the FDA’s Disqualified/Restricted List or if any employee or agent performing any of its obligations hereunder becomes a Debarred Individual, Excluded Individual or a Convicted Individual, or added to the FDA’s Disqualified/Restricted List, Licensee shall immediately notify AbbVie and AbbVie shall have the option, at its sole discretion, to prohibit such Person from performing work under this Agreement. This provision shall survive expiration of this Agreement. For purposes of this provision, the following definitions shall apply:

 

(a)            A “Debarred Individual” is an individual who has been debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from providing services in any capacity to a Person that has an approved or pending drug or biological product application.

 

(b)            A “Debarred Entity” is a corporation, partnership or association that has been debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from submitting or assisting in the submission of any abbreviated drug application, or a subsidiary or affiliate of a Debarred Entity.

 

(c)            An “Excluded Individual” or “Excluded Entity” is (A) an individual or entity, as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in federal health care programs such as Medicare or Medicaid by the Office of the Inspector General (OIG/HHS) of the U.S. Department of Health and Human Services, or (B) is an individual or entity, as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in federal procurement and non-procurement programs, including those produced by the U.S. General Services Administration (GSA).

 

(d)            A “Convicted Individual” or “Convicted Entity” is an individual or entity, as applicable, who has been convicted of a criminal offense that falls within the ambit of 21 U.S.C. §335a (a) or 42 U.S.C. §1320a - 7(a), but has not yet been excluded, debarred, suspended or otherwise declared ineligible.

 

(e)            “FDA’s Disqualified/Restricted List” is the list of clinical investigators restricted from receiving investigational drugs, biologics, or devices if the FDA has determined that the investigators have repeatedly or deliberately failed to comply with regulatory requirements for studies or have submitted false Information to the study sponsor or the FDA.

 

8.3.4.      Sanctioned Party Prohibition. The Parties acknowledge and agree that governmental authorities, including the U.S. federal government prohibits trade with certain sanctioned or blocked parties and publishes and maintains lists of Persons with whom trade is prohibited (each such governmental authority’s list, a “Sanctioned Party List”). Licensee represents and warrants that it (a) is not on any Sanctioned Party List maintained by any governmental authority, (b) has no reason to believe it will be placed on any Sanctioned Party List, and (c) will not deal with, conduct any business with or otherwise transact in any manner related to the rights and obligations contained in this Agreement with any Person on any global Sanctioned Party List.

 

8.4         DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR GRANTS ANY WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE LICENSES GRANTED HEREIN ARE MADE “AS IS, WHERE IS” WITH ALL FAULTS. ANY INFORMATION PROVIDED BY ABBVIE OR ITS AFFILIATES TO LICENSEE IS OR HAS BEEN MADE AVAILABLE ON AN “AS IS” BASIS WITHOUT WARRANTY WITH RESPECT TO COMPLETENESS, COMPLIANCE WITH REGULATORY STANDARDS OR REGULATIONS OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER KIND OF WARRANTY WHETHER EXPRESS OR IMPLIED. IN NO EVENT SHALL ABBVIE BE LIABLE FOR ANY LOSSES IN EXCESS OF THE UPFRONT PAYMENT SET FORTH IN SECTION 4.1 FOR ANY BREACH OF ITS REPRESENTATIONS OR WARRANTIES HEREUNDER. EACH PARTY HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY THAT THE RESEARCH, DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF ANY LICENSED COMPOUND OR LICENSED PRODUCT PURSUANT TO THIS AGREEMENT WILL BE SUCCESSFUL.

 

Article 9
INDEMNITY

 

9.1         Indemnification of AbbVie. Licensee shall indemnify AbbVie, its Affiliates and its and their respective directors, officers, employees, and agents (“AbbVie Indemnitees”), and defend and save each of them harmless, from and against any and all losses, damages, liabilities, fees, costs, and expenses (including reasonable attorneys’ fees and expenses) (collectively, “Losses”) in connection with [***] for those Losses for which AbbVie, in whole or in part, has an obligation to indemnify Licensee pursuant to Section 9.2 hereof, as to which Losses each Party shall indemnify the other to the extent of their respective liability.

 

9.2         Indemnification of Licensee. AbbVie shall indemnify Licensee, its Affiliates and its and their respective directors, officers, employees, and agents (the “Licensee Indemnitees”), and defend and save each of them harmless, from and against any and all Losses in connection with any and all Third Party Claims incurred by or rendered against the Licensee Indemnitees arising from or occurring as a result of [***] for those Losses for which Licensee, in whole or in part, has an obligation to indemnify AbbVie pursuant to Section 9.1 hereof, as to which Losses each Party shall indemnify the other to the extent of their respective liability for the Losses.

 

9.3         Notice of Claim. All indemnification claims in respect of a Party, its Affiliates, or their respective directors, officers, employees and agents shall be made solely by such Party to this Agreement (the “Indemnified Party”). The Indemnified Party shall give the indemnifying Party prompt written notice (an “Indemnification Claim Notice”) of any Losses or discovery of fact upon which such Indemnified Party intends to base a request for indemnification under this ARTICLE 9 [***]. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Losses are known at such time). The Indemnified Party shall furnish promptly to the indemnifying Party copies of all papers and official documents received in respect of any Losses and Third Party Claims.

 

9.4         Control of Defense.

 

9.4.1.      In General. At its option and sole expense, the indemnifying Party may assume the control of the defense of any Third Party Claim by giving written notice to the Indemnified Party within [***] after the indemnifying Party’s receipt of an Indemnification Claim Notice provided that the indemnifying Party has agreed to be fully responsible for all Losses relating to such claims. Upon assuming the defense of a Third Party Claim, the indemnifying Party may appoint as lead counsel in the defense of the Third Party Claim any legal counsel selected by the indemnifying Party which shall be reasonably acceptable to the Indemnified Party (such acceptance not to be unreasonably withheld, conditioned or delayed). If the indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall immediately deliver to the indemnifying Party all original notices and documents (including court papers) received by the Indemnified Party in connection with the Third Party Claim. Should the indemnifying Party assume the defense of a Third Party Claim, except as provided in Section 9.4.2, the indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the analysis, defense or settlement of the Third Party Claim unless the incurring of those expenses were specifically requested in writing by the indemnifying Party.

 

9.4.2.      Right to Participate in or Control Defense. Without limiting Section 9.4.1, any Indemnified Party shall be entitled to participate in, but, subject to Section 9.4.1, not control, the defense of such Third Party Claim and to employ counsel of its choice for such purpose; provided, however, that such participation shall be at the Indemnified Party’s own expense unless (a) the employment and control thereof has been specifically authorized by the indemnifying Party in writing, (b) the indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 9.4.1 (in which case the Indemnified Party shall control the defense), or (c) the interests of the Indemnified Party and the indemnifying Party with respect to such Third Party Claim are sufficiently adverse to prohibit the representation by the same counsel of both Parties under Applicable Law, ethical rules or equitable principles.

 

9.4.3.      Settlement. With respect to any Losses relating solely to the payment of money damages in connection with a Third Party Claim and that do not result in the Indemnified Party’s becoming subject to injunctive or other relief or otherwise adversely affecting the business of the Indemnified Party in any manner, and as to which the indemnifying Party shall have acknowledged in writing the obligation to indemnify the Indemnified Party hereunder, the indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the indemnifying Party, in its sole discretion, shall deem appropriate. With respect to all other Losses in connection with Third Party Claims, where the indemnifying Party has assumed the defense of the Third Party Claim in accordance with Section 9.4.1, the indemnifying Party shall have authority to consent to the entry of any judgment, make any admissions that would adversely affect the Indemnified Party, enter into any settlement or otherwise dispose of such Loss; provided it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed), unless such compromise or settlement involves (a) any admission of legal wrongdoing by the Indemnified Party, (b) any payment by the indemnified Party that is not indemnified under this Agreement, or (c) the imposition of any equitable relief against the Indemnified Party (in which case, (a) through (c), the Indemnified Party may withhold its consent to such settlement in its sole discretion). If the indemnifying Party does not assume and conduct the defense of a Third Party Claim as provided in Section 9.4.1, the Indemnified Party may defend against such Third Party Claim in accordance with Section 9.4.2; provided that the Indemnified Party shall not settle any Third Party Claim without the prior written consent of the indemnifying Party, not to be unreasonably withheld, conditioned or delayed.

 

9.4.4.      Cooperation. Regardless of whether the indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party shall, and shall cause each indemnitee to, cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during normal business hours afforded to the indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim, and making Indemnified Parties and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the indemnifying Party shall reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in connection therewith.

 

9.4.5.      Expenses. Except as provided above, the costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any Third Party Claim shall be reimbursed on a Calendar Quarter basis by the indemnifying Party, without prejudice to the indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund if the indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.

 

9.5         Special, Indirect, and Other Losses. EXCEPT FOR (A) WILLFUL MISCONDUCT AND (B) A PARTY’S BREACH OF ITS OBLIGATIONS UNDER ARTICLE 7, EXCEPT TO THE EXTENT ANY SUCH DAMAGES ARE REQUIRED TO BE PAID TO A THIRD PARTY AS PART OF A THIRD PARTY CLAIM FOR WHICH A PARTY PROVIDES INDEMNIFICATION UNDER THIS ARTICLE 9, NEITHER PARTY NOR ANY OF ITS AFFILIATES SHALL BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS OR BUSINESS INTERRUPTION, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, TORT, NEGLIGENCE, BREACH OF STATUTORY DUTY OR OTHERWISE IN CONNECTION WITH OR ARISING IN ANY WAY OUT OF THE TERMS OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

 

9.6         Insurance. Licensee shall obtain and carry in full force and effect the minimum insurance requirements set forth herein. Such insurance (a) shall be primary insurance with respect to Licensee’s own participation under this Agreement, (b) shall be issued by a recognized insurer rated by A.M. Best “A-VII” (or its equivalent) or better, or an insurer pre-approved in writing by AbbVie, (c) shall list AbbVie and its subsidiaries, Affiliates, directors, officers, employees and agents as an additional insured thereunder, and (d) shall require [***] written notice to be given to AbbVie prior to any cancellation, non-renewal or material change thereof.

 

9.6.1.      Types and Minimum Limits. The types of insurance, and minimum limits shall be:

 

(a)            Licensee shall at all times maintain in force any insurance policy that is required by any Federal, State, National or other such Law, Regulation or Ordinance which may govern or have jurisdiction over any provision of this Agreement and at all times remain fully compliant with any such Law, Regulation or Ordinance.

 

(b)            Clinical Trials Insurance effective at least [***] prior to the launch of any human clinical trials with a minimum limit of [***] in the aggregate to be maintained in force throughout the life of any such clinical trials, such insurance to be effected, maintained and documented to AbbVie in compliance with this Agreement and in compliance with any and all local requirements in any territory in which such trials are conducted.

 

(c)            Product Liability Insurance effective at least [***] prior to First Commercial Sale of a Licensed Compound or Licensed Product with a minimum limit of [***] in the aggregate.

 

9.6.2.      Certificates of Insurance. Within [***] after the Effective Date, Licensee shall provide AbbVie with Certificates of Insurance evidencing compliance with this Section. The insurance policies shall be under an occurrence form, but if only a claims-made form is available to Licensee, then Licensee shall continue to maintain such insurance after the expiration or termination of this Agreement for the longer of: (a) a period of [***] following termination or expiration of this Agreement, or (b) last sale of a Licensed Product.

 

Article 10
TERM AND TERMINATION

 

10.1       Term.

 

10.1.1.    Term. This Agreement shall commence on the Effective Date and, unless earlier terminated in accordance herewith, shall continue in force and effect until the date of expiration of the last Royalty Term for the last Licensed Product (such period, the “Term”).

 

10.1.2.    Effect of Expiration of the Term. Following the expiration of the Term, the grants in Section 2.1 shall become perpetual, fully-paid, royalty-free, and irrevocable.

 

10.2       Termination for Material Breach.

 

10.2.1.    Material Breach. If either Party (the “Non-Breaching Party”) believes that the other Party (the “Breaching Party”) has materially breached one or more of its material obligations under this Agreement, then the Non-Breaching Party may deliver notice of such material breach to the Breaching Party (a “Default Notice”). If the Breaching Party fails to cure such breach [***] for breach of payment obligations) after receipt of the Default Notice, the Non-Breaching Party may terminate this Agreement upon written notice to the Breaching Party. Notwithstanding the foregoing, if such default cannot be cured within such first [***], such termination will not be effective if such breach has been cured within [***] after such notice if the Breaching Party commences actions to cure such default within such [***] period and thereafter diligently continues such actions. For the avoidance of doubt, the exception set forth in the foregoing sentence shall not apply with respect to any material breach of payment obligations.

 

10.2.2.    Disputed Breach. If the alleged Breaching Party disputes in good faith the existence or materiality of a breach specified in a notice provided by the Non-Breaching Party in accordance with Section 10.2.1 and such alleged Breaching Party provides the Non-Breaching Party notice of such Dispute within the applicable period set forth in Section 10.2.1, then the cure periods set forth in Section 10.2.1 shall not be tolled during the pendency of the dispute resolution process as set forth in Section 11.6 and the non-Breaching Party will not have the right to terminate this Agreement under Section 10.2.1 unless and until such dispute resolution process has been completed (including any cure periods set forth therein).

 

10.3       Additional Termination by AbbVie and Licensee.

 

10.3.1.    If Licensee or any of its Affiliates or Sublicensees, anywhere in the Territory, challenges, or otherwise aides any Third Party to challenge, any claim in an AbbVie Patent (or any corresponding worldwide family member) as invalid, unenforceable or otherwise not patentable or as not being infringed by Licensee’s activities absent the rights and licenses granted hereunder (each, a “Patent Challenge”), AbbVie shall have the right to immediately terminate this Agreement in its entirety, including the rights of any Sublicensees, upon written notice to Licensee; provided that with respect to any Third Party Sublicensee, AbbVie will not have the right to terminate this Agreement under this Section 10.3.1 if Licensee (a) causes such Patent Challenge to be terminated or dismissed (or in the case of ex parte proceedings, multi-party proceedings, or other Patent Challenges in which the challenging party does not have the power to unilaterally cause the Patent Challenge to be withdrawn, causes such Sublicensee to withdraw as a party from such Patent Challenge and to cease actively assisting any other party to such Patent Challenge) or (b) terminates such Sublicensee’s sublicense to the Patents being challenged by the Sublicensee, in each case, within [***] of AbbVie’s notice to the other Party under this Section 10.3.1. If under Applicable Law AbbVie cannot terminate this Agreement as provided in Section 10.3.1, or AbbVie decides not to terminate this Agreement pursuant to Section 10.3.1, then Licensee shall continue to pay AbbVie according to ARTICLE 4 during and after such challenge, unless all claims in all AbbVie Patents are found invalid, unenforceable or otherwise not patentable; and if all claims in all AbbVie Patents are found invalid, unenforceable or otherwise not patentable, all payment obligations by Licensee under ARTICLE 4 shall be reduced by [***].

 

10.3.2.   AbbVie may terminate this Agreement in its entirety immediately if none of Licensee, its Affiliates or its Sublicensees conducts any material amount of Development or Commercialization of a Licensed Compound or Licensed Product for a consecutive period of [***] during the Term, effective immediately upon AbbVie providing written notice to Licensee; provided that if Licensee does not conduct such Development or Commercialization as required under this Section 10.3.2 as a result of a safety concern, regulatory issue, clinical hold, or injunction or other operation of law and Licensee is using Commercially Reasonable Efforts to diligently seek to remedy such issue, such [***] period will be extended for each day any of the foregoing listed in this clause (a) caused such failure to conduct such Development or Commercialization.

 

10.3.3.    Licensee may terminate this Agreement in its entirety, for any or no reason, upon [***] prior written notice to AbbVie.

 

10.4       Termination for Bankruptcy, Insolvency or Similar Event. If either Party (a) becomes the subject, whether voluntarily or involuntarily, of any bankruptcy, insolvency, receivership or similar proceeding, and, in the event of an involuntary case under the bankruptcy code, such case is not dismissed commencement thereof; (b) makes an assignment for the benefit of creditors; (c) appoints or suffers appointment of a receiver or trustee over substantially all of its property; (d) proposes a written agreement of composition, arrangement, readjustment or extension of its debts; (e) files for or is subject to the institution of bankruptcy, liquidation or receivership proceedings; (f) admits in writing its inability to meet its obligations as they fall due in the general course; or (g) becomes subject to a warrant of attachment, execution, or distraint or similar process against substantially all of its property, then the other Party may terminate this Agreement, in whole or in part and in its sole discretion, effective immediately upon written notice to the other Party.

 

10.5       Termination in Entirety. In the event of a termination of this Agreement for any reason:

 

10.5.1.    all rights and licenses granted by AbbVie hereunder shall immediately terminate;

 

10.5.2.    Licensee shall, and hereby does, effective as of the effective date of termination, grant (without any further action required on the part of AbbVie) to AbbVie and its Affiliates, an exclusive, royalty-free, fully paid, worldwide, irrevocable, perpetual license, with the right to grant sublicenses through multiple tiers, under the Reversion Technology to Exploit in the Territory any Reversion Product in the Field in the Territory (the “Reversion License”).

 

10.5.3.    at AbbVie’s request, Licensee shall, and hereby does, effective as of the effective date of termination, assign to AbbVie all of its right, title, and interest in and to all Regulatory Documentation (including any Regulatory Approvals and INDs) applicable to any Reversion Product then owned by Licensee or any of its Affiliates, and shall cause any and all Sublicensees to assign to AbbVie any such Regulatory Documentation then owned by such Sublicensees;

 

10.5.4.    Licensee shall, and hereby does, effective as of the effective date of termination, grant AbbVie an exclusive, royalty-free license and right of reference, with the right to grant multiple tiers of sublicenses and further rights of reference, under all Regulatory Documentation (including any Regulatory Approvals and INDs) then Controlled by Licensee or any of its Affiliates or Sublicensees that are not assigned to AbbVie pursuant to Section 10.5.3 above that are necessary for AbbVie or any of its Affiliates or Sublicensees to Develop or Commercialize any Reversion Product and any improvement to any of the foregoing, as such Regulatory Documentation exists as of the effective date of such termination of this Agreement; and

 

10.5.5.   at AbbVie’s request, Licensee shall, and hereby does, effective as of the effective date of termination assign to AbbVie all right, title, and interest of Licensee in each Product Trademark.

 

10.6       Transition Assistance. In the event of a termination of this Agreement for any reason, Licensee shall, at AbbVie’s written request, perform any or all of the following and agree upon a transition plan with AbbVie that shall address the timing and logistics of the following:

 

10.6.1.    Licensee shall, where permitted by Applicable Law, transfer to AbbVie all of its right, title, and interest in all Regulatory Documentation assigned to AbbVie pursuant to Section 10.5.2;

 

10.6.2.    Licensee shall notify the applicable Regulatory Authorities and take any other action reasonably necessary to effect the transfer set forth in Section 10.6.1 above;

 

10.6.3.  Licensee shall, unless expressly prohibited by any Regulatory Authority, transfer control to AbbVie of all clinical studies being conducted by Licensee as of the effective date of termination and continue to conduct such clinical studies, at Licensee’s cost, for up to [***] to enable such transfer to be completed without interruption of any such clinical study; provided that (a) AbbVie shall not have any obligation to continue any clinical study unless required by Applicable Law, and (b) with respect to each clinical study for which such transfer is expressly prohibited by the applicable Regulatory Authority, if any, Licensee shall continue to conduct such clinical study to completion, at Licensee’s cost;

 

10.6.4.    Licensee shall assign (or cause its Affiliates to assign) to AbbVie any or all agreements with any Third Party with respect to the conduct of pre-clinical development activities or clinical studies for the Reversion Products, including agreements with contract research organizations, clinical sites, and investigators, unless, with respect to any such agreement, such agreement expressly prohibits such assignment, in which case Licensee shall cooperate with AbbVie in reasonable respects to secure the consent of the applicable Third Party to such assignment;

 

10.6.5.    Licensee shall supply to AbbVie all of AbbVie’s requirements of the Reversion Products until the later of (a) such time as AbbVie has established an alternate, validated source of supply for the Reversion Products, and AbbVie is receiving supply from such alternative source and (b) the date that is [***] following the effective date of the termination of this Agreement. The cost to AbbVie for such supply shall be at Licensee’s actual cost to Manufacture such Reversion Products plus [***];

 

10.6.6.    at Licensee’s expense, to the extent applicable, Licensee shall within [***] of AbbVie’s written request, (a) diligently conduct a Know-How transfer to AbbVie, including all relevant Know-How and data, included in the license set forth in Section 10.5.2, and (b) provide other reasonable assistance necessary to permit AbbVie to Develop, Manufacture or Commercialize such Licensed Products;

 

10.6.7.    Licensee shall duly execute and deliver, or cause to be duly executed and delivered, such instruments and shall do and cause to be done such acts and things, including the filing of such assignments, agreements, documents, and instruments, as may be necessary under, or as AbbVie may reasonably request in connection with, or to carry out more effectively the purpose of, or to better assure and confirm unto AbbVie its rights under, Section 10.5 and this Section 10.6.

 

10.7       Remedies. Except as otherwise expressly provided herein, termination of this Agreement in accordance with the provisions hereof shall not limit remedies that may otherwise be available in law or equity.

 

10.8       Accrued Rights; Surviving Obligations. Termination or expiration of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of a Party prior to such termination or expiration. Such termination or expiration shall not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement. Without limiting the foregoing, ARTICLE [***] of this Agreement shall survive the termination or expiration of this Agreement for any reason.

 

Article 11
MISCELLANEOUS

 

11.1       Force Majeure. Neither Party shall be held liable or responsible to the other Party or be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement (other than an obligation to make payments) when such failure or delay is caused by or results from events beyond the reasonable control of the non-performing Party, including fires, floods, earthquakes, hurricanes, embargoes, shortages, epidemics, quarantines, war, acts of war (whether war be declared or not), terrorist acts, insurrections, riots, civil commotion, strikes, lockouts, or other labor disturbances (whether involving the workforce of the non-performing Party or of any other Person), acts of God or acts, omissions or delays in acting by any governmental authority (except to the extent such delay results from the breach by the non-performing Party or any of its Affiliates of any term or condition of this Agreement). The non-performing Party shall notify the other Party of such force majeure within [***] after such occurrence by giving written notice to the other Party stating the nature of the event, its anticipated duration, and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is necessary and the non-performing Party shall use commercially reasonable efforts to remedy its inability to perform. Without limitation to the foregoing, if Licensee is the non-performing Party and the suspension of performance continues for [***] after the date of the occurrence, AbbVie shall have the right to terminate this Agreement pursuant to Section 10.2.1 as if Licensee had committed a material breach, except that in such event no cure period shall apply and AbbVie shall have the right to effect such termination upon written notice to Licensee, in its sole discretion.

 

11.2       Export Control. The Parties acknowledge that certain products, technology, technical data and software (including certain services and training) and certain transactions may be subject to export controls or sanctions under Applicable Law (including the Export Administration Regulations, 15 C.F.R. §§730-774, the International Traffic in Arms Regulations, 22 C.F.R. Parts 120-130, and sanctions programs implemented by the Office of Foreign Assets Control of the U.S. Department of the Treasury). Each Party agrees that it will not knowingly export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity in accordance with Applicable Law.

 

11.3       Assignment. No Party shall, without the prior written consent of the other Party, sell, transfer, assign, delegate, pledge, or otherwise dispose of, whether voluntarily, involuntarily, by operation of law or otherwise, this Agreement or any of its rights or duties hereunder to any Third Party that is not an Affiliate of the assigning Party; provided, however, that no such consent shall be required in connection with (a) a sale of all or substantially all of the assets of such Party to which this Agreement relates, (b) any merger or other change of control of such Party, or (c) AbbVie’s sale, transfer, assignment, delegation, pledge, or disposal of its rights to receive royalty payments under this Agreement. With respect to an assignment to an Affiliate, the assigning Party shall remain responsible for the performance by such Affiliate of the rights and obligations hereunder. Any attempted assignment or delegation in violation of this Section 11.3 shall be void and of no effect. All validly assigned and delegated rights and obligations of the Parties hereunder shall be binding upon and inure to the benefit of and be enforceable by and against the successors and permitted assigns of AbbVie or Licensee, as the case may be. The permitted assignee or permitted transferee shall assume all obligations of its assignor or transferor under this Agreement. Without limiting the foregoing, the grant of rights set forth in this Agreement shall be binding upon any successor or permitted assignee of the assigning Party, and the obligations of such Party.

 

11.4       Severability. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under any present or future law, and if the rights or obligations of either Party under this Agreement will not be materially and adversely affected thereby, (a) such provision shall be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom, and (d) in lieu of such illegal, invalid, or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid, and enforceable provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and reasonably acceptable to the Parties. To the fullest extent permitted by Applicable Law, each Party hereby waives any provision of law that would render any provision hereof illegal, invalid, or unenforceable in any respect.

 

11.5       Governing Law, Jurisdiction and Service.

 

11.5.1.    Governing Law. This Agreement or the performance, enforcement, breach or termination hereof shall be interpreted, governed by and construed in accordance with the laws of the State of New York, United States, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction; provided, that all questions concerning the construction or effect of patent applications and patents shall be determined in accordance with the laws of the country or other jurisdiction in which the particular patent application or patent has been filed or granted, as the case may be. The Parties agree to exclude the application to this Agreement of the United Nations Convention on Contracts for the International Sale of Goods.

