Document:

Exhibit 10.9

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT (this “Lease”) is made this 30th day of September, 2013, between ARE-MA REGION NO. 9, LLC, a Delaware limited liability company (“Landlord”), and KALA PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”).

 

	
Building:
    	
 
    	
100 Beaver Street, Waltham, Massachusetts
    
	
 
    	
 
    	
 
    
	
Premises:
    	
 
    	
That portion of the second floor of the Building,   containing approximately 11,747 rentable square feet, as determined by   Landlord, as shown on Exhibit A.
    
	
 
    	
 
    	
 
    
	
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.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Base Rent:
    	
 
    	
Months 1 — 12:
    	
 
    	
$28.50 per rentable square foot of the Premises per   annum
    
	
 
    	
 
    	
Months 13 — 24:
    	
 
    	
$29.50 per rentable square foot of the Premises per   annum
    
	
 
    	
 
    	
Months 25 — 36:
    	
 
    	
$30.50 per rentable square foot of the Premises per   annum
    

 

Rentable Area of Premises:  11,747 sq. ft

 

Rentable Area of Project:  82,330 sq. ft.                                                                   Tenant’s Share of Operating Expenses:  14.27%

 

Security Deposit:                        $83,697.37

 

Target Commencement Date:  February 1, 2014

 

	
Base Term:
    	
 
    	
Beginning on the Commencement Date and ending 36   months from the first day of the first full month of the Term (as defined in Section 2)   hereof.
    
	
 
    	
 
    	
 
    
	
Permitted Use:
    	
 
    	
Research and development laboratory, related office   and other related uses consistent with the character of the Project and   otherwise in compliance with the provisions of Section 7 hereof.
    

 

	
Address for Rent   Payment:
    P.O. Box 975383 
   Dallas, TX 75397-5383
    	
Landlord’s Notice   Address:
    385 E. Colorado Boulevard,   Suite 299 
   Pasadena, CA 91101 
   Attention: Corporate Secretary
    
	
 
    	
 
    
	
Tenant’s Notice   Address
   Before the Commencement Date:
   135 Beaver Street, Suite 309 
   Waltham, MA 02452 
   Attention: General Counsel
    	
Tenant’s Notice   Address
   After the Commencement Date:
   100 Beaver Street, Suite 201 
   Waltham, MA 02452 
   Attention: General Counsel
    

 

The following Exhibits and Addenda are attached hereto and incorporated herein by this reference:

 

	
x    EXHIBIT A - PREMISES DESCRIPTION   
    	
x    EXHIBIT B - DESCRIPTION OF   PROJECT
    
	
x    EXHIBIT C - WORK LETTER
    	
x    EXHIBIT D - COMMENCEMENT DATE
    
	
x    EXHIBIT E - RULES AND   REGULATIONS
    	
x    EXHIBIT F - TENANT’S PERSONAL   PROPERTY
    
	
x    EXHIBIT G - HAZARDOUS MATERIALS   LIST
    	
 
    

 

 

 

 

	
Net Multi-Tenant Laboratory
    	
 
    	
100 Beaver/Kala
    

 

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 are for the non-exclusive use of tenants of the Project are collectively referred to herein as the “Common Areas,” which shall include, but not be limited to, all common hallways, lobbies, bathrooms, corridors, walkways, elevators (including freight elevators), loading docks and dumpsters. Landlord reserves the right to modify Common Areas, provided that such modifications do not materially adversely affect Tenant’s use of the Premises for the Permitted Use. From and after the Commencement Date through the expiration of the Term, Tenant shall have access to the Building and the Premises 24 hours a day, 7 days a week, except in the case of emergencies, as the result of Legal Requirements, the performance by Landlord of any installation, maintenance or repairs, or any other temporary interruptions, and otherwise subject to the terms of this Lease.

 

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”). 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 within 45 days of the Target Commencement Date for any reason other than Force Majeure delays and Tenant Delays, this Lease may be terminated by Tenant by written notice 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, 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 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 10 business days of the lapse of such 45 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, if Tenant does not terminate this Lease pursuant to the immediately preceding sentence, Base Rent shall be abated 1 day for each day after such 45 day period (as extended by Force Majeure delays and Tenant Delays) that the Premises are not Delivered to Tenant.

 

The “Commencement Date” shall be the earlier of: (i) the date Landlord Delivers the Premises to Tenant; and (ii) the date Landlord could have Delivered the Premises but for Tenant Delays; provided, however, in no event shall the Commencement Date occur prior to January 15, 2014. Upon request of Landlord, Landlord and 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 the Extension Term which Tenant may elect pursuant to Section 40 hereof.

 

Except as set forth in the Work Letter and as otherwise expressly set forth in this Lease: (i) Tenant shall accept the Premises in their condition as of the Commencement Date, subject to all applicable Legal Requirements (as defined in Section 7 hereof); (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. 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 Base Rent and Operating Expenses. Tenant shall be entitled to receive the benefit of all construction warranties and manufacturer’s equipment warranties issued for the benefit of Landlord relating to the Tenant Improvements constructed in the Premises pursuant to the Work Letter.

 

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For the period of 90 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 structural portion of the Premises or Building Systems (as defined in Section 13) serving the Premises, unless Tenant or any Tenant Party was responsible for the cause of such repair, in which case Tenant shall pay the cost.

 

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 Security Deposit and the first month’s Base Rent shall be due and payable on or before January 10, 2014. Tenant shall pay to Landlord in advance, without demand, abatement, deduction or set-off, equal 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” (as defined in Section 5), and (ii) 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.

 

(a)                                 Annual Adjustment. Base Rent shall be increased during the Base Term as provided for in the schedule set forth on page 1 of this Lease. Base Rent adjustments for any fractional calendar month shall be prorated.

 

(b)                                 TI Rent. Landlord shall, subject to the terms of the Work Letter, make the Glasswasher Allowance (as defined in the Work Letter) available to Tenant. Commencing on the Commencement Date and continuing thereafter on the first day of each month during the Term, Tenant shall pay the amount necessary to fully amortize the portion of the Glasswasher Allowance actually funded by Landlord, if any, over 6 years in equal monthly payments with interest at a rate of 8% per annum (“TI Rent”).

 

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

 

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same date that Base Rent is due, Tenant shall pay Landlord an amount equal to 1/12th of Tenant’s Share of the Annual Estimate. Payments for any fractional calendar month shall be prorated.

 

The term “Operating Expenses” means all costs and expenses of any kind or description whatsoever incurred or accrued each calendar year by Landlord with respect to the Project (including, without duplication, Taxes (as defined in Section 9), reasonable reserves consistent with good business practice for future repairs and replacements, capital repairs and improvements amortized over the lesser of 10 years and the useful life of such capital items (as reasonably determined by Landlord taking into account relevant factors), and the costs of Landlord’s third party property manager or, if there is no third party property manager, administration rent in the amount of 2.5% of Base Rent), excluding only:

 

(a)                                 the original construction costs of the Project and renovation prior to the date of the Lease and costs of correcting defects in such original construction or renovation;

 

(b)                                 capital expenditures for expansion of the Project;

 

(c)                                  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;

 

(d)                                 depreciation of the Project (except for capital improvements, the cost of which are includable in Operating Expenses);

 

(e)                                  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;

 

(f)                                   legal and other expenses incurred in the negotiation or enforcement of leases;

 

(g)                                  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;

 

(h)                                 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;

 

(i)                                     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;

 

(j)                                    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;

 

(k)                                 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;

 

(l)                                     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);

 

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(m)                             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;

 

(n)                                 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;

 

(o)                                 costs of Landlord’s charitable or political contributions, or of fine art maintained at the Project;

 

(p)                                 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;

 

(q)                                 costs incurred in the sale or refinancing of the Project;

 

(r)                                    the cost of designing and constructing the Tenant Improvements in the Premises pursuant to the Work Letter;

 

(s)                                   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; and

 

(t)                                    any expenses otherwise includable within Operating Expenses to the extent actually reimbursed by persons other than tenants of the Project under leases for space in the Project.

 

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 and Tenant’s Share of actual Operating Expenses for the previous calendar year, and (b) the total of Tenant’s payments in respect of Operating Expenses for such year. If Tenant’s Share of actual Operating Expenses for such year exceeds Tenant’s payments of Operating Expenses for such year, the excess shall be due and payable by Tenant as Rent within 30 days after delivery of such Annual Statement to Tenant. If Tenant’s payments of Operating Expenses for such year exceed Tenant’s Share of actual 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.

 

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 an independent regionally recognized 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), audit and/or

 

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review the Expense Information for the year in question (the “Independent Review”). 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 5% 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.

 

“Tenant’s Share” shall be the percentage set forth on the first page of this Lease as Tenant’s Share as reasonably adjusted by Landlord for changes in the physical size of the Premises or the Project occurring thereafter. Landlord may equitably increase Tenant’s Share 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.”

 

6.                                      Security Deposit. Tenant shall deposit with Landlord, on or before January 10, 2014, 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, 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. The Security Deposit shall be held by Landlord as security for the performance of Tenant’s obligations under this Lease. The Security Deposit is not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default. Upon each occurrence of a Default (as defined in Section 20), Landlord may use all or any part of the Security Deposit to pay delinquent payments due under this Lease, future rent damages 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. Landlord’s right to use the Security Deposit under this Section 6 includes the right to use the Security Deposit to pay future rent damages following the termination of this Lease pursuant to Section 21(c) below. Upon any use of all or any portion of the Security Deposit, Tenant shall pay Landlord on demand the amount that will restore the Security Deposit to the amount set forth on Page 1 of this Lease. 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

 

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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. Upon bankruptcy or other debtor-creditor proceedings against Tenant, the Security Deposit shall be deemed to be applied first to the payment of Rent and other charges due Landlord for periods prior to the filing of such proceedings. Upon any such use of all or any portion of the Security Deposit, Tenant shall, within 5 days after demand from Landlord, restore the Security Deposit to its original amount. If Tenant shall fully perform every provision of this Lease to be performed by Tenant, 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 (or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder) within 90 days after the expiration or earlier termination of this Lease.

 

If Landlord transfers its interest in the Project or this Lease, Landlord shall either (a) transfer any Security Deposit then held by Landlord to a person or entity assuming Landlord’s obligations under this Section 6, or (b) return to Tenant any Security Deposit then held by Landlord and remaining after the deductions permitted herein. Upon such transfer to such transferee or the return of the Security Deposit to Tenant, Landlord shall have no further obligation with respect to the Security Deposit, and Tenant’s right to the return of the Security Deposit shall apply solely against Landlord’s transferee. The Security Deposit is not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default. Landlord’s obligation respecting the Security Deposit is that of a debtor, not a trustee, and no interest shall accrue thereon.

 

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 and restrictions now or hereafter applicable to the Premises, and to the use and occupancy thereof, including, without limitation, the Americans With Disabilities Act, 42 U.S.C. § 12101, et seq. (together with the regulations promulgated pursuant thereto, “ADA”) (collectively, “Legal Requirements” and each, a “Legal Requirement”). Tenant shall, upon 5 days’ written notice from Landlord, discontinue any use of the Premises which is declared by any Governmental Authority (as defined in Section 9) 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 that would overload the floor 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. Landlord hereby consents to the transport through the Common Areas and the placement within the Premises (in the locations reflected on the Space Plan (as defined in the Work Letter)) of the Tenant equipment reflected in the Space Plan pursuant to its determination that the same, as located as reflected in the Space Plan, is within the structural capacity of the floor of the Premises. Except as may be provided under the Work Letter, Tenant shall not, without the

 

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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 as usually furnished for the Permitted Use.

 

Landlord shall be responsible for the compliance of the Premises and the Common Areas of the Project with Legal Requirements as of the Commencement Date. Following the Commencement Date, Landlord shall, as an Operating Expense (to the extent such Legal Requirement is generally applicable to similar buildings in the area in which the Project is located) and at Tenant’s expense (to the extent such Legal Requirement is triggered by reason of Tenant’s, as compared to other tenants of the Project, specific use of the Premises or Tenant’s Alterations) make any alterations or modifications to the Common Areas or the exterior of the Building that are required by Legal Requirements. Tenant, at its sole expense, shall make any alterations or modifications to the interior of the Premises that are required by Legal Requirements (including, without limitation, compliance of the Premises with the ADA) related to Tenant’s specific use or occupancy of the Premises or Tenant’s Alterations. Notwithstanding any other provision herein to the contrary, Tenant shall be responsible for any and all demands, claims, liabilities, losses, costs, expenses, actions, causes of action, damages or judgments, and all reasonable expenses incurred in investigating or resisting the same (including, without limitation, reasonable attorneys’ fees, charges and disbursements and costs of suit) (collectively, “Claims”) arising out of or in connection with Tenant’s failure to comply with Legal Requirements applicable to Tenant’s specific use or occupancy of the Premises or Tenant’s Alterations, and Tenant shall indemnify, defend, hold and save Landlord harmless from and against any and all Claims arising out of or in connection with any failure of the Premises to comply with any Legal Requirement applicable to Tenant’s specific use or occupancy of the Premises or Tenant’s Alterations.

 

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 except that the monthly rental shall be equal to 150% of 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. 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.

 

9.                                      Taxes. Landlord shall pay, as part of Operating Expenses, all taxes, levies, fees, assessments and governmental charges of any kind with respect to the Project, 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

 

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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 any Taxes payable hereunder. 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.

 

10.                               Parking. Subject to all matters of record, Force Majeure, a Taking (as defined in Section 19 below) and the exercise by Landlord of its rights hereunder, Tenant shall have the right, at no additional cost to Tenant, in common with other tenants of the Project pro rata in accordance with the rentable area of the Premises and the rentable areas of the Project occupied by such other tenants, to park in those areas designated for non-reserved parking, subject in each case to Landlord’s rules and regulations. As of the date of this Lease, Tenant’s pro rata share of parking spaces is equal to 3.3 parking spaces per 1,000 rentable square feet of the Premises. Landlord may allocate parking spaces among Tenant and other tenants in the Project pro rata as described above if Landlord determines that such parking facilities are becoming crowded. Landlord shall not be responsible for enforcing Tenant’s parking rights against any third parties, including other tenants of the Project.

 

11.                               Utilities, Services. Landlord shall provide, subject to the terms of this Section 11, water, electricity, heat, light, power, sewer, and other utilities (including gas and fire sprinklers to the extent the Project is plumbed for such services), refuse and trash collection and janitorial services (collectively, “Utilities”). Landlord shall pay, as Operating Expenses or subject to Tenant’s reimbursement obligation, 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. Landlord may cause, at Landlord’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. Tenant shall pay, as part of Operating Expenses, its share of all charges for jointly metered Utilities based upon consumption, as reasonably determined by Landlord. No interruption or failure of Utilities, 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.

 

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Landlord’s sole obligation for either providing emergency generators or providing emergency back-up power to Tenant shall be:  (i) to provide emergency generators with not less than the capacity of the emergency generators located in the Building as of the Commencement Date, and (ii) to contract with a third party to maintain the emergency generators as per the manufacturer’s standard maintenance guidelines.  Landlord shall have no obligation to provide Tenant with operational emergency generators or back-up power or to supervise, oversee or confirm that the third party maintaining the emergency generators is maintaining the generators as per the manufacturer’s standard guidelines or otherwise.  During any period of replacement, repair or maintenance of the emergency generators when the emergency generators are not operational, including any delays thereto due to the inability to obtain parts or replacement equipment, Landlord shall have no obligation to provide Tenant with an alternative back-up generator or generators or alternative sources of back-up power.  At least once per month as part of the maintenance of the Building, Landlord shall run the emergency generator for a period reasonably determined by Landlord for the purpose of determining whether it operates when started.  Tenant expressly acknowledges and agrees that Landlord does not guaranty that such emergency generators will be operational at all times or that emergency power will be available to the Premises when needed.

 

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 affects the structure or Building Systems and shall not be otherwise unreasonably withheld, conditioned or delayed.  Tenant may construct nonstructural cosmetic Alterations in the Premises without Landlord’s prior approval if the aggregate cost of all such work in any 12 month period does not exceed $50,000 (a “Notice-Only Alteration”), provided Tenant notifies Landlord in writing of such intended Notice-Only Alteration, and such notice shall be accompanied by plans, specifications, work contracts and such other information concerning the nature and cost of the Notice-Only Alteration as may be reasonably requested by Landlord, which notice and accompanying materials shall be delivered to Landlord not less than 15 business days in advance of any proposed construction.  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 and absolute 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 persons 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 Legal Requirements and shall implement at its sole cost and expense any alteration or modification required by Legal Requirements as a result of any Alterations.  Tenant shall pay to Landlord, as Additional Rent, on demand an amount equal to 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.  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.

 

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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 in amounts and from an insurance company satisfactory to Landlord protecting Landlord against liability for personal injury or property damage during construction.  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.

 

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, Landlord may, at the time its approval of any such Installation is requested, or at the time it receives notice of a Notice-Only Alteration, notify Tenant that 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 property of any kind paid for by Landlord, 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, as an Operating Expense, shall maintain all of the structural, exterior, parking and other Common Areas of the Project, including HVAC, plumbing, fire sprinklers, elevators and all other building systems serving the Premises and other portions of the Project (“Building Systems”), in good repair, reasonable wear and tear and uninsured losses and damages caused by Tenant, or by any of Tenant’s agents, servants, employees, invitees 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

 

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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 72 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, 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, vandalism, war, or similar cause of damage or destruction shall be controlled by Section 18.

 

14.                               Tenant’s Repairs.  Subject to Section 13 hereof, Tenant, at its expense, shall repair, replace and maintain in good condition all portions of the Premises, 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, Landlord may perform such work and shall be reimbursed by Tenant within 10 business 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 in an identified suite held by Tenant.

 

16.                               Indemnification.  Tenant hereby indemnifies and agrees to defend, save and hold Landlord harmless from and against any and all Claims for injury or death to persons or damage to property occurring within or about the Premises, 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.  Landlord shall not be

 

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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 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.

 

17.                               Insurance.  Landlord shall maintain all risk property and, if applicable, sprinkler damage insurance covering the full replacement cost of the Project or such lesser coverage amount as Landlord may elect provided such coverage amount is not less than 90% of such full replacement cost.  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 at Tenant’s expense; workers’ compensation insurance with no less than the minimum limits required by law; employer’s liability insurance with such limits as required by law; 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 policy shall name Alexandria Real Estate Equities, Inc., and Landlord, its officers, directors, employees, managers and agents (collectively, “Landlord 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; contain a hostile fire endorsement and a contractual liability endorsement; and provide primary coverage to Landlord (any policy issued to Landlord providing duplicate or similar coverage shall be deemed excess over Tenant’s policies).  Certificates of insurance snowing the limits of coverage required hereunder and showing Landlord as an additional insured shall be delivered to Landlord by Tenant upon commencement of the Term and upon each renewal of said insurance.  Tenant’s policy shall include 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, 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

 

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lease rather than that of a fee owner, and/or (iii) any management company retained by Landlord to manage the Project.