 

11.5.2.    Service. Each Party further agrees that service of any process, summons, notice or document by registered mail to its address set forth in Section 11.7.2 shall be effective service of process for any action, suit, or proceeding brought against it under this Agreement in any such court.

 

11.6       Dispute Resolution. Except as provided in Section 4.11, if a dispute arises between the Parties in connection with or relating to this Agreement or any document or instrument delivered in connection herewith (a “Dispute”), it shall be resolved pursuant to this Section 11.6.

 

11.6.1.    General. Any Dispute shall first be referred to the Senior Officers of the Parties, who shall confer in good faith on the resolution of the issue. Any final decision mutually agreed to by the Senior Officers or their delegate and reduced to writing shall be conclusive and binding on the Parties. If the Senior Officers or their delegates are not able to agree on the resolution of any such issue within [***] after such issue was first referred to them, then either Party may, by written notice to the other Party, elect to initiate an alternative dispute resolution (“ADR”) proceeding pursuant to the procedures set forth in Section 11.6.2 for purposes of having the matter settled.

 

11.6.2.    ADR. Any ADR proceeding under this Agreement shall take place pursuant to the procedures set forth in Schedule 11.6.2.

 

11.6.3.    Adverse Ruling. Any determination pursuant to this Section 11.6 that a Party is in material breach of its material obligations hereunder shall specify a (nonexclusive) set of actions to be taken to cure such material breach, if feasible.

 

11.6.4.    Interim Relief and Tolling. Notwithstanding anything herein to the contrary, nothing in this Section 11.6 shall preclude either Party from seeking interim or provisional relief, including a temporary restraining order, preliminary injunction or other interim equitable relief concerning a Dispute following the ADR procedures set forth in Section 11.6.2, if necessary to protect the interests of such Party. This Section shall be specifically enforceable.

 

11.7       Notices.

 

11.7.1.    Notice Requirements. Any notice, request, demand, waiver, consent, approval, or other communication permitted or required under this Agreement shall be in writing, shall refer specifically to this Agreement and shall be deemed given only if delivered (a) by hand, (b) by internationally recognized overnight delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in Section 11.7.2, (c) by email, or (d) to such other address as the Party to whom notice is to be given may have provided to the other Party in accordance with this Section 11.7.1. Such notice shall be deemed to have been given as of the date delivered by hand, on the [***] (at the place of delivery) after deposit with an internationally recognized overnight delivery service, or as of the date of an email is sent. This Section 11.7.1 is not intended to govern the day-to-day business communications necessary between the Parties in performing their obligations under the terms of this Agreement.

 

11.7.2.    Address for Notice.

 

If to Licensee, to:

 

Disc Medicine, Inc.
400 Technology Square, 10^th Floor
Cambridge, MA 02139
Attention: Brian MacDonald

 

With a copy to (which will not constitute notice):

 

Goodwin Procter LLP
100 Northern Avenue
Boston, Massachusetts 02210
Attention: William Collins
Email: wcollins@goodwinlaw.com

 

If to AbbVie, to:

 

AbbVie Inc.
1 North Waukegan Road
North Chicago, Illinois 60064 U.S.
Attention: [***]
Fax: [***]

 

11.8       Entire Agreement; Amendments. This Agreement and Schedules attached hereto [***] sets forth and constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and all prior agreements, understandings, promises, and representations, whether written or oral, with respect thereto are superseded hereby (including that certain Confidentiality Agreement between Licensee and AbbVie or their respective Affiliates effective as of December 10, 2018). Each Party confirms that it is not relying on any representations or warranties of the other Party except as specifically set forth in this Agreement. No amendment, modification, release, or discharge shall be binding upon the Parties unless in writing and duly executed by authorized representatives of both Parties.

 

11.9       Waiver and Non-Exclusion of Remedies. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. The waiver by either Party hereto of any right hereunder or of the failure to perform or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by such other Party whether of a similar nature or otherwise. The rights and remedies provided herein are cumulative and do not exclude any other right or remedy provided by Applicable Law or otherwise available except as expressly set forth herein.

 

11.10     English Language. This Agreement shall be written and executed in, and all other communications under or in connection with this Agreement shall be in, the English language. Any translation into any other language shall not be an official version thereof, and in the event of any conflict in interpretation between the English version and such translation, the English version shall control.

 

11.11     No Benefit to Third Parties. Except as provided in ARTICLE 9, covenants and agreements set forth in this Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns, and they shall not be construed as conferring any rights on any other Persons.

 

11.12     Further Assurance. Each Party shall duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents, and instruments, as may be necessary or as the other Party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof, or to better assure and confirm unto such other Party its rights and remedies under this Agreement.

 

11.13     Relationship of the Parties. It is expressly agreed that AbbVie, on the one hand, and Licensee, on the other hand, shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture, or agency, including for all tax purposes. Neither AbbVie, on the one hand, nor Licensee, on the other hand, shall have the authority to make any statements, representations, or commitments of any kind, or to take any action, which shall be binding on the other, without the prior written consent of the other Party to do so. All persons employed by a Party shall be employees of such Party and not of the other Party and all costs and obligations incurred by reason of any such employment shall be for the account and expense of such Party.

 

11.14     Performance by Affiliates and Sublicensees. Each Party acknowledges and accepts that the other Party may exercise its rights and perform its obligations (including granting or continuing licenses and other rights) under this Agreement either directly or through one or more of its Affiliates. A Party’s Affiliates will have the benefit of all rights (including all licenses and other rights) of such Party under this Agreement. Accordingly, in this Agreement “Licensee” will be interpreted to mean “Licensee or its Affiliates” and “AbbVie” will be interpreted to mean “AbbVie or its Affiliates” where necessary to give each Party’s Affiliates the benefit of the rights provided to such Party in this Agreement and the ability to perform its obligations (including granting or continuing licenses and other rights) under this Agreement; provided, however, that in any event each Party will remain responsible for the acts and omissions, including financial liabilities, of its Affiliates. For clarity, where provisions of this Agreement provide that Licensee shall be “solely” responsible for performing its obligations or the like with respect to a matter, AbbVie acknowledges and accepts that such provisions shall be interpreted to mean that, Licensee may perform such obligations either directly or through one or more of its Affiliates, or by a Sublicensee or permitted Third Party subcontractor of Licensee or any of its Affiliates.

 

11.15     Counterparts; Facsimile Execution. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile or electronically transmitted signatures and such signatures shall be deemed to bind each Party hereto as if they were original signatures.

 

11.16     References. Unless otherwise specified, (a) references in this Agreement to any Article, Section or Schedule shall mean references to such Article, Section or Schedule of this Agreement, (b) references in any Section to any clause are references to such clause of such Section, and (c) references to any agreement, instrument, or other document in this Agreement refer to such agreement, instrument, or other document as originally executed or, if subsequently amended, replaced, or supplemented from time to time, as so amended, replaced, or supplemented and in effect at the relevant time of reference thereto.

 

11.17     Construction. Except where the context otherwise requires, wherever used, the singular shall include the plural, the plural the singular, the use of any gender shall be applicable to all genders and the word “or” is used in the inclusive sense (and/or). Whenever this Agreement refers to a number of days, unless otherwise specified, such number refers to calendar days. The captions of this Agreement are for convenience of reference only and in no way define, describe, extend, or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The term “including,” “include,” or “includes” as used herein shall mean including, without limiting the generality of any description preceding such term. The language of this Agreement shall be deemed to be the language mutually chosen by the Parties and no rule of strict construction shall be applied against either Party hereto. Each Party represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting hereof. In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption will apply against the Party which drafted such terms and provisions.

 

{SIGNATURE PAGE FOLLOWS}

 

THIS AGREEMENT IS EXECUTED by the authorized representatives of the Parties as of the Effective Date.

 

ABBVIE DEUTSCHLAND GMBH & CO. KG			DISC MEDICINE, INC.
By:	/s/ Stefan Simianer		By:	/s/ Brian MacDonald
Name:	Stefan Simianer		Name:	Brian MacDonald
Title:	Managing Director of AbbVie Komplementär GmbH, General Partner of AbbVie Deutschland GmbH & Co. KG		Title	Chief Executive Officer

 

{SIGNATURE PAGE TO LICENSE AGREEMENT} 

 

Schedule 1.3

 

[***]

Schedule 1.4

 

AbbVie Patents

 

[***]

 

---

Schedule 1.54

 

[***]

 

---

Schedule 7.5

 

Press Release

 

Disc Medicine Expands Pipeline Focused on Hepcidin Pathway

 

Enters into exclusive agreement with AbbVie for series of Hemojuvelin Antagonist Monoclonal Antibodies

 

Cambridge, Mass. - [INSERT DATE] - Disc Medicine, a hematology company that is applying new insights in hepcidin biology to develop therapies addressing ineffective red blood cell production in rare hematological diseases, today announced that it has entered into an exclusive license agreement with AbbVie for the worldwide rights to a series of hemojuvelin antagonist monoclonal antibodies. Terms of the license agreement have not been disclosed.

 

“The addition of these hemojuvelin antagonist antibodies to our pipeline is an excellent strategic fit for Disc Medicine,” said Brian MacDonald, CEO of Disc Medicine. “Our first program is a novel, orally administered therapy which increases hepcidin expression to treat iron loading anemias. In contrast, these antibodies target hemojuvelin to reduce hepcidin expression and provide us with the opportunity to develop new approaches to the treatment of anemia in a different spectrum of chronic inflammatory and hematological diseases.”

 

Hepcidin, a small peptide hormone produced in the liver, is the key regulator of iron metabolism that when dysregulated is associated with either iron overload or iron deficiency. Both of these conditions can be associated with ineffective red blood cell production, often leading to severe anemia in a range of hematological and non-hematological diseases that can significantly impact lifespan as well as quality of life.

 

About Disc Medicine
[INSERT BOILERPLATE LANGUAGE]

 

---

Schedule 11.6.2

 

[***]

 

 

Exhibit 10.4

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT (this “Lease”) is made as of this 29 day of October, 2021, between ARE-MA REGION NO. 75, LLC, a Delaware limited liability company (“Landlord”), and DISC MEDICINE, INC., a Delaware corporation (“Tenant”).

 

Building:

The specific building in the Project located at 321 Arsenal Street, Watertown, Massachusetts 02472 (also known as Building 312), in which the Premises are located.

 

Premises:

That portion of the Project, consisting of a portion of the first floor of the Building, commonly known as Suite 101, and containing approximately 7,566 rentable square feet, as determined by Landlord, as shown on Exhibit A, subject to adjustment from time to time in accordance with Sections 5 and 45(o) hereof.

 

Project:

The real property on which the Building in which the Premises are located, together with all improvements thereon and appurtenances thereto as described on Exhibit B.

 

Rentable Area of Premises:	7,566 sq. ft., subject to adjustment from time to time in accordance with Sections 5 and 45(o) hereof.
Rentable Area of Building:	64,858 sq. ft., subject to adjustment from time to time in accordance with Sections 5 and 45(o) hereof.
Rentable Area of Project:	834,782 sq. ft., subject to adjustment from time to time in accordance with Sections 5 and 45(o) hereof.
Building’s Share of Project:	7.77%, subject to adjustment from time to time in accordance with Sections 5 and 45(o) hereof.

 

Tenant’s Share of Operating Expenses:

11.67%, subject to adjustment from time to time in accordance with Sections 5 and 45(o) hereof.

 

Base Rent:

$29,003, per month, subject to adjustment pursuant to Section 4 hereof.

 

Rent Adjustment Percentage: Three percent (3%)

 

Security Deposit:

$116,012

 

Target Commencement Date:

November 12, 2021, subject to the provisions of Section 2 hereof.

 

Base Term:	Beginning on the Commencement Date and ending 60 months from the first day of the first full month of the Term (as defined in Section 2) hereof.
Permitted Use:	General office use, and otherwise in compliance with the provisions of Section 7 hereof.

 

Address for Rent Payment:

Landlord’s Notice Address:

 

ARE-MA Region No. 75, LLC

c/o Alexandria Real Estate Equities, Inc.

JP Morgan Chase	26 North Euclid Avenue
P.O. Box 975383	Pasadena, CA 91101

Dallas, TX 75397-5383

Attention: Corporate Secretary

321 Arsenal (AOTC) / Disc Medicine - Page 2 

 

Tenant’s Notice Address:

 

Before the Commencement Date:

 

150 Cambridgepark Drive, Suite 103

Cambridge, MA 02140

Attention: Joanne Bryce

 

After the Commencement Date:

 

321 Arsenal Street, Suite 101

Watertown, Massachusetts 02472

Attention: Joanne Bryce

 

The following Exhibits and Addenda are attached hereto and incorporated herein by this reference:

 

EXHIBIT A - PREMISES DESCRIPTION 

EXHIBIT B - DESCRIPTION OF PROJECT 

EXHIBIT C - WORK LETTER  

EXHIBIT D - ACKNOWLEDGEMENT OF COMMENCEMENT DATE 

EXHIBIT E - RULES AND REGULATIONS  

EXHIBIT F - REMOVABLE INSTALLATIONS 

EXHIBIT G - IDENTIFICATION OF ACM, PACM & LEAD PAINT

 

1.             Lease of Premises. Upon and subject to all of the terms and conditions hereof, Landlord hereby leases the Premises to Tenant and Tenant hereby leases the Premises from Landlord.

 

The portions of the Project which from time to time are for the non-exclusive use of Tenant and one or more other tenants of the Project or other third parties are collectively referred to herein as the “Common Areas.” The Common Areas include, without limitation, the various amenities, amenities facilities, and buildings or other improvements containing the same located in, on or otherwise serving the Project, if any, as may exist from time to time and be available for use by Tenant and one or more other tenants of the Project or other third parties (“Amenities”). Amenities may include, by way of example, things such as business centers, conference centers, restaurants, or gyms and other athletic facilities. It is understood that Landlord may contract with affiliates or third parties to provide Amenities rather than providing the same itself. In either case, the cost thereof will be included in Operating Expenses or paid directly by Tenant to such affiliate or third party. Notwithstanding anything contained in this Lease to the contrary and for the avoidance of doubt, however, Landlord has no obligation to provide, and if provided has no obligation to continue to provide, any Amenities or other Common Areas, other than reasonable access to the Premises (including, but not limited to, elevators) and any parking required by the terms of this Lease to be available to Tenant. Tenant shall have access to the Premises twenty-four (24) hours per day during the Term of this Lease, except in the case of emergencies or Force Majeure, as the result of governmental action or Legal Requirements, the performance by Landlord of any installation, maintenance or repairs, or other work, any other temporary interruptions, and otherwise subject to the terms of this Lease.

321 Arsenal (AOTC) / Disc Medicine - Page 3

 

2.             Delivery; Acceptance of Premises; Commencement Date. Landlord shall use reasonable efforts to deliver the Premises to Tenant on or before the Target Commencement Date, with Landlord’s Work Substantially Completed (“Delivery” or “Deliver”); provided, however, that the Target Commencement Date may be extended by Landlord up to 60 days in the event that there are delays due to the performance by third parties of critical redevelopment activities to the Project (including, without limitation, electrical upgrades to and environmental remediations of the Project) (“Redevelopment Delays”); it being acknowledged that Landlord may exercise such extension via one or more written notices to Tenant. Landlord will give Tenant written notice, in reasonable detail, within a reasonable period after learning of such Redevelopment Delays. If Landlord fails to timely Deliver the Premises, Landlord shall not be liable to Tenant for any loss or damage resulting therefrom, and this Lease shall not be void or voidable except as provided herein. If Landlord does not Deliver the Premises on or before December 31, 2021 for any reason other than Force Majeure delays, Redevelopment Delays (up to 60 days, as allowed above in this Section 2) and Tenant Delays, then Tenant shall be entitled to a day for day abatement of Base Rent for each day for the period from and after January 1, 2022 (or such later date after giving effect to Force Majeure delays, Redevelopment Delays, and Tenant Delays) until the earlier of the date that Landlord Delivers the Premises or 180 days after the Target Commencement Date. If Landlord does not Deliver the Premises within 180 days of the Target Commencement Date for any reason other than Force Majeure delays, Redevelopment Delays, and Tenant Delays, this Lease may be terminated by Tenant by written notice (given no later than 5 business days after the expiration of the 180 day period (as so extended) to Landlord, and if so terminated by Tenant: (a) the Security Deposit, or any balance thereof (i.e., after deducting therefrom all amounts to which Landlord is entitled under the provisions of this Lease), shall be returned to Tenant within fifteen (15) business days after the termination of the Lease pursuant to this Section 2, and (b) neither Landlord nor Tenant shall have any further rights, duties or obligations under this Lease, except with respect to provisions which expressly survive termination of this Lease. As used herein, the terms “Landlord’s Work,” “Tenant’s Work,” “Tenant Delays” and “Substantially Completed” shall have the meanings set forth for such terms in the Work Letter. If Tenant does not elect to void this Lease within 5 business days of the lapse of such 180-day period, such right to void this Lease shall be waived and this Lease shall remain in full force and effect. Notwithstanding anything to the contrary contained herein and for the avoidance of any doubt, the termination rights provided for in this paragraph shall terminate on the Commencement Date.

 

The “Commencement Date” shall be the earliest of: (i) the date Landlord Delivers the Premises to Tenant, (ii) the date Landlord could have Delivered the Premises but for Tenant Delays; and (iii) the date Tenant conducts any business in the Premises or any part thereof. Upon request of Landlord, Tenant shall execute and deliver a written acknowledgment of the Commencement Date and the expiration date of the Term when such are established in the form of the “Acknowledgement of Commencement Date” attached to this Lease as Exhibit D; provided, however, Tenant’s failure to execute and deliver such acknowledgment shall not affect Landlord’s rights hereunder. The “Term” of this Lease shall be the Base Term, as defined above on the first page of this Lease, and (if timely and properly exercised) the Extension Term that Tenant may elect pursuant to Section 40 hereof.

 

Subject to the provisions of Section 3 of the Work Letter, Landlord shall permit Tenant access to the Premises at such times set forth in Section 3 of the Work Letter prior to the Commencement Date for Tenant’s installation and setup of furniture, fixtures and equipment (“FF&E Installation”), provided that such FF&E Installation is coordinated with Landlord, and Tenant complies with this Lease and all other reasonable restrictions and conditions Landlord may impose. All such access shall be during normal business hours. Any access to the Premises by Tenant before the Commencement Date shall be subject to all of the terms and conditions of this Lease, excluding the obligation to pay Base Rent, Operating Expenses, or utility charges (unless such utility charges during Tenant’s early access are materially in excess of the utility charges incurred by Landlord during the construction of Landlord’s Work prior to such early access, as reasonably determined by Landlord, in which case, Tenant shall promptly reimburse Landlord for such excess costs).

 

Except as set forth in the next paragraph or the Work Letter: (i) Tenant shall accept the Premises in their condition as of the Commencement Date; (ii) Landlord shall have no obligation for any defects in the Premises; and (iii) Tenant’s taking possession of the Premises shall be conclusive evidence that Tenant accepts the Premises and that the Premises were in good condition at the time possession was taken. Any occupancy of the Premises by Tenant before the Commencement Date shall be subject to all of the terms and conditions of this Lease, including the obligation to pay Rent.

 

On the Commencement Date, the Premises shall be tendered to Tenant in broom clean condition, free of occupants and personal property. For the period of 30 consecutive days after the Commencement Date, Landlord shall, at its sole cost and expense (which shall not constitute an Operating Expense), be responsible for any repairs that are required to be made to the Building Systems (as defined in Section 13), unless Tenant or any Tenant Party was responsible for the cause of such repair, in which case Tenant shall pay the cost. Reference is hereby made to the Work Letter for any warranties on Landlord’s Work.

321 Arsenal (AOTC) / Disc Medicine - Page 4

 

Tenant agrees and acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the condition of all or any portion of the Premises or the Project, and/or the suitability of the Premises or the Project for the conduct of Tenant’s business, and Tenant waives any implied warranty that the Premises or the Project are suitable for the Permitted Use. This Lease constitutes the complete agreement of Landlord and Tenant with respect to the subject matter hereof and supersedes any and all prior representations, inducements, promises, agreements, understandings and negotiations which are not contained herein. Landlord in executing this Lease does so in reliance upon Tenant’s representations, warranties, acknowledgments and agreements contained herein.

 

3.             Rent.

 

(a)           Base Rent. The first month’s Base Rent and the Security Deposit shall be due and payable on delivery of an executed copy of this Lease to Landlord. Tenant shall pay to Landlord in advance, without demand, abatement, deduction or set-off, monthly installments of Base Rent on or before the first day of each calendar month during the Term hereof, in lawful money of the United States of America, at the office of Landlord for payment of Rent set forth above, or to such other person or at such other place as Landlord may from time to time designate in writing. Payments of Base Rent for any fractional calendar month shall be prorated. The obligation of Tenant to pay Base Rent and other sums to Landlord and the obligations of Landlord under this Lease are independent obligations. Tenant shall have no right at any time to abate, reduce, or set-off any Rent (as defined in Section 5) due hereunder except for any abatement as may be expressly provided in this Lease.

 

(b)           Additional Rent. In addition to Base Rent, Tenant agrees to pay to Landlord as additional rent (“Additional Rent”): (i) Tenant’s Share of Operating Expenses, (ii) administrative rent in the amount of 3% of the then applicable Base Rent, and (iii) any and all other amounts Tenant assumes or agrees to pay under the provisions of this Lease, including, without limitation, any and all other sums that may become due by reason of any default of Tenant or failure to comply with the agreements, terms, covenants and conditions of this Lease to be performed by Tenant, after any applicable notice and cure period.

 

4.             Base Rent Adjustments. Base Rent shall be increased on each annual anniversary of the first day of the first full calendar month during the Term of this Lease (each an “Adjustment Date”) by multiplying the Base Rent payable immediately before such Adjustment Date by the Rent Adjustment Percentage and adding the resulting amount to such Base Rent payable immediately before such Adjustment Date. Base Rent, as so adjusted, shall thereafter be due as provided herein. Base Rent adjustments for any fractional calendar month shall be prorated.

 

5.             Operating Expense Payments. Landlord shall deliver to Tenant a written estimate of Operating Expenses for each calendar year during the Term (the “Annual Estimate”), which may be revised by Landlord from time to time during such calendar year. During each month of the Term, on the same date that Base Rent is due, Tenant shall pay Landlord an amount equal to 1/12th of Tenant’s Share of Operating Expenses of the Annual Estimate. Payments for any fractional calendar month shall be prorated.

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The term “Operating Expenses” means: (A) all costs and expenses of any kind or description whatsoever incurred or accrued each calendar year by Landlord with respect to the Building, including, without duplication, Taxes (as defined in Section 9), capital repairs, improvements and replacements amortized over the lesser of 10 years and the useful life of such capital items, the costs of Landlord’s third-party property manager, administrative rent in the amount of 3% of the then applicable Base Rent, and the cost of upgrades to the Building or enhanced services provided at the Building that are intended to encourage social distancing (also referred to as physical distancing), promote and protect health and physical well-being, and/or prevent or limit the spread or transmission of communicable diseases and/or viruses of any kind or nature, including, without limitation, COVID-19 (collectively, “Infectious Conditions”), and (B) the Building’s Share of Project of all costs and expenses of any kind or description whatsoever incurred or accrued each calendar year by Landlord with respect to the Project (other than those costs and expenses specific to the Building or any other building not containing Amenities), including, without duplication, costs and expenses related to the use, operation, ownership, management, maintenance, and repair of the Amenities and other Common Areas (including for the avoidance of doubt, payment or reimbursement by Landlord to affiliates of Landlord or third parties for market rent paid by such affiliates or third parties to Landlord for Amenity space and reduced rent or other concessions or subsidies provided to restaurants or others providing Amenities, and any payments made by Landlord to any Amenity provider to provide any Amenities), Taxes, capital repairs, improvements and replacements amortized over the lesser of 10 years and the useful life of such capital items, and the cost of upgrades to the Project or enhanced services provided at the Project that are intended to encourage social distancing (also referred to as physical distancing), promote and protect health and physical well-being, and/or prevent or limit the spread or transmission of Infectious Conditions. The only Amenities for which a separate use fee may be charged to Tenant in addition to inclusion of the costs and expenses thereof in Operating Expenses are related to the use of any conference facility or fitness center (if a conference facility or fitness center is created and available). Landlord or the Amenity provider may charge standard rates for usage of any conference facilities and services thereto. No membership fee will be charged for any fitness facility (or for basic offerings normally included in a membership fee), but Landlord may charge a separate fee for additional services, if available, such as personal trainers or wellness clinics. Operating Expenses shall exclude only:

 

(i)             the original construction costs of the Project prior to the date of this Lease and the cost of correcting defects in such original construction of the Project, or the construction costs of any expansion of the Project or of any redevelopment of the Project;

 

(ii)            capital expenditures for expansion of the Project (including, but not limited to, the creation and development (as opposed to operation and maintenance) of the Amenities and other Common Areas);

 

(iii)           interest, principal payments of Mortgage (as defined in Section 27) debts of Landlord, financing costs and amortization of funds borrowed by Landlord, whether secured or unsecured;

 

(iv)          depreciation of the Project (except for capital improvements, the cost of which are includable in Operating Expenses);

 

(v)           advertising, legal and space planning expenses and leasing commissions and other costs and expenses incurred in procuring and leasing space to tenants for the Project, including any leasing office maintained in the Project, free rent and construction allowances for tenants;

 

(vi)          legal and other expenses incurred in the negotiation or enforcement of leases;

 

(vii)         costs of completing, fixturing, improving, renovating, painting, redecorating or other work, which Landlord pays for or performs for other tenants within their premises, and costs of correcting defects in such work;

 

(viii)        costs to be reimbursed by other tenants of the Project or Taxes to be paid directly by Tenant or other tenants of the Project, whether or not actually paid;

 

(ix)          salaries, wages, benefits and other compensation paid to officers and employees of Landlord who are not assigned in whole or in part to the operation, management, maintenance or repair of the Project;

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(x)           general organizational, administrative and overhead costs relating to maintaining Landlord‘s existence, either as a corporation, partnership, or other entity, including general corporate, legal and accounting expenses;

 

(xi)          costs (including attorneys’ fees and costs of settlement, judgments and payments in lieu thereof) incurred in connection with disputes with tenants, other occupants, or prospective tenants, and costs and expenses, including legal fees, incurred in connection with negotiations or disputes with employees, consultants, management agents, leasing agents, purchasers or mortgagees of the Building;

 

(xii)         costs incurred by Landlord due to the violation by Landlord, its employees, agents or contractors or any tenant of the terms and conditions of any lease of space in the Project or any Legal Requirement (as defined in Section 7);

 

(xiii)        penalties, fines or interest incurred as a result of Landlord‘s inability or failure to make payment of Taxes and/or to file any tax or informational returns when due, or from Landlord‘s failure to make any payment of Taxes required to be made by Landlord hereunder before delinquency;

 

(xiv)        overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for goods and/or services in or to the Project to the extent the same exceeds the costs of such goods and/or services rendered by unaffiliated third parties on a competitive basis;

 

(xv)         costs of Landlord’s charitable or political contributions, or of fine art maintained at the Project;

 

(xvi)        costs in connection with services (including electricity), items or other benefits of a type which are not standard for the Project and which are not available to Tenant without specific charges therefor, but which are provided to another tenant or occupant of the Project, whether or not such other tenant or occupant is specifically charged therefor by Landlord;

 

(xvii)       costs incurred in the sale or refinancing of the Project; and

 

(xviii)      net income taxes of Landlord or the owner of any interest in the Project, franchise, capital stock, gift, estate or inheritance taxes or any federal, state or local documentary taxes imposed against the Project or any portion thereof or interest therein.