 

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 and agents (“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 45 days after discovery of such damage 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; provided, however, that notwithstanding Landlord’s election to restore, Tenant may elect to terminate this Lease by written notice to Landlord delivered within 5 business days of receipt of a notice from Landlord estimating a Restoration Period for the Premises longer than the Maximum Restoration Period.  If Tenant has not exercised its Extension Right pursuant to Section 40, Tenant may also terminate this Lease by written notice to Landlord delivered within 5 business days after receipt of a notice estimating the date on which the Restoration Period is expected to occur if the Restoration Period is estimated by Landlord to be completed during the last 12 months of the Base Term.  Unless either Landlord or Tenant 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, or Tenant may by written notice to Landlord delivered within 5 business days of the expiration of the Maximum Restoration Period or, if longer, the Restoration Period, elect to terminate this Lease, 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

 

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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 (as defined in Section 34) 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, either Landlord or Tenant may terminate this Lease upon written notice to the other if the Premises are damaged during the last year of the Term and Landlord reasonably estimates that it will take more than 2 months to repair such damage; provided, however, that such notice is delivered within 10 business days after the date that Landlord provides Tenant with written notice of the estimated Restoration Period.  Landlord shall also have the right to terminate this Lease 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 reasonably acceptable to Tenant during the period of repair that is suitable for the temporary conduct of Tenant’s business.  In the event that no Hazardous Material Clearances are required to be obtained by Tenant with respect to the Premises, rent abatement shall commence on the date of discovery of the damage or destruction.  Such abatement shall be the sole remedy of Tenant, and except as provided in this Section 18, Tenant waives any right to terminate the Lease by reason of damage or casualty loss.

 

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 in Landlord’s reasonable judgment, impair Landlord’s ownership or operation of the Project or would in the reasonable judgment of Landlord and Tenant either prevent or materially interfere with Tenant’s use of the Premises (as resolved, if the parties are unable to agree, by arbitration by a single arbitrator with the qualifications and experience appropriate to resolve the matter and appointed pursuant to and acting in accordance with the rules of the American Arbitration Association), then upon written notice by Landlord or Tenant 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 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

 

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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.

 

(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)                                  Abandonment.  Tenant shall abandon the Premises.  Tenant shall not be deemed to have abandoned the Premises if (i) Tenant provides Landlord with reasonable advance notice prior to vacating and, at the time of vacating the Premises, Tenant completes Tenant’s obligations with respect to the Surrender Plan in compliance with Section 28 (Tenant will not be required prepare another Surrender Plan at the expiration or earlier termination of the Term if Tenant does not re-enter the Premises following such abandonment), (ii) Tenant has made reasonable arrangements with Landlord for the security of the Premises for the balance of the Term, and (iii) Tenant continues during the balance of the Term to satisfy all of its obligations under the Lease as they come due.

 

(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.

 

(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 5 days after a second notice requesting such document.

 

(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 days after written notice thereof from Landlord to Tenant.

 

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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 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)                                 Payment By Landlord; Interest.  Upon a Default by Tenant hereunder, Landlord may, without waiving or releasing any obligation of Tenant hereunder, make such payment or perform such act.  All sums so paid or incurred by Landlord, 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 payable 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.  Notwithstanding the foregoing, before assessing a late charge the first time in any calendar year, Landlord shall provide Tenant written notice of the delinquency and will waive the right if Tenant pays such delinquency within 5 days thereafter.  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.

 

(c)                                  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.  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 right of Tenant hereunder shall expire and terminate, and Tenant 

 

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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 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)                                  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 as if this Lease had not been made, 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.  Landlord, at its option, notwithstanding any other provision of this Lease, shall be entitled to recover from Tenant, as and for liquidated damages, the sum of:

 

(A)                               all Base Rent, Additional Rent and other amounts payable by Tenant hereunder then due or accrued and unpaid:  and

 

(B)                               the amount equal to the aggregate of all unpaid Base Rent and Additional Rent which would have been payable if this Lease had not been terminated prior to the end of the Term then in effect, discounted to its then present value in accordance with accepted financial practice using a rate of 5% per annum, for loss of the bargain; and

 

(C)                               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

 

(D)                               the net proceeds of any re-letting actually received by Landlord and the amount of damages which Tenant proves could have been avoided had Landlord taken reasonable steps to mitigate its damages.

 

(iii)                               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, but in each case not more than the amount to which Landlord would otherwise be entitled under this Section 21.

 

(iv)                              Nothing in this Section 21 shall be deemed to affect the right of either party to indemnifications pursuant to this Lease.

 

(v)                                 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.

 

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(vi)                              If either party 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, the non-prevailing party shall pay to the prevailing party all fees, costs and other expenses which may become payable as a result thereof or in connection therewith, including attorneys’ fees and expenses.

 

(vii)                           If Tenant shall default 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 without notice in the case of emergency or in case such default will result in a violation of any legal or insurance requirements, or in the imposition of any lien against all or any portion of the Premises (but only after Tenant has failed to respond to such lien as permitted by Section 15 within the time period provided in Section 15), and (b) in any other case if such default continues after any applicable notice and cure period provided in Section 21.  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, shall be paid by Tenant to Landlord within 10 days after demand.

 

(viii)                        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(d), at Tenant’s expense, to the extent provided in Section 30(d).

 

(ix)                              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 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, or 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.

 

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 of any provision of this Lease shall be deemed to have been made unless expressly so made in writing.  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.

 

22.                               Assignment and Subletting.

 

(a)                                 General Prohibition.  Without Landlord’s prior written consent subject to and on the conditions described in Section 22(b) below, 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, and any attempt 

 

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to do any of the foregoing shall be void and of no effect.  If Tenant is a corporation, partnership or limited liability company, 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 25% or more of the issued and outstanding shares or other ownership interests of such corporation are, or voting control is, transferred (but excepting transfers upon deaths of individual owners) from a person or persons or entity or entities which were owners thereof at time of execution of this Lease to persons or entities who were not owners of shares or other ownership interests of the corporation, partnership or limited liability company 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.  Notwithstanding the foregoing, Tenant shall have the right to obtain financing from institutional investors (including venture capital funding and corporate partners) which regularly invest in private biotechnology companies or undergo a public offering which results in a change in control of Tenant without such change of control constituting an assignment under this Section 22 requiring Landlord consent, provided that (i) Tenant notifies Landlord in writing of the financing at least 5 business days prior to the closing of the financing, and (ii) provided that in no event shall such financing result in a change in use of the Premises from the use contemplated by Tenant at the commencement of the Term.

 

(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; or (iii) 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 reasonable 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 reasonable judgment, the proposed assignee or subtenant is engaged in areas of scientific research or other business concerns that are controversial; (4) in Landlord’s reasonable judgment, the proposed assignee or subtenant lacks the creditworthiness to support the financial obligations it will incur under the proposed assignment or sublease; (5) in Landlord’s reasonable judgment, the character, 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; (6) 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; (7) Landlord has experienced previous defaults by or is in litigation with the proposed assignee or subtenant; (8) the use of the Premises by the proposed assignee or subtenant will violate any applicable Legal Requirement; (9) 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; (10) the proposed assignee or subtenant is an entity with whom Landlord is negotiating to lease space in the Project; or (11) the assignment or sublease is prohibited by Landlord’s lender.  If Landlord delivers notice of its election to exercise an Assignment Termination, Tenant shall have the

 

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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 One Thousand Five Hundred Dollars ($1,500) in connection with its consideration of any Assignment Notice and/or its preparation or review of any consent documents.  Notwithstanding the foregoing, Tenant shall have the right to assign this Lease, upon 10 days prior written notice to Landlord (unless Tenant is prohibited from providing such notice by confidentiality or Legal Requirements in which case Tenant shall notify Landlord promptly thereafter) but without obtaining Landlord’s prior written consent, to a corporation or other entity which is 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 the Lease, and (ii) as of the date that is 1 day after the Permitted Assignment, 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 (iii) such assignee shall agree in writing to assume all of the terms, covenants and conditions of this Lease arising after the effective date of the assignment (a “Permitted Assignment”).

 

(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 the 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 Rent payable under this Lease, (excluding however, any Rent payable under this Section) (“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 the 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.

 

(f)                                   Prior Conduct of Proposed Transferee.  Notwithstanding any other provision of this Section 22, if (i) the proposed assignee or sublessee of Tenant has been required by any prior landlord, lender or Governmental Authority to take remedial action in connection with Hazardous Materials contaminating a property, where the contamination resulted from such party’s action or use of the property in question, (ii) the proposed assignee or sublessee is subject to an enforcement order issued by any Governmental Authority in connection with the use, storage, handling, treatment, generation, release or disposal of Hazardous Materials (including, without limitation, any order related to the failure to make a required reporting to any Governmental Authority), or (iii) because of the existence of a pre-existing environmental condition in the vicinity of or underlying the Project, the risk that Landlord would be targeted as a responsible party in connection with the remediation of such pre-existing environmental condition would be materially increased or exacerbated by the proposed use of Hazardous Materials by such proposed assignee or sublessee, Landlord shall have the absolute right to refuse to consent to any assignment or subletting to any such party.

 

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.  Notwithstanding the foregoing, in no event shall Tenant be required to make any statement or certification that Tenant reasonably determines contains misstatements of material facts.  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 the Lease is in full force 

 

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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 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 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.

 

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 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.  Tenant hereby appoints Landlord attorney-in-fact for Tenant irrevocably (such power of attorney being coupled with an interest) to execute, acknowledge and deliver any such instrument and instruments for and in the name of Tenant and to cause any such instrument to be recorded.  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.  Notwithstanding the foregoing, in no event shall Tenant be required to execute any instruments pursuant to this Section 27 which Tenant reasonably determines contains misstatements of material facts in which case Tenant shall immediately notify Landlord in writing of the existence of such misstatements of material facts.  The term “Mortgage” whenever used in this Lease shall be deemed to include deeds of trust, security assignments and any other encumbrances, and any reference to the “Holder” of a Mortgage shall be deemed to include the beneficiary under a deed of trust.

 

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 (collectively, “Tenant HazMat Operations”) 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.  At least 3 months prior to the surrender of 

 

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the Premises, Tenant shall deliver to Landlord a narrative description of the actions proposed (or required by any Governmental Authority) to be taken by Tenant in order to surrender the Premises (including any Installations permitted by Landlord to remain in the Premises) at the expiration or earlier termination of the Term, free from any residual impact from the Tenant HazMat Operations and otherwise released for unrestricted use and occupancy (the “Surrender Plan”).  Such Surrender Plan shall be accompanied by a current listing of (i) all Hazardous Materials licenses and permits held by or on behalf of any Tenant Party with respect to the Premises, and (ii) all Hazardous Materials used, stored, handled, treated, generated, released or disposed of from the Premises, and shall be subject to the review and approval of Landlord’s environmental consultant.  In connection with the review and approval of the Surrender Plan, upon the request of Landlord, Tenant shall deliver to Landlord or its consultant such additional non-proprietary information concerning Tenant HazMat Operations as Landlord shall request.  On or before such surrender, Tenant shall deliver to Landlord evidence that the approved Surrender Plan shall have been satisfactorily completed and Landlord shall have the right, subject to reimbursement at Tenant’s expense as set forth below, to cause Landlord’s environmental consultant to inspect the Premises and perform such additional procedures as may be deemed reasonably necessary to confirm that the Premises are, as of the effective date of such surrender or early termination of the Lease, free from any residual impact from Tenant HazMat Operations.  Tenant shall reimburse Landlord, as Additional Rent, for the actual out-of pocket expense incurred by Landlord for Landlord’s environmental consultant to review and approve the Surrender Plan and to visit the Premises and verify satisfactory completion of the same, which cost shall not exceed $5,000.  Landlord shall have the unrestricted right to deliver such Surrender Plan and any report by Landlord’s environmental consultant with respect to the surrender of the Premises to third parties.

 

If Tenant shall fail to prepare or submit a Surrender Plan approved by Landlord, or if Tenant shall fail to complete the approved Surrender Plan, or if such Surrender Plan, whether or not approved by Landlord, shall fail to adequately address any residual effect of Tenant HazMat Operations in, on or about the Premises, Landlord shall have the right to take such actions as Landlord may deem reasonable or appropriate to assure that the Premises and the Project are surrendered free from any residual impact from Tenant HazMat Operations, the cost of which actions shall be reimbursed by Tenant as Additional Rent, without regard to the limitation set forth in the first paragraph of this Section 28.

 

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.

 

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.

 

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30.                               Environmental Requirements.

 

(a)                                 Prohibition/Compliance/lndemnity.  Tenant shall not cause or permit any Hazardous Materials (as hereinafter defined) to be brought upon, kept, used, stored, handled, treated, generated in or about, or released or disposed of from, the Premises or the Project in violation of applicable Environmental Requirements (as hereinafter defined) by Tenant or any Tenant Party.  If Tenant breaches the obligation stated in the preceding sentence, or if the presence of Hazardous Materials in the Premises during the Term or any holding over results in contamination of the Premises, the Project or any adjacent property or if contamination of the Premises, the Project or any adjacent property by Hazardous Materials brought into, kept, used, stored, handled, treated, generated in or about, or released or disposed of from, the Premises by anyone other than Landlord and Landlord’s employees, agents and contractors otherwise occurs during the Term or any holding over, Tenant hereby indemnifies and shall defend and hold Landlord, its officers, directors, employees, agents 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 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, 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.  Without limiting the foregoing, if the presence of any Hazardous Materials on the Premises, the Project or any adjacent property caused or permitted by Tenant or any Tenant Party results in any contamination of the Premises, the Project or any adjacent property, Tenant shall promptly take all actions at its sole expense and in accordance with applicable Environmental Requirements as are necessary to return the Premises, 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 or the Project.

 

(b)                                 Business.  Landlord acknowledges that it is not the intent of this Section 30 to prohibit Tenant from using the Premises for the Permitted Use.  Tenant may operate its business according to prudent industry practices so long as the use or presence of Hazardous Materials is strictly and properly monitored according to all then applicable Environmental Requirements.  As a material inducement to Landlord to allow Tenant to use Hazardous Materials in connection with its business, Tenant agrees to deliver to Landlord prior to the Commencement Date a list identifying each type of Hazardous Materials to be brought upon, kept, used, stored, handled, treated, generated on, or released or disposed of from, the Premises and setting forth any and all governmental approvals or permits required in connection with the presence, use, storage, handling, treatment, generation, release or disposal of such Hazardous Materials on or from the Premises (“Hazardous Materials List”).  Tenant shall deliver to Landlord an updated Hazardous Materials List at least once a year and shall also deliver an updated list before any new Hazardous Material is brought onto, kept, used, stored, handled, treated, generated on, or released or disposed of from, the Premises.  Tenant shall deliver to Landlord true and correct copies of the following documents (the “Haz Mat Documents”) relating to the use, storage, handling, treatment, generation, release or disposal of Hazardous Materials prior to the Commencement Date, or if unavailable at that 

 

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time, concurrent with the receipt from or submission to a Governmental Authority:  permits; approvals; reports and correspondence; storage and management plans, notice of violations of any Legal Requirements; 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 Tenant its written consent to do so, which consent may be withheld in Landlord’s sole and absolute discretion); 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; and a Surrender Plan (to the extent surrender in accordance with Section 28 cannot be accomplished in 3 months).  Tenant is not required, however, to provide Landlord with any portion(s) of the Haz Mat Documents containing information of a proprietary nature which, in and of themselves, do not contain a reference to any Hazardous Materials or hazardous activities.  It is not the intent of this Section to provide Landlord with information which could be detrimental to Tenant’s business should such information become possessed by Tenant’s competitors.  Notwithstanding anything to the contrary contained herein, Tenant has advised Landlord that the Hazardous Materials List attached to this Lease as Exhibit G reflects the type and quality of Hazardous Materials that Tenant will initially be using in the Premises and Landlord acknowledges and agrees that the Hazardous Materials List attached hereto as Exhibit G fulfills Tenant’s obligation to deliver a Hazardous Materials List pursuant to the second sentence of this paragraph.

 

(c)                                  Tenant Representation and Warranty.  Tenant hereby represents and warrants to Landlord that (i) neither Tenant nor any of its legal predecessors has been required by any prior landlord, lender or Governmental Authority at any time to take remedial action in connection with Hazardous Materials contaminating a property which contamination was permitted by Tenant of such predecessor or resulted from Tenant’s or such predecessor’s action or use of the property in question, and (ii) Tenant is not subject to any enforcement order issued by any Governmental Authority in connection with the use, storage, handling, treatment, generation, release or disposal of Hazardous Materials (including, without limitation, any order related to the failure to make a required reporting to any Governmental Authority).  If Landlord determines that this representation and warranty was not true as of the date of this lease, Landlord shall have the right to terminate this Lease in Landlord’s sole and absolute discretion.

 

(d)                                 Testing.  Landlord shall have the right to conduct annual tests of the Premises to determine whether any contamination of the Premises or the Project has occurred as a result of Tenant’s use.  Tenant shall be required to pay the cost of such annual test of the Premises if there is violation of this Section 30 or if contamination for which Tenant is responsible under this Section 30 is identified; provided, however, that if Tenant conducts its own tests of the Premises using third party contractors and test procedures acceptable to Landlord which tests are certified to Landlord, Landlord shall accept such tests in lieu of the annual tests to be paid for by Tenant.  In addition, at any time, and from time to time, prior to the expiration or earlier termination of the Term, Landlord shall have the right to conduct appropriate tests of the Premises and the Project to determine if contamination has occurred as a result of Tenant’s use of the Premises.  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.  If contamination has occurred for which Tenant is liable under this Section 30, Tenant shall pay all costs to conduct such tests.  If no such contamination is found, Landlord shall pay the costs of such tests (which shall not constitute an Operating Expense).  Landlord shall provide Tenant with a copy of all third party, non-confidential reports and tests of the Premises made by or on behalf of Landlord during the Term without representation or warranty and subject to a confidentiality agreement.  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 which Landlord may have against Tenant.

 

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(e)                                  Control Areas.  Tenant shall be allowed to utilize up to its pro rata share of the Hazardous Materials inventory within any control area or zone (located within the Premises), as designated by the applicable building code, for chemical use or storage.  As used in the preceding sentence, Tenant’s pro rata share of any control areas or zones located within the Premises shall be determined based on the rentable square footage that Tenant leases within the applicable control area or zone.  For purposes of example only, if a control area or zone contains 10,000 rentable square feet and 2,000 rentable square feet of a tenant’s premises are located within such control area or zone (while such premises as a whole contains 5,000 rentable square feet), the applicable tenant’s pro rata share of such control area would be 20%.

 

(f)                                   Underground Tanks.  If underground or other storage tanks storing Hazardous Materials located on the Premises or the Project are used by Tenant or are hereafter placed on the Premises or the Project by Tenant, Tenant shall install, use, monitor, operate, maintain, upgrade and manage such storage tanks, maintain appropriate records, obtain and maintain appropriate insurance, implement reporting procedures, properly close any underground storage tanks, and take or cause to be taken all other actions necessary or required under applicable state and federal Legal Requirements, as such now exists or may hereafter be adopted or amended in connection with the installation, use, maintenance, management, operation, upgrading and closure of such storage tanks.

 

(g)                                  Tenant’s Obligations.  Tenant’s obligations under this Section 30 shall survive the expiration or earlier termination of the 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 and the completion of the approved Surrender Plan), 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.

 

(h)                                 Definitions.  As used herein, 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 Project, 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.  As used herein, 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.

 

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 

 

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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 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.