 

“Tenant’s Share of Operating Expenses” shall be the percentage set forth on the first page of this Lease as Tenant’s Share of Operating Expenses as reasonably adjusted by Landlord from time to time following changes to or remeasurement of the Premises, the Building or other buildings within the Project occurring from time to time. Any such remeasurement of a building within the Project shall be performed by Landlord in accordance with the Standard Method for Measuring Floor Area in Office Buildings as adopted by the Building Owners and Managers Association International (ANSI/BOMA Z65.1-2017), as customarily modified by Landlord for office/lab properties in the Cambridge/Watertown market. Landlord may equitably increase Tenant’s Share of Operating Expenses for any item of expense or cost reimbursable by Tenant that relates to a repair, replacement, or service that benefits only the Premises or only a portion of the Project that includes the Premises or that varies with occupancy or use. Base Rent, Tenant’s Share of Operating Expenses, and all other amounts payable by Tenant to Landlord hereunder are collectively referred to herein as “Rent.”

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Within 90 days after the end of each calendar year (or such longer period as may be reasonably required), Landlord shall furnish to Tenant a statement (an “Annual Statement”) showing in reasonable detail: (a) the total of actual Operating Expenses and resulting Tenant’s Share of Operating Expenses for the previous calendar year, and (b) the total of Tenant’s payments in respect of Operating Expenses for such year. If the actual Tenant’s Share of Operating Expenses for such year exceeds Tenant’s payments of Operating Expenses for such year, the excess shall be due and payable by Tenant to Landlord as Rent within 30 days after delivery of such Annual Statement to Tenant. If, however, Tenant’s payments of Operating Expenses for such year exceed the actual Tenant’s Share of Operating Expenses for such year, Landlord shall pay the excess to Tenant within 30 days after delivery of such Annual Statement, except that after the expiration, or earlier termination of the Term or if Tenant is delinquent in its obligation to pay Rent, Landlord shall pay the excess to Tenant after deducting all other amounts due Landlord. Landlord’s and Tenant’s obligations to pay any overpayments or deficiencies due pursuant to this paragraph shall survive the expiration or earlier termination of this Lease.

 

The Annual Statement shall be final and binding upon Tenant unless Tenant, within 30 days after Tenant’s receipt thereof, shall contest any item therein by giving written notice to Landlord, specifying each item contested and the reason therefor. If, during such 30-day period, Tenant reasonably and in good faith questions or contests the accuracy of Landlord’s statement of Tenant’s Share of Operating Expenses, Landlord will provide Tenant with access to Landlord’s books and records relating to the operation of the Project and such information as Landlord reasonably determines to be responsive to Tenant’s questions (the “Expense Information”). If after Tenant’s review of such Expense Information, Landlord and Tenant cannot agree upon the amount of Tenant’s Share of Operating Expenses, then Tenant shall have the right to have a nationally or regionally recognized independent public accounting firm selected by Tenant, working pursuant to a fee arrangement other than a contingent fee (at Tenant’s sole cost and expense) and approved by Landlord (which approval shall not be unreasonably withheld or delayed) (the “Independent Accountant”), audit and/or review (the “Independent Review”) of the Expense Information for the year in question. The results of any such Independent Review shall be binding on Landlord and Tenant. If the Independent Review shows that the payments actually made by Tenant with respect to Operating Expenses for the calendar year in question exceeded Tenant’s Share of Operating Expenses for such calendar year, Landlord shall at Landlord’s option either (i) credit the excess amount to the next succeeding installments of estimated Operating Expenses or (ii) pay the excess to Tenant within 30 days after delivery of such statement, except that after the expiration or earlier termination of this Lease or if Tenant is delinquent in its obligation to pay Rent, Landlord shall pay the excess to Tenant after deducting all other amounts due Landlord. If the Independent Review shows that Tenant’s payments with respect to Operating Expenses for such calendar year were less than Tenant’s Share of Operating Expenses for the calendar year, Tenant shall pay the deficiency to Landlord within 30 days after delivery of such statement. If the Independent Review shows that Tenant has overpaid with respect to Operating Expenses by more than 7%, then Landlord shall reimburse Tenant for all costs incurred by Tenant for the Independent Review. Operating Expenses for the calendar years in which Tenant’s obligation to share therein begins and ends shall be prorated. Notwithstanding anything set forth herein to the contrary, if the Project is not at least 95% occupied on average during any year of the Term, Tenant’s Share of Operating Expenses for such year shall be computed as though the Project had been 95% occupied on average during such year.

 

6.             Security Deposit. Tenant shall deposit with Landlord, upon delivery of an executed copy of this Lease to Landlord, a security deposit (the “Security Deposit”) for the performance of all of Tenant’s obligations hereunder in the amount set forth on page 1 of this Lease, which Security Deposit shall be in the form of an unconditional and irrevocable letter of credit (the “Letter of Credit”): (i) in form and substance satisfactory to Landlord, (ii) naming Landlord as beneficiary, (iii) expressly allowing Landlord to draw upon it at any time from time to time by delivering to the issuer notice that Landlord is entitled to draw thereunder, (iv) issued by an FDIC-insured financial institution satisfactory to Landlord (Landlord acknowledging that Silicon Valley Bank is an approved issuer), and (v) redeemable by presentation of a sight draft in the state of Landlord’s choice. If Tenant does not provide Landlord with a substitute Letter of Credit complying with all of the requirements hereof at least 10 days before the stated expiration date of any then current Letter of Credit, Landlord shall have the right to draw the full amount of the current Letter of Credit and hold the funds drawn in cash without obligation for interest thereon as the Security Deposit. Any cash proceeds of the Letter of Credit following a draw by the Landlord (the “Cash Proceeds”) are property of the Landlord, and Tenant shall have no right in the Security Deposit or the Letter of Credit other than the right to a return of the Letter of Credit when both this Lease has terminated and Tenant’s obligations under this Lease have been completely fulfilled as set forth herein.

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The Security Deposit and the Letter of Credit and Cash Proceeds shall be held by Landlord without obligation for interest thereon as security for the performance of all of Tenant’s obligations under this Lease. The Security Deposit and the Letter of Credit and the Cash Proceeds are not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default. Upon each occurrence of Default (as defined in Section 20), Landlord may use and apply all or part of the Security Deposit and the Letter of Credit and the Cash Proceeds, without notice to or any action by Tenant or any other person or entity, to pay delinquent payments due under this Lease, and the cost of any damage, injury, expense or liability caused by such Default, without prejudice to any other remedy provided herein or provided by law. Upon such use or application, Tenant shall have no right whatsoever to any amount so used or applied. Landlord's right to use and apply the Security Deposit and the Letter of Credit and the Cash Proceeds under this Section 6 includes the right to use and apply the Security Deposit and the Letter of Credit and the Cash Proceeds to pay future rent damages following the termination of this Lease pursuant to Section 21(c) below. Upon any use or application of all or any portion of the Security Deposit and the Letter of Credit or the Cash Proceeds, Tenant on demand shall pay Landlord the amount, or provide Landlord a replacement Letter of Credit meeting the foregoing criteria, that will restore the Security Deposit to its original amount. Upon bankruptcy or other debtor-creditor proceedings against Tenant, the Security Deposit and the Letter of Credit and the Cash Proceeds shall be deemed to be applied first to the obligations of Tenant arising for periods prior to the filing of such proceedings. Tenant hereby waives the provisions of any law, now or hereafter in force, which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of Rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or unforeseeable, caused by the act or omission of Tenant or any officer, employee, agent or invitee of Tenant. The Security Deposit and the Letter of Credit and the Cash Proceeds, after deducting therefrom all amounts to which Landlord has used or applied in accordance with this Lease, or to which Landlord is entitled under the provisions of this Lease, shall be returned to Tenant (or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder) within 60 days after the expiration or earlier termination of this Lease. For the avoidance of doubt, no portion of the Security Deposit and the Letter of Credit and the Cash Proceeds shall be returned to Tenant until both this Lease has terminated and Tenant’s obligations under this Lease have been completely fulfilled as set forth herein.

 

If Landlord transfers its interest in the Project or this Lease, Landlord shall either, at Landlord’s election in its sole discretion, (a) transfer any Security Deposit and the Letter of Credit and the Cash Proceeds then held by Landlord to a person or entity assuming Landlord’s obligations under this Section 6 after deducting therefrom all amounts to which Landlord has used or applied in accordance with this Lease, or to which Landlord is entitled under the provisions of this Lease, or (b) return to Tenant any Security Deposit and the Letter of Credit and the Cash Proceeds then held by Landlord and remaining after the deductions permitted herein. Upon such transfer to such transferee or the return of the Security Deposit and the Letter of Credit and the Cash Proceeds to Tenant, Landlord shall have no further obligation with respect to the Security Deposit and the Letter of Credit and the Cash Proceeds, and, in the event of a transfer, Tenant’s right to the return of the Security Deposit and the Letter of Credit and the Cash Proceeds shall apply solely against Landlord’s transferee.

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7.             Use. The Premises shall be used solely for the Permitted Use set forth in the basic lease provisions on page 1 of this Lease, and in compliance with all laws, orders, judgments, ordinances, regulations, codes, directives, permits, licenses, covenants, requirements and restrictions now or hereafter applicable to the Premises, and to the use and occupancy thereof (collectively, “Legal Requirements” and each, a “Legal Requirement”), including, without limitation, (i) the Americans With Disabilities Act, 42 U.S.C. § 12101, et seq. (together with the regulations promulgated pursuant thereto, “ADA”), and (ii) all restrictions, requirements and provisions set forth in the record documents identified in Section 44 and/or imposed by Governmental Authorities (as defined in Section 9) having jurisdiction, including, without limitation, those related to the historical significance of, and historical activity on, the Project. Tenant shall, upon 5 days’ written notice from Landlord, discontinue any use of the Premises which is declared by any Governmental Authority having jurisdiction to be a violation of a Legal Requirement. Tenant will not use or permit the Premises to be used for any purpose or in any manner that would void Tenant’s or Landlord’s insurance, increase the insurance risk, or cause the disallowance of any sprinkler or other credits. Tenant shall not permit any part of the Premises to be used as a “place of public accommodation”, as defined in the ADA or any similar legal requirement. Tenant shall reimburse Landlord promptly upon demand for any additional premium charged for any such insurance policy by reason of Tenant’s failure to comply with the provisions of this Section or otherwise caused by Tenant’s use and/or occupancy of the Premises. Tenant will use the Premises in a careful, safe and proper manner and will not commit or permit waste, overload the floor or structure of the Premises, subject the Premises to use that would damage the Premises or obstruct or interfere with the rights of Landlord or other tenants or occupants of the Project, including conducting or giving notice of any auction, liquidation, or going out of business sale on the Premises, or using or allowing the Premises to be used for any unlawful purpose. Tenant shall cause any equipment or machinery to be installed in the Premises so as to reasonably prevent sounds or vibrations from the Premises from extending into Common Areas, or other space in the Project. Tenant shall not place any machinery or equipment weighing 500 pounds or more in or upon the Premises or transport or move such items through the Common Areas of the Project or in the Project elevators without the prior written consent of Landlord. Except as may be provided under the Work Letter, Tenant shall not, without the prior written consent of Landlord, use the Premises in any manner which will require ventilation, air exchange, heating, gas, steam, electricity or water beyond the existing capacity of the Project as proportionately allocated to the Premises based upon Tenant’s Share of Operating Expenses as usually furnished for the Permitted Use.

 

Tenant acknowledges that Landlord may, but shall not be obligated to, seek to obtain Leadership in Energy and Environmental Design (LEED), WELL Building Standard, or other similar “green” certification (“Green Standards”) with respect to the Project and/or the Premises, and Tenant agrees to reasonably cooperate with Landlord, and to provide such information and/or documentation as Landlord may reasonably request, in connection therewith (including, without limitation, with respect to utility and energy consumption). Tenant hereby acknowledges that Landlord’s costs or expenses incurred related to Green Standards shall be included as part of Operating Expenses.

 

8.             Holding Over. If, with Landlord’s express written consent, Tenant retains possession of the Premises after the termination of the Term, (i) unless otherwise agreed in such written consent, such possession shall be subject to immediate termination by Landlord at any time, (ii) all of the other terms and provisions of this Lease (including, without limitation, the adjustment of Base Rent pursuant to Section 4 hereof) shall remain in full force and effect (excluding any expansion or renewal option or other similar right or option) during such holdover period, (iii) Tenant shall continue to pay Base Rent in the amount payable upon the date of the expiration or earlier termination of this Lease or such other amount as Landlord may indicate, in Landlord’s sole and absolute discretion, in such written consent, and (iv) all other payments shall continue under the terms of this Lease. If Tenant remains in possession of the Premises after the expiration or earlier termination of the Term without the express written consent of Landlord, (A) Tenant shall become a tenant at sufferance upon the terms of this Lease, including the obligation to pay 100% of all Additional Rent due under this Lease, except that the monthly Base Rent shall be equal to 150% of the Base Rent in effect during the last 30 days of the Term, and (B) Tenant shall be responsible for all damages suffered by Landlord resulting from or occasioned by Tenant’s holding over, including consequential damages; provided that, unless Landlord gave written notice to Tenant at least 30 days before the expiration of the Term that a subsequent tenant would be leasing the Premises or any part thereof and that Landlord reasonably anticipates holding over is reasonably likely to impact Landlord’s delivery schedule to such new tenant, Tenant shall be responsible for consequential damages only once Tenant’s holding over exceeds 15 days. No holding over by Tenant, whether with or without consent of Landlord, shall operate to extend this Lease except as otherwise expressly provided, and this Section 8 shall not be construed as consent for Tenant to retain possession of the Premises. Acceptance by Landlord of Rent after the expiration of the Term or earlier termination of this Lease shall not result in a renewal or reinstatement of this Lease.

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9.             Taxes. Except as set forth below in this Section 9, Landlord shall pay, as part of Operating Expenses, all taxes, levies, fees, assessments and governmental charges of any kind, existing as of the Commencement Date or thereafter enacted (collectively referred to as “Taxes”), imposed by any federal, state, regional, municipal, local or other governmental authority or agency, including, without limitation, quasi-public agencies (collectively, “Governmental Authority”) during the Term, including, without limitation, all Taxes: (i) imposed on or measured by or based, in whole or in part, on rent payable to (or gross receipts received by) Landlord under this Lease and/or from the rental by Landlord of the Project or any portion thereof, or (ii) based on the square footage, assessed value or other measure or evaluation of any kind of the Premises or the Project, or (iii) assessed or imposed by or on the operation or maintenance of any portion of the Premises or the Project, including parking, or (iv) assessed or imposed by, or at the direction of, or resulting from Legal Requirements, or interpretations thereof, promulgated by any Governmental Authority, or (v) imposed as a license or other fee, charge, tax, or assessment on Landlord’s business or occupation of leasing space in the Project. Landlord may contest by appropriate legal proceedings the amount, validity, or application of any Taxes or liens securing Taxes. Taxes shall not include any net income taxes imposed on Landlord except to the extent such net income taxes are in substitution for or in addition to any Taxes payable hereunder in which case the same shall be deemed to be included within the definition of the term “Taxes.” If any such Tax is levied or assessed directly against Tenant, then Tenant shall be responsible for and shall pay the same at such times and in such manner as the taxing authority shall require. Tenant shall pay, prior to delinquency, any and all Taxes levied or assessed against any personal property or trade fixtures placed by Tenant in the Premises, whether levied or assessed against Landlord or Tenant. If any Taxes on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s property, or if the assessed valuation of the Project is increased by a value attributable to improvements in or alterations to the Premises, whether owned by Landlord or Tenant and whether or not affixed to the real property so as to become a part thereof, higher than the base valuation on which Landlord from time-to-time allocates Taxes to all tenants in the Project, Landlord shall have the right, but not the obligation, to pay such Taxes. Landlord’s determination of any excess assessed valuation shall be binding and conclusive, absent manifest error. The amount of any such payment by Landlord shall constitute Additional Rent due from Tenant to Landlord immediately upon demand. As of the date of this Lease, the Building is not a standalone tax parcel. Landlord shall allocate any Taxes applicable to a taxable lot among all buildings, including the Building, located on the assessors’ lot on which the Building is located in a fair and equitable manner as determined by Landlord.

 

10.          Parking. Subject to all applicable Legal Requirements, Force Majeure (as defined in Section 34 below), a Taking (as defined in Section 19 below) and the exercise by Landlord of its rights hereunder (including, without limitation Landlord’s rights set forth in Section 45(o)), Tenant shall have the right to park, at a rate of 2.0 cars per 1,000 rentable square feet of the Premises, in those areas of the Project designated by Landlord for non-reserved parking, subject to Landlord’s rules and regulations. Such parking shall be on a first-come-first-served, non-exclusive basis. Landlord shall not be responsible for enforcing Tenant’s parking rights against any third parties, including other tenants of the Project. Landlord reserves the right, but not the obligation, to dictate specific locations of the Project that Tenant is permitted to use for its parking rights under this Section 10. If, at any time during the Term, the Project is subject to a transportation demand management plan (“TDMP”) setting forth requirements related to parking at the Project, Tenant (at its sole cost and expense) shall comply with such TDMP. As of the date hereof, the Project is subject to that certain Transportation Demand Management Program dated June 2021 (as amended from time to time, the “Existing TDMP”). Tenant shall, at Tenant’s sole cost and expense, for as long as the Existing TDMP remains applicable to the Project, comply with the Existing TDMP as applicable to the Project, including without limitation: (i) offer a subsidized transportation benefit to all employees in accordance with the terms of the Existing TDMP; (ii) offer a subsidy to a bike share service to all employees in accordance with the terms of the Existing TDMP; (iii) implement a Commuter Choice Program; (iv) discourage single-occupant vehicle (“SOV”) use by its employees; (v) promote alternative modes of transportation and use of alternative work hours; (vi) at Landlord’s request, meet with Landlord and/or its representatives to discuss transportation programs and initiatives; (vii) participate in annual surveys, monitoring transportation programs and initiatives at the Project; (viii) cooperate with Landlord in connection with transportation programs and initiatives promulgated pursuant to the Existing TDMP; (ix) provide alternative work programs (such as telecommuting, flex-time and compressed work weeks) to its employees in order to reduce traffic impacts in Watertown during peak commuter hours; (x) offer an emergency ride home (“ERH”) through the Transportation Demand Management Coordinator and Watertown Transportation Management Association, or have its own ERH program, for all employees who commute by non-SOV mode at least 3 days a week; and (xi) otherwise cooperate with Landlord in encouraging employees to seek alternate modes of transportation.

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11.           Utilities, Services.

 

(a)           Utilities, Janitorial Services. Landlord shall provide, subject to the terms of this Section 11, (i) facilities for water, electricity, heat, light, sewer, and other utilities (including fire sprinklers to the extent the Project is plumbed for such services) (collectively, “Utilities”) and (ii) refuse and trash collection and janitorial services for the Common Areas and, at Landlord’s election, the Premises (collectively, “Janitorial Services”). Landlord shall pay, subject to Tenant’s reimbursement obligation or inclusion of such costs as Operating Expenses, for all Utilities used on the Premises, all maintenance charges for Utilities, and any storm sewer charges or other similar charges for Utilities imposed by any Governmental Authority or Utility provider, and any taxes, penalties, surcharges or similar charges thereon, as well as the cost for Janitorial Services. Landlord may cause, at Tenant’s expense, any Utilities to be separately metered or charged directly to Tenant by the provider. Tenant shall pay directly to the Utility provider, prior to delinquency, any separately metered Utilities and services which may be furnished to Tenant or the Premises during the Term. Landlord may cause, at Tenant’s expense, the Janitorial Services to be separately charged or charged directly to Tenant by the provider. Tenant shall pay directly to the Janitorial Services provider, prior to delinquency, any separately charged Janitorial Services. Tenant shall pay, as part of Operating Expenses, its share of all charges for jointly metered Utilities based upon consumption and all charges for Janitorial Services that are not separately charged, as reasonably determined by Landlord. No interruption or failure of Utilities or Janitorial Services, from any cause whatsoever other than Landlord’s willful misconduct, shall result in eviction or constructive eviction of Tenant, termination of this Lease or the abatement of Rent. Tenant agrees to limit use of water and sewer with respect to Common Areas to normal restroom use. To the extent such services are not provided by Landlord, Tenant shall be responsible for obtaining and paying for its own janitorial services for the Premises. Utilities shall be available to the Premises 24 hours per day, 7 days per week, except in the case of emergencies, as the result of Legal Requirements, the failure of any Utility provider to provide such Utilities, the performance by Landlord or any Utility provider of any installation, maintenance or repairs, or any other temporary interruptions.

 

(b)           Service Interruptions. Notwithstanding anything to the contrary set forth herein, if (i) a stoppage of an Essential Service (as defined below) to the Premises shall occur and such stoppage is due solely to the gross negligence or willful misconduct of Landlord and not due in any part to any act or omission on the part of Tenant or any Tenant Party or any matter beyond Landlord’s reasonable control (any such stoppage of an Essential Service being hereinafter referred to as a “Service Interruption”), and (ii) such Service Interruption continues for more than 5 consecutive business days after Landlord shall have received written notice thereof from Tenant, and (iii) as a result of such Service Interruption, the conduct of Tenant’s normal operations in the Premises are materially and adversely affected, then, to the extent that such Service Interruption is covered by rental interruption insurance carried by Landlord pursuant to this Lease, there shall be an abatement of one day’s Base Rent for each day during which such Service Interruption continues after such 5 business day period; provided, however, that if any part of the Premises is reasonably useable for Tenant’s normal business operations or if Tenant conducts all or any part of its operations in any portion of the Premises notwithstanding such Service Interruption, then the amount of each daily abatement of Base Rent shall only be proportionate to the nature and extent of the interruption of Tenant’s normal operations or ability to use the Premises. The rights granted to Tenant under this paragraph shall be Tenant’s sole and exclusive remedy resulting from a failure of Landlord to provide services, and Landlord shall not otherwise be liable for any loss or damage suffered or sustained by Tenant resulting from any failure or cessation of services. For purposes hereof, the term “Essential Services” shall mean the following services: electricity, water, and sewer, but in each case only to the extent that Landlord has an obligation to provide same to Tenant under this Lease. The rental abatement set forth in this paragraph shall only apply as long as the original Tenant is the tenant occupying the Premises under this Lease and shall not apply to any assignee or sublessee.

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(c)           Intentionally Omitted.

 

(d)           Usage Data. Tenant agrees to provide Landlord with access to Tenant’s water and/or energy usage data on a monthly basis, either by providing Tenant’s applicable utility login credentials to Landlord’s Measurabl online portal, or by another delivery method reasonably agreed to by Landlord and Tenant. The costs and expenses incurred by Landlord in connection with receiving and analyzing such water and/or energy usage data (including, without limitation, as may be required pursuant to applicable Legal Requirements) shall be included as part of Operating Expenses.

 

12.          Alterations and Tenant’s Property. Any alterations, additions, or improvements made to the Premises by or on behalf of Tenant, including additional locks or bolts of any kind or nature upon any doors or windows in the Premises, but excluding installation, removal or realignment of furniture systems (other than removal of furniture systems owned or paid for by Landlord) not involving any modifications to the structure or connections (other than by ordinary plugs or jacks) to Building Systems (as defined in Section 13) (“Alterations”) shall be subject to Landlord’s prior written consent, which may be given or withheld in Landlord’s sole discretion if any such Alteration could reasonably be expected to affect the Building structure or Building Systems and shall not be otherwise unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, Tenant may hang in the Premises whiteboards, pictures and signs that are not visible from outside of the Premises, that do not damage the Premises, other than typical nail holes, without Landlord’s consent, provided Tenant shall, at Tenant’s sole cost and expense, patch any nail holes and repair any damage to the Premises caused thereby prior to the end of the Term. If Landlord approves any Alterations, Landlord may impose such conditions on Tenant in connection with the commencement, performance and completion of such Alterations as Landlord may deem appropriate in Landlord’s sole discretion. Any request for approval shall be in writing, delivered not less than 15 business days in advance of any proposed construction, and accompanied by plans, specifications, bid proposals, work contracts and such other information concerning the nature and cost of the alterations as may be reasonably requested by Landlord, including the identities and mailing addresses of all contractors, subcontractors, or others performing work or supplying materials. Landlord’s right to review plans and specifications and to monitor construction shall be solely for its own benefit, and Landlord shall have no duty to ensure that such plans and specifications or construction comply with applicable Legal Requirements. Tenant shall cause, at its sole cost and expense, all Alterations to comply with insurance requirements and with applicable Legal Requirements and shall implement at its sole cost and expense any alteration or modification required by applicable Legal Requirements as a result of any Alterations. Tenant shall pay to Landlord, as Additional Rent, on demand, an amount equal to (a) 5% of all charges incurred by Tenant or its contractors or agents in connection with any Alteration to cover Landlord’s overhead and expenses for plan review, coordination, scheduling and supervision, and (b) the reasonable out-of-pocket costs incurred by Landlord with respect to each Alteration. Before Tenant begins any Alteration, Landlord may post on and about the Premises notices of non-responsibility pursuant to applicable law. Tenant shall reimburse Landlord for, and indemnify and hold Landlord harmless from, any expense incurred by Landlord by reason of faulty work done by Tenant or its contractors, delays caused by such work, or inadequate cleanup.

 

Tenant shall furnish security or make other arrangements satisfactory to Landlord to assure payment for the completion of all Alterations work free and clear of liens, and shall provide (and cause each contractor or subcontractor to provide) certificates of insurance for workers’ compensation and other coverage, including commercial general liability insurance, in amounts and from an insurance company satisfactory to Landlord to protect Landlord against liability for personal injury or property damage during construction and shall include Landlord as an additional insured thereunder. Upon completion of any Alterations, Tenant shall deliver to Landlord: (i) sworn statements setting forth the names of all contractors and subcontractors who did the work and final lien waivers from all such contractors and subcontractors; and (ii) “as built” plans for any such Alteration.

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Except for Removable Installations (as hereinafter defined), all Installations (as hereinafter defined) shall be and shall remain the property of Landlord during the Term and following the expiration or earlier termination of the Term, shall not be removed by Tenant at any time during the Term, and shall remain upon and be surrendered with the Premises as a part thereof. Notwithstanding the foregoing, if concurrently with Tenant’s request for Landlord’s consent to an Installation Tenant asks Landlord to notify Tenant if removal of such Installation is required upon the expiration or earlier termination of the Term, then Landlord shall, at the time of its approval of any such Installation is requested, notify Tenant whether Landlord requires that Tenant remove such Installation upon the expiration or earlier termination of the Term, in which event Tenant shall remove such Installation in accordance with the immediately succeeding sentence. Upon the expiration or earlier termination of the Term, Tenant shall remove (i) all wires, cables or similar equipment which Tenant has installed in the Premises or in the risers or plenums of the Building, (ii) any Installations for which Landlord has given Tenant notice of removal in accordance with the immediately preceding sentence, and (iii) all of Tenant’s Property (as hereinafter defined), and Tenant shall restore and repair any damage caused by or occasioned as a result of such removal, including, without limitation, capping off all such connections behind the walls of the Premises and repairing any holes. During any restoration period beyond the expiration or earlier termination of the Term, Tenant shall pay Rent to Landlord as provided herein as if said space were otherwise occupied by Tenant. If Landlord is requested by Tenant or any lender, lessor or other person or entity claiming an interest in any of Tenant's Property to waive any lien Landlord may have against any of Tenant's Property, and Landlord consents to such waiver, then Landlord shall be entitled to be paid as administrative rent a fee of $1,000 per occurrence for its time and effort in preparing and negotiating such a waiver of lien.

 

For purposes of this Lease, (x) “Removable Installations” means any items listed on Exhibit F attached hereto and any items agreed by Landlord in writing to be included on Exhibit F in the future, (y) “Tenant’s Property” means Removable Installations and, other than Installations, any personal property or equipment of Tenant that may be removed without material damage to the Premises, and (z) “Installations” means all Alterations, all fixtures, and all partitions, hardware, built-in machinery, built-in casework and cabinets and other similar additions, equipment, property and improvements built into the Premises so as to become an integral part of the Premises, including, without limitation, fume hoods which penetrate the roof or plenum area, built-in cold rooms, built-in warm rooms, walk-in cold rooms, walk-in warm rooms, deionized water systems, glass washing equipment, autoclaves, chillers, built-in plumbing, electrical and mechanical equipment and systems, and any power generator and transfer switch.

 

13.           Landlord’s Repairs. Landlord shall, at Landlord's sole expense (and not as an Operating Expense), be responsible for capital repairs and replacements of the roof (not including the roof membrane), exterior walls and foundation of the Building (“Structural Items”), unless the need for such repairs or replacements is caused by Tenant or any Tenant Parties, in which case Tenant shall bear the full cost to repair or replace such Structural Items. Landlord shall (with all related costs included as an Operating Expense) be responsible for the routine maintenance and repair of such Structural Items. Landlord shall (with all related costs included as an Operating Expense) maintain, repair and replace the roof membrane and all of the exterior, parking and other Common Areas of the Project, including HVAC, plumbing, fire sprinklers and all other building systems serving the Premises and other portions of the Project (“Building Systems”) but excluding those exclusively serving the Premises, in good repair, reasonable wear and tear and uninsured losses and damages caused by Tenant, or by any of Tenant, or by any of Tenant’s assignees, sublessees, licensees, agents, servants, employees, invitees and vendors, contractors (or any of Tenant’s assignees, sublessees and/or licensees respective agents, servants, employees, invitees, vendors, and contractors) (collectively, “Tenant Parties”) excluded. Losses and damages caused by Tenant or any Tenant Party shall be repaired by Landlord, to the extent not covered by insurance, at Tenant’s sole cost and expense. Landlord reserves the right to stop Building Systems services when necessary (i) by reason of accident or emergency, or (ii) for planned repairs, alterations or improvements, which are, in the judgment of Landlord, desirable or necessary to be made, until said repairs, alterations or improvements shall have been completed. Landlord shall have no responsibility or liability for failure to supply Building Systems services during any such period of interruption; provided, however, that Landlord shall, except in case of emergency, make a commercially reasonable effort to give Tenant 24 hours advance notice of any planned stoppage of Building Systems services for routine maintenance, repairs, alterations or improvements. Tenant shall promptly give Landlord written notice of any repair required by Landlord pursuant to this Section 13, after which Landlord shall make a commercially reasonable effort to effect such repair. Landlord shall not be liable for any failure to make any repairs or to perform any maintenance unless such failure shall persist for an unreasonable time after Tenant’s written notice of the need for such repairs or maintenance. Tenant waives its rights under any state or local law to terminate this Lease or to make such repairs at Landlord’s expense and agrees that the parties’ respective rights with respect to such matters shall be solely as set forth herein. Repairs required as the result of fire, earthquake, flood, hurricane, sinkhole, tornado, vandalism, war, or similar cause of damage or destruction shall be controlled by Section 18.

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14.          Tenant’s Repairs. Subject to Section 13 hereof, Tenant, at its sole expense, shall repair, replace and maintain in good condition all portions of the Premises, building systems exclusively serving the Premises, and systems installed by Tenant, including, without limitation, entries, doors, ceilings, interior windows, interior walls, and the interior side of demising walls. Such repair and replacement may include capital expenditures and repairs whose benefit may extend beyond the Term. Should Tenant fail to make any such repair or replacement or fail to maintain the Premises, Landlord shall give Tenant notice of such failure. If Tenant fails to commence cure of such failure within 10 days of Landlord’s notice, and thereafter diligently prosecute such cure to completion (not to exceed 45 days), Landlord may perform such work and shall be reimbursed by Tenant within 10 days after demand therefor; provided, however, that if such failure by Tenant creates or could create an emergency, Landlord may immediately commence cure of such failure and shall thereafter be entitled to recover the costs of such cure from Tenant. Subject to Sections 17 and 18, Tenant shall bear the full uninsured cost of any repair or replacement to any part of the Project that results from damage caused by Tenant or any Tenant Party and any repair that benefits only the Premises.

 

15.          Mechanic’s Liens. Tenant shall discharge, by bond or otherwise, any mechanic’s lien filed against the Premises or against the Project for work claimed to have been done for, or materials claimed to have been furnished to, Tenant within 10 days after the filing thereof, at Tenant’s sole cost, and shall otherwise keep the Premises and the Project free from any liens arising out of work performed, materials furnished or obligations incurred by Tenant. Should Tenant fail to discharge any lien described herein, Landlord shall have the right, but not the obligation, to pay such claim or post a bond or otherwise provide security to eliminate the lien as a claim against title to the Project and the cost thereof shall be immediately due from Tenant as Additional Rent. If Tenant shall lease or finance the acquisition of office equipment, furnishings, or other personal property of a removable nature utilized by Tenant in the operation of Tenant’s business, Tenant warrants that any Uniform Commercial Code Financing Statement filed as a matter of public record by any lessor or creditor of Tenant will upon its face or by exhibit thereto indicate that such Financing Statement is applicable only to removable personal property of Tenant located within the Premises. In no event shall the address of the Project be furnished on the statement without qualifying language as to applicability of the lien only to removable personal property located within the Premises.

 

16.          Indemnification. Tenant hereby indemnifies and agrees to defend, save and hold Landlord, its officers, directors, employees, managers, agents, sub-agents, constituent entities, affiliates and lease signatory(ies) (collectively, “Landlord Indemnified Parties”) harmless from and against any and all actions (including, without limitation, administrative or judicial proceedings, and orders or judgments arising out of or resulting therefrom), costs, claims, damages (including, without limitation, punitive damages and damages based upon diminution in value of the Premises or the Project, or the loss of, or restriction on, use of the Premises or any portion of the Project), expenses (including, without limitation, attorneys’, consultants’ and experts’ fees, court costs and amounts paid in settlement of any claims or actions), fines, forfeitures or other civil, administrative or criminal penalties, injunctive or other relief (whether or not based upon personal injury, death to persons or property damage occurring within or about the Premises), liabilities or losses (collectively, “Claims”), arising directly or indirectly out of use or occupancy of the Premises or a breach or default by Tenant in the performance of any of its obligations hereunder, except to the extent caused by the willful misconduct or negligence of Landlord Indemnified Parties.  Landlord Indemnified Parties shall not be liable to Tenant for, and Tenant assumes all risk of damage to, personal property (including, without limitation, loss of records kept within the Premises).  Tenant further waives any and all Claims for injury to Tenant's business or loss of income relating to any such damage or destruction of personal property (including, without limitation, any loss of records).  Landlord Indemnified Parties shall not be liable for any damages arising from any act, omission or neglect of any tenant in the Project or of any other third party.

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17.          Insurance. Landlord shall maintain all risk property and, if applicable, sprinkler damage insurance covering the full replacement cost of the Project. Landlord shall further procure and maintain commercial general liability insurance with a single loss limit of not less than $2,000,000 for bodily injury and property damage with respect to the Project. Landlord may, but is not obligated to, maintain such other insurance and additional coverages as it may deem necessary, including, but not limited to, flood, environmental hazard and earthquake, loss or failure of building equipment, errors and omissions, rental loss during the period of repair or rebuilding, workers’ compensation insurance and fidelity bonds for employees employed to perform services and insurance for any improvements installed by Tenant or which are in addition to the standard improvements customarily furnished by Landlord without regard to whether or not such are made a part of the Project. All such insurance shall be included as part of the Operating Expenses. The Project may be included in a blanket policy (in which case the cost of such insurance allocable to the Project will be determined by Landlord based upon the insurer’s cost calculations). Tenant shall also reimburse Landlord for any increased premiums or additional insurance which Landlord reasonably deems necessary as a result of Tenant’s use of the Premises.

 

Tenant, at its sole cost and expense, shall maintain during the Term: all risk property insurance with business interruption and extra expense coverage, covering the full replacement cost of all property and improvements installed or placed in the Premises by Tenant or on behalf of Tenant at Tenant’s expense; workers’ compensation insurance with no less than the minimum limits required by law; employer’s liability insurance with employers liability limits of $1,000,000 bodily injury by accident – each accident, $1,000,000 bodily injury by disease – policy limit, and $1,000,000 bodily injury by disease – each employee; and commercial general liability insurance, with a minimum limit of not less than $2,000,000 per occurrence for bodily injury and property damage with respect to the Premises. The commercial general liability insurance maintained by Tenant shall name Alexandria Real Estate Equities, Inc., and Landlord, its officers, directors, employees, managers, agents, sub-agents, constituent entities, affiliates and lease signatory(ies) (collectively, “Landlord Insured Parties”), as additional insureds; insure on an occurrence and not a claims-made basis; be issued by insurance companies which have a rating of not less than policyholder rating of A and financial category rating of at least Class X in “Best’s Insurance Guide”; shall not be cancelable for nonpayment of premium unless 30 days prior written notice shall have been given to Landlord from the insurer (10 days prior notice for nonpayment of premium); not contain a hostile fire exclusion; contain a contractual liability endorsement; and provide primary coverage to Landlord Insured Parties (any policy issued to Landlord Insured Parties providing duplicate or similar coverage shall be deemed excess over Tenant’s policies, regardless of limits). Copies of such policies (if requested by Landlord) or certificates of insurance showing the limits of coverage required hereunder and showing Landlord as an additional insured, along with reasonable evidence of the payment of premiums for the applicable period, shall be delivered to Landlord by Tenant prior to (i) the earlier to occur of (x) the Commencement Date, or (y) the date that Tenant accesses the Premises under this Lease, and (ii) each renewal of said insurance. Tenant’s policy may be a “blanket policy” with an aggregate per location endorsement which specifically provides that the amount of insurance shall not be prejudiced by other losses covered by the policy. Tenant shall, at least 5 days prior to the expiration of such policies, furnish Landlord with renewal certificates.

 

In each instance where insurance is to name Landlord as an additional insured, Tenant shall upon written request of Landlord also designate and furnish certificates so evidencing Landlord as additional insured to: (i) any lender of Landlord holding a security interest in the Project or any portion thereof, (ii) the landlord under any lease wherein Landlord is tenant of the real property on which the Project is located, if the interest of Landlord is or shall become that of a tenant under a ground or other underlying lease rather than that of a fee owner, and/or (iii) any management company retained by Landlord to manage the Project.

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The property insurance obtained by Landlord and Tenant shall include a waiver of subrogation by the insurers and all rights based upon an assignment from its insured, against Landlord or Tenant, and their respective officers, directors, employees, managers, agents, invitees and contractors (“Related Parties”), in connection with any loss or damage thereby insured against. Neither party nor its respective Related Parties shall be liable to the other for loss or damage caused by any risk insured against under property insurance required to be maintained hereunder, and each party waives any claims against the other party, and its respective Related Parties, for such loss or damage. The failure of a party to insure its property shall not void this waiver. Landlord and its respective Related Parties shall not be liable for, and Tenant hereby waives all claims against such parties for, business interruption and losses occasioned thereby sustained by Tenant or any person claiming through Tenant resulting from any accident or occurrence in or upon the Premises or the Project from any cause whatsoever. If the foregoing waivers shall contravene any law with respect to exculpatory agreements, the liability of Landlord or Tenant shall be deemed not released but shall be secondary to the other’s insurer.

 

Landlord may require insurance policy limits to be raised to conform with requirements of Landlord’s lender and/or to bring coverage limits to levels then being generally required of new tenants within the Project.

 

18.          Restoration. If, at any time during the Term, the Project or the Premises are damaged or destroyed by a fire or other insured casualty, Landlord shall notify Tenant within 60 days after discovery of such damage (the “Restoration Notice”) as to the amount of time Landlord reasonably estimates it will take to restore the Project or the Premises, as applicable (the “Restoration Period”). If the Restoration Period is estimated to exceed 9 months (the “Maximum Restoration Period”), Landlord may, in such notice, elect to terminate this Lease as of the date that is 75 days after the date of discovery of such damage or destruction, or if the damage will take more than three (3) months to restore and it occurs in the last nine (9) months of the Term, then either Landlord or Tenant may terminate this Lease by written notice to the other party given within fifteen (15) days following Landlord’s Restoration Notice. If Landlord estimates the Restoration Period will exceed one (1) year, then Tenant may terminate this Lease by written notice to Landlord given within fifteen (15) days following Landlord’s Restoration Notice. Unless Landlord so elects to terminate this Lease, Landlord shall, subject to receipt of sufficient insurance proceeds (with any deductible to be treated as a current Operating Expense), promptly restore the Premises (excluding the improvements installed by Tenant or by Landlord and paid for by Tenant), subject to delays arising from the collection of insurance proceeds, from Force Majeure events or as needed to obtain any license, clearance or other authorization of any kind required to enter into and restore the Premises issued by any Governmental Authority having jurisdiction over the use, storage, handling, treatment, generation, release, disposal, removal or remediation of Hazardous Materials (as defined in Section 30) in, on or about the Premises (collectively referred to herein as “Hazardous Materials Clearances”); provided, however, that if repair or restoration of the Premises is not substantially complete as of the end of the Maximum Restoration Period or, if longer, the Restoration Period, Landlord may, in its sole and absolute discretion, elect not to proceed with such repair and restoration, in which event Landlord shall be relieved of its obligation to make such repairs or restoration and this Lease shall terminate as of the date that is 75 days after the later of: (i) discovery of such damage or destruction, or (ii) the date all required Hazardous Materials Clearances are obtained, but Landlord shall retain any Rent paid and the right to any Rent payable by Tenant prior to such election by Landlord or Tenant.

 

Tenant, at its expense, shall promptly perform, subject to delays arising from the collection of insurance proceeds, from Force Majeure events or to obtain Hazardous Material Clearances, all repairs or restoration not required to be done by Landlord and shall promptly re-enter the Premises and commence doing business in accordance with this Lease. Notwithstanding the foregoing, Landlord may terminate this Lease if the Premises are damaged during the last 18 months of the Term and Landlord reasonably estimates that it will take more than 4 months to repair such damage, or if insurance proceeds are not available for such restoration. Rent shall be abated from the date all required Hazardous Material Clearances are obtained until the Premises are repaired and restored, in the proportion which the area of the Premises, if any, which is not usable by Tenant bears to the total area of the Premises, unless Landlord provides Tenant with other space during the period of repair that is suitable for the temporary conduct of Tenant’s business. Such abatement shall be the sole remedy of Tenant, and except as provided in this Section 18, Tenant waives any right to terminate this Lease by reason of damage or casualty loss.

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The provisions of this Lease, including this Section 18, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, or any other portion of the Project, and any statute or regulation which is now or may hereafter be in effect shall have no application to this Lease or any damage or destruction to all or any part of the Premises or any other portion of the Project, the parties hereto expressly agreeing that this Section 18 sets forth their entire understanding and agreement with respect to such matters.

 

19.           Condemnation. If the whole or any material part of the Premises or the Project is taken for any public or quasi-public use under governmental law, ordinance, or regulation, or by right of eminent domain, or by private purchase in lieu thereof (a “Taking” or “Taken”), and the Taking would (a) in Landlord’s reasonable judgment, materially interfere with or impair Landlord’s ownership or operation of the Project or the Building or (b) either prevent or materially interfere with Tenant’s use of the Premises, then upon written notice by Landlord in the case of (a) or (b), or by Tenant in the case of (b), to the other, this Lease shall terminate and Rent shall be apportioned as of said date. If part of the Premises shall be Taken, and this Lease is not terminated as provided above, Landlord shall promptly restore the Premises and the Project as nearly as is commercially reasonable under the circumstances to their condition prior to such partial Taking and the rentable square footage of the Building, the rentable square footage of the Premises, Tenant’s Share of Operating Expenses and the Rent payable hereunder during the unexpired Term shall be reduced to such extent as Landlord determines may be fair and reasonable under the circumstances. Upon any such Taking, Landlord shall be entitled to receive the entire price or award from any such Taking without any payment to Tenant, and Tenant hereby assigns to Landlord Tenant’s interest, if any, in such award. Tenant shall have the right, to the extent that same shall not diminish Landlord’s award, to make a separate claim against the condemning authority (but not Landlord) for such compensation as may be separately awarded or recoverable by Tenant for moving expenses and damage to Tenant’s trade fixtures, if a separate award for such items is made to Tenant. Tenant hereby waives any and all rights it might otherwise have pursuant to any provision of state law to terminate this Lease upon a partial Taking of the Premises or the Project.

 

20.           Events of Default. Each of the following events shall be a default (“Default”) by Tenant under this Lease:

 

(a)           Payment Defaults. Tenant shall fail to pay any installment of Rent or any other payment hereunder when due; provided that, for the first instance within a 12-month period of Tenant’s failure to pay any amounts due hereunder when due, Tenant shall be in Default only if such failure continues for five (5) days following notice from Landlord to Tenant that such amount(s) are past due. All notices under this clause (a) shall be in lieu of, and not in addition to, or shall be deemed to be, any notice required by law.

 

(b)           Insurance. Any insurance required to be maintained by Tenant pursuant to this Lease shall be canceled or terminated or shall expire or shall be reduced or materially changed, or Landlord shall receive a notice of nonrenewal of any such insurance and Tenant shall fail to obtain replacement insurance at least 20 days before the expiration of the current coverage.

 

(c)           [Intentionally Omitted].

 

(d)           Improper Transfer. Tenant shall assign, sublease or otherwise transfer or attempt to transfer all or any portion of Tenant’s interest in this Lease or the Premises except as expressly permitted herein, or Tenant’s interest in this Lease shall be attached, executed upon, or otherwise judicially seized and such action is not released within 90 days of the action.

 

(e)           Liens. Tenant shall fail to discharge or otherwise obtain the release of any lien placed upon the Premises in violation of this Lease within 10 days after any such lien is filed against the Premises.

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(f)            Insolvency Events. Tenant or any guarantor or surety of Tenant’s obligations hereunder shall: (A) make a general assignment for the benefit of creditors; (B) commence any case, proceeding or other action seeking to have an order for relief entered on its behalf as a debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or of any substantial part of its property (collectively a “Proceeding for Relief”); (C) become the subject of any Proceeding for Relief which is not dismissed within 90 days of its filing or entry; or (D) die or suffer a legal disability (if Tenant, guarantor, or surety is an individual) or be dissolved or otherwise fail to maintain its legal existence (if Tenant, guarantor or surety is a corporation, partnership or other entity).

 

(g)           Estoppel Certificate or Subordination Agreement. Tenant fails to execute any document required from Tenant under Sections 23 or 27 within the time periods set forth in such applicable Section.

 

(h)           Other Defaults. Tenant shall fail to comply with any provision of this Lease other than those specifically referred to in this Section 20, and, except as otherwise expressly provided herein, such failure shall continue for a period of 10 business days after written notice thereof from Landlord to Tenant.

 

Any notice given under Section 20(h) hereof shall: (i) specify the alleged default, (ii) demand that Tenant cure such default, (iii) be in lieu of, and not in addition to, or shall be deemed to be, any notice required under any provision of applicable law, and (iv) not be deemed a forfeiture or a termination of this Lease unless Landlord elects otherwise in such notice; provided that if the nature of Tenant’s default pursuant to Section 20(h) is such that it cannot be cured by the payment of money and reasonably requires more than 10 days to cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said initial 10 day period and thereafter diligently prosecutes the same to completion; provided, however, that such cure shall be completed no later than 30 days from the date of Landlord’s notice.

 

21.           Landlord’s Remedies.

 

(a)           Performance; Payment; Interest. If default by Tenant shall occur in the keeping, observance or performance of any covenant, agreement, term, provision or condition herein contained, Landlord, without thereby waiving such default, may perform the same for the account and at the expense of Tenant (a) immediately or at any time thereafter and with only such notice, if any, as may be practicable under the circumstances in the case of an emergency or in case such default will result in a violation of any Legal Requirement or insurance requirements, or in the imposition of any lien against all or any portion of the Premises or the Project not discharged, released or bonded over to Landlord’s satisfaction by Tenant within the time period required pursuant to Section 15 of this Lease, and (b) in any other case if such default continues after any applicable notice and cure period provided in Section 20. All reasonable costs and expenses incurred by Landlord in connection with any such performance by it for the account of Tenant and also all reasonable costs and expenses, including attorneys’ fees and disbursements incurred by Landlord in any action or proceeding (including any summary dispossess proceeding) brought by Landlord to enforce any obligation of Tenant under this Lease and/or right of Landlord in or to the Premises, together with interest thereon, from the date such sums were paid or incurred, at the annual rate equal to 12% per annum or the highest rate permitted by law (the “Default Rate”), whichever is less, shall be paid by Tenant to Landlord on demand as Additional Rent. Nothing herein shall be construed to create or impose a duty on Landlord to mitigate any damages resulting from Tenant’s default hereunder.