 

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 year 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.  Landlord shall not be responsible or liable for delays in the performance of its obligations hereunder when caused by, related to, or arising out of acts of God, sinkholes or subsidence, strikes, lockouts, or other labor disputes, embargoes, quarantines, 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 restrictions, orders, limitations, regulations, or controls, national emergencies, delay in issuance or revocation of permits, enemy or hostile governmental action, terrorism, insurrection, riots, civil disturbance or commotion, fire or other casualty, and other causes or events beyond the reasonable control of Landlord (“Force Majeure”).

 

35.                               Brokers.  Landlord and Tenant each represents and warrants that it has not dealt with any broker, agent or other person (collectively, “Broker”) in connection with this transaction and that no 

 

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Broker brought about this transaction, other than Cushman & Wakefield and NAI Hunneman Commercial.  Landlord and Tenant each hereby agree to indemnify and hold the other harmless from and against any claims by any Broker, other than the broker, if any named in this Section 35, 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 Cushman & Wakefield and NAI Hunneman Commercial arising out of the execution of this Lease in accordance with the terms of a separate written agreements between Cushman & Wakefield and NAI Hunneman Commercial and Landlord.  Tenant shall not be required to pay any commissions to Cushman & Wakefield and NAI Hunneman Commercial in connection with this Lease.

 

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, AGENTS OR CONTRACTORS.  UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE FOR INJURY TO TENANT’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.

 

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.

 

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 

 

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any signs, notices, window or door lettering, placards, decorations, or advertising media of any type which can be viewed from the exterior of the Premises.  Signage on the second floor and the lobby directory tablet shall be inscribed, painted or affixed for Tenant by Landlord at Tenant’s cost, and shall be of a size, color and type acceptable to Landlord.  Nothing may be placed on the exterior of corridor walls or corridor doors other than Landlord’s standard lettering.  The lobby directory tablet shall be provided exclusively for the display of the name and location of tenants.

 

39.                               Right to Expand.

 

(a)                                 Expansion in the Building.  Tenant shall, during the Base Term, have the one-time right, but not the obligation, to expand the Premises (the “Expansion Right”) to include any Available Space in the Building upon the terms and conditions set forth in this Section.  For purposes of this Section 39(a), “Available Space” shall mean the balance of the rentable square footage in the Building not already included as part of the Premises, which is not occupied by a tenant or which is occupied by an existing tenant whose lease is expiring within 6 months or less and such tenant does not wish to renew (whether or not such tenant has a right to renew) its occupancy of such space.  If there is any Available Space in the Building, Landlord shall, at such time as Landlord shall elect so long as Tenant’s rights hereunder are preserved, deliver to Tenant written notice (the “Expansion Notice”) of such Available Space, together with the terms and conditions on which Landlord is prepared to lease Tenant such Available Space; provided that Base Rent shall be at the Market Rate (as defined in Section 40(a) below) for such Available Space.  Tenant shall be entitled to exercise its right under this Section 39(a) only with respect to the entire Available Space described in such Expansion Notice (“Identified Available Space”).  Tenant shall have 5 business days following delivery of the Expansion Notice to deliver to Landlord written notification of Tenant’s exercise of the Expansion Right with respect to the Identified Available Space (“Exercise Notice”).  Tenant shall be entitled to lease such Identified Available Space upon the terms and conditions set forth in the Expansion Notice.  If Landlord and Tenant are unable to agree on the Market Rate for the Available Space after negotiating in good faith within 5 days after Tenant’s delivery of an Exercise Notice, the applicable Market Rate will be determined through arbitration in accordance with Section 40(b).  Tenant acknowledges and agrees that, if Tenant has delivered an Exercise Notice pursuant to this Section 39(a), Tenant shall have no right thereafter to rescind or elect not to lease the Available Space.  Tenant acknowledges that the Term of the Lease with respect to the Identified Available Space may not be co-terminous with the Term of the Lease with respect to the original Premises.  Notwithstanding anything to the contrary contained herein, Tenant shall have no right to exercise the Expansion Right and the provisions of this Section 39(a) shall no longer apply after the date that is 9 months prior to the expiration of the Base Term if Tenant has not exercised its Extension Right pursuant to Section 40.  If Tenant fails to deliver an Exercise Notice to Landlord for the Identified Available Space within the required 5 business day period, Tenant shall be deemed to have forever waived its rights under this Section 39(a) to lease the Identified Available Space, and Landlord shall have the right to lease the Identified Available Space to any third party on any terms and conditions acceptable to Landlord. 

 

(b)                                 Amended Lease.  If:  (i) Tenant fails to timely deliver an Exercise Notice, or (ii) after the expiration of a period of 10 days from the date Tenant gives notice accepting Landlord’s offer to lease such Identified Available Space, no lease amendment or lease agreement for the Identified Available Space has been executed, and Landlord tenders to Tenant an amendment to this Lease setting forth the terms for the rental of the Identified Available Space consistent with those set forth in the Expansion Notice and otherwise consistent with the terms of this Lease and Tenant fails to execute such Lease amendment within 10 business days following such tender, Tenant shall be deemed to have forever waived its right to lease such Identified Available Space.

 

(c)                                  Exceptions.  Notwithstanding the above, the Expansion Right shall, at Landlord’s option, not be in effect and may not be exercised by Tenant:

 

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(i)                                     during any period of time that Tenant is in Default under any provision of the Lease; or

 

(ii)                                  if Tenant has been in Default under any provision of the Lease 3 or more times, whether or not the Defaults are cured, during the 12 month period prior to the date on which Tenant seeks to exercise the Expansion Right.

 

(d)                                 Termination.  The Expansion Right shall, at Landlord’s option, terminate and be of no further force or effect even after Tenant’s due and timely exercise of the Expansion Right, if, after such exercise, but prior to the commencement date of the lease of such Identified Available Space, (i) Tenant fails to timely cure any default by Tenant under the Lease; or (ii) Tenant has Defaulted 3 or more times during the period from the date of the exercise of the Expansion Right to the date of the commencement of the lease of the Identified Available Space, whether or not such Defaults are cured.

 

(e)                                  Rights Personal.  The Expansion Right is personal to Tenant and 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 Tenant’s interest in the Lease.

 

(f)                                   No Extensions.  The period of time within which the Expansion Right may be exercised shall not be extended or enlarged by reason of Tenant’s inability to exercise the Expansion Right.

 

40.                               Right to Extend Term.  Tenant shall have the right to extend the Term of the Lease upon the following terms and conditions:

 

(a)                                 Extension Rights.  Tenant shall have 1 right (an “Extension Right”) to extend the term of this Lease for 2 years (an “Extension Term”) on the same terms and conditions as this Lease (other than with respect to Base Rent and the Work Letter) by giving Landlord written notice of its election to exercise the Extension Right at least 9 months prior to the expiration of the Base Term of the Lease.

 

Upon the commencement of the Extension Term, Base Rent for the first year of the Extension Term 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.  As used herein, “Market Rate” shall mean shall mean the then market rental rate, as determined by Landlord and agreed to by Tenant, for laboratory space in the Waltham market of comparable size, quality, and location as the Premises, taking into account all relevant factors.

 

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(b).  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 the Lease for the Extension Term.

 

(b)                                 Arbitration.

 

(i)                                     Within 10 days of Tenant’s notice to Landlord of its election (or 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 either party fails to timely submit an Extension Proposal, the other party’s submitted proposal shall determine the Base Rent and escalations for the Extension Term.  

 

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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 (and 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.

 

(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 3% 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 the greater Waltham metropolitan area, 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 the greater Waltham metropolitan area, (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.

 

(c)                                  Rights Personal.  The Extension Right is personal to Tenant and is 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 Tenant’s interest in the Lease.

 

(d)                                 Exceptions.  Notwithstanding anything set forth above to the contrary, the Extension Right shall, at Landlord’s option, not be in effect and Tenant may not exercise the Extension Right:

 

(i)                                     during any period of time that Tenant is in Default under any provision of this Lease; or

 

(ii)                                  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 the Extension Right, whether or not the Defaults are cured.

 

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(e)                                  No Extensions.  The period of time within which the Extension Right may be exercised shall not be extended or enlarged by reason of Tenant’s inability to exercise the Extension Right.

 

(f)                                   Termination.  The Extension Right shall, at Landlord’s option, terminate and be of no further force or effect even after Tenant’s due and timely exercise of the Extension Right, if, after such exercise, but prior to the commencement date of the 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 the Extension Right to the date of the commencement of the Extension Term, whether or not such Defaults are cured.

 

41.                               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, 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, (ii) Tenant’s most recent unaudited quarterly financial statements within 45 days of the end of each of Tenant’s first three fiscal quarters of 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, and (v) any other financial information or summaries that Tenant typically provides to its lenders or shareholders.  Notwithstanding the foregoing, in no event shall Tenant be required to provide any financial information to Landlord which Tenant does not otherwise prepare (or cause to be prepared) for its own purposes.  So long as Tenant is a “public company” and its financial information is publicly available, then the foregoing delivery requirements of this Section 41(c) shall not apply.  Landlord shall treat Tenant’s financial information as confidential information belonging to Tenant.  Landlord may, however, disclose Tenant’s financial information to Landlord’s auditors, attorneys, consultants, lenders and prospective purchasers; provided, however, that Landlord advises such parties of the confidentiality of such information.

 

(d)                                 Recordation.  Neither this Lease nor a memorandum of lease shall be filed by or on behalf of Tenant in any public record.  Landlord may prepare and file, and upon request by Landlord Tenant will execute, a memorandum of lease.

 

(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.

 

33

 

(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 state in which the Premises are located, excluding any principles of conflicts of laws.

 

(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 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.

 

(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)                                 Hazardous Activities.  Notwithstanding any other provision of this Lease, Landlord, for itself and its employees, agents and contractors, reserves the right to refuse to perform any repairs or 

 

34

 

services in any portion of the Premises which, pursuant to Tenant’s routine safety guidelines, practices or custom or prudent industry practices, require any form of protective clothing or equipment other than safety glasses.  In any such case, Tenant shall contract with parties who are acceptable to Landlord, in Landlord’s reasonable discretion, for all such repairs and services, and Landlord shall, to the extent required, equitably adjust Tenant’s Share of Operating Expenses in respect of such repairs or services to reflect that Landlord is not providing such repairs or services to Tenant.

 

[ Signatures on next page ]

 

35

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and year first above written.

 

	
 
    	
TENANT:
    
	
 
    	
 
    
	
 
    	
KALA PHARMACEUTICALS, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Guillaume Pfefer
    
	
 
    	
Its:
    	
President   and CEO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
LANDLORD:
    
	
 
    	
 
    
	
 
    	
ARE-MA   REGION NO. 9, LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
ARE-MA   REGION NO. 9MM, LLC, a Delaware limited liability company, manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
ALEXANDRIA   REAL ESTATE EQUITIES, L.P., a Delaware limited partnership, its member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
ARE-QRS   CORP., a Maryland corporation, general partner
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/   Eric S. Johnson
    
	
 
    	
 
    	
 
    	
 
    	
Eric   S. Johnson
    
	
 
    	
 
    	
 
    	
Its:
    	
Vice   President
    
	
 
    	
 
    	
 
    	
 
    	
Real   Estate Legal Affairs
    

 

36

 

EXHIBIT A TO LEASE

 

DESCRIPTION OF PREMISES

 

 

1

 

EXHIBIT B TO LEASE

 

DESCRIPTION OF PROJECT

 

The land with the buildings and improvements thereon known as and numbered 100 Beaver Street, Waltham, Middlesex County, Massachusetts more fully bounded and described as follows:

 

A certain parcel of land with buildings thereon situated on Beaver Street in the City of Waltham, Middlesex County, Massachusetts, being shown as Lot 2 on a plan entitled, “Subdivision Plan of Land, Waltham, Mass.”, dated March 28, 1985, R.E. Cameron & Associates, Inc., C.E.’s, recorded in Middlesex South Registry of Deeds, Book 16248, Page 282, bounded and described as follows:

 

	
SOUTHERLY
    	
by   the centerline of a way shown on said plan as “Parsons Avenue, 40ft. wide –   Unimproved”, 673.53 ft.;
    
	
 
    	
 
    
	
WESTERLY
    	
by   Lot 1, as shown on said plan, 220.28 ft.;
    
	
 
    	
 
    
	
NORTHERLY
    	
by   a 30 ft. wide right of way, as shown on said plan 663.20 ft.;
    
	
 
    	
 
    
	
EASTERLY
    	
by   Beaver Street, as shown on said plan 169.22 ft.;
    
	
 
    	
 
    
	
SOUTHEASTERLY
    	
by   land of owners unknown 176.43 ft. as shown on said plan.
    

 

1

 

EXHIBIT C TO LEASE

 

WORK LETTER

 

THIS WORK LETTER dated September 30, 2013 (this “Work Letter”) is made and entered into by and between ARE-MA REGION NO. 9, LLC, a Delaware limited liability company (“Landlord”), and KALA PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”), and is attached to and made a part of the Lease Agreement dated September 30, 2013 (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.

 

1.                                      General Requirements.

 

(a)                                 Tenant’s Authorized Representative.  Tenant designates Kathy Rizzo and Guillaume Pfefer (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 (collectively, “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 Dawn Leaman (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 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.  Landlord and Tenant hereby acknowledge and agree that: (i) TRG Builders shall be the general contractor for the Tenant Improvements, (ii) any subcontractors for the Tenant Improvements shall be selected by Landlord, subject to Tenant’s approval, which approval shall not be unreasonably withheld, conditioned or delayed, and (iii) ArchDesign shall be the architect (the “TI Architect”) for the Tenant Improvements.

 

2.                                      Tenant Improvements.

 

(a)                                 Tenant Improvements Defined.  As used herein, “Tenant Improvements” shall mean all improvements to the Project of a fixed and permanent nature as shown on the TI Construction Drawings, as defined in Section 2(c) below.  Other than Landlord’s Work (as defined in Section 3(a) below, Landlord shall not have any obligation whatsoever with respect to the finishing of the Premises for Tenant’s use and occupancy.

 

(b)                                 Tenant’s Space Plans.  Landlord and Tenant acknowledge and agree that the plan prepared by the TI Architect attached hereto as Schedule 1 (the “Space Plan”) has been approved by both Landlord and Tenant.

 

 

(c)                                  Working Drawings.  Landlord shall cause the TI Architect to prepare and deliver to Tenant for review and comment construction plans, specifications and drawings for the Tenant Improvements (“TI Construction Drawings”), which TI Construction Drawings shall be prepared substantially in accordance with the Space Plan.  Tenant shall be solely responsible for ensuring that the TI Construction Drawings reflect Tenant’s requirements for the Tenant Improvements.  Tenant shall deliver its written comments on the TI Construction Drawings to Landlord not later than 10 business days after Tenant’s receipt of the same; provided, however, that Tenant may not disapprove any matter that is consistent with the Space Plan without submitting a Change Request.  Landlord and the TI Architect shall consider all such comments in good faith and shall, within 10 business days after receipt, notify Tenant how Landlord proposes to respond to such comments, but Tenant’s review rights pursuant to the foregoing sentence shall not delay the design or construction schedule for the Tenant Improvements.  Any disputes in connection with such comments shall be resolved in accordance with Section 2(d) hereof.  Provided that the design reflected in the TI Construction Drawings is consistent with the Space Plan, Tenant shall approve the TI Construction Drawings submitted by Landlord, unless Tenant submits a Change Request.  Once approved by Tenant, subject to the provisions of Section 4 below, Landlord shall not materially modify the TI Construction Drawings except as may be reasonably required in connection with the issuance of the TI Permit (as defined in Section 3(b) below).

 

(d)                                 Approval and Completion.  It is hereby acknowledged by Landlord and Tenant that the TI Construction Drawings must be completed and approved not later than October 15, 2013, in order for the Landlord’s Work to be Substantially Complete by the Target Commencement Date (as defined in the Lease).  Upon any dispute regarding the design of the Tenant Improvements, which is not settled within 10 business days after notice of such dispute is delivered by one party to the other, Tenant may make the final decision regarding the design of the Tenant Improvements, provided (i) Tenant acts reasonably and such final decision is either consistent with or a compromise between Landlord’s and Tenant’s positions with respect to such dispute, (ii) that all costs and expenses resulting from any such decision by Tenant shall be payable by Tenant, and (iii) Tenant’s decision will not affect the base Building, structural components of the Building or any Building systems.  Any changes to the TI Construction Drawings following Landlord’s and Tenant’s approval of same requested by Tenant shall be processed as provided in Section 4 hereof.

 

3.                                      Performance of Landlord’s Work.

 

(a)                                 Definition of Landlord’s Work.  As used herein, “Landlord’s Work” shall mean the work of constructing and completing the Tenant Improvements.

 

(b)                                 Commencement and Permitting.  Landlord shall commence construction of the Tenant Improvements upon obtaining a building permit (the “TI Permit”) authorizing the construction of the Tenant Improvements consistent with the TI Construction Drawings approved by Tenant.  The cost of obtaining the TI Permit shall be payable by Landlord.  Tenant shall assist Landlord in obtaining the TI Permit.  If any Governmental Authority having jurisdiction over Landlord’s Work or any portion thereof shall impose terms or conditions upon the construction thereof that: (i) are inconsistent with Landlord’s obligations hereunder, (ii) increase the cost of constructing Landlord’s Work, or (iii) will materially delay the construction of Landlord’s Work, Landlord and Tenant shall reasonably and in good faith seek means by which to mitigate or eliminate any such terms and conditions provided; however, that such terms and conditions do not constitute material changes to the TI Construction Drawings and that the cost of such terms and conditions shall be the responsibility of Landlord.

 

 

(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 accordance with the TI Permit 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 and shall obtain a certificate or temporary certificate of occupancy (or an equivalent approval) for the Premises permitting lawful occupancy of the Premises during the Term (but specifically excluding any permits, licenses or other governmental approvals required to be obtained in connection with Tenant’s operations in the Premises not relating to Landlord’s Work)(“Substantial Completion” or “Substantially Complete”).  Upon Substantial Completion of Landlord’s Work, Landlord shall require the TI Architect and the general contractor to 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.  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 (including the TI Permit); (ii) to comply with any request by Tenant for modifications to Landlord’s Work; (iii) to comport with good design, engineering, and construction practices that are not material; or (iv) to make reasonable adjustments in accordance with good design, engineering, and construction practices for field deviations or conditions encountered during the construction of Landlord’s Work.

 

(d)                                 Selection of Materials.  Where more than one type of material or structure is indicated on the TI Construction Drawings approved by Landlord and Tenant, the option will be selected at Landlord’s sole and absolute subjective discretion, provided that such material or structure shall be consistent with existing Building standard materials and/or structures, as applicable.  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 with the TI Construction Drawings (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 continue to use reasonable efforts to remedy such Construction Defect .

 

Tenant shall be entitled to receive the benefit of all construction warranties and manufacturer’s equipment warranties relating to equipment installed in the Premises.  If requested by Tenant, Landlord shall attempt to obtain extended warranties from manufacturers and suppliers of such equipment, but the cost of any such extended warranties shall be borne solely by Tenant.  Landlord shall promptly undertake and complete, or cause to be completed, all punch list items.

 

(f)                                   Commencement Date Delay.  Except as otherwise provided in the 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 one or more of the following causes in which case the Target Commencement Date shall be extended (“Tenant Delay”):

 

(i)                                     Tenant’s Representative was not available within 2 business days to give or receive any Communication or to take any other action required to be taken by Tenant hereunder;

 

(ii)                                  Tenant’s request for Change Requests (as defined in Section 4(a) below) to the extent that they actually result in a delay of Landlord’s Work, whether or not any such Change Requests are actually performed;

 

(iii)                               Construction of any Change Requests;

 

(iv)                              Tenant’s request for materials, finishes or installations requiring unusually long lead times to the extent they actually result in a delay of Landlord’s Work, provided that promptly after Landlord learns of such long lead time items, Landlord informs Tenant that the requested items will require unusually long lead times;

 

(v)                                 Tenant’s delay in reviewing, revising or approving plans and specifications beyond the periods set forth herein;

 

(vi)                              Tenant’s delay in providing information critical to the normal progression of the Project.  Tenant shall provide such information as soon as reasonably possible, but in no event longer than one week after receipt of any request for such information from Landlord;

 

(vii)                           Tenant’s delay in making payments to Landlord for Excess TI Costs (as defined in Section 5(b) below); or

 

(viii)                        Any other act or omission by Tenant or any Tenant Party (as defined in the Lease), or persons employed by any of such persons that continues for more than 2 days after Landlord’s notice thereof to Tenant.

 

If Delivery is delayed for any of the foregoing reasons, then Landlord shall cause the TI Architect to certify the date on which the Tenant Improvements would have been Substantially Completed but for such Tenant Delay and such certified date shall be the date of Delivery.

 

4.                                      Changes.  Any changes requested by Tenant to the Space Plan attached to this Work Letter or after the delivery and approval by Landlord and Tenant of the TI Construction Drawings, any changes by Tenant to the TI Construction Drawings, shall be requested and instituted in accordance with the provisions of this Section 4 and shall be subject to the written approval of Landlord and the TI Architect, such approval not to be unreasonably withheld, conditioned or delayed.

 

(a)                                 Tenant’s Request For Changes.  If Tenant shall request changes to the Tenant Improvements that are not reflected in the Space Plan or TI Construction Drawings, as applicable (“Changes”), Tenant shall request such Changes by notifying Landlord in writing in substantially the same form as the AIA standard change order form (a “Change Request”), which Change Request shall detail the nature and extent of any such Change. Such Change Request must be signed by Tenant’s Representative.  Landlord shall, before proceeding with any Change, use commercially reasonable efforts to respond to Tenant as soon as is reasonably possible with an estimate of: (i) the time it will take, and (ii) the architectural and engineering fees and costs that will be incurred, to analyze such Change Request

 

 

(which costs shall be paid by Tenant to the extent actually incurred, whether or not such change is implemented). Landlord shall thereafter submit to Tenant in writing, within 5 business days of receipt of the Change Request (or such longer period of time as is reasonably required depending on the extent of the Change Request), an analysis of the additional cost or savings involved, including, without limitation, architectural and engineering costs and the period of time, if any, that the Change will extend the date on which Landlord’s Work will be Substantially Complete. Any such delay in the completion of Landlord’s Work caused by a Change, including any suspension of Landlord’s Work while any such Change is being evaluated and/or designed, shall be Tenant Delay.

 

(b)                                 Implementation of Changes.  If Tenant: (i) approves in writing the cost or savings and the estimated extension in the time for completion of Landlord’s Work, if any, and (ii) deposits with Landlord any Excess TI Costs required in connection with such Change, Landlord shall cause the approved Change to be instituted.  Notwithstanding any approval or disapproval by Tenant of any estimate of the delay caused by such proposed Change, the TI Architect’s determination of the amount of Tenant Delay in connection with such Change shall be final and binding on Landlord and Tenant.

 

5.                                      Costs.

 

(a)                                 TI Costs.  Landlord shall be solely responsible for the payment of all design, permits and construction and related costs and expenses in connection with the construction of the Tenant Improvements, including, without limitation, the cost of preparing the TI Construction Drawings and the Space Plans and Landlord’s out-of-pocket expenses (collectively, “TI Costs”).  Notwithstanding anything to the contrary contained herein, in no event shall Landlord be required to pay for any furniture, personal property or other non-Building system materials or equipment, including, but not limited to, Tenant’s voice or data cabling, non-ducted biological safety cabinets and other scientific equipment not incorporated into the Tenant Improvements (collectively “FF&E”), which FF&E shall be at Tenant’s option and cost.

 

(b)                                 Excess TI Costs.  Notwithstanding anything to the contrary contained herein, Tenant acknowledges and agrees that Landlord shall have no responsibility for any costs arising from or related to (i) Tenant’s changes to the Space Plan, (ii) Tenant’s changes to the TI Construction Drawings approved pursuant to Section 2(d) hereof, (iii) Tenant Delays, and (iv) the cost of Changes and Change Requests (collectively, “Excess TI Costs”); provided, however, Tenant shall only be responsible for the same to the extent of any net increase in the actual cost of the Tenant Improvements.  Notwithstanding anything to the contrary contained herein, Tenant shall also be responsible for any and all costs relating to the purchase and installation of the Glasswasher (as defined below), provided that Tenant shall have the right, but not the obligation, to use the Glasswasher Allowance to pay for such costs.  Upon Landlord’s request from time to time, Tenant shall deposit with Landlord, as a condition precedent to Landlord’s obligation to complete the Tenant Improvements, 100% of the Excess TI Costs.  If Tenant fails to deposit the Excess TI Costs with Landlord, 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 purposes of any litigation instituted with regard to such amounts, those amounts will be deemed Rent under the Lease.

 

(c)                                  Glasswasher Allowance.  Landlord shall provide to Tenant an allowance of up to $50,000 in the aggregate (“Glasswasher Allowance”) for the purchase and installation of a glasswasher, reasonably acceptable to Landlord and Tenant (“Glasswasher”) in the Premises.  Tenant shall notify Landlord how much, if any, Glasswasher Allowance Tenant has elected to receive from Landlord within 30 days after the mutual execution and delivery of the Lease by the parties.  Such election shall be final

 

 

and binding on Tenant, and may not thereafter be modified without Landlord’s consent, which may be granted or withheld in Landlord’s sole and absolute subjective discretion.  If Tenant elects to use any portion of the Glasswasher Allowance, Tenant shall be responsible for all costs of the Glasswasher in excess of the Glasswasher Allowance.  Tenant shall have no right to the use or benefit (including any reduction to or payment of Base Rent) of any portion of the Glasswasher Allowance not required for the purchase and installation of the Glasswasher.  Any portion of the Glasswasher Allowance actually disbursed shall, to the extent used, result in TI Rent as set forth in the Lease.  If all or any portion of the Glasswasher Allowance is used to purchase or install the Glasswasher, the Glasswasher shall be the property of Landlord and Tenant shall not remove the Glasswasher at the expiration or earlier termination of the Term, nor shall Tenant have the right to remove the Glasswasher from the Premises at any time during the Term.

 

6.                                      Tenant Access.

 

(a)                                 Tenant’s Access Rights.  Landlord hereby agrees to permit Tenant access, at Tenant’s sole risk and expense, to the Building (i) 30 days prior to the Commencement Date to install Tenant’s voice and data cabling, telecommunications and other equipment, and to perform any work required by Tenant other than Landlord’s Work (collectively, “Tenant’s Work”), provided that such Tenant’s Work is coordinated with the TI 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.

 

(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 performing Tenant’s Work 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 arising from such access to the Project by Tenant or any Tenant Party prior to the Substantial Completion of the Landlord’s Work.

 

7.                                      Miscellaneous.

 

(a)                                 Consents.  Whenever consent or approval of either party is required under this Work Letter, that party shall not unreasonably withhold, condition or delay such consent or approval, unless expressly set forth herein to the contrary.

 

 

(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.

 

 

Schedule 1

 

Space Plan

 

 

 

TRG BUILDERS

 

	
Kala Pharmaceuticals
    	
 
    	
Revised    9/12/13
    
	
100 Beaver Stret
    	
 
    	
 
    
	
Waltham, MA
    	
 
    	
 
    
	
Budget Estimate
    	
 
    	
 
    

 

	
Division/Description
    	
 
    	
Qty
    	
 
    	
UM
    	
 
    	
Unit Cost
    	
 
    	
Total
    	
 
    	
Division Total
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Project   Requirements
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Final cleaning
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
General labor / daily cleaning
    	
 
    	
17
    	
 
    	
dys
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Debris dumpsters
    	
 
    	
4
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Misc. tools and supplies.
    	
 
    	
2
    	
 
    	
mo
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Reproduction of contract   documents.
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
General   safety/protection/barricades, incl maintenance.
    	
 
    	
2
    	
 
    	
mo
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Safety inspections
    	
 
    	
6
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dust control (materials)
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Draining & shutdown fees (   sprinkler, etc.)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
By Others
    	
 
    	
 
    	
 
    
	
General police details/fire watch
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
W/ subs
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Demolition
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Remove walls per plans
    	
 
    	
717
    	
 
    	
If
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Remove partial suspended ceilings   as required
    	
 
    	
4201
    	
 
    	
sf
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Remove carpet as required
    	
 
    	
1207
    	
 
    	
sf
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Remove VCT
    	
 
    	
5230
    	
 
    	
sf
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Remove doors & frames
    	
 
    	
26
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Remove GWB ceilings
    	
 
    	
323
    	
 
    	
sf
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Remove abandoned lab casework   & hoods
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Haz. Waste abatement &   removal
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
By Others
    	
 
    	
 
    	
 
    
	
Common area temp protection,   isolation, exhaust
    	
 
    	
1
    	
 
    	
alw
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
General labor & daily cleanup
    	
 
    	
3
    	
 
    	
dys
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dumpsters
    	
 
    	
3
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Concrete &   Masonry
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
No work
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Steel & misc.   iron
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
No work
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Rough and Finish   Carpentry
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Misc. carpentry labor
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
By super
    	
 
    	
 
    	
 
    
	
Installation of doors &   hardware
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
By super
    	
 
    	
 
    	
 
    
	
New Cafe / meeting millwork   uppers & lowers
    	
 
    	
16
    	
 
    	
If
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Allowance to patch wood window   sills per new layout
    	
 
    	
84
    	
 
    	
If
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Lab supply & office supply   shelving / bench
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
By Others
    	
 
    	
 
    	
 
    
	
General labor & daily cleanup
    	
 
    	
3
    	
 
    	
dys
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dumpsters
    	
 
    	
1
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Thermal and   Moisture Protection
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Misc caulking
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
In painting
    	
 
    	
 
    	
 
    

 

Page 1 of 5

 

 

	
Division/Description
    	
 
    	
Qty
    	
 
    	
UM
    	
 
    	
Unit Cost
    	
 
    	
Total
    	
 
    	
Division Total
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Doors,   Frames and Hardware
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Reuse existing   office doors & frames as possible
    	
 
    	
5
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    	
 
    
	
New wood doors, frames &   hardware
    	
 
    	
12
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New HM sidelite frames
    	
 
    	
4
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Reuse existing sidelite frames
    	
 
    	
6
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    	
 
    
	
Specially / card access hardware
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
By others
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Glass and Glazing
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Remove & reinstall existing   glass at sidelites
    	
 
    	
6
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New glass door sidelite glazing
    	
 
    	
4
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New 4’ high borrowed lite glass   at Café / Meeting
    	
 
    	
14
    	
 
    	
If
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New interior butt glazed glass   wall at Café / meeting
    	
 
    	
14
    	
 
    	
If
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New interior butt glazed glass   wall at Executive Office
    	
 
    	
10
    	
 
    	
If
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Vision kits at doors
    	
 
    	
3
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Conf. room & main entry glass
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Existing
    	
 
    	
 
    	
 
    
	
General labor & daily cleanup
    	
 
    	
1
    	
 
    	
dys
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Gypsum Drywall
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Install door frames
    	
 
    	
17
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Install sidelite frames
    	
 
    	
10
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New 10’ GWB partitions
    	
 
    	
443
    	
 
    	
If
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New full ht GWB partitions
    	
 
    	
90
    	
 
    	
If
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Inwall blocking
    	
 
    	
1
    	
 
    	
a/w
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Allowance for misc. patch at demo   areas
    	
 
    	
1
    	
 
    	
a/w
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Extend existing to clock as   required for demising
    	
 
    	
325
    	
 
    	
sf
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
GWB. ceilings
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
EXCLUDED
    	
 
    	
 
    	
 
    
	
General labor & daily cleanup
    	
 
    	
3
    	
 
    	
dys
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dumpsters
    	
 
    	
1
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Acoustic Ceilings
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New Mylar ceiling tiles in   existing grid
    	
 
    	
3,385
    	
 
    	
sf
    	
 
    	
7.75
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New suspended ceilings as required   to match @ office areas
    	
 
    	
5,292
    	
 
    	
sf
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New suspended ceiling at   Cafeteria.
    	
 
    	
550
    	
 
    	
sf
    	
 
    	
4.30
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
General labor & daily cleanup
    	
 
    	
3
    	
 
    	
dys
    	
 
    	
400
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dumpsters
    	
 
    	
0.50
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Page 2 of 5

 

 

	
Division/Description
    	
 
    	
Qty
    	
 
    	
UM
    	
 
    	
Unit Cost
    	
 
    	
Total
    	
 
    	
Division Total
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Flooring   Systems
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sheet vinyl in   BL-2 lab
    	
 
    	
30
    	
 
    	
sy
    	
 
    	
95
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New VCT Cafeteria / Meeting
    	
 
    	
550
    	
 
    	
sf
    	
 
    	
2.75
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New VCT at main labs & lab   corridor
    	
 
    	
3,538
    	
 
    	
sf
    	
 
    	
2.75
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New VCT at Lab supply
    	
 
    	
187
    	
 
    	
sf
    	
 
    	
2.75
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Vinyl baseboard
    	
 
    	
1,388
    	
 
    	
If
    	
 
    	
2.25
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Floor prep
    	
 
    	
4,200
    	
 
    	
sf
    	
 
    	
1.25
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Carpet for Exec. Area 3 offices
    	
 
    	
67
    	
 
    	
sy
    	
 
    	
35
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Caroet for offices adjacent to   café
    	
 
    	
34
    	
 
    	
sy
    	
 
    	
35
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Carpet at open office area
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    	
 
    
	
Carpet at conf. room
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    	
 
    
	
Carpet at reception
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    	
 
    
	
Epoxy flooring in glass wash
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    	
 
    
	
New carpet at new offices
    	
 
    	
7
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    	
 
    
	
New carpet at small conf. rooms
    	
 
    	
2
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    	
 
    
	
Subcontractor quote
    	
 
    	
1
    	
 
    	
qt
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
General labor & daily cleanup
    	
 
    	
2
    	
 
    	
dys
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dumpsters
    	
 
    	
0.50
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Painting
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Epoxy paint new & existing   walls at lab & lab support rooms
    	
 
    	
4,474
    	
 
    	
sf
    	
 
    	
1.10
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Latex prime & paint at new   & existing office & office support areas
    	
 
    	
7,920
    	
 
    	
sf
    	
 
    	
0.75
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Paint new & existing door   & sidelite frames
    	
 
    	
16
    	
 
    	
ea
    	
 
    	
1.75
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Existing paint to remain at   existing to remain areas
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    	
 
    
	
General labor & daily cleanup
    	
 
    	
2
    	
 
    	
dys
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Specialties &   furnishings
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Supply & install Dishwasher
    	
 
    	
1
    	
 
    	
alw
    	
 
    	
650
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Supply & install Ref.
    	
 
    	
1
    	
 
    	
alw
    	
 
    	
1,400
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Office furniture & cubicles
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
By others
    	
 
    	
 
    	
 
    
	
Supply & install Lancer 1400   LXPGW (Labrepco qt)
    	
 
    	
1
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
By others
    	
 
    	
 
    	
 
    
	
Sales tax for Lancer equipment
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
By others
    	
 
    	
 
    	
 
    
	
Remove & dispose of existing   wash equipment
    	
 
    	
1
    	
 
    	
qt
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Laboratory equipment (BSC’s,   etc.)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
By others
    	
 
    	
 
    	
 
    
	
Reception desk
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
By others
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Laboratory Casework
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Supply & install new fixed   lab casework island benches per plans
    	
 
    	
4
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    	
 
    
	
New island bench reagent shelving   per plans
    	
 
    	
3
    	
 
    	
pcs
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    	
 
    
	
New wall bench with epoxy sink at   Analytical
    	
 
    	
29
    	
 
    	
If
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    	
 
    
	
New wall bench at Ancillary lab
    	
 
    	
13
    	
 
    	
If
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    	
 
    
	
New island bench sink bases with   epoxy sinks
    	
 
    	
2
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    	
 
    
	
Island benches to have 6’ wide epoxy   tops
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    	
 
    
	
Subcontractor quote (LFI&S)
    	
 
    	
1
    	
 
    	
qt
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
6’ Chemical Fume hoods
    	
 
    	
5
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    	
 
    
	
New Chemical Fume Hoods
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
EXCLUDED
    	
 
    	
 
    	
 
    
	
BL2 lab bench
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    	
 
    
	
Glasswash Room lab bench
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    	
 
    
	
General labor   & daily cleanup
    	
 
    	
2
    	
 
    	
dys
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Page 3 of 5

 

 

	
Division Description
    	
 
    	
Qty
    	
 
    	
UM
    	
 
    	
Unit Cost
    	
 
    	
Total
    	
 
    	
Division Total
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fire Protection
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Relocate heads per code at areas of renovation
    	
 
    	
5,292
    	
 
    	
sf
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fire protection engineering
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
General labor & daily cleanup
    	
 
    	
2
    	
 
    	
dys
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Draining & shut down fees
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Plumbing
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Demo & disconnect of existing   adandoned services
    	
 
    	
1
    	
 
    	
is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
New Cafteria sink, piping, drain & DW   connection
    	
 
    	
1
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
New vacuum piping & drops (connect to   existing mains)
    	
 
    	
10
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Now C, A piping & drops (connect to existing   mains)
    	
 
    	
10
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
New gaseous N2 piping to existing CFH’s
    	
 
    	
5
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Design & engineering & permits
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Change out sinks at existing lab (water,   drain, RODI & EW)
    	
 
    	
3
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Disconnect existing GW & connect to new   Lancer unit
    	
 
    	
1
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Subcontractor budget (NSMC)
    	
 
    	
1
    	
 
    	
bgt
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Existing sinks at BL2 & GW rooms
    	
 
    	
3
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    
	
Utilities & piping to furne hoods 
    	
 
    	
5
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    
	
Vacuum pump, Air compressor & RODI system
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    
	
Existing ES / EW stations & piping
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    
	
N2 / Specialty gas manfolds
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
EXCLUDED
    	
 
    	
 
    
	
Natural gas piping
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
EXCLUDED
    	
 
    	
 
    
	
New RODI piping & drops
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
None shown
    	
 
    	
 
    
	
Liquid N2 & piping
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
By others
    	
 
    	
 
    
	
Process chiller & chiller equipment piping
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
By others
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
HVAC
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Demo and Make safe hot water piping to   existing reheat coils
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Demo and Make safe supply and exhaust valves   in existing holding room
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Provide four new VAV boxes with re heats   (cafe, conference, and offices
    	
 
    	
4
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
New controls and wiring
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Disconnect and make safe existing hood
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Programing
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Graphics upgrade to existing controls
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Hot water piping to new coils
    	
 
    	
5
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Pipe and duct insulation
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Start up, testing, balancing
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Design & engineering & permits
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Subcontractor budget (ESI)
    	
 
    	
1
    	
 
    	
bgt
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
General labor & daily cleanup
    	
 
    	