 

(b)           Late Payment Rent. Late payment by Tenant to Landlord of Rent and other sums due will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult and impracticable to ascertain. Such costs include, but are not limited to, processing and accounting charges and late charges which may be imposed on Landlord under any Mortgage covering the Premises. Therefore, if any installment of Rent due from Tenant is not received by Landlord within 5 days after the date such payment is due, Tenant shall pay to Landlord an additional sum of 6% of the overdue Rent as a late charge. The parties agree that this late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. In addition to the late charge, Rent not paid when due shall bear interest at the Default Rate from the 5th day after the date due until paid.

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(c)           Additional Remedies. Upon the occurrence of a Default, Landlord, at its option, without further notice or demand to Tenant, shall have in addition to all other rights and remedies provided in this Lease, at law or in equity, the option to pursue any one or more of the following remedies, each and all of which shall be cumulative and nonexclusive, without any notice or demand whatsoever (except as otherwise expressly provided in Section 21(c)(v) with respect to Landlord’s Lump Sum Election). No cure in whole or in part of such Default by Tenant after Landlord has taken any action beyond giving Tenant notice of such Default to pursue any remedy provided for herein (including retaining counsel to file an action or otherwise pursue any remedies) shall in any way affect Landlord’s right to pursue such remedy or any other remedy provided Landlord herein or under law or in equity, unless Landlord, in its sole discretion, elects to waive such Default.

 

(i)             This Lease and the Term and estate hereby granted are subject to the limitation that whenever a Default shall have happened and be continuing, Landlord shall have the right, at its election, then or thereafter while any such Default shall continue and notwithstanding the fact that Landlord may have some other remedy hereunder or at law or in equity, to give Tenant written notice of Landlord’s intention to terminate this Lease on a date specified in such notice, which date shall be not less than 5 days after the giving of such notice, and upon the date so specified, this Lease and the estate hereby granted shall expire and terminate with the same force and effect as if the date specified in such notice were the date hereinbefore fixed for the expiration of this Lease, and all rights of Tenant hereunder shall expire and terminate, and Tenant shall be liable as hereinafter in this Section 21(c) provided. If any such notice is given, Landlord shall have, on such date so specified, the right of re-entry and possession of the Premises and the right to remove all persons and property therefrom and to store such property in a warehouse or elsewhere at the risk and expense, and for the account, of Tenant. Should Landlord elect to re-enter as herein provided or should Landlord take possession pursuant to legal proceedings or pursuant to any notice provided for by law, Landlord may, subject to Section 21(c)(ii) from time to time re-let the Premises or any part thereof for such term or terms and at such rental or rentals and upon such terms and conditions as Landlord may deem advisable, with the right to make commercially reasonable alterations in and repairs to the Premises.

 

(ii)            Landlord shall be deemed to have satisfied any obligation to mitigate its damages by hiring an experienced commercial real estate broker to market the Premises and directing such broker to advertise and show the Premises to prospective tenants.

 

(iii)           In the event of any termination of this Lease as in this Section 21 provided or as required or permitted by law or in equity, Tenant shall forthwith quit and surrender the Premises to Landlord, and Landlord may, without further notice, enter upon, re-enter, possess and repossess the same by summary proceedings, ejectment or otherwise, and again have, repossess and enjoy the same free of any rights of Tenant, and in any such event Tenant and no person claiming through or under Tenant by virtue of any law or an order of any court shall be entitled to possession or to remain in possession of the Premises.

 

(iv)          If this Lease is terminated or if Landlord shall re-enter the Premises as aforesaid, or in the event of the termination of this Lease, or of re-entry, by or under any proceeding or action or any provision of law by reason of a Default by Tenant, Tenant covenants and agrees forthwith to pay and be liable for, on the days originally fixed in this Lease for the payment thereof, amounts equal to the installments of Base Rent and all Additional Rent as they would, under the terms of this Lease become due if this Lease had not been terminated or if Landlord had not entered or re-entered, as aforesaid, and whether the Premises be relet or remain vacant, in whole or in part, or for a period less than the remainder of the Term, or for the whole thereof, but in the event that the Premises be relet by Landlord, Tenant shall be entitled to a credit in the net amount of rent and other charges received by Landlord in reletting, after deduction of all of Landlord’s expenses incurred in reletting the Premises (including, without limitation, tenant improvement, demising and remodeling costs, brokerage fees and the like), and in collecting the rent in connection therewith, in the following manner: Amounts received by Landlord after reletting, if any, shall first be applied against such Landlord’s expenses, until the same are recovered, and until such recovery, Tenant shall pay, as of each day when a payment would fall due under this Lease, the amount which Tenant is obligated to pay under the terms of this Lease (Tenant’s liability prior to any such reletting and such recovery by Landlord no in any way to be diminished as a result of the fact that such reletting might be for a rent higher than the rent provided for in this Lease); when and if such expenses have been completely recovered by Landlord, the amounts received from reletting by Landlord as have not previously been applied shall be credited against Tenant’s obligations as of each day when a payment would fall due under this Lease, and only the net amount thereof shall be payable by Tenant. Further, Tenant shall not be entitled to any credit of any kind for any period after the date when the Term of this Lease is scheduled to expire according to its terms.

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Actions, proceedings or suits for the recovery of damages, whether liquidated or other damages, under this Lease, or any installments thereof, may be brought by Landlord from time to time at its election, and nothing contained herein shall be deemed to require Landlord to postpone suit until the date when the Term of this Lease would have expired if it had not been terminated hereunder.

 

(v)           In addition, Landlord, at its election, notwithstanding any other provision of this Lease, by written notice to Tenant (the “Lump Sum Election”), shall be entitled to recover from Tenant, as and for liquidated damages, at any time following any termination of this Lease after the occurrence of a Default, a lump sum payment representing, at the time of Landlord’s written notice of its Lump Sum Election, the sum of:

 

(A)          the then present value (calculated in accordance with accepted financial practice using as the discount rate the yield to maturity on United States Treasury Notes as set forth below) of the amount of unpaid Base Rent and Additional Rent that would have been payable pursuant to this Lease for the remainder of the Term following Landlord’s Lump Sum Election if this Lease had not been terminated, and

 

(B)           all other damages and expenses (including attorneys’ fees and expenses), if any, which Landlord shall have sustained by reason of the breach of any provision of this Lease; less

 

(C)           the net rental revenue that Landlord may expect to obtain for the Premises for the balance of the Term, calculated based on the then present value (calculated in accordance with accepted financial practice using as the discount rate the yield to maturity on United States Treasury Notes as set forth below) of the aggregate net fair market rent plus additional charges payable for the Premises (if less than the then present value of Base Rent and Additional Rent that would have been payable pursuant to this Lease) for the remainder of the Term following Landlord’s Lump Sum Election, calculated as of the date of Landlord’s Lump Sum Election, and taking into account reasonable estimates of the length of time until the space will be leased and rent will commence to be paid, and future costs to relet any then vacant portions of the Premises (except to the extent that Tenant has actually paid such costs pursuant to this Section 21).

 

Landlord’s recovery under its Lump Sum Election shall be in addition to Tenant’s obligations to pay Base Rent and Additional Rent due and costs incurred prior to the date of Landlord’s Lump Sum Election, and in lieu of any Base Rent and Additional Rent which would otherwise have been due under this Section from and after the date of Landlord’s Lump Sum Election. The yield to maturity on United States Treasury Notes having a maturity date that is nearest the date that would have been the last day of the Term of this Lease, as reported in The Wall Street Journal or a comparable publication if it ceases to publish such yields, shall be used in calculating present values for purposes of Landlord’s Lump Sum Election. For the purposes of this Section, if Landlord makes the Lump Sum Election to recover liquidated damages in accordance with this Section, the total Additional Rent shall be computed based upon Landlord’s reasonable estimate of Tenant’s Share of Operating Expenses and other Additional Rent for each 12-month period in what would have been the remainder of the Term of this Lease and any part thereof at the end of such remainder of the Term, but in no event less than the amounts therefor payable for the twelve (12) calendar months (or if less than twelve (12) calendar months have elapsed since the date hereof, the partial year increased to be on an annualized basis) immediately preceding the date of Landlord’s Lump Sum Election. Amounts of Tenant’s Share of Operating Expenses and any other Additional Rent for any partial year at the beginning of the Term, for the month in which the Lump Sum Election is made, or at the end of what would have been the remainder of the Term shall be prorated.

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(vi)          Nothing herein contained shall limit or prejudice the right of Landlord, in any bankruptcy or insolvency proceeding, to prove for and obtain as liquidated damages by reason of such termination an amount equal to the maximum allowed by any bankruptcy or insolvency proceedings, or to prove for and obtain as liquidated damages by reason of such termination, an amount equal to the maximum allowed by any statute or rule of law, whether such amount shall be greater or less than the excess referred to above.

 

(vii)         Nothing in this Section 21 shall be deemed to affect the right of either party to indemnifications pursuant to this Lease, which shall be in addition to the remedies set forth in this Section 21.

 

(viii)        If Landlord terminates this Lease upon the occurrence of a Default, Tenant will quit and surrender the Premises to Landlord or its agents, and Landlord may, without further notice, enter upon, re-enter and repossess the Premises by summary proceedings, ejectment or otherwise. The words “enter”, “re-enter”, and “re-entry” are not restricted to their technical legal meanings.

 

(ix)          If Tenant shall be in default in the observance or performance of any provision of this Lease, and an action shall be brought for the enforcement thereof in which it shall be determined that Tenant was in default, Tenant shall pay to Landlord all reasonable, out of pocket fees, costs and other expenses which may become payable as a result thereof or in connection therewith, including reasonable attorneys’ fees and expenses.

 

(x)           Independent of the exercise of any other remedy of Landlord hereunder or under applicable law, Landlord may conduct an environmental test of the Premises as generally described in Section 30(c).

 

(xi)          In the event that Tenant is in breach or Default under this Lease, whether or not Landlord exercises its right to terminate or any other remedy, Tenant shall reimburse Landlord upon demand for any out of pocket costs and expenses that Landlord may incur in connection with any such breach or Default, as provided in this Section 21(c). Such costs shall include legal fees and costs incurred for the negotiation of a settlement, enforcement of rights or otherwise. Tenant shall also indemnify Landlord against and hold Landlord harmless from all costs, expenses, demands and liability, including without limitation, legal fees and costs Landlord shall incur if Landlord shall become or be made a party to any claim or action instituted by Tenant against any third party, by any third party against Tenant or by or against any person holding any interest under or using the Premises by license of or agreement with Tenant.

 

(d)       Except as otherwise provided in this Section 21, no right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to any other legal or equitable right or remedy given hereunder, or now or hereafter existing. No waiver by Landlord of any provision of this Lease shall be deemed to have been made unless expressly so made in writing by Landlord expressly waiving such provision. Landlord shall be entitled, to the extent permitted by law, to seek injunctive relief in case of the violation, or attempted or threatened violation, of any provision of this Lease, or to seek a decree compelling observance or performance of any provision of this Lease, or to seek any other legal or equitable remedy.

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22.          Assignment and Subletting.

 

(a)           General Prohibition. Without Landlord’s prior written consent subject to and on the conditions described in this Section 22, Tenant shall not, directly or indirectly, voluntarily or by operation of law, assign this Lease or sublease the Premises or any part thereof or mortgage, pledge, or hypothecate its leasehold interest or grant any concession or license within the Premises or any part thereof, and any attempt to do any of the foregoing shall be void and of no effect. If Tenant is a corporation, partnership (limited, general or other) or limited liability company (or other business associations), the shares or other ownership interests thereof which are not actively traded upon a stock exchange or in the over-the-counter market, a transfer or series of transfers whereby 49% or more of the issued and outstanding shares or other ownership interests of such corporation, partnership (limited, general or other) or limited liability company (or other business associations) are, or voting control is, transferred (but excepting transfers upon deaths of individual owners) from a person or persons or entity or entities (or other business associations) which were owners thereof at time of execution of this Lease to persons or entities (or other business associations) who were not owners of shares or other ownership interests of the corporation, partnership or limited liability company (or other business associations) at time of execution of this Lease, shall be deemed an assignment of this Lease requiring the consent of Landlord as provided in this Section 22.

 

(b)           Permitted Transfers. If Tenant desires to assign, sublease, hypothecate or otherwise transfer this Lease or sublet the Premises other than pursuant to a Permitted Assignment (as defined below), then at least 15 business days, but not more than 45 business days, before the date Tenant desires the assignment or sublease to be effective (the “Assignment Date”), Tenant shall give Landlord a notice (the “Assignment Notice”) containing such information about the proposed assignee or sublessee, including the proposed use of the Premises and any Hazardous Materials proposed to be used, stored handled, treated, generated in or released or disposed of from the Premises, the Assignment Date, any relationship between Tenant and the proposed assignee or sublessee, and all material terms and conditions of the proposed assignment or sublease, including a copy of any proposed assignment or sublease in its final form, and such other information as Landlord may deem reasonably necessary or appropriate to its consideration whether to grant its consent. Landlord may, by giving written notice to Tenant within 15 business days after receipt of the Assignment Notice: (i) grant such consent, (ii) refuse such consent, in its reasonable discretion (provided that in the case of a sublease Landlord shall further have the right to review and approve or disapprove the proposed form of sublease prior to the effective date of any such subletting), or (iii) if the proposed assignment, hypothecation or other transfer or subletting concerns 50% or more (together with all other then effective subleases) of the Premises, terminate this Lease with respect to the space described in the Assignment Notice as of the Assignment Date (an “Assignment Termination”). Among other reasons, it shall be reasonable for Landlord to withhold its consent in any of these instances:  (1) the proposed assignee or subtenant is a governmental agency; (2) in Landlord’s judgment, the use of the Premises by the proposed assignee or subtenant would entail any alterations that would lessen the value of the leasehold improvements in the Premises, or would require increased services by Landlord; (3) in Landlord’s judgment, the character, nature, operations, creditworthiness, reputation, or business of the proposed assignee or subtenant is inconsistent with the desired tenant-mix or the quality of other tenancies in the Project or is inconsistent with the type and quality of the nature of the Building or are controversial; (4) Landlord has received from any prior landlord to the proposed assignee or subtenant a negative report concerning such prior landlord’s experience with the proposed assignee or subtenant; (5) Landlord has experienced previous defaults by or is in litigation with the proposed assignee or subtenant; (6) the use of the Premises by the proposed assignee or subtenant will violate any applicable Legal Requirement; (7) the proposed assignee or subtenant, or any entity that, directly or indirectly, controls, is controlled by, or is under common control with the proposed assignee or subtenant, is then an occupant of the Project; (8) the proposed assignee or subtenant is an entity with whom Landlord is negotiating to lease space in the Project; or (9) the assignment or sublease is prohibited by Landlord’s lender, if any. If Landlord delivers notice of its election to exercise an Assignment Termination, Tenant shall have the right to withdraw such Assignment Notice by written notice to Landlord of such election within 5 business days after Landlord’s notice electing to exercise the Assignment Termination. If Tenant withdraws such Assignment Notice, this Lease shall continue in full force and effect. If Tenant does not withdraw such Assignment Notice, this Lease, and the term and estate herein granted, shall terminate as of the Assignment Date with respect to the space described in such Assignment Notice. No failure of Landlord to exercise any such option to terminate this Lease, or to deliver a timely notice in response to the Assignment Notice, shall be deemed to be Landlord’s consent to the proposed assignment, sublease or other transfer. Tenant shall pay to Landlord a fee equal to Two Thousand Five Hundred Dollars ($2,500) in connection with its consideration of any Assignment Notice and/or its preparation or review of any consent documents.

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In addition, Tenant shall have the right to assign this Lease, upon 15 business days prior written notice to Landlord (except to the extent prohibited by applicable securities or other laws or regulations or confidentiality requirements, in which case such notice shall be provided as soon as permitted but in no event later than 10 days before such transaction) but without obtaining Landlord’s prior written consent, to (a) a corporation or other entity which is controlling, controlled by or under common control with Tenant, provided that (i) the net worth (as determined in accordance with generally accepted accounting principles (“GAAP”)) of the assignee is not less than the greater of the net worth (as determined in accordance with GAAP) of Tenant as of (A) the Commencement Date, or (B) as of the date of Tenant’s most current quarterly or annual financial statements, and (ii) such assignee shall agree in writing to assume all of the terms, covenants and conditions of this Lease (“Control Permitted Assignment”), or (b) a successor-in-interest to Tenant, by way of merger, consolidation or corporate reorganization, or by the purchase of all or substantially all of the assets or the ownership interests of Tenant provided that (i) such merger or consolidation, or such acquisition or assumption, as the case may be, is for a good business purpose and not principally for the purpose of transferring this Lease, and (ii) the net worth (as determined in accordance with GAAP) of the assignee is not less than the greater of the net worth (as determined in accordance with GAAP) of Tenant as of (A) the Commencement Date, or (B) as of the date of Tenant’s most current quarterly or annual financial statements, and (iii) such assignee shall agree in writing to assume all of the terms, covenants and conditions of this Lease (a “Corporate Permitted Assignment”). Control Permitted Assignments and Corporate Permitted Assignments are hereinafter referred to as “Permitted Assignments.”

 

(c)           Additional Conditions. As a condition to any such assignment or subletting, whether or not Landlord’s consent is required, Landlord may require:

 

(i)             that any assignee or subtenant agree, in writing at the time of such assignment or subletting, that if Landlord gives such party notice that Tenant is in default under this Lease, such party shall thereafter make all payments otherwise due Tenant directly to Landlord, which payments will be received by Landlord without any liability except to credit such payment against those due under this Lease, and any such third party shall agree to attorn to Landlord or its successors and assigns should this Lease be terminated for any reason; provided, however, in no event shall Landlord or its successors or assigns be obligated to accept such attornment; and

 

(ii)            A list of Hazardous Materials, certified by the proposed assignee or sublessee to be true and correct, which the proposed assignee or sublessee intends to use, store, handle, treat, generate in or release or dispose of from the Premises, together with copies of all documents relating to such use, storage, handling, treatment, generation, release or disposal of Hazardous Materials by the proposed assignee or subtenant in the Premises or on the Project, prior to the proposed assignment or subletting, including, without limitation: permits; approvals; reports and correspondence; storage and management plans; plans relating to the installation of any storage tanks to be installed in or under the Project (provided, said installation of tanks shall only be permitted after Landlord has given its written consent to do so, which consent may be withheld in Landlord’s sole and absolute discretion); and all closure plans or any other documents required by any and all federal, state and local Governmental Authorities for any storage tanks installed in, on or under the Project for the closure of any such tanks. Neither Tenant nor any such proposed assignee or subtenant is required, however, to provide Landlord with any portion(s) of the such documents containing information of a proprietary nature which, in and of themselves, do not contain a reference to any Hazardous Materials or hazardous activities.

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(d)           No Release of Tenant, Sharing of Excess Rents. Notwithstanding any assignment or subletting, Tenant and any guarantor or surety of Tenant’s obligations under this Lease shall at all times remain fully and primarily responsible and liable for the payment of Rent and for compliance with all of Tenant’s other obligations under this Lease. If the Rent due and payable by a sublessee or assignee (or a combination of the rental payable under such sublease or assignment plus any bonus or other consideration therefor or incident thereto in any form), exceeds the sum of the rental payable under this Lease (excluding however, any Rent payable under this Section) and actual and reasonable brokerage fees, legal costs, rent abatement periods, and any design or construction fees directly related to and required pursuant to the terms of any such sublease) (“Excess Rent”), then Tenant shall be bound and obligated to pay Landlord as Additional Rent hereunder 50% of such Excess Rent within 10 days following receipt thereof by Tenant. If Tenant shall sublet the Premises or any part thereof, Tenant hereby immediately and irrevocably assigns to Landlord, as security for Tenant’s obligations under this Lease, all rent from any such subletting, and Landlord as assignee and as attorney-in-fact for Tenant, or a receiver for Tenant appointed on Landlord’s application, may collect such rent and apply it toward Tenant’s obligations under this Lease; except that, until the occurrence of a Default, Tenant shall have the right to collect such rent.

 

(e)           No Waiver. The consent by Landlord to an assignment or subletting shall not relieve Tenant or any assignees of this Lease or any sublessees of the Premises from obtaining the consent of Landlord to any further assignment or subletting nor shall it release Tenant or any assignee or sublessee of Tenant from full and primary liability under this Lease. The acceptance of Rent hereunder, or the acceptance of performance of any other term, covenant, or condition thereof, from any other person or entity shall not be deemed to be a waiver of any of the provisions of this Lease or a consent to any subletting, assignment or other transfer of the Premises.

 

23.          Estoppel Certificate. Tenant shall, within 10 business days of written notice from Landlord, execute, acknowledge and deliver a statement in writing in any form reasonably requested by a proposed lender or purchaser, (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease as so modified is in full force and effect) and the dates to which the rental and other charges are paid in advance, if any, (ii) acknowledging that there are not any uncured defaults on the part of Landlord hereunder, or specifying such defaults if any are claimed, and (iii) setting forth such further information with respect to the status of this Lease or the Premises as may be requested thereon. Any such statement may be relied upon by any prospective purchaser or encumbrancer of all or any portion of the real property of which the Premises are a part. Tenant’s failure to deliver such statement within such time shall, at the option of Landlord, constitute a Default under this Lease, and, in any event, shall be conclusive upon Tenant that this Lease is in full force and effect and without modification except as may be represented by Landlord in any certificate prepared by Landlord and delivered to Tenant for execution.

 

24.          Quiet Enjoyment. So long as Tenant is not in Default under this Lease, Tenant shall, subject to the terms of this Lease, at all times during the Term, have peaceful and quiet enjoyment of the Premises against any person claiming by, through or under Landlord.

 

25.          Prorations. All prorations required or permitted to be made hereunder shall be made on the basis of a 360-day year and 30-day months.

 

26.          Rules and Regulations. Tenant and any and all Tenant Parties shall, at all times during the Term and any extension thereof, comply with all reasonable rules and regulations at any time or from time to time established, modified or amended by Landlord covering use of the Premises and the Project. The current rules and regulations are attached hereto as Exhibit E. If there is any conflict between said rules and regulations and other provisions of this Lease, the terms and provisions of this Lease shall control. Landlord shall not have any liability or obligation for the breach of any rules or regulations by other tenants in the Project and shall not enforce such rules and regulations in a discriminatory manner.

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In addition to the foregoing, Landlord shall have the right to institute, modify or amend at any time or from time to time reasonable rules and regulations related to Tenant’s use of the Amenities, including by way of example but not limitation, requirements related to reservation systems for conference facilities, designation of permitted caterers or restaurants that may serve any conference facilities, reasonable fees for the use of conference facilities, liability waivers for individuals using gyms, and access card entry requirements. Tenant and any and all Tenant Parties shall comply with all such rules and regulations.

 

Tenant shall cause all Tenant Parties to comply with all rules and regulations established from time to time by Landlord pursuant to this Section 26. Tenant will reimburse Landlord for all damages caused by Tenant’s or any Tenant Party’s failure to comply with the provisions of this Section 26 and will also pay to Landlord, as Additional Rent, an amount equal to any increase in insurance premiums caused by such failure to comply.

 

27.          Subordination. This Lease and Tenant’s interest and rights hereunder are hereby made and shall be subject and subordinate at all times to the lien of any Mortgage now existing or hereafter created on or against the Project, the Building or the Premises, and all amendments, restatements, renewals, modifications, consolidations, refinancing, assignments and extensions thereof, without the necessity of any further instrument or act on the part of Tenant; provided, however that so long as there is no Default hereunder, Tenant’s right to possession of the Premises shall not be disturbed by the Holder of any such Mortgage. Tenant agrees, at the election of the Holder of any such Mortgage, to attorn to any such Holder. Tenant agrees upon demand to execute, acknowledge and deliver such instruments, confirming such subordination, and such instruments of attornment as shall be requested by any such Holder, provided any such instruments contain appropriate non-disturbance provisions assuring Tenant’s quiet enjoyment of the Premises as set forth in Section 24 hereof. Notwithstanding the foregoing, any such Holder may at any time subordinate its Mortgage to this Lease, without Tenant’s consent, by notice in writing to Tenant, and thereupon this Lease shall be deemed prior to such Mortgage without regard to their respective dates of execution, delivery or recording and in that event such Holder shall have the same rights with respect to this Lease as though this Lease had been executed prior to the execution, delivery and recording of such Mortgage and had been assigned to such Holder. The term “Mortgage” whenever used in this Lease shall be deemed to include mortgages, deeds of trust, security assignments and any other encumbrances, and any reference to the “Holder” of a Mortgage shall be deemed to include the mortgagee or beneficiary under a deed of trust.

 

As of the date of this Lease, there is no existing Mortgage encumbering the Project. If during the Term there is a Mortgage encumbering the Project, Landlord agrees to use reasonable efforts to cause the Holder of the then-current Mortgage to enter into a subordination, non-disturbance and attornment agreement ("SNDA") with Tenant with respect to this Lease. The SNDA shall be on the form proscribed by the Holder and Tenant shall pay the Holder's fees and costs in connection with obtaining such SNDA; provided, however, that Landlord shall request that Holder make any changes to the SNDA requested by Tenant. Landlord's failure to cause the Holder to enter into the SNDA with Tenant (or make any of the changes requested by Tenant) shall not be a default by Landlord under this Lease.

 

28.          Surrender. Upon the expiration of the Term or earlier termination of Tenant’s right of possession, Tenant shall surrender the Premises to Landlord in the same condition as received, subject to any Alterations or Installations permitted by Landlord to remain in the Premises, free of Hazardous Materials brought upon, kept, used, stored, handled, treated, generated in, or released or disposed of from, the Premises by any person other than a Landlord Party and released of all Hazardous Materials Clearances, broom clean, ordinary wear and tear and casualty loss and condemnation covered by Sections 18 and 19 excepted.