2
    	
 
    	
dys
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Electrical
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fixtures and switching
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Recepticals and wire mold
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Re-use fixtures where possible
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
New parabolic lights in new private offices
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Power wiring to new HVAC equipment
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Relocate existing panels in Future cafe
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Distribution and feeds
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Fire alarm
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
misc power for equipment
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
480 v 3 ph power for new GW
    	
 
    	
1
    	
 
    	
ea
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Design & engineering & permits
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    
	
Ring & String Tenant supplied T/D wiring
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    

 

Page 4 of 5

 

 

	
Division/Description
    	
 
    	
Qty
    	
 
    	
UM
    	
 
    	
Unit Cost
    	
 
    	
Total
    	
 
    	
Division Total
    	
 
    
	
Subcontractor budget   (IES)
    	
 
    	
1
    	
 
    	
bgt
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Ring &   String for Tenant supplied T/D wiring
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
inc
    	
 
    	
 
    	
 
    
	
T/D wiring
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
By Others
    	
 
    	
 
    	
 
    
	
Existing Laboratory   lighting
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    	
 
    
	
Existing glass   wash room lighting & power
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
To remain
    	
 
    	
 
    	
 
    
	
Engineering
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Architectural   services (Archdesign)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
MEP Engineering
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
WJ subs
    	
 
    	
 
    	
 
    
	
Structural   engineering
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
EXCLUDED
    	
 
    	
 
    	
 
    
	
Pre-construction   & planner
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Permits
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fire department   fees
    	
 
    	
1
    	
 
    	
Is
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Building Permit   fees
    	
 
    	
22
    	
 
    	
%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
I&I fees
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
EXCLUDED
    	
 
    	
 
    	
 
    
	
Supervision   & Management
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Project Manager (2/5   time)
    	
 
    	
8
    	
 
    	
wks
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Working   Superintendent
    	
 
    	
8
    	
 
    	
wks
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Admin &   accounting
    	
 
    	
6
    	
 
    	
dys
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
General   Conditions
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Field Office
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Field office   supplies
    	
 
    	
2
    	
 
    	
mo
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Courier/overnight/postage
    	
 
    	
2
    	
 
    	
mo
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Drinking water
    	
 
    	
2
    	
 
    	
mo
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sanitary   facilities
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Use existing
    	
 
    	
 
    	
 
    
	
Cell Phone &   wireless usage
    	
 
    	
200
    	
 
    	
mo
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Insurance
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
General   Liability Insurance
    	
 
    	
0.8
    	
 
    	
%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Bond
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Excluded
    	
 
    	
 
    	
 
    

 

Clarifications:

 

1) Estimate is based on normal working hours (7:00-3:30 M-F)

2) Estimate is based on a single phase of construction

3) Estimate is based on drawings: Space Plan Option “D” 8/19/13 & KALA equipment list 82313 by John R. Refuse AIA

4) Estimate EXCLUDES any new CFH’s

 

Page 5 of 5

 

 

EXHIBIT D TO LEASE

 

ACKNOWLEDGMENT OF COMMENCEMENT DATE

 

This ACKNOWLEDGMENT OF COMMENCEMENT DATE is made this       day of               ,      , between ARE-MA REGION NO. 9, LLC, a Delaware limited liability company (“Landlord”), and KALA PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”), and is attached to and made a part of the Lease dated             ,       (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 is             ,      , and the termination date of the Base Term of the Lease shall be midnight on             ,      .  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:
    
	
 
    	
 
    
	
 
    	
KALA   PHARMACEUTICALS, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LANDLORD:
    
	
 
    	
 
    
	
 
    	
ARE-MA   REGION NO. 9, LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
ARE-MA   REGION NO. 9MM, LLC, a Delaware limited liability company, manager
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
ALEXANDRIA   REAL ESTATE EQUITIES, L.P., a Delaware limited partnership, its member
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
ARE-QRS   CORP.,
    
	
 
    	
 
    	
a   Maryland corporation,
    
	
 
    	
 
    	
general   partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Its:
    	
 
    
							

 

1

 

EXHIBIT E TO LEASE

 

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.

 

3.                                      Except for animals assisting the disabled, no animals shall be allowed in the offices, halls, or corridors in the Project.

 

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.

 

1

 

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.

 

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.

 

2

 

EXHIBIT F TO LEASE

 

TENANT’S PERSONAL PROPERTY

 

None.

 

1

 

EXHIBIT G TO LEASE

 

HAZARDOUS MATERIALS LIST

 

	
Kala   Pharmaceuticals, Inc.
    	
FLAMMABLE CHEMICALS   LISTING
    	
Sep-2013
    

 

Kala Pharmaceuticals Inc.

Third Floor, 135 BEAVER STREET

WALTHAM, MA

 

Sep-13

 

Requested Permit Amounts:

 

	
Class I
    	
 
    	
100 gallons
    
	
Class II
    	
 
    	
20 gallons
    
	
Class III
    	
 
    	
20 gallons
    
	
Flammable gas
    	
 
    	
300 cu ft
    
	
Flammable solids
    	
 
    	
<10 lbs
    

 

FLAMMABLE CHEMICALS LISTING

 

FLAMMABLE LIQUIDS-Class 1A, 1B, 1C

 

	
 
    	
 
    	
Substance
    	
 
    	
Flammable Class
    	
 
    	
Physical state
    	
 
    	
Volume (L)
    	
 
    	
Volume (Gal)
    
	
10684
    	
 
    	
Diethyl ether
    	
 
    	
1A
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10265
    	
 
    	
Diethyl ether
    	
 
    	
1A
    	
 
    	
liquid
    	
 
    	
20
    	
 
    	
5.14
    
	
NA
    	
 
    	
Waste Class 1A
    	
 
    	
1A
    	
 
    	
liquid
    	
 
    	
77.6
    	
 
    	
20.00
    
	
total volume Class 1A:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
101.8
    	
 
    	
26.17
    
	
10440
    	
 
    	
1,4-Dioxane
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10705
    	
 
    	
2-Propanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10723
    	
 
    	
2-Propanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10724
    	
 
    	
2-Propanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10746
    	
 
    	
2-Propanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10747
    	
 
    	
2-Propanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10713
    	
 
    	
Acetone
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10719
    	
 
    	
Acetone
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10943
    	
 
    	
Acetone
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10753
    	
 
    	
Acetonitrile
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10729
    	
 
    	
Acetonitrile
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10725
    	
 
    	
Acetonitrile
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10730
    	
 
    	
Acetonitrile
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10702
    	
 
    	
Acetonitrile
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10697
    	
 
    	
Acetonitrile
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10386
    	
 
    	
Acetonitrile
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10272
    	
 
    	
Benzene
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10392
    	
 
    	
Cyclohexane
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10289
    	
 
    	
Ethanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10748
    	
 
    	
Ethyl acetate
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10749
    	
 
    	
Ethyl acetate
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10755
    	
 
    	
Ethyl acetate
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10756
    	
 
    	
Ethyl acetate
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10718
    	
 
    	
Ethyl acetate
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10715
    	
 
    	
Ethyl acetate
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10958
    	
 
    	
Hexanes
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10393
    	
 
    	
Isopropyl ether
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10738
    	
 
    	
Methanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10739
    	
 
    	
Methanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10734
    	
 
    	
Methanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10740
    	
 
    	
Methanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    

 

1

 

	
10689
    	
 
    	
Methanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10391
    	
 
    	
Methanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10434
    	
 
    	
Methyl ethyl ketone
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10279
    	
 
    	
Methyl ethyl ketone
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10546
    	
 
    	
n-Propanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10288
    	
 
    	
Propyl acetate
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10292
    	
 
    	
Pyridine
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10517
    	
 
    	
t-Butanol
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10647
    	
 
    	
Tetrahydrofuran
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10670
    	
 
    	
Tetrahydrofuran
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
026
    
	
10290
    	
 
    	
Toluene
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10375
    	
 
    	
Methyl tert-butyl ether
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10962
    	
 
    	
1,2-Dichloroethane
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10962
    	
 
    	
1,2-Dichloroethane
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.28
    
	
NA
    	
 
    	
Waste, Class 1B
    	
 
    	
1B
    	
 
    	
liquid
    	
 
    	
155.6
    	
 
    	
40.00
    
	
total volume Class 1B:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
284.6
    	
 
    	
73.16
    
	
10295
    	
 
    	
Nitromethane
    	
 
    	
1C
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10269
    	
 
    	
1-Butanol
    	
 
    	
1C
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
total volume Class 1C:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
2
    	
 
    	
0.51
    
	
total volume Class 1:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
388.4
    	
 
    	
99.85
    

 

NOTE: Total volume of Class I is higher than the June 2013 list by 9 gallons due to increase in Waste from 51 to 60 gallons.

 

COMBUSTIBLE LIQUIDS-Class II

 

	
 
    	
 
    	
Substance
    	
 
    	
Flammable Class
    	
 
    	
Physical state
    	
 
    	
Volume (L)
    	
 
    	
Volume (Gal)
    
	
10278
    	
 
    	
1,2-Dimethoxyethane
    	
 
    	
2
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10268
    	
 
    	
N,N-Dimethylformamide
    	
 
    	
2
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10731
    	
 
    	
N,N-Dimethylformamide
    	
 
    	
2
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10277
    	
 
    	
1-Octanethiol
    	
 
    	
2
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10291
    	
 
    	
Hexan-1-ol
    	
 
    	
2
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10274
    	
 
    	
2-Methoxyethyl ether
    	
 
    	
2
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
total   volume Class 2:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
6
    	
 
    	
1.54
    

 

COMBUSTIBLE LIQUIDS-Class III

 

	
 
    	
 
    	
Substance
    	
 
    	
Flammable Class
    	
 
    	
Physical state
    	
 
    	
Volume (L)
    	
 
    	
Volume (Gal)
    
	
10520
    	
 
    	
N,N-Dimethylacetamide
    	
 
    	
3A
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10264
    	
 
    	
Dimethyl sulfoxide
    	
 
    	
3
    	
 
    	
liquid
    	
 
    	
4
    	
 
    	
1.03
    
	
10273
    	
 
    	
Etahanolamine
    	
 
    	
3A
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10297
    	
 
    	
Ethylene glycol
    	
 
    	
3B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10276
    	
 
    	
Ethylene glycol
    	
 
    	
3B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10632
    	
 
    	
N-Methyl-2-pyrrolidone
    	
 
    	
3A
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
10293
    	
 
    	
Propylene glycol
    	
 
    	
3B
    	
 
    	
liquid
    	
 
    	
1
    	
 
    	
0.26
    
	
total   volume Class 3:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
10
    	
 
    	
2.57
    

 

FLAMMABLE GASES

 

	
 
    	
 
    	
Substance
    	
 
    	
Vol   (cu. ft)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
NA
    	
 
    	
HYDROGEN
    	
 
    	
100
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
10390
    	
 
    	
BUTANE CYL
    	
 
    	
30
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
10389
    	
 
    	
PROPANE-1-1
    	
 
    	
17
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
total volume
    	
 
    	
 
    	
 
    	
147
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

2Exhibit 10.10

 

KALA PHARMACEUTICALS, INC.

 

LOAN AND SECURITY AGREEMENT

 

 

This LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into as of November 20, 2014, by and among Square 1 Bank (“Square 1”), in its capacity as administrative and collateral agent (together with its successors and assigns in such capacity, “Agent”) for the lenders hereto as of the date hereof and other financial institutions who hereafter become parties to this Agreement as lenders (each individually a “Lender” and, collectively, the “Lenders”), the Lenders set forth on Schedule 1 hereto and Kala Pharmaceuticals, Inc. (“Borrower”).

 

RECITALS

 

Borrower wishes to obtain credit from time to time from the Lenders, and the Lenders desire to extend credit to Borrower.  This Agreement sets forth the terms on which the Lenders will advance credit to Borrower and Borrower will repay the amounts owing to the Lenders.

 

AGREEMENT

 

The parties agree as follows:

 

1.                                      DEFINITIONS AND CONSTRUCTION.

 

1.1                               Definitions.  As used in this Agreement, all capitalized terms shall have the definitions set forth on Exhibit A.  Any term used in the Code and not defined herein shall have the meaning given to the term in the Code.

 

1.2                               Accounting Terms.  Any accounting term not specifically defined on Exhibit A shall be construed in accordance with GAAP, and all calculations shall be made in accordance with GAAP (except for the calculation of warrant liabilities and stock compensation expenses on Borrower’s unaudited financial statements only, which calculations shall be made in accordance with management accounting consistent with past practices).  The term “financial statements” shall include the accompanying notes and schedules.

 

2.                                      LOAN AND TERMS OF PAYMENT.

 

2.1                               Credit Extensions.

 

(a)                                 Promise to Pay.  Borrower promises to pay to the Lenders, in lawful money of the United States of America, the aggregate unpaid principal amount of all Credit Extensions made by the Lenders to Borrower, together with interest on the unpaid principal amount of such Credit Extensions at rates in accordance with the terms hereof.

 

(b)                                 Term Loan.

 

(i)                        Subject to and upon the terms and conditions of this Agreement, the Lenders agree to make, severally and not jointly, according to each Lender’s Term Loan Commitment Amount, one or more term loans to Borrower in an aggregate principal amount not to exceed $10,000,000 (each a “Term Loan” and, collectively, the “Term Loans”).  Each Term Loan shall be in a minimum amount of $250,000.  Borrower may request Term Loans at any time from the date hereof through the Availability End Date.  The proceeds

 

1

 

of the Term Loans shall be used for general working capital purposes, and for capital equipment purchases, to pay Lender Expenses and to pay the fees under this Agreement.

 

(ii)                    Interest shall accrue from the date of each Term Loan at the rate specified in Section 2.2(a) and, through the Interest-Only End Date, shall be payable monthly in arrears beginning on the first day of the month next following such Term Loan, and continuing on the same day of each month thereafter.  Any Term Loans that are outstanding on the Interest-Only End Date shall be payable in 30 equal monthly installments of principal, plus all accrued interest, beginning on the first day of the month immediately following the Interest-Only End Date and continuing on the same day of each month thereafter through the Term Loan Maturity Date, at which time all amounts due in connection with the Term Loans and any other amounts due under this Agreement shall be immediately due and payable.  Term Loans, once repaid, may not be reborrowed.  Borrower may prepay any Term Loan, subject to the payment of the Prepayment Fee.

 

(iii)                When Borrower desires to obtain a Term Loan, Borrower shall notify Agent (which notice shall be irrevocable) by facsimile transmission to be received no later than 3:30 p.m. Eastern time at least five Business Days prior to the date on which the Term Loan is to be made.  Such notice shall be substantially in the form of Exhibit C and signed by an Authorized Officer.  Promptly upon receiving such notice, Agent shall notify each Lender of the contents of such notice and each Lender’s Pro Rata Share of such Term Loan.

 

2.2                               Interest Rates, Payments, and Calculations.

 

(a)                                 Interest Rates.  Except as set forth in Section 2.2(b), the Term Loans shall bear interest, on the outstanding daily balance thereof, at a variable annual rate equal to the greater of (i) 3.00% above the Prime Rate then in effect, or (ii) 6.25%.

 

(b)                                 Late Fee; Default Rate.  If any payment is not made within 15 days after the date such payment is due, Borrower shall pay Agent (for the benefit of the Lenders) a late fee equal to the lesser of (i) 5% of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under applicable law.  All Obligations shall bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to five percentage points above the interest rate applicable immediately prior to the occurrence of the Event of Default.

 

(c)                                  Payments.  Agent shall charge all interest, all Lender Expenses, and all Periodic Payments against any of Borrower’s deposit accounts.  Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall thereafter accrue interest at the rate then applicable hereunder.

 

(d)                                 Computation.  In the event the Prime Rate is changed from time to time hereafter, the applicable rate of interest hereunder shall be increased or decreased, effective as of the day the Prime Rate is changed, by an amount equal to such change in the Prime Rate.  All interest chargeable under the Loan Documents shall be computed on the basis of a 360-day year for the actual number of days elapsed.

 

2

 

2.3                               Crediting Payments.  Prior to the occurrence of an Event of Default, Agent shall credit a wire transfer of funds, check or other item of payment to such deposit account or Obligation as Borrower specifies.  After the occurrence and during the continuance of an Event of Default, Agent shall have the right, in its sole discretion, to immediately apply any wire transfer of funds, check, or other item of payment Agent may receive to conditionally reduce Obligations, but such applications of funds shall not be considered a payment on account unless such payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment.  Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Agent after 5:30 p.m. Eastern time shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day.  Whenever any payment to Agent under the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of such extension.

 

2.4                               Fees.  Borrower shall pay the following:

 

(a)                                 Facility Fee.  On or before the Closing Date, a fee equal to $50,000 to be paid to Agent (for the benefit of the Lenders), which shall be nonrefundable;

 

(b)                                 Lender Expenses.  On the Closing Date, all Lender Expenses incurred through the Closing Date, and, after the Closing Date, all Lender Expenses, as and when they become due.

 

(c)                                  Prepayment Fee.  In connection with any prepayment of any principal amount of the Term Loans prior to the Term Loan Maturity Date, including following acceleration under Section 9.1, Borrower shall pay to Agent (for the benefit of the Lenders), on the date of such prepayment, a prepayment fee (the “Prepayment Fee”) in an amount equal to the principal amount so prepaid multiplied by a percentage determined in accordance with the following schedule:

 

	
Period
    	
 
    	
Applicable Prepayment Percentage
    	
 
    
	
From the Closing   Date to (but not including) the first anniversary of the Closing Date
    	
 
    	
0.90
    	
%
    
	
From the first   anniversary of the Closing Date to (but not including) the second anniversary   of the Closing Date
    	
 
    	
0.60
    	
%
    
	
From the second   anniversary of the Closing Date and thereafter until the Term Loan Maturity   Date
    	
 
    	
0.30
    	
%
    

 

Borrower acknowledges that the foregoing Prepayment Fee represents a reasonable and fair estimate for the loss that the Lenders may sustain from the prepayment of the Term Loans prior to the Term Loan Maturity Date and further acknowledges that, except as specifically provided herein, Borrower has no right to optionally prepay the Term Loans in whole or in part without paying the foregoing Prepayment Fee.  For the avoidance of doubt, no Prepayment Fee shall be payable in connection with any payment of regularly scheduled principal installments of the Term Loans.

 

3

 

2.5                               Term.  This Agreement shall become effective on the Closing Date and, subject to Section 12.7, shall continue in full force and effect for so long as any Obligations remain outstanding or any Lender has any obligation to make Credit Extensions under this Agreement.  Notwithstanding the foregoing, the Lenders shall have the right to terminate their obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default.