 

Tenant shall immediately return to Landlord all keys and/or access cards to parking, the Project, restrooms or all or any portion of the Premises furnished to or otherwise procured by Tenant. If any such access card or key is lost, Tenant shall pay to Landlord, at Landlord’s election, either the cost of replacing such lost access card or key or the cost of reprogramming the access security system in which such access card was used or changing the lock or locks opened by such lost key. Any Tenant’s Property, Alterations and property not so removed by Tenant as permitted or required herein shall be deemed abandoned and may be stored, removed, and disposed of by Landlord at Tenant’s expense, and Tenant waives all claims against Landlord for any damages resulting from Landlord’s retention and/or disposition of such property. All obligations of Tenant hereunder not fully performed as of the termination of the Term, including the obligations of Tenant under Section 30 hereof, shall survive the expiration or earlier termination of the Term, including, without limitation, indemnity obligations, payment obligations with respect to Rent and obligations concerning the condition and repair of the Premises.

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29.          Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.

 

30.          Environmental Requirements.

 

(a)           Prohibition/Compliance. Except for Hazardous Material contained in products customarily used by tenants in de minimis quantities for ordinary cleaning and office purposes, Tenant shall not permit or cause any party to bring any Hazardous Material upon the Premises or use, store, handle, treat, generate, manufacture, transport, release or dispose of any Hazardous Material in, on or from the Premises without Landlord’s prior written consent which may be withheld in Landlord’s sole discretion. Tenant, at its sole cost and expense, shall operate its business in the Premises in strict compliance with all Environmental Requirements and shall remove or remediate in a manner satisfactory to Landlord any Hazardous Materials released on or from the Premises by Tenant or any Tenant Party. Tenant shall complete and certify disclosure statements as requested by Landlord from time to time relating to Tenant’s use, storage, handling, treatment, generation, manufacture, transportation, release or disposal of Hazardous Materials on or from the Premises. The term “Environmental Requirements” means all applicable present and future statutes, regulations, ordinances, rules, codes, judgments, orders or other similar enactments of any Governmental Authority regulating or relating to health, safety, or environmental conditions on, under, or about the Premises, or the environment, including without limitation, the following: the Comprehensive Environmental Response, Compensation and Liability Act; the Resource Conservation and Recovery Act; and all state and local counterparts thereto, and any regulations or policies promulgated or issued thereunder. The term “Hazardous Materials” means and includes any substance, material, waste, pollutant, or contaminant listed or defined as hazardous or toxic, or regulated by reason of its impact or potential impact on humans, animals and/or the environment under any Environmental Requirements, asbestos and petroleum, including crude oil or any fraction thereof, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas). As defined in Environmental Requirements, Tenant is and shall be deemed to be the “operator” of Tenant’s “facility” and the “owner” of all Hazardous Materials brought on the Premises by Tenant or any Tenant Party, and the wastes, by-products, or residues generated, resulting, or produced therefrom.

 

(b)           Indemnity. Tenant hereby indemnifies and shall defend and hold Landlord, its officers, directors, employees, manager, agents, affiliates and contractors harmless from any and all actions (including, without limitation, remedial or enforcement actions of any kind, administrative or judicial proceedings, and orders or judgments arising out of or resulting therefrom), costs, claims, damages (including, without limitation, punitive damages and damages based upon diminution in value of the Premises, the Building, or the Project, or the loss of, or restriction on, use of the Premises, the Building, or any portion of the Project), expenses (including, without limitation, attorneys’, consultants’ and experts’ fees, court costs and amounts paid in settlement of any claims or actions), fines, forfeitures or other civil, administrative or criminal penalties, injunctive or other relief (whether or not based upon personal injury, property damage, or contamination of, or adverse effects upon, the environment, water tables or natural resources), liabilities or losses (collectively, “Environmental Claims”) which arise during or after the Term as a result of such contamination. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, treatment, remedial, removal, or restoration work required by any federal, state or local Governmental Authority because of Hazardous Materials present in the air, soil or ground water above, on, or under the Premises, the Building, the Project or any other adjacent property. Without limiting the foregoing, if the presence of any Hazardous Materials in, on or under the Premises, the Building, the Project or any adjacent property caused or permitted by Tenant or any Tenant Party results in any contamination of the Premises, the Building, the Project or any adjacent property, Tenant shall promptly take all actions at its sole expense and in accordance with applicable law as are necessary to return the Premises, the Building, the Project or any adjacent property to the condition existing prior to the time of such contamination, provided that Landlord’s approval of such action shall first be obtained, which approval shall not unreasonably be withheld so long as such actions would not potentially have any material adverse long-term or short-term effect on the Premises, the Building, or the Project.

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(c)           Landlord’s Tests. Landlord shall have access to, and a right to perform inspections and tests of, the Premises to determine Tenant’s compliance with Environmental Requirements, its obligations under this Section 30, or the environmental condition of the Premises or the Project. In connection with such testing, upon the request of Landlord, Tenant shall deliver to Landlord or its consultant such non-proprietary information concerning the use of Hazardous Materials in or about the Premises by Tenant or any Tenant Party. Access shall be granted to Landlord upon Landlord’s prior notice to Tenant and at such times so as to minimize, so far as may be reasonable under the circumstances, any disturbance to Tenant’s operations. Such inspections and tests shall be conducted at Landlord’s expense, unless such inspections or tests reveal that Tenant has not complied with any Environmental Requirement, in which case Tenant shall reimburse Landlord for the reasonable cost of such inspection and tests. Tenant shall, at its sole cost and expense, promptly and satisfactorily remediate any environmental conditions identified by such testing in accordance with all Environmental Requirements. Landlord’s receipt of or satisfaction with any environmental assessment in no way waives any rights that Landlord may have against Tenant.

 

(d)           Tenant’s Obligations. Tenant’s obligations under this Section 30 shall survive the expiration or earlier termination of this Lease. During any period of time after the expiration or earlier termination of this Lease required by Tenant or Landlord to complete the removal from the Premises of any Hazardous Materials (including, without limitation, the release and termination of any licenses or permits restricting the use of the Premises), Tenant shall continue to pay the full Rent in accordance with this Lease for any portion of the Premises not relet by Landlord in Landlord’s sole discretion, which Rent shall be prorated daily.

 

31.          Tenant’s Remedies/Limitation of Liability. Landlord shall not be in default hereunder unless Landlord fails to perform any of its obligations hereunder within 30 days after written notice from Tenant specifying such failure (unless such performance will, due to the nature of the obligation, require a period of time in excess of 30 days, then after such period of time as is reasonably necessary). Upon any default by Landlord, Tenant shall give notice by registered or certified mail to any Holder of a Mortgage covering the Premises and to any landlord of any lease of property in or on which the Premises are located and Tenant shall offer such Holder and/or landlord a reasonable opportunity to cure the default, including time to obtain possession of the Project by power of sale or a judicial action if such should prove necessary to effect a cure; provided Landlord shall have furnished to Tenant in writing the names and addresses of all such persons who are to receive such notices. All obligations of Landlord hereunder shall be construed as covenants, not conditions; and, except as may be otherwise expressly provided in this Lease, Tenant may not terminate this Lease for breach of Landlord’s obligations hereunder.

 

All obligations of Landlord under this Lease will be binding upon Landlord only during the period of its ownership of the Premises and not thereafter. The term “Landlord” in this Lease shall mean only the fee owner for the time being of the Premises. Upon the transfer by such owner of its interest in the Premises, such owner shall thereupon be released and discharged from all obligations of Landlord thereafter accruing, but such obligations shall be binding during the Term upon each new owner for the duration of such owner’s ownership.

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32.          Inspection and Access. Landlord and its agents, representatives, and contractors may enter the Premises at any reasonable time to inspect the Premises and to make such repairs as may be required or permitted pursuant to this Lease and for any other business purpose. Landlord and Landlord’s representatives may enter the Premises during business hours on not less than 48 hours advance written notice (except in the case of emergencies in which case no such notice shall be required and such entry may be at any time) for the purpose of effecting any such repairs, inspecting the Premises, showing the Premises to prospective purchasers and, during the last 18 months of the Term, to prospective tenants or for any other business purpose. Landlord may erect a suitable sign on the Premises stating the Premises are available to let or that the Project is available for sale. Landlord may grant easements, make public dedications, designate Common Areas and create restrictions on or about the Premises, provided that no such easement, dedication, designation or restriction materially, adversely affects Tenant’s use or occupancy of the Premises for the Permitted Use. At Landlord’s request, Tenant shall execute such instruments as may be necessary for such easements, dedications or restrictions. Tenant shall at all times, except in the case of emergencies, have the right to escort Landlord or its agents, representatives, contractors or guests while the same are in the Premises, provided such escort does not materially and adversely affect Landlord’s access rights hereunder.

 

33.          Security. Tenant acknowledges and agrees that security devices and services, if any, while intended to deter crime may not in given instances prevent theft or other criminal acts and that Landlord is not providing any security services with respect to the Premises. Tenant agrees that Landlord shall not be liable to Tenant for, and Tenant waives any claim against Landlord with respect to, any loss by theft or any other damage suffered or incurred by Tenant in connection with any unauthorized entry into the Premises or any other breach of security with respect to the Premises. Tenant shall be solely responsible for the personal safety of Tenant’s officers, employees, agents, contractors, guests and invitees while any such person is in, on or about the Premises and/or the Project. Tenant shall at Tenant’s cost obtain insurance coverage to the extent Tenant desires protection against such criminal acts.

 

34.          Force Majeure. Except for Tenant’s obligation to timely pay Rent or any other payment due hereunder (which such obligation shall not under any circumstance be delayed or excused), neither Landlord nor Tenant shall be responsible or liable for delays in the performance of its obligations hereunder when such delay in performance is caused by, related to or arises out of acts of God, sinkholes or subsidence, strikes, labor stoppages, lockouts, or other labor disputes, embargoes, quarantines, declared states of emergency or public health emergencies, pandemics, epidemics, infectious disease, weather, national, regional, or local disasters, calamities, or catastrophes, inability to obtain labor or materials (or reasonable substitutes therefor) at reasonable costs or failure of, or inability to obtain, utilities necessary for performance, governmental decrees, laws, actions, restrictions, orders, limitations, regulations, or controls, regional, state, local, or national emergencies, delay in inspection by federal, state or local inspectors, officials or other applicable Governmental Authorities, delay in issuance or revocation of permits, approvals, certificates of occupancy, or entitlements, enemy or hostile governmental action, terrorism, insurrection, riots, civil disturbance or commotion, fire or other casualty, and any other causes or events beyond the reasonable control of the obligated party (“Force Majeure”).

 

35.          Brokers. Landlord and Tenant each represents and warrants that, other than Cushman & Wakefield and CBRE (the “Brokers”), it has not dealt with any broker, agent or other person entitled to a commission, compensation or fee in connection with this transaction. Landlord and Tenant each hereby agree to indemnify and hold the other harmless from and against any claims by any broker, agent or other person or entity, other than the Brokers, claiming a commission or other form of compensation by virtue of having dealt with Tenant or Landlord, as applicable, with regard to this leasing transaction. Landlord shall be responsible for all commissions due to the Brokers arising out of the execution of this Lease subject to and in accordance with the terms of a separate agreement(s) with the Brokers.

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36.          Limitation on Landlord’s Liability. NOTWITHSTANDING ANYTHING SET FORTH HEREIN OR IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE CONTRARY: (A) LANDLORD SHALL NOT BE LIABLE TO TENANT OR ANY OTHER PERSON FOR (AND TENANT AND EACH SUCH OTHER PERSON ASSUME ALL RISK OF) LOSS, DAMAGE OR INJURY, WHETHER ACTUAL OR CONSEQUENTIAL TO: TENANT’S PERSONAL PROPERTY OF EVERY KIND AND DESCRIPTION, INCLUDING, WITHOUT LIMITATION, TRADE FIXTURES, EQUIPMENT, INVENTORY, SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS, PRODUCT, SPECIMENS, SAMPLES, AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER RECORDS OF EVERY KIND AND DESCRIPTION KEPT AT THE PREMISES AND ANY AND ALL INCOME DERIVED OR DERIVABLE THEREFROM; (B) THERE SHALL BE NO PERSONAL RECOURSE TO LANDLORD FOR ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR ARISING IN ANY WAY UNDER THIS LEASE OR ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT WITH RESPECT TO THE SUBJECT MATTER HEREOF AND ANY LIABILITY OF LANDLORD HEREUNDER SHALL BE STRICTLY LIMITED SOLELY TO LANDLORD’S INTEREST IN THE PROJECT OR ANY PROCEEDS FROM SALE OR CONDEMNATION THEREOF AND ANY INSURANCE PROCEEDS PAYABLE IN RESPECT OF LANDLORD’S INTEREST IN THE PROJECT OR IN CONNECTION WITH ANY SUCH LOSS; AND (C) IN NO EVENT SHALL ANY PERSONAL LIABILITY BE ASSERTED AGAINST LANDLORD IN CONNECTION WITH THIS LEASE NOR SHALL ANY RECOURSE BE HAD TO ANY OTHER PROPERTY OR ASSETS OF LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, MANAGERS, AFFILIATES, AGENTS OR CONTRACTORS. UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, MANAGERS, AFFILIATES, AGENTS OR CONTRACTORS BE LIABLE FOR INJURY TO TENANT’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM. Tenant acknowledges and agrees that ANY measures and/or services implemented at the Project, if any, intended to encourage social distancing (also referred to as physical distancing), promote and protect health and physical well-being and/or prevent or limit the spread or transmission of Infectious Conditions, may not prevent or limit the spread or transmission of such Infectious Conditions (IT BEING UNDERSTOOD AND AGREED THAT LANDLORD HAS NO OBLIGATION TO UNDERTAKE ANY SUCH MEASURES OR SERVICES AND HAS MADE NO REPRESENTATION THAT IT WILL UNDERTAKE ANY SUCH MEASURES OR SERVICES, NOR AS TO THE SUFFICIENCY OF ANY MEASURES OR SERVICES UNDERTAKEN BY LANDLORD IF LANDLORD UNDERTAKES ANY MEASURES OR SERVICES, AND TENANT WILL NOT RELY ON ANY MEASURES OR SERVICES UNDERTAKEN BY LANDLORD IF LANDLORD UNDERTAKES ANY MEASURES OR SERVICES). Neither Landlord nor any Landlord Indemnified Parties shall have any liability and Tenant irrevocably releases and waives any claims against Landlord and the Landlord Indemnified Parties with respect to any loss, damage, injury or death in connection with (x) the implementation, MANNER OF IMPLEMENTATION, or failure of Landlord or any Landlord Indemnified Parties to implement OR ENFORCE, any measures and/or services at the Project intended to encourage social distancing (also referred to as physical distancing), promote and protect health and physical well-being and/or prevent or limit the spread or transmission of Infectious Conditions, or (y) the failure of any measures and/or services implemented at the Project, if any, to prevent or limit the spread or transmission of any Infectious Conditions.

 

37.          Severability. If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws, then and in that event, it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby. It is also the intention of the parties to this Lease that in lieu of each clause or provision of this Lease that is illegal, invalid or unenforceable, there be added, as a part of this Lease, a clause or provision as similar in effect to such illegal, invalid or unenforceable clause or provision as shall be legal, valid and enforceable.

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38.          Signs; Exterior Appearance. Tenant shall not, without the prior written consent of Landlord, which may be granted or withheld in Landlord’s sole discretion: (i) attach any awnings, exterior lights, decorations, balloons, flags, pennants, banners, painting or other projection to any outside wall of the Project, (ii) use any curtains, blinds, shades or screens other than Landlord’s standard window coverings, (iii) coat or otherwise sunscreen the interior or exterior of any windows, (iv) place any bottles, parcels, or other articles on the window sills, (v) place any equipment, furniture or other items of personal property on any exterior balcony, or (vi) paint, affix or exhibit on any part of the Premises or the Project any signs, notices, window or door lettering, graphics, placards, decorations, or advertising media of any type which can be viewed from the exterior of the Premises. At Tenant’s election, to the extent permitted by Legal Requirements, and subject to Landlord’s prior written approval of size, location and design, Landlord shall cause to be installed (at Tenant’s sole cost and expense) the following signage: (i) suite-entry signage in the entryway or immediately adjacent to such entryway of the Premises, and (ii) Tenant’s pro rata share (as reasonably determined by Landlord) of non-exclusive signage bearing Tenant’s name and logo on the monument sign serving the Building, if any. Tenant shall provide Landlord with the applicable signs and/or placards to be installed pursuant to the foregoing sentence. All costs associated with the design, permitting, approval, fabrication, installation, maintenance, and removal (and associated repairs of damage to the Building and/or the monument sign due to Tenant’s signage removal), shall be borne exclusively by Tenant.

 

39.          Intentionally Omitted.

 

40.          Right to Extend Term. Tenant shall have the right to extend the Term of this Lease upon the following terms and conditions:

 

(a)           Extension Right. Tenant shall have a one-time right (the “Extension Right”) to extend the term of this Lease for 5 years (the “Extension Term”) on the same terms and conditions as this Lease (other than with respect to Base Rent, which shall be determined as set forth below, and the Work Letter, which shall not be applicable) by giving Landlord written notice of its election to exercise the Extension Right at least 12 months prior (but no earlier than 18 months prior) to the expiration of the Base Term of this Lease.

 

(b)           Base Rent. Upon the commencement of the Extension Term, Base Rent shall be payable at the Market Rate (as defined below). Base Rent shall thereafter be adjusted on each annual anniversary of the commencement of the Extension Term by a percentage as determined by Landlord and agreed to by Tenant at the time the Market Rate is determined or determined by arbitration as provided below. As used herein, “Market Rate” shall mean the rate that comparable landlords of comparable buildings have accepted in current transactions from non-equity (i.e., not being offered equity in the buildings) and nonaffiliated tenants of similar financial strength for space of comparable size and quality (including all Tenant Improvements, Alterations and other improvements) for office use within Class A office/laboratory complexes (including the Project in the Watertown, Allston, Brighton and West Cambridge markets for a comparable term, with the determination of the Market Rate to take into account all relevant factors, including, without limitation, tenant inducements, views, available amenities (including, without limitation, the Amenities), age of the Building, age of mechanical systems serving the Premises, parking availability, leasing commissions, and allowances or concessions, if any. Notwithstanding the foregoing, the Market Rate shall in no event be less than the Base Rent payable as of the date immediately preceding the commencement of the Extension Term increased by the Rent Adjustment Percentage multiplied by such Base Rent.

 

If, on or before the date which is 180 days prior to the expiration of the Base Term of this Lease, Tenant has not agreed with Landlord’s determination of the Market Rate and the rent escalations during the Extension Term after negotiating in good faith, Tenant shall be deemed to have elected arbitration as described in Section 40(c). Tenant acknowledges and agrees that, if Tenant has elected to exercise the Extension Right by delivering notice to Landlord as required in this Section 40(a), Tenant shall have no right thereafter to rescind or elect not to extend the term of this Lease for the Extension Term.

 

(c)           Arbitration.

 

(i)             Within 10 days of Tenant’s deemed election to arbitrate Market Rate and escalations, each party shall deliver to the other a proposal containing the Market Rate and escalations that the submitting party believes to be correct (“Extension Proposal”). If Landlord fails to timely submit an Extension Proposal, Landlord’s original submission will be used for this purpose. If Tenant fails to timely submit an Extension Proposal, Landlord’s submitted proposal shall determine the Base Rent and escalations for the Extension Term. If both parties submit Extension Proposals, then Landlord and Tenant shall meet within 7 days after delivery of the last Extension Proposal and make a good faith attempt to mutually appoint a single Arbitrator (defined below) to determine the Market Rate and escalations. If Landlord and Tenant are unable to agree upon a single Arbitrator, then each shall, by written notice delivered to the other within 10 days after the meeting, select an Arbitrator. If either party fails to timely give notice of its selection for an Arbitrator, the other party’s submitted proposal shall determine the Base Rent for the Extension Term. The 2 Arbitrators so appointed shall, within 5 business days after their appointment, appoint a third Arbitrator. If the 2 Arbitrators so selected cannot agree on the selection of the third Arbitrator within the time above specified, then either party, on behalf of both parties, may request such appointment of such third Arbitrator by application to any state court of general jurisdiction in the jurisdiction in which the Premises are located, upon 10 days prior written notice to the other party of such intent.

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(ii)            The decision of the Arbitrator(s) shall be made within 30 days after the appointment of a single Arbitrator or the third Arbitrator, as applicable. The decision of the single Arbitrator shall be final and binding upon the parties. The average of the two closest Arbitrators in a three Arbitrator panel shall be final and binding upon the parties. Each party shall pay the fees and expenses of the Arbitrator appointed by or on behalf of such party and the fees and expenses of the third Arbitrator shall be borne equally by both parties. If the Market Rate and escalations are not determined by the first day of the Extension Term, then Tenant shall pay Landlord Base Rent in an amount equal to the Base Rent in effect immediately prior to the Extension Term and increased by the Rent Adjustment Percentage until such determination is made. After the determination of the Market Rate and escalations, the parties shall make any necessary adjustments to such payments made by Tenant. Landlord and Tenant shall then execute an amendment recognizing the Market Rate and escalations for the Extension Term.

 

(iii)           An “Arbitrator” shall be any person appointed by or on behalf of either party or appointed pursuant to the provisions hereof and: (i) shall be (A) a member of the American Institute of Real Estate Appraisers with not less than 10 years of experience in the appraisal of improved office and high tech industrial real estate in Greater Boston, or (B) a licensed commercial real estate broker with not less than 15 years’ experience representing landlords and/or tenants in the leasing of high tech or life sciences space in Greater Boston, (ii) devoting substantially all of their time to professional appraisal or brokerage work, as applicable, at the time of appointment and (iii) be in all respects impartial and disinterested.

 

(d)           Rights Personal. Extension Rights are personal to Disc Medicine, Inc. and any successor pursuant to a Permitted Assignment, and otherwise are not assignable without Landlord’s consent, which may be granted or withheld in Landlord’s sole discretion separate and apart from any consent by Landlord to an assignment of Disc Medicine, Inc.’s interest in this Lease.

 

(e)           Exceptions. Notwithstanding anything set forth above to the contrary, Extension Rights shall, at Landlord’s option, not be in effect and Tenant may not exercise any of the Extension Rights:

 

(i)             if Tenant (or successor pursuant to a Permitted Assignment) is not then occupying at least 75% of the Premises;

 

(ii)            during any period of time that Tenant is in Default under any provision of this Lease; or

 

(iii)           if Tenant has been in Default under any provision of this Lease 3 or more times, whether or not the Defaults are cured, during the 12-month period immediately prior to the date that Tenant intends to exercise an Extension Right, whether or not the Defaults are cured.

 

(f)            No Extensions. The period of time within which any Extension Rights may be exercised shall not be extended or enlarged by reason of Tenant’s inability to exercise the Extension Rights.

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(g)           Termination. The Extension Rights shall, at Landlord’s option, terminate and be of no further force or effect even after Tenant’s due and timely exercise of an Extension Right, if, after such exercise, but prior to the commencement date of an Extension Term, (i) Tenant fails to timely cure any default by Tenant under this Lease; or (ii) Tenant has Defaulted 3 or more times during the period from the date of the exercise of an Extension Right to the date of the commencement of the Extension Term, whether or not such Defaults are cured.

 

41.          Shuttle Service. During the Term, Landlord may provide or otherwise arrange for (but shall not be obligated to provide or otherwise arrange for) Shuttle Service to and from the Project on weekdays (subject to weather conditions, holidays, Force Majeure), and Tenant’s employees shall, subject to seating availability, have the right to use such Shuttle Service at all times that such Shuttle Service is in operation and available for use by tenants of the Project. “Shuttle Service” shall mean shuttle bus service provided or contracted for by Landlord between the Project and various commuting locations in the Watertown/Cambridge/Boston area, as determined by Landlord from time to time. No fee shall be charged to any passenger that utilizes the Shuttle Service, provided that all costs of such Shuttle Service shall be included as part of Operating Expenses. Tenant’s use of the Shuttle Service shall be at Tenant’s sole risk, and Tenant hereby acknowledges that Landlord shall have no liability with respect thereto. Tenant shall indemnify, defend and hold Landlord harmless from and against any Claims by any of Tenant’s employees or invitees related to the Shuttle Service or any personal injury or property damage related thereto or arising therefrom.

 

42.          Intentionally Omitted.

 

43.          Asbestos.

 

(a)           Notification of Asbestos. Landlord hereby notifies Tenant of the presence of asbestos-containing materials (“ACMs”), presumed asbestos-containing materials (“PACMs”), and/or lead paint within or about the Project in the location of the buildings identified in Exhibit G.

 

(b)           Tenant Acknowledgement. By execution of this Lease, Tenant hereby acknowledges receipt of the notification in paragraph (a) of this Section 43 and understands that the purpose of such notification is to make Tenant and any agents, employees, and contractors of Tenant, aware of the presence of ACMs, PACMs, and/or lead paint within or about the Building in order to avoid or minimize any damage to or disturbance of such ACMs, PACMs, and/or lead paint.