 

3.                                      CONDITIONS OF LOANS.

 

3.1                               Conditions Precedent to Closing.  The agreement of Agent and the Lenders to enter into this Agreement on the Closing Date is subject to the condition precedent that Agent and the Lenders shall have received, in form and substance satisfactory to Agent and the Lenders, each of the following items and shall have completed each of the following requirements:

 

(a)                                 this Agreement;

 

(b)                                 an officer’s certificate of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement;

 

(c)                                  a financing statement (Form UCC-1);

 

(d)                                 a Loan Advance/Paydown Request Form in a minimum amount of $5,000,000;

 

(e)                                  payment of the fees and Lender Expenses then due specified in Section 2.4, which may be debited from any of Borrower’s accounts with Square 1;

 

(f)                                   current SOS Reports indicating that, except for Permitted Liens, there are no other security interests or Liens of record in the Collateral;

 

(g)                                 current financial statements, including audited statements for Borrower’s most recently ended fiscal year, together with an unqualified opinion (or an opinion qualified only for going concern solely due to Borrower’s projected need for additional funding to continue operations), company prepared consolidated, if applicable, balance sheets, income statements and statements of cash flows for the most recently ended month in accordance with Section 6.2, and such other updated financial information as the Lenders may reasonably request;

 

(h)                                 current Compliance Certificate in accordance with Section 6.2;

 

(i)                                    warrants duly executed by Borrower and issued to each Lender;

 

(j)                                    a Borrower Information Certificate;

 

(k)                                 a deposit account control agreement with respect to Borrower’s account numbers and at Square 1;

 

(l)                                    [Reserved];

 

4

 

(m)                             a payoff letter from Lighthouse Capital Partners VI, L.P.;

 

(n)                                 a copy of Borrower’s policies or certificates of insurance including any endorsements showing Agent as loss payee (for the benefit of Lenders) and showing Agent and each Lender as an additional insured;

 

(o)                                 such other documents or certificates, and completion of such other matters, as Agent and/or any Lender may reasonably request; and

 

(p)                                 Borrower shall have opened and funded deposit accounts held with Square 1.

 

3.2                               Conditions Precedent to all Credit Extensions.  The obligation of the Lenders to make each Credit Extension, including the initial Credit Extension, is contingent upon Borrower’s compliance with Section 3.1 above, and is further subject to the following conditions (except that the initial Credit Extension is not subject to the conditions in clause (b)):

 

(a)                                 timely receipt by Agent of the Loan Advance/Paydown Request Form as provided in Section 2.1;

 

(b)                                 Borrower shall have transferred substantially all of its Cash assets into operating accounts held with Square 1 and shall otherwise be in compliance with Section 6.6 hereof;

 

(c)                                  in the Lenders’ sole reasonable discretion, there has not been a Material Adverse Effect; and

 

(d)                                 the representations and warranties contained in Article 5 shall be true and correct in all material respects on and as of the date of such Loan Advance/Paydown Request Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and be continuing, or would exist after giving effect to such Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date).  The making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2.

 

4.                                      CREATION OF SECURITY INTEREST.

 

4.1                               Grant of Security Interest.  Borrower grants and pledges to Agent (for the benefit of the Lenders) a continuing security interest in the Collateral to secure prompt repayment of any and all Obligations and to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents (other than warrants).  Except for Permitted Liens or as disclosed in the Schedule, such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in later-acquired Collateral.  Borrower also hereby agrees not to sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its Intellectual Property, except for Permitted Transfers and Permitted Liens.  Notwithstanding any termination

 

5

 

of this Agreement or of any filings undertaken related to Agent’s or the Lenders’ rights under the Code, Agent’s Lien on the Collateral shall remain in effect for so long as any Obligations are outstanding.

 

4.2                               Perfection of Security Interest.  Borrower authorizes Agent to file at any time financing statements, continuation statements, and amendments thereto that (a) either specifically describe the Collateral or describe the Collateral as all assets of Borrower of the kind pledged hereunder, and (b) contain any other information required by the Code for the sufficiency of filing office acceptance of any financing statement, continuation statement, or amendment, including whether Borrower is an organization, the type of organization and any organizational identification number issued to Borrower, if applicable.  Borrower shall have possession of the Collateral, except where expressly otherwise provided in this Agreement or where Agent chooses to perfect its security interest by possession in addition to the filing of a financing statement.  Where Collateral is in possession of a third-party bailee, Borrower shall take such steps as Agent reasonably requests for Agent to (i) to the extent required under Section 7.10 below, obtain an acknowledgment, in form and substance reasonably satisfactory to Agent and the Required Lenders, of the bailee that the bailee holds such Collateral for the benefit of Agent, and (ii) to the extent required under Section 6.6 below, obtain “control” of any Collateral consisting of investment property, deposit accounts, letter-of-credit rights or electronic chattel paper (as such items and the term “control” are defined in Revised Article 9 of the Code) by causing the securities intermediary or depositary institution or issuing bank to execute a control agreement in form and substance reasonably satisfactory to Agent and the Required Lenders.  Borrower will not create any chattel paper without placing a legend on the chattel paper acceptable to Agent indicating that Agent (for the benefit of the Lenders) has a security interest in the chattel paper.  Borrower from time to time, pursuant to additional agreements by Borrower, may deposit with a Lender specific cash collateral to secure specific Obligations; Borrower authorizes the Lenders to hold such specific balances in pledge and to decline to honor any drafts thereon or any request by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as the specific Obligations are outstanding.  Borrower shall take such other actions as Agent reasonably requests to perfect Agent’s security interests granted under this Agreement.

 

5.                                      REPRESENTATIONS AND WARRANTIES.

 

Borrower represents and warrants to Agent and each Lender as follows:

 

5.1                               Due Organization and Qualification.  Borrower and each Subsidiary is duly existing under the laws of the state in which it is organized and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified, except where the failure to do so would not reasonably be expected to cause a Material Adverse Effect.

 

5.2                               Due Authorization; No Conflict.  The execution, delivery, and performance of the Loan Documents are within Borrower’s powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower’s Certificate of Incorporation or Bylaws, nor will they constitute an event of default under any material agreement by which Borrower is bound.  Borrower is not in default under any

 

6

 

agreement by which it is bound, except to the extent such default would not reasonably be expected to cause a Material Adverse Effect.

 

5.3                               Collateral.  Except as set forth on Schedule 5.3, Borrower has rights in or the power to transfer the Collateral, and its title to the Collateral is free and clear of Liens, adverse claims, and restrictions on transfer or pledge except for Permitted Liens and licenses and agreements containing customary anti-assignment provisions so long as such provisions are, or would be, rendered unenforceable or ineffective under applicable law (including, without limitation, Sections 9-406, 9-407 and 9-408 of the Code).  Other than movable items of personal property such as laptop computers, all Collateral having an aggregate book value in excess of $100,000 is located solely in the Collateral State, at the locations set forth on Schedule 7.10 and such other locations permitted under Section 7.10.  All Inventory is in all material respects of good and merchantable quality, free from all material defects, except for Inventory for which adequate reserves have been made.  Except as set forth in the Schedule or as permitted under Section 6.6, none of Borrower’s Cash is maintained or invested with a Person other than Square 1 or Square 1’s Affiliates.

 

5.4                               Intellectual Property.  Except as set forth on Schedule 5.4, Borrower is the sole owner of the Intellectual Property created or purchased by Borrower.  Except as set forth on Schedule 5.4, to the best of Borrower’s knowledge, each of the Copyrights, Trademarks and Patents created or purchased by Borrower is valid and enforceable, and no part of the Intellectual Property created or purchased by Borrower has been judged invalid or unenforceable, in whole or in part, and no claim has been made to Borrower that any part of the Intellectual Property created or purchased by Borrower violates the rights of any third party except to the extent such claim would not reasonably be expected to cause a Material Adverse Effect.

 

5.5                               Name; Location of Chief Executive Office.  Except as disclosed in the Schedule, Borrower has not done business under any name other than that specified on the signature page hereof, and its exact legal name is as set forth in the first paragraph of this Agreement.  As of the date hereof, the chief executive office of Borrower is located at the address indicated in Article 10 hereof.

 

5.6                               Litigation.  Except as set forth in the Schedule, there are no actions or proceedings pending by or against Borrower or any Subsidiary before any court or administrative agency which would reasonably be expected to have a Material Adverse Effect.

 

5.7                               No Material Adverse Change in Financial Statements.  All consolidated and consolidating, if applicable, financial statements related to Borrower and any Subsidiary that are delivered by Borrower to Agent and the Lenders fairly present in all material respects Borrower’s consolidated and consolidating, if applicable, financial condition as of the date thereof and Borrower’s consolidated and consolidating, if applicable, results of operations for the period then ended.  There has not been a material adverse change in the consolidated or in the consolidating, if applicable, financial condition of Borrower since the date of the most recent of such financial statements submitted to Agent and the Lenders.

 

5.8                               Solvency, Payment of Debts.  Borrower is able to pay its debts (including trade debts) as they mature; the fair saleable value of Borrower’s assets (including goodwill

 

7

 

minus disposition costs) exceeds the fair value of its liabilities; and Borrower is not left with unreasonably small capital after the transactions contemplated by this Agreement.

 

5.9                               Compliance with Laws and Regulations.  Borrower and each Subsidiary have met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA.  No event has occurred resulting from Borrower’s failure to comply with ERISA that is reasonably likely to result in Borrower’s incurring any liability that could have a Material Adverse Effect.  Borrower is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940.  Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System).  Borrower has not violated any statutes, laws, ordinances or rules applicable to it, the violation of which would reasonably be expected to have a Material Adverse Effect.  Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made adequate provision for the payment of, all taxes reflected therein except those being contested in good faith with adequate reserves under GAAP or where the failure to file such returns or pay such taxes would not reasonably be expected to have a Material Adverse Effect.

 

5.10                        Subsidiaries.  Borrower does not own any stock, partnership interest or other equity securities of any Person, except for Permitted Investments.

 

5.11                        Government Consents.  Borrower and each Subsidiary have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower’s business as currently conducted, except where the failure to do so would not reasonably be expected to cause a Material Adverse Effect.

 

5.12                        Inbound Licenses; Other Agreements.  Except as disclosed on the Schedule, disclosed in accordance with Section 6.7, Borrower is not a party to, nor is bound by, any material license or other similar agreement important for the conduct of Borrower’s business that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property important for the conduct of Borrower’s business, other than this Agreement or the other Loan Documents.

 

5.13                        Full Disclosure.  No representation, warranty or other statement made by Borrower in any certificate or written statement furnished to Agent or any Lender in connection with the Loan Documents taken together with all such certificates and written statements furnished to Agent or any Lender contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading in light of the circumstances in which they were made, it being recognized by Agent and the Lenders that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results.

 

8

 

6.                                      AFFIRMATIVE COVENANTS.

 

Borrower covenants that, until payment in full of all outstanding Obligations, and for so long as any Lender may have any commitment to make a Credit Extension hereunder, Borrower shall do all of the following (unless Agent and the Required Lenders provide their prior written consent, which shall not be unreasonably withheld):

 

6.1                               Good Standing and Government Compliance.  Borrower shall maintain its and each of its Subsidiaries’ corporate existence and good standing in their respective states of formation, shall maintain qualification and good standing in each other jurisdiction in which the failure to so qualify would reasonably be expected to have a Material Adverse Effect, and shall furnish to Agent the organizational identification number issued to Borrower by the authorities of the state in which Borrower is organized, if applicable.  Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA.  Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and regulations to which it is subject, and shall maintain, and shall cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, the loss of which or failure to comply with which would reasonably be expected to have a Material Adverse Effect.

 

6.2                               Financial Statements, Reports, Certificates.  Borrower shall deliver to Agent and the Lenders:  (i) as soon as available, but in any event within 30 days after the end of each calendar month, a company prepared consolidated and consolidating, if applicable, balance sheet, income statement, and statement of cash flows covering Borrower’s operations during such period, in a form reasonably acceptable to Agent and the Required Lenders and certified by a Responsible Officer pursuant to a Compliance Certificate; (ii) as soon as available, but in any event within 90 days after the end of each calendar quarter, a company prepared consolidated and consolidating, if applicable, balance sheet, income statement, and statement of cash flows covering Borrower’s operations during such period, in a form reasonably acceptable to Agent and the Required Lenders and certified by a Responsible Officer; (iii) as soon as available, but in any event within 180 days after the end of Borrower’s fiscal year, audited (or such other level as is required pursuant to the Investment Agreement) consolidated and consolidating, if applicable, financial statements of Borrower prepared in accordance with GAAP, consistently applied, together with an opinion (which is either unqualified, qualified only for going concern solely due to Borrower’s projected need for additional funding to continue operations or otherwise consented to in writing by Agent and the Required Lenders) on such financial statements of an independent certified public accounting firm reasonably acceptable to Agent and the Required Lenders; (iv) an annual budget approved by Borrower’s Board of Directors as soon as available but not later than the earlier of (A) 60 days after the end of each fiscal year during the term of this Agreement or (B) five days following approval by Borrower’s Board of Directors; (v) if applicable, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt and all reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission; (vi) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened against Borrower or any Subsidiary that would reasonably be expected to result in damages or costs to Borrower or any Subsidiary of $250,000 or more; (vii) promptly upon receipt, each management letter prepared by Borrower’s independent certified public accounting firm regarding Borrower’s management

 

9

 

control systems; (viii) promptly following presentation to Borrower’s Board of Directors, and no less frequently than quarterly (or more frequently if requested by Agent or the Required Lenders (such frequency not to exceed six times per year so long as no Event of Default has occurred and is continuing)), clinical program updates in the form provided to Borrower’s Board of Directors with such additional information as any Lender may reasonably request from time to time; and (ix) such budgets, sales projections, operating plans or other financial information generally prepared by Borrower in the ordinary course of business as any Lender may reasonably request from time to time.

 

(a)                                 Within 30 days after the last day of each month, Borrower shall deliver to Agent and the Lenders with the monthly financial statements a Compliance Certificate certified as of the last day of the applicable month and signed by a Responsible Officer in substantially the form of Exhibit D hereto, together with aged listings by invoice date of accounts receivable and accounts payable.

 

(b)                                 As soon as possible and in any event within three Business Days after becoming aware of the occurrence or existence of an Event of Default hereunder, Borrower shall deliver to Agent and the Lenders a written statement of a Responsible Officer setting forth details of the Event of Default, and the action which Borrower has taken or proposes to take with respect thereto.

 

(c)                                  Agent (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower’s usual business hours but no more than once a year (unless an Event of Default has occurred and is continuing), to inspect Borrower’s Books and to make copies thereof and to check, test, inspect, audit and appraise the Collateral (and Lenders (through any of their respective officers, employees or agents) shall have the right to join any such inspection) at Borrower’s expense in order to verify Borrower’s financial condition or the amount of, condition of, or any other matter relating to, the Collateral.

 

Borrower may deliver to Agent and the Lenders on an electronic basis any certificates, reports or information required pursuant to this Section 6.2, and Agent and the Lenders shall be entitled to rely on the information contained in the electronic files, provided that Agent and the Lenders in good faith believe that the files were delivered by a Responsible Officer.  Borrower shall include a submission date on any certificates and reports to be delivered electronically.

 

6.3                               Inventory and Equipment; Returns.  Borrower shall keep all Inventory and Equipment in good and merchantable condition, free from all material defects except for Inventory and Equipment (a) sold in the ordinary course of business, and (b) for which adequate reserves have been made, in all cases in the United States and such other locations as to which Borrower gives prior written notice.  Returns and allowances, if any, as between Borrower and its account debtors shall be on the same basis and in accordance with the usual customary practices of Borrower, as they exist on the Closing Date.  Borrower shall promptly notify Agent and the Lenders of all returns and recoveries and of all written disputes and claims involving inventory having a book value of more than $100,000.

 

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6.4                               Taxes.  Borrower shall make, and cause each Subsidiary to make, due and timely payment or deposit of all material federal, state, and local taxes, assessments, or contributions required of it by law, including, but not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability, and will execute and deliver to Agent, on demand, proof satisfactory to Agent indicating that Borrower or a Subsidiary has made such payments or deposits and any appropriate certificates attesting to the payment or deposit thereof; provided that Borrower or a Subsidiary need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower or such Subsidiary.

 

6.5                               Insurance.  Borrower, at its expense, shall (a) keep the Collateral insured against loss or damage, and (b) maintain liability and other insurance, in each case as ordinarily insured against by other owners in businesses similar to Borrower’s.  All such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Agent and the Required Lenders.  All policies of property insurance shall contain a lender’s loss payable endorsement, in a form reasonably satisfactory to Agent and the Required Lenders, showing Agent (for the benefit of the Lenders) as an additional loss payee, and all applicable liability insurance policies shall show Agent and each Lender as an additional insured and specify that the insurer must give at least 20 days’ notice to Agent and each Lender before canceling its policy for any reason (except ten days’ notice for nonpayment).  Upon Agent’s or any Lender’s request, Borrower shall deliver to Agent and the Lenders certified copies of the policies of insurance and evidence of all premium payments.  Proceeds payable under any casualty policy will, at Borrower’s option, be payable to Borrower to repair or replace the property subject to the claim, provided that any such repaired or replacement property shall be deemed Collateral in which Agent (for the benefit of the Lenders) has been granted a first priority security interest, provided that, if an Event of Default has occurred and is continuing, all proceeds payable under any such policy shall, at Agent’s option, be payable to Agent (for the benefit of the Lenders) to be applied on account of the Obligations.

 

6.6                               Primary Depository.  Borrower shall, within one Business Day of the Closing Date, maintain substantially all of its depository and operating accounts with Square 1 and substantially all of its primary investment accounts with Square 1 or Square 1’s Affiliates; provided that, for a period of 60 days following the Closing Date, Borrower may maintain at Silicon Valley Bank (a) up to $85,000 to secure a letter of credit issued for the benefit of Borrower’s landlord with respect to Borrower’s lease of its offices at 100 Beaver Street, Suite 201, Waltham, MA 02453, (b) up to $35,000 to secure credit card reimbursement obligations and (c) up to $300,000 in its operating account.  Borrower shall, within 60 days of the Closing Date, maintain all of its depository and operating accounts with Square 1 and its primary investment accounts with Square 1 or Square 1’s Affiliates.  Prior to maintaining any deposit accounts with Square 1 or any investment accounts with Square 1’s Affiliates, Borrower, Agent, and any such Affiliate, as applicable, shall have entered into a deposit account control agreement or a securities account control agreement, as applicable, with respect to any such deposit accounts and investment accounts, in form and substance satisfactory to Agent and the Required Lenders.

 

6.7                               Consent of Inbound Licensors.  Within ten days after entering into or becoming bound by any material inbound license or similar agreement, Borrower shall:  (a) provide written notice to Agent and the Lenders of the material terms of such license or

 

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agreement with a description of its likely impact on Borrower’s business or financial condition; and (b) upon request of Agent, in good faith use commercially reasonable efforts to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for Borrower’s interest in such licenses or contract rights to be deemed Collateral and for Agent (for the benefit of the Lenders) to have a security interest in it that would reasonably be expected to otherwise be restricted by the terms of the applicable license or agreement, whether now existing or entered into in the future, provided, however, that the failure to obtain any such consent or waiver shall not constitute a default under this Agreement.

 

6.8                               Creation/Acquisition of Subsidiaries.  In the event that any Borrower or any Subsidiary of any Borrower creates or acquires any Subsidiary, Borrower or such Subsidiary shall promptly notify Agent and the Lenders of such creation or acquisition, and Borrower or such Subsidiary shall take all actions reasonably requested by Agent or any Lender to achieve any of the following with respect to such “New Subsidiary” (defined as a Subsidiary formed after the date hereof during the term of this Agreement): (a) if such New Subsidiary is organized under the laws of the United States, to cause such New Subsidiary to become either a co-Borrower hereunder, or a secured guarantor with respect to the Obligations; and (b) to grant and pledge to Agent (for the benefit of the Lenders) a perfected security interest in 100% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such New Subsidiary which is organized under the laws of the United States, and 65% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such New Subsidiary which is not organized under the laws of the United States.