 

(c)           Acknowledgement from Contractors/Employees. Tenant shall give Landlord at least 14 days’ prior written notice before conducting, authorizing or permitting any of the activities listed below within or about the Premises, and before soliciting bids from any person to perform such services. Such notice shall identify or describe the proposed scope, location, date and time of such activities and the name, address and telephone number of each person who may be conducting such activities. Thereafter, Tenant shall grant Landlord reasonable access to the Premises to determine whether any ACMs, PACMs, or lead paint will be disturbed in connection with such activities. Tenant shall not solicit bids from any person for the performance of such activities without Landlord’s prior written approval. Upon Landlord’s request, Tenant shall deliver to Landlord a copy of a signed acknowledgement from any contractor, agent, or employee of Tenant acknowledging receipt of information describing the presence of ACMs, PACMs, and/or lead paint within or about the Project in the location of the buildings identified in Exhibit G prior to the commencement of such activities. Nothing in this Section 43 shall be deemed to expand Tenant’s rights under this Lease or otherwise to conduct, authorize or permit any such activities.

 

(i)             Removal of thermal system insulation (“TSI”) and surfacing ACMs and PACMs (i.e., sprayed-on or troweled-on material, e.g., textured ceiling paint or fireproofing material);

 

(ii)            Removal of ACMs or PACMs that are not TSI or surfacing ACMs or PACMs; or

 

(iii)           Repair and maintenance of operations that are likely to disturb ACMs or PACMs.

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44.          Disclosure of Encumbrances.

 

(a)           Acknowledgement. Tenant hereby acknowledges that the Project is a historic site listed on the National Register of Historic Places that was formerly owned and operated by the United States Army for research and production of military weapons and related materials dating back to the mid-1800s, and that such uses included those that impacted the environmental condition of the Project. Accordingly, the Project is subject to various restrictions related to the historical significance of certain aspects of the Project and environmental contamination of other aspects of the Project. Tenant has been given the opportunity to review all such matters to its satisfaction and Landlord makes no representations, warranties or assurances with respect thereto.

 

(b)           Deed. Notwithstanding anything contained in this Lease to the contrary, the Premises (and Tenant’s rights therein) are subject to all easements, restrictions and encumbrances now or hereafter of record so long as the same may be in force and effect, including without limitation all easements, restrictions and covenants contained in that certain Quitclaim Deed dated August 20, 1998, recorded with the Middlesex Southern District Registry of Deeds at Book 29012, Page 420, from the United States of America, acting by and through the Secretary of the Army (the “Army”), to the Watertown Arsenal Development Corporation, with respect to the Premises (the “Army Deed”), which Army Deed is incorporated by reference and includes, without limitation, (i) covenants in Part IV of the Army Deed associated with the Army’s obligations under the Federal Facility Agreement between the Army and the United States Environmental Protection Agency and (ii) covenants in Part XI associated with certain historical resources at the Premises.

 

(c)           Environmental Grant. Notice is hereby given that a Grant of Environmental Restriction and Easement, dated August 11, 1998, pursuant to Massachusetts General Laws Chapter 21E, has been recorded by the Army with the Middlesex Southern District Registry of Deeds at Book 28978, Page 549; as amended by a First Amendment to Grant of Environmental Restriction and Easement, dated February 5, 1999, recorded at Book 29779, Page 359; as affected by a Subordination Agreement, dated March 16, 1999, recorded at Book 29957, Page 104; as further affected by a Subordination Agreement, dated March 24, 1999, recorded at Book 29985, Page 151; as further amended by a Second Amendment to Grant of Environmental Restriction and Easement, dated April 15, 1999, recorded at Book 30066, Page 116; as further affected by a Partial Release of Environmental Restriction and Easement, dated June 10, 1999, recorded at Book 30278, Page 511; as further amended by a Third Amendment to Grant of Environmental Restriction and Easement, dated June 7, 1999, recorded at Book 30278, Page 513; as further amended by a Fourth Amendment to Grant of Environmental Restriction and Easement, dated July 22, 2000, recorded at Book 31682, Page 99; as further amended by a Fifth Amendment to Grant of Environmental Restriction and Easement dated July 14, 2004, and recorded with said Registry of Deeds in Book 44119, Page 1; as affected by a plan entitled “Plan Showing Excavation Areas B, E, and G in Watertown, Massachusetts,” dated February 20, 2002, as revised on September 25, 2002, prepared by Dunn McKenzie, Inc., recorded as Plan No. 1348 of 2004; as further amended by a Sixth Amendment to Grant of Environmental Restriction and Easement dated March 21, 2005, and recorded with said Registry of Deeds in Book 45129, Page 1; as further affected by a plan entitled “Plan Showing Commercial Reuse Area in Watertown, Massachusetts,” dated October 25, 2004, as revised on March 16, 2005, prepared by Dunn McKenzie, Inc., recorded as Plan No. 523 of 2005; as further amended by a Seventh Amendment to Grant of Environmental Restriction and Easement dated August 9, 2006, and recorded with said Registry of Deeds in Book 48562, Page 187; and as further affected by a plan entitled “Plan Showing Commercial Reuse Area in Watertown, Massachusetts,” dated August 16, 2004, as revised on March 16, 2005 and February 10, 2006, prepared by Dunn McKenzie, Inc., recorded as Plan No. 1480 of 2006 (the “Grant”). This restriction on the activities conducted on the Premises and use limitations contained in the Grant are hereby incorporated by reference and shall be independently enforceable by the Army under the Grant as a restrictive covenant and equitable servitude.

321 Arsenal (AOTC) / Disc Medicine - Page 34 

 

(d)           Activity and Use Limitations. Notice is hereby further given that the following three (3) Notices of Activity and Use Limitations, pursuant to Massachusetts General Laws Chapter 21E, have been recorded with the Middlesex Southern District Registry of Deeds: (i) dated August 11, 1998, recorded at Book 28959, Page 92; (ii) dated August 11, 1998, recorded at Book 28959, Page 190, as amended by a First Amendment to Notice of Activity and Use Limitations, dated October 26, 1999, recorded at Book 30801, Page 319, as further amended by a Second Amendment to Notice of Activity and Use Limitations, dated December 9, 2019, recorded at Book 73807, Page 226; and (iii) dated February 4, 1999, recorded at Book 29766, Page 17, as amended by a First Amendment to Notice of Activity and Use Limitations, dated August 19th, 2004, recorded at Book 43589, Page 438, and as further amended by a Second Amendment to Notice of Activity and Use Limitation, dated February 28, 2005, recorded at Book 44737, Page 453 (collectively, the “Notices of AULs”). The restriction on activities conducted on the Premises and use limitations contained in the Notices of AULs are hereby incorporated by reference and shall be independently enforceable by the Army as a restrictive covenant and equitable servitude.

 

45.          Miscellaneous.

 

(a)           Notices. All notices or other communications between the parties shall be in writing and shall be deemed duly given upon delivery or refusal to accept delivery by the addressee thereof if delivered in person, or upon actual receipt if delivered by reputable overnight guaranty courier, addressed and sent to the parties at their addresses set forth above. Landlord and Tenant may from time to time by written notice to the other designate another address for receipt of future notices.

 

(b)           Joint and Several Liability. If and when included within the term “Tenant,” as used in this instrument, there is more than one person or entity named as Tenant, each shall be jointly and severally liable for the obligations of Tenant.

 

(c)           Financial Information. Tenant shall furnish Landlord  with true and complete copies of (i) Tenant’s most recent audited annual financial statements within 90 days of the end of each of Tenant’s fiscal years during the Term, provided, however, unaudited annual financial statements will be acceptable if Tenant does not have and will not obtain audited annual financial statements, provided such unaudited annual financials are accompanied by a treasurer’s certificate attesting to the accuracy of such unaudited annual financial statements, (ii) Tenant’s most recent unaudited quarterly financial statements within 45 days of the end of each of Tenant’s fiscal quarters during each of Tenant’s fiscal years during the Term, (iii) at Landlord’s request from time to time, updated business plans, including cash flow projections and/or pro forma balance sheets and income statements, all of which shall be treated by Landlord as confidential information belonging to Tenant, (iv) corporate brochures and/or profiles prepared by Tenant for prospective investors, at Landlord’s request from time to time, and (v) at Landlord’s request from time to time, any other financial information or summaries that Tenant typically provides to its lenders or shareholders. So long as Tenant is a “public company” and its financial information is publicly available, then the foregoing delivery requirements of this Section 45(c) shall not apply.

 

(d)           Recordation. Neither this Lease nor a notice of lease shall be filed by or on behalf of Tenant in any public record. Landlord may prepare, and upon request by Landlord, Tenant will execute, a notice of lease, which Landlord may then cause to have recorded in the applicable public record at Tenant’s expense. If a notice of lease shall be filed, promptly following the expiration or earlier termination of this Lease, Landlord and Tenant shall execute a notice of termination of lease in a mutually acceptable form (the “Notice of Termination”), acknowledging the termination of this Lease. In the event that Tenant fails to execute such Notice of Termination within 10 days after Landlord delivers same to Tenant, Tenant hereby irrevocably appoints Landlord as Tenant’s attorney-in-fact coupled with an interest (which appointment shall survive the expiration or early termination of the Term) with full power of substitution to execute, acknowledge, and deliver the Notice of Termination in Tenant’s name.

 

(e)           Interpretation. The normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Lease or any exhibits or amendments hereto. Words of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires. The captions inserted in this Lease are for convenience only and in no way define, limit or otherwise describe the scope or intent of this Lease, or any provision hereof, or in any way affect the interpretation of this Lease. Each term and provision of this Lease to be performed and observed by Tenant shall be construed to be both a covenant and a condition. Tenant’s covenants contained in this Lease are independent and not dependent, and Tenant hereby waives the benefit of any statute or judicial law to the contrary. Tenant’s obligation to pay Rent shall not be discharged or otherwise affected by any law or regulation now or hereafter applicable to the Premises, or any other restriction on Tenant’s use, or (except as expressly provided in this Lease) any casualty or taking, or any failure by Landlord to perform any covenant contained herein, or any other occurrence; and no termination or abatement remedy that is not expressly provided for in this Lease for any breach or failure by Landlord to perform any obligation under this Lease shall be implied or applicable as a matter of law.

321 Arsenal (AOTC) / Disc Medicine - Page 35 

 

(f)            Not Binding Until Executed. The submission by Landlord to Tenant of this Lease shall have no binding force or effect, shall not constitute an option for the leasing of the Premises, nor confer any right or impose any obligations upon either party until execution of this Lease by both parties.

 

(g)           Limitations on Interest. It is expressly the intent of Landlord and Tenant at all times to comply with applicable law governing the maximum rate or amount of any interest payable on or in connection with this Lease. If applicable law is ever judicially interpreted so as to render usurious any interest called for under this Lease, or contracted for, charged, taken, reserved, or received with respect to this Lease, then it is Landlord’s and Tenant’s express intent that all excess amounts theretofore collected by Landlord be credited on the applicable obligation (or, if the obligation has been or would thereby be paid in full, refunded to Tenant), and the provisions of this Lease immediately shall be deemed reformed and the amounts thereafter collectible hereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder.

 

(h)           Choice of Law. Construction and interpretation of this Lease shall be governed by the internal laws of the Commonwealth of Massachusetts, excluding any principles of conflicts of laws. Each of Landlord and Tenant acknowledges and agrees that all disputes arising, directly or indirectly, out of or relating to this Lease shall be dealt with by application of the laws of the Commonwealth of Massachusetts and adjudicated in the state courts of the Commonwealth of Massachusetts sitting in Middlesex County or the United States District Court for the District of Massachusetts; and hereby expressly and irrevocably submits to the jurisdiction of such courts in any suit, action or proceeding arising, directly or indirectly, out of or relating to this Lease. So far as is permitted under the applicable law, this consent to personal jurisdiction shall be self-operative and no further instrument or action, other than service of process in one of the manners permitted by law, shall be necessary in order to confer jurisdiction upon either party in any such court.

 

(i)             Time. Time is of the essence as to the performance of Tenant’s obligations under this Lease.

 

(j)             OFAC. Tenant and all beneficial owners of Tenant are currently (a) in compliance with and shall at all times during the Term of this Lease remain in compliance with the regulations of the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury and any statute, executive order, or regulation relating thereto (collectively, the “OFAC Rules”), (b) not listed on, and shall not during the Term of this Lease be listed on, the Specially Designated Nationals and Blocked Persons List, Foreign Sanctions Evaders List, or the Sectoral Sanctions Identification List, which are all maintained by OFAC and/or on any other similar list maintained by OFAC or other governmental authority pursuant to any authorizing statute, executive order, or regulation, and (c) not a person or entity with whom a U.S. person is prohibited from conducting business under the OFAC Rules.

 

(k)           Incorporation by Reference. All exhibits and addenda attached hereto are hereby incorporated into this Lease and made a part hereof. If there is any conflict between such exhibits or addenda and the terms of this Lease, such exhibits or addenda shall control.

 

(l)             Entire Agreement. This Lease, including the exhibits attached hereto, constitutes the entire agreement between Landlord and Tenant pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, letters of intent, negotiations and discussions, whether oral or written, of the parties, and there are no warranties, representations or other agreements, express or implied, made to either party by the other party in connection with the subject matter hereof except as specifically set forth herein.

321 Arsenal (AOTC) / Disc Medicine - Page 36 

 

(m)          No Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly installment of Base Rent or any Additional Rent will be other than on account of the earliest stipulated Base Rent and Additional Rent, nor will any endorsement or statement on any check or letter accompanying a check for payment of any Base Rent or Additional Rent be an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or to pursue any other remedy provided in this Lease.

 

(n)           Intentionally Omitted.

 

(o)           Redevelopment of Project. Tenant acknowledges that Landlord intends to undertake significant renovations and/or construction at the Project, including, without limitation, for lab, office and retail uses, and including, without limitation, the creation of one or more Amenities or Amenity buildings or centers. Landlord expressly reserves the right, in its sole discretion, from time to time to expand, develop, renovate, redevelop, alter, improve, maintain, construct, demolish, relocate and/or reconfigure the Project (or portions thereof) and buildings, Common Areas (including parking and site drives) and other improvements therein, as the same may exist from time to time and, in connection therewith or in addition thereto, as the case may be, from time to time without limitation:  (a) change the shape, size, location, number and/or extent or existence of any improvements, buildings, structures, lobbies, hallways, entrances, exits, parking and/or parking areas; (b) modify, eliminate and/or add any buildings, improvements, and parking structure(s) either above or below grade, from or to the Project, the Amenities or other Common Areas and/or any other portion of the Project and/or make any other changes thereto affecting the same; (c) amend any existing land use and zoning approvals for the Project (including, without limitation, any special permit applicable to the Project) and seek additional approvals, relief or zoning amendments in connection with any future expansion, development, renovation, redevelopment, alteration, demolition, relocation, improvement, operation, maintenance or repair of the Project (including, without limitation, the Common Areas); and (d) make any other changes, additions and/or deletions in any way affecting the Project and/or any portion thereof as Landlord may elect from time to time, including without limitation, creation and/or elimination of, and/or additions to and/or deletions from, the land comprising the Project, the Amenities or other Common Areas and/or any other portion of the Project. Landlord shall have the right, in connection with such contemplated activities, to subject the Project and its appurtenant rights to easements for the construction, reconstruction, alteration, demolition, relocation, improvement, operation, repair or maintenance of elements thereof, for access and egress, for parking, for the installation, maintenance, repair, replacement or relocation of utilities serving the Project, and to subject the Project to such other rights, agreements, and covenants for such purposes as Landlord may determine; provided that such rights, agreements, and covenants do not change Tenant’s Permitted Use of the Premises. This Lease shall be subject and subordinate to all such matters. For the avoidance of doubt, however, Landlord shall have no obligation to undertake any action described in this Section 45(o), and Tenant is not entering into this Lease in reliance of Landlord making any alteration to the Project or any other action described in this Section 45(o).

 

Tenant hereby agrees that this Lease shall be subject and subordinate to any expansion, development, renovation, redevelopment, alteration, improvement, maintenance, demolition, relocation and/or reconfiguration activity, or any other matter set forth in this Section 45(o), and, in connection with such activity or matter, Landlord may, from time to time, cause the rentable square footage of the Premises, the Building and/or the Project to be remeasured by Landlord’s architect. Neither Tenant nor any affiliate of Tenant shall take any action, directly or indirectly, to oppose any of the foregoing activities by Landlord or its affiliates. Landlord and its agents, employees, licensees and contractors shall also have the right to undertake work pursuant to any actions contemplated above; to shore up the foundations and/or walls of the Building (or any other structures within the Project); to erect scaffolding and protective barricades around, within or adjacent to the Building (or any other structures within the Project); to close off Common Areas; and to do any other act necessary for the safety of the Building (or any other structures within the Project) or the expeditious completion of such work. Tenant acknowledges that construction noise, vibrations and dust, and alterations of traffic patterns or parking, associated with construction activities are to be expected during the course of such construction. Notwithstanding anything to the contrary contained in this Lease, Tenant shall have no right to cancel or terminate this Lease and Landlord shall not be liable to Tenant for any damages, compensation or reduction of Rent by reason of (i) inconvenience or annoyance or for loss of business resulting from any act by Landlord pursuant to this Section 45(o), or (ii) any changes, expansion, renovation or reconfiguration of the Project; nor shall Tenant have the right to restrict, inhibit or prohibit any such changes, expansion, renovation or reconfiguration, provided, however, Landlord shall not change Tenant’s Permitted Use of the Premises.

321 Arsenal (AOTC) / Disc Medicine - Page 37 

 

(p)           Discontinued Use. If, at any time following the Commencement Date, Tenant (and/or any assignee or subtenant) does not continuously operate a portion of its business in the Premises for a period of 180 consecutive days, other than due to a Force Majeure, Landlord may, but is not obligated to, elect to terminate this Lease upon 30 days’ written notice to Tenant, whereupon this Lease shall terminate 30 days after Landlord’s delivery of such written notice (“Termination Date”), and Tenant shall vacate the Premises and deliver possession thereof to Landlord in the condition required by the terms of this Lease on or before the Termination Date and Tenant shall have no further obligations under this Lease except for those accruing prior to the Termination Date and those which, pursuant to the terms of this Lease, survive the expiration or early termination of this Lease.

 

(q)           Counterparts. This Lease may be executed in 2 or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature process complying with the U.S. federal ESIGN Act of 2000) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. Electronic signatures shall be deemed original signatures for purposes of this Lease and all matters related thereto, with such electronic signatures having the same legal effect as original signatures.

 

(r)            Non-Disclosure of Terms. Tenant acknowledges and agrees that the terms of this Lease are confidential and constitute proprietary information of Landlord. Disclosure of such terms may adversely affect the ability of Landlord and its affiliates to negotiate, manage, and administer other leases and impair Landlord’s relationship with other tenants. Accordingly, as a material inducement for Landlord to enter into this Lease, Tenant, on behalf of itself and its partners, managers, members, officers, directors, employees, agents, and attorneys, agrees that it shall not disclose the terms and conditions of this Lease to any publication or other media or any tenant or apparent prospective tenant of the Building or other portion of the Project, or real estate agent or broker, either directly or indirectly.

 

(s)           Prevailing Party’s Fees. In the event that either party should bring suit or commence any suit or proceeding related to this Lease, then all reasonable costs and expenses, including reasonable attorneys’ fees and expert fees, incurred by the prevailing party relating to such legal action shall be paid by the other party, which obligation on the part of the other party shall be deemed to have accrued on the date of the commencement of such action and shall be enforceable whether or not the action is prosecuted to judgment.

 

[ Signatures on next page ]

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date first above written.

 

	TENANT:
	DISC MEDICINE, INC., a Delaware corporation
	By:	/s/ John Quisel
	Name:	John Quisel
	Title:	Chief Executive Officer
	☒ I hereby certify that the signature, name, and title above are my signature, name and title.

 

	LANDLORD:
	ARE-MA Region No. 75, LLC, a Delaware limited liability company
	By:	Alexandria Real Estate Equities, L.P., a Delaware limited partnership, managing member
		By:	ARE-QRS Corp., a Maryland corporation, general partner
			By:	/s/ Kristen Childs
			Name:	Kristen Childs
			Title:	Vice President – Real Estate L

 

[Signature Page to Lease Agreement – 321 Arsenal Street] 

321 Arsenal (AOTC) / Disc Medicine – Ex. A

 

EXHIBIT A

 

DESCRIPTION OF PREMISES

 

 

321 Arsenal (AOTC) / Disc Medicine – Ex. B

 

EXHIBIT B

 

DESCRIPTION OF PROJECT

 

A certain parcel of land with the buildings thereon situated on the Southerly side of Arsenal Street in Watertown, Middlesex County, Massachusetts and being shown as Lot 1 on a plan entitled “Plan of Land in Watertown, Massachusetts” dated June 19, 1997, prepared by Dunn-McKenzie, Inc. and recorded with the Middlesex South Registry of Deeds on August 5, 1998 as Plan No. 832 in Book 28930, Page 478, bounded and described as follows:

 

Beginning on the southerly sideline of Arsenal Street at the Northwesterly corner of Arsenal Associates Land being the Northeasterly corner of Lot 1 on the easterly sideline of Talcott Street (a private road); thence

 

SOUTH 13° 53’-39” WEST

a distance of 737.70 feet by Arsenal Associates and Town of Watertown land to an angle in said property; thence

 

SOUTH 11° 42’-25” EAST

a distance of 2.67 feet to a corner of Lot 2; thence

 

NORTH 76° 03’-07” WEST

a distance of 438.96 feet through a granite bound to a Hex-rod (set) for a corner; thence

 

SOUTH 19° 17’-48” WEST

a distance of 125.38 feet to an Iron Rod (set) for a corner; thence

 

SOUTH 50° 21’-36” WEST

a distance of 163.25 feet to an Iron Rod (set) at North Beacon Street on curve for a corner; thence

 

NORTHWESTERLY

on a curve to the right having a radius of 586.00 feet, an arc distance of 160.79 feet to the point of tangency; thence

 

NORTH 20° 36’-23” WEST

a distance of 292.07 feet to the point of curvature; thence

 

NORTHWESTERLY

on a curve to the left having a radius of 627.44 feet, an arc distance of 465.40 feet to the point of tangency; thence

 

NORTH 63° 06’-20” WEST

a distance of 707.76 feet to a slight angle break; thence

 

NORTH 63° 43’50” WEST

a distance of 101.12 feet to a corner of land of Burnham Manning Post #1105-Veterans of Foreign Wars of U.S.A., Inc. the last five courses being by North Beacon Street; thence

 

NORTH 25° 59’-00” EAST

a distance of 435.94 feet to a corner of Arsenal Street; thence

 

SOUTH 69° 39’-19” EAST

a distance of 1455.13 feet to a Stone Bound at a slight angle break; thence

 

SOUTH 68° 05’-21” EAST

a distance of 451.60 feet to a corner at the point and place of beginning, the last two courses being by Arsenal Street.

 

Lot 1 contains 1,281,841 square feet (29.42 Acres) more or less.

321 Arsenal (AOTC) / Disc Medicine – Ex. C

 

EXHIBIT C

 

WORK LETTER

 

This WORK LETTER (this “Work Letter”) is incorporated into that certain Lease Agreement (the “Lease”) dated as of October 29, 2021, by and between ARE-MA REGION NO. 75, LLC, a Delaware corporation (“Landlord”), and DISC MEDICINE, INC., a Delaware corporation (“Tenant”). Any initially capitalized terms used but not defined herein shall have the meanings given them in the Lease.

 

1.       General Requirements.

 

(a)       Tenant’s Authorized Representative. Tenant designates Betty Quigley and Joanne Bryce (either such individual acting alone, “Tenant’s Representative”) as the only persons authorized to act for Tenant pursuant to this Work Letter. Landlord shall not be obligated to respond to or act upon any request, approval, inquiry or other communication (“Communication”) from or on behalf of Tenant in connection with this Work Letter unless such Communication is in writing from Tenant’s Representative. Tenant may change either Tenant’s Representative at any time upon not less than 5 business days advance written notice to Landlord. Neither Tenant nor Tenant’s Representative shall be authorized to direct Landlord’s contractors in the performance of Landlord’s Work (as hereinafter defined).

 

(b)       Landlord’s Authorized Representative. Landlord designates Tim White and Suzie Markin (either such individual acting alone, “Landlord’s Representative”) as the only persons authorized to act for Landlord pursuant to this Work Letter. Tenant shall not be obligated to respond to or act upon any request, approval, inquiry or other Communication from or on behalf of Landlord in connection with this Work Letter unless such Communication is in writing from Landlord’s Representative. Landlord may change either Landlord’s Representative at any time upon not less than 5 business days advance written notice to Tenant. Landlord’s Representative shall be the sole persons authorized to direct Landlord’s contractors in the performance of Landlord’s Work.

 

(c)       Architects, Consultants and Contractors. Siena Construction shall be the general contractor and Cube3 Architects shall be the architect (the “Landlord Architect”) for the Landlord Work; provided that Landlord shall have the right to replace Siena Construction and Cube3 Architects.

 

2.       Performance of Landlord’s Work.

 

(a)       Definition of Landlord’s Work. As used herein, “Landlord’s Work” shall mean the construction, completion and installation of the improvements and fixtures within the Premises as depicted on and materially in accordance with the construction plans and specification listed on Schedule 1 attached hereto (the “Construction Plans”). A complete copy of such construction plans has previously been provided by Landlord to Tenant. For the avoidance of doubt, such construction plans include substantial areas outside of the Premises, but “Landlord’s Work” as used herein shall consist only of that portion of the construction work shown on such construction plans located within the Premises and, for the purposes of the Lease and this Work Letter, the term “Construction Plans” shall only mean those portions of such construction plans depicting work within the Premises. Tenant shall be solely responsible for ensuring that the design and specifications for Landlord’s Work are consistent with Tenant’s requirements. Landlord shall be responsible for obtaining all permits, approvals and entitlements necessary for Landlord’s Work, but shall have no obligation to, and shall not, secure any permits, approvals or entitlements related to Tenant’s specific use of the Premises or Tenant’s business operations therein.

321 Arsenal (AOTC) / Disc Medicine – Ex. C

 

(b)       Changes. If Tenant shall request changes to Landlord’s Work (“Changes”), Tenant shall request such Changes by delivery of written notice to Landlord detailing the nature and extent of any such Change (a “Change Request”). Such Change Request must be signed by Tenant’s Representative. Landlord shall use commercially reasonable efforts to respond to Tenant as soon as is reasonably possible with an estimate of: (i) the time it will take to analyze the Change Request, and (ii) the architectural and engineering fees and costs that will be incurred, to analyze such Change Request (which costs shall be paid for by Tenant to the extent actually incurred, whether or not such change is implemented). Landlord shall thereafter submit to Tenant in writing an analysis of the costs anticipated to be incurred by Landlord as a result of such Changes (including to analyze, design and implement the same), including, without limitation, architectural and engineering costs (collectively, “Change Costs”) and the period of time, if any, that the Change (including to analyze, design and implement the same) is expected to extend the date on which Landlord’s Work will be Substantially Complete. Any delay in the completion of Landlord’s Work caused by a Change (whether more or less than estimated, anticipated or expected), including any suspension of Landlord’s Work while any such Change is being evaluated and/or designed, shall be Tenant Delay (without the need for notice to Tenant identifying it as such). Any Change will be subject to Landlord’s approval in its sole discretion.

 

If Landlord approves the Change and Tenant approves in writing the estimated Change Costs and the estimated extension in the time for completion of Landlord’s Work, Landlord shall cause the approved Changes to be instituted. Notwithstanding anything to the contrary contained herein, Landlord shall have the right to institute Tenant’s requested Changes prior to approval by Tenant of the estimated Change Costs and/or the estimated extension of the time for completion of Landlord’s Work to the extent Landlord deems it appropriate to promptly incorporate such Changes into its construction schedule. Notwithstanding any approval or disapproval by Tenant of any estimated, anticipated or expected Change Costs or delay caused by such proposed Change, Tenant shall be responsible for the actual Change Costs (whether more or less than estimated, anticipated or expected) and the Landlord Architect’s determination of the actual amount of Tenant Delay in connection with such Change shall be final and binding on Landlord and Tenant (whether more or less than estimated, anticipated or expected). Tenant shall pay to Landlord upon demand the actual Change Costs. If Tenant fails to timely pay such amounts to Landlord, then Landlord shall have all of the rights and remedies set forth in the Lease for nonpayment of Rent (including, but not limited to, the right to interest at the Default Rate and the right to assess a late charge). For all purposes including purposes of any litigation instituted with regard to such amounts, those amounts will be deemed Rent under the Lease.

 

Tenant acknowledges that Landlord has already made certain changes to the Construction Plans at Tenant’s request and is in the process of making certain changes to the Construction Plans at Tenant’s request, such changes being subject to Landlord’s approval (collectively, the “Previously Agreed Modifications”). The Previously Agreed Modifications are generally described in Schedule 2 attached hereto. Tenant will reimburse Landlord for the actual cost to design and construct the Previously Agreed Modifications upon the Commencement Date (whether listed on Schedule 2 or not and whether more or less than those set forth on Schedule 2), and any delay in the design or construction of Landlord’s Work on account of the design and construction of the Previously Agreed Modifications shall be a Tenant Delay without further notice from Landlord (whether more or less than that set forth on Schedule 2). Notwithstanding the foregoing, Landlord hereby acknowledges that the Previously Agreed Modifications set forth on Schedule 2 attached hereto shall not be a Tenant Delay. In the event of a dispute concerning the amount of such Tenant Delay, the same will be resolved by Landlord’s Architect.

 

(c)       Completion of Landlord’s Work. Landlord shall substantially complete or cause to be substantially completed Landlord’s Work in a good and workmanlike manner, in material compliance with the Construction Plans, subject, in each case, to Minor Variations and normal “punch list” items of a non-material nature that do not interfere with the use of the Premises. Landlord’s Work shall be deemed “Substantial Complete” when (i) the Landlord Architect and the general contractor execute and deliver, for the benefit of Tenant and Landlord, a Certificate of Substantial Completion in the form of the American Institute of Architects (“AIA”) document G704, and (ii) a certificate of occupancy permitting lawful occupancy (temporary or permanent) or a signed building card from the city inspectors has been issued or obtained permitting lawful occupancy of the space unless the same cannot be obtained due to work or other activities of Tenant. For purposes of this Work Letter, “Minor Variations” shall mean any modifications reasonably required: (i) to comply with all applicable Legal Requirements and/or to obtain or to comply with any required permit; (ii) to comport with good design, engineering, and construction practices that are not material; or (iii) to make reasonable adjustments for field deviations or conditions encountered during the construction of Landlord’s Work.

321 Arsenal (AOTC) / Disc Medicine – Ex. C

 

(d)       Selection of Materials. Where a material or structure is not indicated on the Construction Plans, the option will be selected at Landlord’s sole and absolute subjective discretion. As to all building materials and equipment that Landlord is obligated to supply under this Work Letter, Landlord shall select the manufacturer thereof in its sole and absolute subjective discretion.

 

(e)       Delivery of the Premises. When Landlord’s Work is Substantially Complete, subject to the remaining terms and provisions of this Section 3(e), Tenant shall accept the Premises. Tenant’s taking possession and acceptance of the Premises shall not constitute a waiver of: (i) any warranty with respect to workmanship (including installation of equipment) or material (exclusive of equipment provided directly by manufacturers), (ii) any non-compliance of Landlord’s Work with applicable Legal Requirements, or (iii) any claim that Landlord’s Work was not completed substantially in accordance the Construction Plans (subject to Minor Variations and such other changes as are permitted hereunder) (collectively, a “Construction Defect”). Tenant shall have one year after Substantial Completion within which to notify Landlord of any such Construction Defect discovered by Tenant, and Landlord shall use reasonable efforts to remedy or cause the responsible contractor to remedy any such Construction Defect within 30 days thereafter. Notwithstanding the foregoing, Landlord shall not be in default under the Lease if the applicable contractor, despite Landlord’s reasonable efforts, fails to remedy such Construction Defect within such 30- day period, in which case Landlord shall have no further obligation with respect to such Construction Defect other than to cooperate, at no cost to Landlord, with Tenant should Tenant elect to pursue a claim against such contractor, provided that Tenant shall defend with counsel reasonably acceptable to Landlord, indemnify and hold Landlord harmless from and against any claims arising out of or in connection with any such claim.

 

Tenant shall be entitled to receive the benefit of all construction warranties and manufacturer’s equipment warranties relating to equipment installed in the Premises. Landlord shall promptly undertake and complete, or cause to be completed, all punch list items.

 

(f)       Commencement Date Delay. Except as otherwise provided in this Lease, Delivery of the Premises shall occur when Landlord’s Work has been Substantially Completed, except to the extent that completion of Landlord’s Work shall have been actually delayed by any act or omission of Tenant or any Tenant Party (as defined in the Lease), or persons employed by any of such persons, or by any other reason defined as a Tenant Delay in this Work Letter (“Tenant Delay”), in which case, Landlord shall cause the Landlord Architect to certify the date on which Landlord’s Work would have been Substantially Completed but for such Tenant Delay and such certified date shall be the date of Delivery.

 

3.       Tenant Access.

 

(a)       Tenant’s Access Rights. Except to the extent expressly set forth in the Construction Plans, Tenant shall be responsible for its own tel/data cabling, furniture, fixtures, and equipment, the installation of which shall be subject to the provisions of the Lease and this Work Letter. Landlord hereby agrees to permit Tenant access, at Tenant’s sole risk and expense, to the Building (i) in advance of the Commencement Date as indicated on Landlord’s project schedule for the FF&E Installation (as defined in the Lease) and the installation of Tenant’s tel/data cabling, provided that such installation and setup is coordinated with the Landlord Architect and the general contractor, and complies with the Lease and all other reasonable restrictions and conditions Landlord may impose, and (ii) prior to the completion of Landlord’s Work, to inspect and observe work in process; all such access shall be during normal business hours or at such other times as are reasonably designated by Landlord. Notwithstanding the foregoing, Tenant shall have no right to enter onto the Premises or the Project unless and until Tenant shall deliver to Landlord evidence reasonably satisfactory to Landlord demonstrating that any insurance reasonably required by Landlord in connection with such pre-commencement access (including, but not limited to, any insurance that Landlord may require pursuant to the Lease) is in full force and effect. Any entry by Tenant shall comply with all established safety practices of Landlord’s contractor and Landlord until completion of Landlord’s Work and acceptance thereof by Tenant.

 

(b)       No Interference. Neither Tenant nor any Tenant Party (as defined in the Lease) shall interfere with the performance of Landlord’s Work, nor with any inspections or issuance of final approvals by applicable Governmental Authorities, and upon any such interference, Landlord shall have the right to exclude Tenant and any Tenant Party from the Premises and the Project until Substantial Completion of Landlord’s Work.

321 Arsenal (AOTC) / Disc Medicine – Ex. C

 

(c)       No Acceptance of Premises. The fact that Tenant may, with Landlord’s consent, enter into the Project prior to the date Landlord’s Work is Substantially Complete for the purpose of the FF&E Installation and the installation of Tenant’s tel/data cabling shall not be deemed an acceptance by Tenant of possession of the Premises, but in such event Tenant shall defend with counsel reasonably acceptable by Landlord, indemnify and hold Landlord harmless from and against any loss of or damage to Tenant’s property, completed work, fixtures, equipment, materials or merchandise, and from liability for death of, or injury to, any person, caused by the act or omission of Tenant or any Tenant Party.

 

4.       Miscellaneous.

 

(a)       Miscellaneous Charges. Tenant shall not be charged for freight elevators, security, access to loading docks, parking, utilities, or temporary HVAC during Tenant’s move into the Building, provided that said activities occur during normal Building hours.

 

(b)       Modification. No modification, waiver or amendment of this Work Letter or of any of its conditions or provisions shall be binding upon Landlord or Tenant unless in writing signed by Landlord and Tenant.

 

(c)       No Default. In no event shall Landlord have any obligation to perform any Landlord’s Work during any period that Tenant is in Default under the Lease.

 

[Remainder of page left blank]

 

321 Arsenal (AOTC) / Disc Medicine – Ex. D

 

EXHIBIT D

 

ACKNOWLEDGEMENT OF COMMENCEMENT DATE

 

This ACKNOWLEDGMENT OF COMMENCEMENT DATE is made as of this ____ day of ______________, 202____, between ARE-MA REGION NO. 75, LLC, a Delaware limited liability company (“Landlord”), and DISC MEDICINE, INC., a _____________ (“Tenant”), and is attached to and made a part of that certain Lease Agreement dated as of _____________, 2021 (the “Lease”), by and between Landlord and Tenant. Any initially capitalized terms used but not defined herein shall have the meanings given them in the Lease.

 

Landlord and Tenant hereby acknowledge and agree, for all purposes of the Lease, that the Commencement Date of the Base Term of the Lease is _____________, 202____, and the expiration date of the Base Term of the Lease shall be at 11:59 p.m. on ______________, 20____. In case of a conflict between the terms of the Lease and the terms of this Acknowledgment of Commencement Date, this Acknowledgment of Commencement Date shall control for all purposes.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this ACKNOWLEDGMENT OF COMMENCEMENT DATE to be effective on the date first above written.

 

TENANT:

 

DISC MEDICINE, INC.,
a Delaware corporation

 

By:

Name:

Title:

 

 

LANDLORD:

 

ARE-MA REGION NO. 75, LLC,
a Delaware limited liability company

 

By:	Alexandria Real Estate Equities, L.P., a Delaware limited partnership, managing member
	By:	ARE-QRS Corp., a Maryland corporation, general partner

  

By:

Name:

Title:

321 Arsenal (AOTC) / Disc Medicine – Ex. E

 

EXHIBIT E

 

Rules and Regulations

 

1.             The sidewalk, entries, and driveways of the Project shall not be obstructed by Tenant, or any Tenant Party, or used by them for any purpose other than ingress and egress to and from the Premises.

 

2.             Tenant shall not place any objects, including antennas, outdoor furniture, etc., in the parking areas, landscaped areas or other areas outside of its Premises, or on the roof of the Project (except as permitted by the terms of this Lease).

 

3.             Except for animals assisting the disabled, no animals shall be allowed in the offices, halls, or corridors in the Building without Landlord’s express written consent.

 

4.             Tenant shall not disturb the occupants of the Project or adjoining buildings by the use of any radio or musical instrument or by the making of loud or improper noises.

 

5.             If Tenant desires telegraphic, telephonic or other electric connections in the Premises, Landlord or its agent will direct the electrician as to where and how the wires may be introduced; and, without such direction, no boring or cutting of wires will be permitted. Any such installation or connection shall be made at Tenant’s expense.

 

6.             Tenant shall not install or operate any steam or gas engine or boiler, or other mechanical apparatus in the Premises, except as specifically approved in the Lease. The use of oil, gas or inflammable liquids for heating, lighting or any other purpose is expressly prohibited. Explosives or other articles deemed extra hazardous shall not be brought into the Project.

 

7.             Parking any type of recreational vehicles is specifically prohibited on or about the Project. Except for the overnight parking of operative vehicles, no vehicle of any type shall be stored in the parking areas at any time. In the event that a vehicle is disabled, it shall be removed within 48 hours. There shall be no “For Sale” or other advertising signs on or about any parked vehicle. All vehicles shall be parked in the designated parking areas in conformity with all signs and other markings. All parking will be open parking, and no reserved parking, numbering or lettering of individual spaces will be permitted except as specified by Landlord.

 

8.             Tenant shall maintain the Premises free from rodents, insects and other pests.

 

9.             Landlord reserves the right to exclude or expel from the Project any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs or who shall in any manner do any act in violation of the Rules and Regulations of the Project.

 

10.          Tenant shall not cause any unnecessary labor by reason of Tenant’s carelessness or indifference in the preservation of good order and cleanliness. Landlord shall not be responsible to Tenant for any loss of property on the Premises, however occurring, or for any damage done to the effects of Tenant by the janitors or any other employee or person.

 

11.          Tenant shall give Landlord prompt notice of any defects in the water, lawn sprinkler, sewage, gas pipes, electrical lights and fixtures, heating apparatus, or any other service equipment affecting the Premises.

 

12.          Tenant shall not permit storage outside the Premises, including without limitation, outside storage of trucks and other vehicles, or dumping of waste or refuse or permit any harmful materials to be placed in any drainage system or sanitary system in or about the Premises.

321 Arsenal (AOTC) / Disc Medicine – Ex. E

 

13.          All moveable trash receptacles provided by the trash disposal firm for the Premises must be kept in the trash enclosure areas, if any, provided for that purpose.

 

14.          No auction, public or private, will be permitted on the Premises or the Project.

 

15.          No awnings shall be placed over the windows in the Premises except with the prior written consent of Landlord.

 

16.          The Premises shall not be used for lodging, sleeping or cooking or for any immoral or illegal purposes or for any purpose other than that specified in the Lease. No gaming devices shall be operated in the Premises.

 

17.          Tenant shall ascertain from Landlord the maximum amount of electrical current which can safely be used in the Premises, taking into account the capacity of the electrical wiring in the Project and the Premises and the needs of other tenants, and shall not use more than such safe capacity. Landlord’s consent to the installation of electric equipment shall not relieve Tenant from the obligation not to use more electricity than such safe capacity.

 

18.          Tenant assumes full responsibility for protecting the Premises from theft, robbery and pilferage.

 

19.          Tenant shall not install or operate on the Premises any machinery or mechanical devices of a nature not directly related to Tenant’s ordinary use of the Premises and shall keep all such machinery free of vibration, noise and air waves which may be transmitted beyond the Premises.

 

20.          Tenant shall cause any vendors and other service providers hired by Tenant to perform services at the Premises or the Project to maintain in effect workers’ compensation insurance as required by Legal Requirements and commercial general liability insurance with coverage amounts reasonably acceptable to Landlord.  Tenant shall cause such vendors and service providers to name Landlord and Alexandria Real Estate Equities, Inc. as additional insureds under such policies and shall provide Landlord with certificates of insurance evidencing the required coverages (and showing Landlord and Alexandria Real Estate Equities, Inc. as additional insureds under such policies) prior to the applicable vendor or service provider providing any services to Tenant at the Project.

 

21.          Neither Tenant nor any of the Tenant Parties shall have the right to photograph, videotape, film, digitally record or by any other means record, transmit and/or distribute any images, pictures or videos of all or any portion of the Premises or the Project.

 

22.          Tenant shall regularly review the guidelines published by the Centers for Disease Control (CDC) and any state and/or local governmental agencies, and will implement the practices and procedures suggested thereby, as well as industry standard best practices, to limit or prevent the spread or transmission of Infectious Conditions.

 

23.          Landlord shall have the right, but not the obligation, to require Tenant to implement procedures intended to mitigate the spread or transmission of Infectious Conditions.

 

24.          Without limiting Landlord’s general right to amend, update, and implement new rules and regulations, Tenant acknowledges that Landlord has the right, but has no obligation, to implement additional rules and regulations relating to access to the Premises, the Building and/or the Project (including, without limitation, the Amenities) that are intended to promote and protect health and physical well-being and/or prevent or limit the spread or transmission of Infectious Conditions.

321 Arsenal (AOTC) / Disc Medicine – Ex. F

 

EXHIBIT F

 

REMOVABLE INSTALLATIONS

 

None.

321 Arsenal (AOTC) / Disc Medicine – Ex. G

 

EXHIBIT G

 

IDENTIFICATION OF ACM, PACM & LEAD PAINT

 

NOTIFICATION OF THE PRESENCE OF ASBESTOS CONTAINING MATERIALS

 

This notification provides certain information about asbestos within or about the Premises at Arsenal on the Charles, Watertown, Massachusetts (“Building”).

 

Historically, asbestos was commonly used in building products used in the construction of buildings across the country. Asbestos-containing building products were used because they are fire-resistant and provide good noise and temperature insulation. Because of their prevalence, asbestos-containing materials, or ACMs, are still sometimes found in buildings today.

 

The Buildings at the site were constructed prior to 1981 and an asbestos survey of the buildings conducted in 2019 confirmed the presence of Asbestos Containing Materials (ACMs). The asbestos survey has determined that ACMs and/or materials that might contain ACMs, referred to as presumed asbestos-containing materials or PACMs, are present within or about the Premises as follows:

 

Building 60
Building 97
Building 117
Building 118
Building 311
Building 312
Building 313

 

Because ACMs and PACMs may be present within or about the Building, we have hired an independent environmental consulting firm to prepare an operations and maintenance program (“O&M Program”). The O&M Program is designed to minimize the potential of any harmful asbestos exposure to any person within or about the Building. The O&M Program includes a description of work methods to be taken in order to maintain any ACMs or PACMs within or about the Building in good condition and to prevent any significant disturbance of such ACMs or PACMs. Appropriate personnel receive regular periodic training on how to properly administer the O&M Program.

 

The O&M Program describes the risks associated with asbestos exposure and how to prevent such exposure through appropriate work practices. ACMs and PACMs generally are not thought to be a threat to human health unless asbestos fibers are released into the air and inhaled. This does not typically occur unless (1) the ACMs are in a deteriorating condition, or (2) the ACMs have been significantly disturbed (such as through abrasive cleaning, or maintenance or renovation activities). If inhaled, asbestos fibers can accumulate in the lungs and, as exposure increases, the risk of disease (such as asbestosis or cancer) increases. However, measures to minimize exposure, and consequently minimize the accumulation of asbestos fibers, reduce the risks of adverse health effects.

 

The O&M Program describes a number of activities that should be avoided in order to prevent a release of asbestos fibers. In particular, you should be aware that some of the activities which may present a health risk include moving, drilling, boring, or otherwise disturbing ACMs. Consequently, such activities should not be attempted by any person not qualified to handle ACMs.

 

The O&M Program is available for review during regular business hours at Landlord’s office located at 400 Technology Square, Suite 101, Cambridge, MA 02139.

 

Exhibit 10.5

 

ADDENDUM TO LICENSE AGREEMENT

 

THIS ADDENDUM TO LICENSE AGREEMENT (this “Addendum”) is entered into as of December 7, 2021 (the “Effective Date”) by and among Disc Medicine, Inc., a Delaware corporation with an office and place of business at 321 Arsenal Street, Suite 101, Watertown, MA 02472 (“Disc” or the “Company”), F. Hoffmann-La Roche Ltd, with an office and place of business at Grenzacherstrasse 124, 4070 Basel, Switzerland (“Roche Basel”) and Hoffmann-La Roche Inc., with an office and place of business at 150 Clove Road, Suite 8, Little Falls, New Jersey 07424, U.S.A. (“Roche US”; Roche Basel and Roche US together referred to as “Roche”). Each of Disc, Roche US and Roche Basel are referred to herein as a “Party” and collectively as the “Parties”.

 

INTRODUCTION

 

WHEREAS, the Parties entered into a License Agreement on May 7, 2021 (the “Agreement”).

 

WHEREAS, the Parties wish to memorialize their mutual understanding of what rights Roche and its Affiliate(s) may have under the Agreement in the event that Disc completes an IPO.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises and conditions hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:

 

AGREEMENT

 

Capitalized terms used but not defined herein will have the meanings set forth in the Agreement.

 

1.

Notwithstanding anything to the contrary in the Agreement, and in lieu of the provisions and procedures set forth in the first two sentences of Section 10.11 thereof, in the event that Disc completes an IPO during the Agreement Term, then the Roche Equityholder will be issued a number of shares of the Company’s capital stock (or the common stock of any successor to the Company in the IPO) equal to two and eighty-five one hundreds of a percent (2.85%) of the outstanding shares of common stock of the Company (or such successor) as of immediately after the completion of the IPO (including the exercise by the underwriters thereof of any overallotment option), which number of Shares shall constitute the Roche Shares for all purposes under the Agreement. Except as expressly modified by the forgoing sentence, the Agreement, including Section 10.11 thereof, remains unmodified and in full force and effect.

 

2.

The Parties hereby agree to discuss in good faith a mutually acceptable revised set of terms to replace those set forth in Section 1 hereunder in the event that prior to an IPO, Disc discontinues or materially delays development for either of (a) the Compound or (b) DISC-0974.

 

3.

Sections 19 and 21 of the Agreement are hereby incorporated by reference as if set forth herein (mutatis mutandis), except that references therein to the Agreement shall be deemed to be references to this Addendum.

4.

This Addendum shall automatically terminate upon the earliest to occur, if any, of (i) the Company notifying Roche that it has determined not to proceed with the Public Offering, (ii) the termination of the Underwriting Agreement before the sale of any Shares to the Underwriters, (iii) the registration statement filed with the SEC with respect to the Public Offering contemplated by the Underwriting Agreement is withdrawn or (iv) February 28, 2022, in the event the closing of the Public Offering shall not have occurred on or before such date. For purposes of this Addendum, Underwriting Agreement shall mean an Underwriting Agreement that Morgan Stanley & Co. LLC, Jefferies LLC and SVB Leerink LLC (collectively, the “Representatives”) propose to enter into with Disc Medicine, Inc. (the “Underwriting Agreement”), providing for the public offering (the “Public Offering”) by the several Underwriters, including the Representatives (the “Underwriters”), of shares of the common stock, par value $0.0001 per share, of the Company.

 

5.

This Addendum may be executed in counterparts, each of which counterparts, when so executed and delivered, will be deemed to be an original, and all of which counterparts, taken together, will constitute one and the same instrument even if both Parties have not executed the same counterpart. Signatures provided by facsimile transmission or in Adobe™ Portable Document Format (PDF) sent by electronic mail will be deemed to be original signatures. No provision of this Addendum may be amended or modified other than by a written document signed by authorized representatives of each Party hereto specifically referencing this Addendum.

 

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, each Party has caused this Addendum to be duly executed by its authorized representative under seal, in duplicate on the Effective Date.

 

 

	DISC MEDICINE, INC.
	/s/ John Quisel
	Name: John Quisel
	Title: President & CEO
	F. Hoffmann-La Roche Ltd
	/s/ Vikas Kabra
	Name: Vikas Kabra
	Title: Authorized Signatory
	/s/ Barbara Schroeder
	Name: Barbara Schroeder
	Title: Authorized Signatory
	Hoffmann-La Roche Inc.
	/s/ John Parise
	Name: John Parise
	Title: Authorized Signatory

 

[Signature Page to Addendum to License Agreement]

 

THIS SECOND AMENDMENT AGREEMENT (the “Amendment”) is made on March 7, 2022 (the “Amendment Date”

Exhibit 21.1

 

Subsidiaries of Disc Medicine, Inc.

 

Subsidiary		Jurisdiction of Organization
Disc Medicine Securities Corp.		Massachusetts

 

---

LIST OF SUBSIDIARIES

February 11, 2021

Name of Active Subsidiary		Jurisdiction
Gemini Therapeutics Sub, Inc. (100%)		Delaware

Exhibit 23.2

 

Consent of Independent Registered Public Accounting Firm

 

We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-4) and related Proxy Statement/Prospectus of Gemini Therapeutics, Inc. and to the incorporation by reference therein of our report dated March 10, 2022, with respect to the consolidated financial statements of Gemini Therapeutics, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 2021, filed with the Securities and Exchange Commission.

 

/s/ Ernst & Young LLP
Boston, Massachusetts September 2, 2022