 

6.9                               Further Assurances.  At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Agent or any Lender to effect the purposes of this Agreement.

 

6.10                        Post-Closing.  Borrower shall use its commercially reasonable efforts to deliver a fully-executed landlord waiver with respect to Borrower’s lease of its offices at 100 Beaver Street, Suite 201, Waltham, MA 02453, in form and substance reasonably satisfactory to Agent and the Required Lenders on or before the date 30 days following the Closing Date.

 

7.                                      NEGATIVE COVENANTS.

 

Borrower covenants and agrees that, so long as any credit hereunder shall be available and until the outstanding Obligations are paid in full or for so long as any Lender may have any commitment to make any Credit Extensions, Borrower will not do any of the following without Agent’s and the Required Lenders’ prior written consent, which shall not be unreasonably withheld:

 

7.1                               Dispositions.  Convey, sell, lease, license, transfer or otherwise dispose of (collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, or move Cash balances on deposit with Square 1 to accounts opened at another financial institution, other than Permitted Transfers.

 

7.2                               Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year; Change in Control.  Change its

 

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name or the state of Borrower’s formation or relocate its chief executive office without 30 days’ prior written notification to Agent and the Lenders; replace or suffer the departure of its chief executive officer (or, if Borrower did not have a chief executive officer, its Interim President and Chief Business Officer) or chief financial officer (or, if Borrower did not have a chief financial officer, its Senior Director of Finance) without delivering written notification to Agent and the Lenders within ten days; fail to appoint an interim replacement or fill a vacancy in the position of chief executive officer or chief financial officer for more than 60 consecutive days (it being understood and agreed that (x) Borrower currently does not have a chief executive officer and shall have no obligation to appoint an interim replacement for or fill a vacancy in such position so long as Borrower’s Interim President and Chief Business Officer remains in such position and (y) Borrower currently does not have a chief financial officer and shall have no obligation to appoint an interim replacement for or fill a vacancy in such position so long as Borrower’s Senior Director of Finance remains in such position); suffer a change on its board of directors which results in the failure of at least one partner from at least one of (a) Polaris Venture Partners or its Affiliates, (b) Third Rock Ventures or its Affiliates, and (c) Lux Capital or its Affiliates to serve as a voting member (other than a change resulting from a partner of such an investor failing to be elected to the board of directors following a bona fide equity financing or series of financings in which such investor’s ownership in Borrower is diluted) or suffer the resignation of one or more directors from its board of directors in anticipation of Borrower’s insolvency, in either case without the prior written consent of Agent and the Required Lenders which may be withheld in Agent’s and the Required Lenders’ sole discretion; take action to liquidate, wind up, or otherwise cease to conduct business; engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or incidental to the businesses currently engaged in by Borrower; change its fiscal year end; or have a Change in Control.

 

7.3                               Mergers or Acquisitions.  Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations of a Subsidiary into another Subsidiary or into Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person except where (a) each of the following conditions is applicable:  (i) the consideration paid in connection with such transactions (including assumption of liabilities) does not in the aggregate exceed $100,000 during any fiscal year, (ii) no Event of Default has occurred, is continuing or would exist after giving effect to such transactions, (iii) such transactions do not result in a Change in Control, and (iv) Borrower is the surviving entity; or (b) the Obligations are repaid in full concurrently with the closing of any merger or consolidation of Borrower in which Borrower is not the surviving entity; provided, however, that Borrower shall not, without Agent’s and the Required Lenders’ prior written consent, enter into any binding contractual arrangement with any investment bank, broker, financial advisor or similar Person to attempt to facilitate a merger or acquisition of Borrower, unless (i) no Event of Default exists when such agreement is entered into by Borrower, (ii)  such agreement does not give such Person the right to claim any fee, payment or damages from any parties, other than from Borrower or Borrower’s investors, in connection with a sale of Borrower’s stock or assets pursuant to or resulting from an assignment for the benefit of creditors, an asset turnover to Borrower’s creditors (including, without limitation, the Lenders), foreclosure, bankruptcy or similar liquidation, and (iii) Borrower notifies Agent and the Lenders in advance of entering into such an agreement (provided that the failure to give such notification shall not be deemed a breach of this Agreement).

 

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7.4                               Indebtedness.  Create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation to prepay any Indebtedness, except Indebtedness to the Lenders.

 

7.5                               Encumbrances.  Create, incur, assume or allow any Lien with respect to its property, or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens, or covenant to any other Person (other than (a) the licensors of in-licensed property with respect to such property, (b) the lessors of specific equipment or lenders financing specific equipment with respect to such leased or financed equipment or (c) Schedule 7.5) that Borrower in the future will refrain from creating, incurring, assuming or allowing any Lien with respect to any of Borrower’s property, except for licenses and agreements containing customary anti-assignment provisions so long as such provisions are, or would be, rendered unenforceable or ineffective under applicable law (including, without limitation, Sections 9-406, 9-407 and 9-408 of the Code).

 

7.6                               Distributions.  Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any capital stock, except that Borrower may (a) repurchase the stock of former employees or directors pursuant to stock repurchase agreements in an aggregate amount not to exceed $100,000 in any fiscal year, so long as an Event of Default does not exist prior to such repurchase or would not exist after giving effect to such repurchase, and (b) repurchase the stock of former employees or directors pursuant to stock repurchase agreements in any amount where the consideration for the repurchase is the cancellation of indebtedness owed by such former employees or directors to Borrower regardless of whether an Event of Default exists.

 

7.7                               Investments.  Directly or indirectly acquire or own an Investment in, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments, or maintain or invest any of its investment property with a Person other than Square 1 and Square 1’s Affiliates or permit any Subsidiary to do so unless such Person has entered into a control agreement with Agent (for the benefit of the Lenders), in form and substance reasonably satisfactory to Agent and the Required Lenders, or suffer or permit any Subsidiary to be a party to, or be bound by, an agreement that restricts such Subsidiary from paying dividends or otherwise distributing property to Borrower.

 

7.8                               Transactions with Affiliates.  Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s-length transaction with a non-affiliated Person and except for transactions permitted under Section 7.9.

 

7.9                               Subordinated Debt.  Make any payment in respect of any Subordinated Debt, or permit any of its Subsidiaries to make any such payment, except in compliance with the terms of such Subordinated Debt, or amend any provision affecting Agent’s or the Lenders’ rights contained in any documentation relating to the Subordinated Debt without Agent’s and the Required Lenders’ prior written consent.

 

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7.10                        Inventory and Equipment.  Store Inventory or Equipment with a book value in excess of $100,000 with a bailee, warehouseman, collocation facility or similar third party (other than equipment in transit or held for repair in the ordinary course of Borrower’s business) unless the third party has been notified of Agent’s security interest and Agent (a) has received an acknowledgment from the third party that it is holding or will hold the Inventory or Equipment for Agent’s benefit or (b) is in possession of the warehouse receipt, where negotiable, covering such Inventory or Equipment.  Except for Inventory sold in the ordinary course of business and for movable items of personal property having an aggregate book value not in excess of $100,000, and except for such other locations as Agent may approve in writing, Borrower shall keep the Inventory and Equipment only at the locations set forth on Schedule 7.10 and such other locations of which Borrower gives Agent and the Lenders prior written notice and as to which Agent is able to take such actions as may be reasonably necessary to perfect its security interest or to obtain a bailee’s acknowledgment of Agent’s rights in the Collateral.

 

7.11                        No Investment Company; Margin Regulation.  Become or be controlled by an “investment company,” within the meaning of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension for such purpose.

 

8.                                      EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an Event of Default by Borrower under this Agreement:

 

8.1                               Payment Default.  If Borrower fails to pay any of the Obligations when due;

 

8.2                               Covenant Default.

 

(a)                                 If Borrower fails to perform any obligation under Section 6.2 (financial reporting), 6.4 (taxes), 6.5 (insurance), or 6.6 (primary accounts), or violates any of the covenants contained in Article 7 of this Agreement; or

 

(b)                                 If Borrower fails or neglects to perform or observe any other material term, provision, condition, or covenant contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Agent and/or any Lender and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within ten days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the ten-day period or cannot after diligent attempts by Borrower be cured within such ten-day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed 30 days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made;

 

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8.3                               Material Adverse Change.  If there occurs any circumstance or any circumstances which would reasonably be expected to have a Material Adverse Effect;

 

8.4                               Attachment.  If any material portion of Borrower’s assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within ten days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any material portion of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower (provided that no Credit Extensions will be made during such cure period);

 

8.5                               Insolvency.  If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or stayed within 45 days (provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding);

 

8.6                               Other Agreements.  If there is a default or other failure to perform in any agreement to which Borrower is a party with a third party or parties (a) resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of $250,000, (b) in connection with any lease of real property material to the conduct of Borrower’s business, if such default or failure to perform results in the right of another party, whether or not exercised, to terminate such lease, or (c) that would reasonably be expected to have a Material Adverse Effect;

 

8.7                               Judgments.  If a final non-appealable, uninsured judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least $250,000 shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten days (provided that no Credit Extensions will be made prior to the satisfaction or stay of the judgment); or

 

8.8                               Misrepresentations.  If any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth herein or in any certificate delivered to Agent or any Lender by any Responsible Officer pursuant to this Agreement or to induce Agent or any Lender to enter into this Agreement or any other Loan Document.

 

9.                                      LENDERS’ RIGHTS AND REMEDIES.

 

9.1                               Rights and Remedies.  Upon the occurrence and during the continuance of an Event of Default, Agent may, and at the written direction of the Required Lenders shall,

 

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without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower:

 

(a)                                 Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable (provided that, upon the occurrence of an Event of Default described in Section 8.5 (insolvency), all Obligations shall become immediately due and payable without any action by Agent or the Lenders);

 

(b)                                 Notify Borrower that Lenders are ceasing advancing money or extending credit to or for the benefit of Borrower under this Agreement and/or under any other agreement between Borrower and Agent and/or any Lender;

 

(c)                                  Settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Agent reasonably considers advisable;

 

(d)                                 Make such payments and do such acts as Agent considers necessary or reasonable to protect its security interest in the Collateral.  Borrower agrees to assemble the Collateral if Agent so requires, and to make the Collateral available to Agent as Agent may designate.  Borrower authorizes Agent to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Agent’s determination appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith.  With respect to any of Borrower’s owned premises, Borrower hereby grants Agent a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of Agent’s rights or remedies provided herein, at law, in equity, or otherwise;

 

(e)                                  Set off and apply to the Obligations any and all (i) balances and deposits of Borrower held by a Lender, and (ii) indebtedness at any time owing to or for the credit or the account of Borrower held by a Lender;

 

(f)                                   Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral.  Agent is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Agent’s exercise of its rights under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements shall inure to Agent’s benefit;

 

(g)                                 Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower’s premises) as is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Agent deems appropriate.  Agent may sell the Collateral without giving any warranties as to the Collateral.  Agent may specifically disclaim any warranties of title or the like.  This procedure will not be considered adversely to affect the

 

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commercial reasonableness of any sale of the Collateral.  If Agent sells any of the Collateral upon credit, Borrower will be credited only with payments actually made by the purchaser, received by Agent, and applied to the indebtedness of the purchaser.  If the purchaser fails to pay for the Collateral, Agent may resell the Collateral and Borrower shall be credited with the proceeds of the sale;

 

(h)                                 Credit bid and purchase at any public sale;

 

(i)                                    Apply for the appointment of a receiver, trustee, liquidator or conservator of the Collateral, without notice and without regard to the adequacy of the security for the Obligations and without regard to the solvency of Borrower, any guarantor or any other Person liable for any of the Obligations; and

 

(j)                                    Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.

 

Agent’s compliance with any applicable state or federal law requirements in connection with a disposition of the Collateral will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.

 

9.2                               Power of Attorney.  Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Agent (and any of Agent’s designated officers or employees) (for the benefit of the Lenders) as Borrower’s true and lawful attorney to:  (a) send requests for verification of Accounts or notify account debtors of Agent’s security interest in the Accounts; (b) endorse Borrower’s name on any checks or other forms of payment or security that may come into Agent’s possession; (c) sign Borrower’s name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims under and decisions with respect to Borrower’s policies of insurance; (f) settle and adjust disputes and claims respecting the accounts directly with account debtors, for amounts and upon terms which Agent determines to be reasonable; and (g) file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral; provided that Agent may exercise such power of attorney to sign the name of Borrower on any of the documents described in clause (g) above, regardless of whether an Event of Default has occurred.  The appointment of Agent as Borrower’s attorney in fact, and each and every one of Agent’s rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully repaid and performed, and each Lender’s obligation to provide advances hereunder is terminated.

 

9.3                               Accounts Collection.  At any time after the occurrence and during the continuation of an Event of Default, Agent may notify any Person owing funds to Borrower of Agent’s security interest in such funds and verify the amount of such Account.  Borrower shall collect all amounts owing to Borrower for Agent, receive in trust all payments as Agent’s trustee, and immediately deliver such payments to Agent (for the benefit of the Lenders) in their original form as received from the account debtor, with proper endorsements for deposit.

 

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9.4                               Lender Expenses.  If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Agent may do any or all of the following after reasonable notice to Borrower:  (a) make payment of the same or any part thereof; or (b) obtain and maintain insurance policies of the type discussed in Section 6.5 of this Agreement, and take any action with respect to such policies as Agent deems prudent.  Any amounts so paid or deposited by Agent shall constitute Lender Expenses, shall be immediately due and payable, shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral.  Any payments made by Agent shall not constitute an agreement by Agent or any Lender to make similar payments in the future or a waiver by Agent of any Event of Default under this Agreement.

 

9.5                               Liability for Collateral; Duty of Agent With Respect to Collateral; Marshaling.

 

(a)                                 Agent and the Lenders have no obligation to clean up or otherwise prepare the Collateral for sale.  All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.

 

(b)                                 Agent’s and each Lender’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in Agent’s or the Lender’s possession shall be to deal with it in the same manner as Agent and the Lender, as applicable, deals with similar property for its own account.  The powers conferred on Agent and the Lenders hereunder are solely to protect Agent’s and the Lenders’ interest in the Collateral and shall not impose any duty upon Agent or any Lender to exercise any such powers.  Agent and each Lender shall be accountable only for amounts that Agent or the Lender receives as a result of the exercise of such powers, and neither Agent nor any Lender shall be responsible to Borrower for any act or failure to act hereunder, except for its own gross negligence or willful misconduct as finally determined by a non-appealable judgment of a court of competent jurisdiction.  In addition, neither Agent nor any Lender shall be liable or responsible for any loss or damage to any Collateral, or for any diminution in the value thereof, by reason of the act or omission of any warehousemen, carrier, forwarding agency, consignee or other bailee selected by it in good faith.  Agent may (but shall not be obligated to except at the request of the Required Lenders) pay taxes on behalf of Borrower, satisfy any Liens against the Collateral (other than Permitted Liens), purchase insurance to protect Agent’s and the Lenders’ interest if Borrower fails to maintain the insurance required hereunder and pay for the maintenance, insurance, protection and preservation of the Collateral and effect compliance with the terms of any Loan Document.  Borrower agrees to reimburse Agent, on demand, for all costs and expenses incurred by Agent in connection with such payment or performance and agrees that such amounts shall constitute Obligations.  Borrower hereby (i) waives any right under the UCC or any other applicable law to receive notice and/or copies of any filed or recorded financing statements, amendments thereto, continuations thereof or termination statements and (ii) releases and excuses Agent and each Lender from any obligation under the UCC or any other applicable law to provide notice or a copy of any such filed or recorded documents.

 

(c)                                  Neither Agent nor any Lender shall be under any obligation to marshal any property in favor of Borrower or any other Person or against or in payment of any Obligation.

 

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9.6                               No Obligation to Pursue Others.  Agent and the Lenders have no obligation to attempt to satisfy the Obligations by collecting them from any other person liable for them, and Agent may release, modify or waive any collateral provided by any other Person to secure any of the Obligations, all without affecting Agent’s and the Lenders’ rights against Borrower.  Borrower waives any right it may have to require Agent or any Lender to pursue any other Person for any of the Obligations.

 

9.7                               Remedies Cumulative.  Agent’s and the Lenders’ rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative.  Agent and the Lenders shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity.  No exercise by Agent or any Lender of one right or remedy shall be deemed an election, and no waiver by Agent or any Lender of any Event of Default on Borrower’s part shall be deemed a continuing waiver.  No delay by Agent or any Lender shall constitute a waiver, election, or acquiescence by it.  No waiver by Agent or any Lender shall be effective unless made in a written document signed on behalf of Agent and the Required Lenders and then shall be effective only in the specific instance and for the specific purpose for which it was given.  Borrower expressly agrees that this Section 9.7 may not be waived or modified by Agent or any Lender by course of performance, conduct, estoppel or otherwise.

 

9.8                               Demand; Protest.  Except as otherwise provided in this Agreement, Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment and any other notices relating to the Obligations.

 

10.                               NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to Borrower, to Agent or to the Lenders, as the case may be, at its address set forth below:

 

	
If to Borrower:
    	
Kala Pharmaceuticals, Inc.
    
	
 
    	
Attn: Mary Reumuth
    
	
 
    	
100 Beaver Street,   Suite 201
    
	
 
    	
Waltham, MA 02453
    
	
 
    	
FAX: (781) 642-0399
    
	
 
    	
 
    
	
With a copy (which will
    	
 
    
	
not constitute notice)   to:
    	
Wilmer Cutler Pickering   Hale and Dorr LLP
    
	
 
    	
Attn: Jamie N.   Class, Esq.
    
	
 
    	
60 State Street
    
	
 
    	
Boston, MA 02446
    
	
 
    	
FAX: (617) 526-5000
    

 

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If to Agent:
    	
Square 1 Bank
    
	
 
    	
Attn: Loan Operations   Manager
    
	
 
    	
Durham, NC 27701
    
	
 
    	
FAX: (919) 314-3080
    
	
 
    	
 
    
	
If to a Lender:
    	
To such Lender’s address on Schedule 1
    

 

The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.

 

11.                               CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

 

This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of North Carolina, without regard to principles of conflicts of law.  Jurisdiction shall lie in the State of North Carolina.  All disputes, controversies, claims, actions and similar proceedings arising with respect to Borrower’s account or any related agreement or transaction shall be brought in the General Court of Justice of North Carolina sitting in Durham County, North Carolina or the United States District Court for the Middle District of North Carolina, except as provided below with respect to arbitration of such matters.  AGENT, EACH LENDER AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED.  EACH OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM.  THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY AGENT, ANY LENDER OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM.  If the jury waiver set forth in this Article 11 is not enforceable, then any dispute, controversy, claim, action or similar proceeding arising out of or relating to this Agreement, the Loan Documents or any of the transactions contemplated therein shall be settled by final and binding arbitration held in Durham County, North Carolina in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with those rules.  The arbitrator shall apply North Carolina law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration. Judgment upon any award resulting from arbitration may be entered into and enforced by any state or federal court having jurisdiction thereof.  Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this Article.  The costs and expenses of the arbitration, including without limitation, the arbitrator’s fees and expert witness fees, and reasonable attorneys’ fees, incurred by the parties to the arbitration may be awarded to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator.  Unless and until the arbitrator decides that one party is to pay for all (or a share) of

 

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such costs and expenses, both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator.

 

12.                               GENERAL PROVISIONS.

 

12.1                        Successors and Assigns.  This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties and shall bind all persons who become bound as a debtor to this Agreement.  Borrower may not transfer, pledge or assign this Agreement or any rights or obligations under it without Agent’s and each Lender’s prior written consent (which may be granted or withheld in Agent’s and each Lender’s sole discretion).  The Lenders have the right without the consent of or notice to Borrower to sell, transfer, assign, pledge, negotiate or grant a participation in (any such sale, transfer, assignment, negotiation or grant of a participation, a “Lender Transfer”) all or any part of, or any interest in, the Lenders’ obligations, rights and benefits under this Agreement and the other Loan Documents; provided, however, that any such Lender Transfer of its obligations, rights and benefits under this Agreement and the other Loan Documents shall (a) be in minimum increments of $1,000,000 or, if the remaining outstanding principal amount of the obligations owing to such Lender is less than $1,000,000, then the entirety of such lesser amount, and (b) except with respect to a Lender Transfer to the transferring Lender’s Affiliate, another Lender or an Affiliate of another Lender, require the prior written consent of Agent which consent shall not be unreasonably withheld or delayed.  Borrower and Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned until Agent shall have received and accepted an effective assignment agreement in form satisfactory to Agent executed, delivered and fully completed by the applicable parties thereto, and shall have received such other information regarding such transferee as Agent reasonably shall require.

 

12.2                        Indemnification.  Borrower shall defend, indemnify and hold harmless Agent, each Lender and their respective officers, employees, and agents (each an “Indemnified Person”) against:  (a) all obligations, demands, claims, and liabilities claimed or asserted (collectively, “Claims”) by any other party in connection with the transactions contemplated by this Agreement; and (b) all losses or Lender Expenses in any way suffered, incurred, or paid by any Indemnified Person as a result of or in any way arising out of, following, or consequential to transactions between Borrower and Agent and/or any Lender whether under this Agreement, or otherwise (including without limitation reasonable attorneys’ fees and expenses), except for Claims, losses and/or Lender Expenses caused by an Indemnified Person’s gross negligence or willful misconduct.

 

12.3                        Time of Essence.  Time is of the essence for the performance of all obligations set forth in this Agreement.

 

12.4                        Severability of Provisions.  Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

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12.5                        Amendments, Waivers; Integration.

 

(a)                                 No amendment, modification, termination or waiver of any provision of any Loan Document, and no consent with respect to any departure by Borrower therefrom, shall be effective unless the same shall be in writing and signed by Agent, the Required Lenders (or by Agent with the consent of the Required Lenders) and Borrower; provided that no such amendment, waiver or consent shall, unless in writing and signed by all of the Lenders directly affected thereby (or by Agent with the written consent of all of the Lenders directly affected thereby), in addition to Agent, the Required Lenders (or by Agent with the written consent of the Required Lenders) and Borrower, do any of the following:  (i) increase or decrease the amount of any Term Loan Commitment Amount (which shall be deemed to affect all of the Lenders), (ii) reduce the principal of or rate of interest on (other than waiving the imposition of the Default Rate) any Credit Extension or reduce the amount of any fees payable under any Loan Document, (iii) postpone the date fixed for or reduce or waive any scheduled installment of principal or any payment of interest or fees due to any Lender under the Loan Documents, (iv) release or subordinate the Lien on all or substantially all of the Collateral, or consent to a transfer of all or substantially all of the Collateral or Intellectual Property, in each case, except as otherwise may be provided in any Loan Document (which shall be deemed to affect all of the Lenders), (v) release Borrower from, or consent to Borrower’s assignment or delegation of, Borrower’s obligations under the Loan Documents (which shall be deemed to affect all of the Lenders), except as otherwise may be provided in any Loan Document, (vi) amend or modify the definition of “Required Lenders” or “Pro Rata Share” or any provision providing for the consent or other action by all of the Lenders, or (vii) amend, modify, terminate or waive this Section 12.5(a).

 

(b)                                 Notwithstanding any provision in Section 12.5(a) to the contrary, (i) Agent may amend Schedule 1 to reflect assignments permitted hereunder and (ii) Agent and Borrower may amend or modify any Loan Document to grant a new Lien, extend an existing Lien over additional property or join additional Persons as credit parties hereunder, in each case for the benefit of Agent and the Lenders.

 

(c)                                  All prior agreements, understandings, representations, warranties and negotiations between Borrower and the Lenders with respect to the subject matter of this Agreement and the other Loan Documents, if any, are merged into this Agreement and the Loan Documents.

 

12.6                        Counterparts.  This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Executed copies of the signature pages of this Agreement sent by facsimile or transmitted electronically in Portable Document Format (PDF), or any similar format, shall be treated as originals, fully binding and with full legal force and effect, and the parties waive any rights they may have to object to such treatment.

 

12.7                        Survival.  All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations remain outstanding or any Lender has any obligation to make any Credit Extension to Borrower.  The obligations of

 

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Borrower to indemnify Agent and the Lenders with respect to the expenses, damages, losses, costs and liabilities described in Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Agent and/or any Lender have run.

 

12.8                        Confidentiality.  In handling any confidential information, Agent, the Lenders, Borrower and all employees and agents of each such party shall exercise the same degree of care that such party exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information provided by or on behalf of such party pursuant to the Loan Documents or upon request of such party, except that disclosure of such information may be made (a) in the case of Agent and the Lenders, to the subsidiaries or Affiliates of Agent or any Lender in connection with their present or prospective business relations with Borrower, provided that such subsidiaries or Affiliates are bound by confidentiality obligations substantially the same as those of this Section 12.8, (b) in the case of Agent or any Lender, to prospective transferees or purchasers of any interest in the Credit Extensions, provided that they have entered into a comparable confidentiality agreement in favor of Borrower and have delivered a copy to Borrower, (c) as requested or required by law, regulations, rule or order (including, without limitation, the rules or regulations of any regulatory authority having jurisdiction over such party or its securities or stock exchange on which such party’s securities are traded), in legal proceedings, by subpoena, civil investigative demand or judicial order or by other similar order or process, (d) in the case of Agent and the Lenders, as may be required in connection with the examination, audit or similar investigation of Agent or any Lender, (e) as Agent or any Lender may determine in connection with the enforcement of any remedies hereunder or (f) to a Representative of Agent, the Lenders or Borrower, provided that such Representative is bound by either confidentiality obligations substantially the same as those of this Section 12.8 with the party providing it confidential information or other legal or fiduciary obligation to such party.  Confidential information hereunder shall not include information that either:  (i) is in the public domain or in the knowledge or possession of the receiving party when disclosed to such party, or becomes part of the public domain after disclosure to such receiving party through no fault of such receiving party; or (ii) is disclosed to such receiving party by a third party, provided that the receiving party does not have actual knowledge that such third party is prohibited from disclosing such information.

 

13.                               AGENT.

 

13.1                        Appointment and Authority.

 

(a)                                 Each Lender hereby appoints Square 1 (together with any successor Agent pursuant to Section 13.7) as Agent under the Loan Documents and authorizes Agent to (i) execute and deliver the Loan Documents and accept delivery thereof on its behalf from Borrower, (ii) take such action on its behalf and to exercise all rights, powers and remedies and perform the duties as are expressly delegated to Agent under the Loan Documents, and (iii) exercise such powers as are reasonably incidental thereto.  The provisions of this Article 13 are solely for the benefit of Agent and the Lenders, and Borrower shall have no rights as a third-party beneficiary of any of such provisions.

 

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(b)                                 Without limiting the generality of clause (a) above, Agent shall have the sole and exclusive right and authority (to the exclusion of the Lenders) and is hereby authorized to (i) act as the disbursing and collecting agent for the Lenders with respect to all payments and collections arising in connection with the Loan Documents (including in any other bankruptcy, insolvency or similar proceeding), and each Person making any payment in connection with any Loan Document to any Lender is hereby authorized to make such payment to Agent, (ii) file and prove claims and file other documents necessary or desirable to allow the claims of Agent and the Lenders with respect to any Obligations in any bankruptcy, insolvency or similar proceeding, (iii) act as collateral agent for Agent and each Lender for purposes of the perfection, holding and enforcing of all Liens created by the Loan Documents and all other purposes stated therein, together with such powers and discretion as are reasonably incidental thereto and (iv) execute any amendment, consent or waiver under the Loan Documents on behalf of any Lender that has consented in writing to such amendment, consent or waiver; provided, however, that Agent hereby appoints, authorizes and directs each Lender to act as collateral sub-agent for Agent and the Lenders for purposes of the perfection of all Liens with respect to the Collateral, including any deposit account maintained by Borrower with, and cash held by, such Lender, and may further authorize and direct the Lenders to take further actions as collateral sub-agents for purposes of enforcing such Liens or otherwise to transfer the Collateral subject thereto to Agent, and each Lender hereby agrees to take such further actions to the extent, and only to the extent, so authorized and directed.  Agent may, upon any term or condition it specifies, delegate or exercise any of its rights, powers and remedies under, and delegate or perform any of its duties or any other action with respect to, any Loan Document by or through any trustee, co-agent, employee, attorney-in-fact and any other Person (including any other Lender).  Any such Person shall benefit from this Article 13 to the extent provided by Agent but shall only have obligations to Agent and not to Borrower, any Lender or any other Person, and neither Borrower, any Lender nor any other Person shall have any rights, directly or indirectly, as a third-party beneficiary or otherwise against any such Person.

 

(c)                                  The Lenders irrevocably authorize Agent to release any Lien on any property granted to or held by Agent under any Loan Document (i) upon all of the Obligations (other than contingent obligations not yet accrued and payable) having been paid in full and so long as no Lender has any commitment to make any Credit Extensions, (ii) that is disposed of as part of or in connection with any Permitted Transfer, (iii) subject to Section 12.5, if approved, authorized or ratified in writing by the Required Lenders or (iv) as expressly provided in any of the other Loan Documents.  Upon request by Agent at any time, the Required Lenders will confirm in writing Agent’s authority to release its interest in particular types or items of property.  In each case as specified in this Section 13.1(c), Agent will, at Borrower’s expense, execute and deliver to Borrower such documents as Borrower may reasonably request to evidence the release of items of Collateral from the assignment and security interest granted under the Loan Documents, in each case in accordance with the terms of the Loan Documents and this Section 13.1(c); provided that Borrower shall have delivered to Agent a certificate of a Responsible Officer of Borrower certifying that any such transaction has been consummated in compliance with this Agreement and the other Loan Documents as Agent shall reasonably request.

 

(d)                                 Under the Loan Documents, Agent (i) is acting solely on behalf of the Lenders, with duties that are entirely administrative in nature, notwithstanding the use of the

 

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defined term “Agent”, the terms “agent”, “Agent” and “collateral agent” and similar terms in any Loan Document to refer to Agent, which terms are used for title purposes only, (ii) is not assuming any obligation under any Loan Document other than as expressly set forth herein or therein or any role as agent, fiduciary or trustee of or for any Lender or any other Person, and (iii) shall have no implied functions, responsibilities, duties, obligations or other liabilities under any Loan Document.  Each Lender, by accepting the benefits of the Loan Documents, hereby waives and agrees not to assert any claim against Agent based on the roles, duties and legal relationships expressly disclaimed in clauses (i) through (iii) above.

 

13.2                        Binding Effect; Use of Discretion.

 

(a)                                 Each Lender, by accepting the benefits of the Loan Documents, agrees that (i) any action taken by Agent or the Required Lenders (or, if expressly required in any Loan Document, a greater proportion of the Lenders) in accordance with the provisions of the Loan Documents, (ii) any action taken by Agent in reliance upon the instructions of the Required Lenders (or, where so required, such greater proportion), and (iii) the exercise by Agent or the Required Lenders (or, where so required, such greater proportion) of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders.

 

(b)                                If Agent shall request instructions from the Required Lenders or all of the affected Lenders with respect to any act or action (including failure to act) in connection with any Loan Document, then Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from the Required Lenders or all of the affected Lenders, as the case may be, and Agent shall not incur liability to any Person by reason of so refraining.  Agent shall be fully justified in failing or refusing to take any action under any Loan Document (i) if such action would, in the opinion of Agent, be contrary to any requirement of law or any Loan Document, (ii) if such action would, in the opinion of Agent, expose Agent to any potential liability under any requirement of law, or (iii) if Agent shall not first be indemnified to its satisfaction against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.  Without limiting the foregoing, no Lender shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting under any Loan Document in accordance with the instructions of the Required Lenders or all of the affected Lenders, as applicable.

 

13.3                        Agent’s Reliance, Etc.  Agent may, without incurring any liability hereunder, (a) consult with any of its Related Persons and, whether or not selected by it, any other advisors, accountants and other experts (including advisors to, and accountants and experts engaged by, Borrower) and (b) rely and act upon any document and information (including those transmitted by electronic transmission) and any telephone message or conversation, in each case believed by it to be genuine and transmitted, signed or otherwise authenticated by the appropriate parties.  None of Agent and its Related Persons shall be liable for any action taken or omitted to be taken by any of them under or in connection with any Loan Document, and each Lender and Borrower hereby waives and shall not assert (and Borrower shall cause its Subsidiaries to waive and agree not to assert) any right, claim or cause of action based thereon, except to the extent of liabilities resulting from the gross negligence or willful misconduct of Agent or, as the case may be, such Related Person (each as determined in a final, non-appealable judgment of a court of

 

26

 

competent jurisdiction) in connection with the duties of Agent expressly set forth herein.  Without limiting the foregoing, Agent: (i) shall not be responsible or otherwise incur liability for any action or omission taken in reliance upon the instructions of the Required Lenders or for the actions or omissions of any of its Related Persons, except to the extent that a court of competent jurisdiction determines in a final non-appealable judgment that Agent acted with gross negligence or willful misconduct in the selection of such Related Person; (ii) shall not be responsible to any Lender or other Person for the due execution, legality, validity, enforceability, effectiveness, genuineness, sufficiency or value of, or the attachment, perfection or priority of any Lien created or purported to be created under or in connection with, any Loan Document; (iii) makes no warranty or representation, and shall not be responsible, to any Lender or other Person for any statement, document, information, representation or warranty made or furnished by or on behalf of Borrower or any Related Person of Borrower in connection with any Loan Document or any transaction contemplated therein or any other document or information with respect to Borrower, whether or not transmitted or (except for documents expressly required under any Loan Document to be transmitted to the Lenders) omitted to be transmitted by Agent, including as to completeness, accuracy, scope or adequacy thereof, or for the scope, nature or results of any due diligence performed by Agent in connection with the Loan Documents; and (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any provision of any Loan Document, whether any condition set forth in any Loan Document is satisfied or waived, as to the financial condition of Borrower or as to the existence or continuation or possible occurrence or continuation of any default or Event of Default, and shall not be deemed to have notice or knowledge of such occurrence or continuation unless it has received a notice from Borrower or any Lender describing such default or Event of Default that is clearly labeled “notice of default” (in which case Agent shall promptly give notice of such receipt to all of the Lenders, provided that Agent shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Agent’s gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction); and, for each of the items set forth in clauses (i) through (iv) above, each Lender and Borrower hereby waives and agrees not to assert (and Borrower shall cause its Subsidiaries to waive and agree not to assert) any right, claim or cause of action it might have against Agent based thereon.  No Lender shall have any right of action whatsoever against Agent as a result of Agent acting or (where so instructed) refraining from acting hereunder or under any of the other Loan Documents in accordance with the instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents).

 

13.4                        Agent Individually.  Agent and its Affiliates may make loans and other extensions of credit to, acquire stock of, accept deposits from, and engage in any kind of business with, Borrower or any Affiliate thereof as though it were not acting as Agent and may receive separate fees and other payments therefor.  To the extent Agent or any of its Affiliates is or becomes a Lender hereunder, it shall have and may exercise the same rights and powers hereunder and shall be subject to the same obligations and liabilities as any other Lender, and the terms “Lender”, “Required Lender” and any similar terms shall, except where otherwise expressly provided in any Loan Document, include, without limitation, Agent or such Affiliate, as the case may be, in its individual capacity as a Lender, or as one of the Required Lenders.

 

13.5                        Lender Credit Decision.  Each Lender acknowledges that it shall, independently and without reliance upon Agent, any Lender or any of their Related Persons or

 

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upon any document solely or in part because such document was transmitted by Agent or any of its Related Persons, conduct its own independent investigation of the financial condition and affairs of Borrower and make and continue to make its own credit decisions in connection with entering into, and taking or not taking any action under, any Loan Document or with respect to any transaction contemplated in any Loan Document, in each case based on such documents and information as it shall deem appropriate.  Except for documents expressly required by any Loan Document to be transmitted by Agent to the Lenders, Agent shall not have any duty or responsibility to provide any Lender with credit or any other information concerning Borrower, including with respect to its business, prospects, operations, property, financial and other conditions or creditworthiness, or any Affiliate of Borrower, that may come into the possession of Agent (whether in its capacity as Agent or otherwise) or any of its Related Persons.

 

13.6                        Indemnification.

 

(a)                                 Each Lender agrees to reimburse Agent and each of its Related Persons (to the extent not reimbursed by Borrower) promptly upon demand for its Pro Rata Share of any out-of-pocket costs and expenses (including, without limitation, fees, charges and disbursements of financial, legal and other advisors and any taxes or insurance paid in the name of, or on behalf of, Borrower) incurred by Agent or any of its Related Persons in connection with the preparation, execution, delivery, administration, modification, amendment, consent, waiver or enforcement of, or the taking of any other action (whether through negotiations, through any work-out, bankruptcy, restructuring or other legal or other proceeding (including, without limitation, preparation for and/or response to any subpoena or request for document production relating thereto) or otherwise) in respect of, or legal advice with respect to, its rights or responsibilities under, any Loan Document.  Each Lender further agrees to indemnify Agent and each of its Related Persons (to the extent not indemnified by Borrower), ratably according to its Pro Rata Share, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, to the extent not indemnified by the applicable Lender, taxes, interests and penalties imposed for not properly withholding or backup withholding on payments made to or for the account of any Lender) that may be imposed on, incurred by, or asserted against Agent or any of its Related Persons in any matter relating to or arising out of, in connection with or as a result of any Loan Document or any other act, event or transaction related, contemplated in or attendant to any such document, or, in each case, any action taken or omitted to be taken by Agent or any of its Related Persons under or with respect to the foregoing; provided that no Lender shall be liable to Agent or any of its Related Persons under this Section 13.6 to the extent such liability has resulted from the gross negligence or willful misconduct of Agent or, as the case may be, such Related Person, as determined by a final non-appealable judgment of a court of competent jurisdiction.

 

(b)                                 To the extent required by any applicable requirement of law, Agent may withhold from any payment to any Lender under a Loan Document an amount equal to any applicable withholding tax.  If the Internal Revenue Service or any other governmental authority asserts a claim that Agent did not properly withhold tax from amounts paid to or for the account of any Lender for any reason, or if Agent reasonably determines that it was required to withhold taxes from a prior payment to or for the account of any Lender but failed to do so, such Lender shall promptly indemnify Agent fully for all amounts paid, directly or indirectly, by Agent as tax

 

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or otherwise, including penalties and interest, and together with all expenses incurred by Agent.  Agent may offset against any payment to any Lender under a Loan Document any applicable withholding tax that was required to be withheld from any prior payment to such Lender but which was not so withheld, as well as any other amounts for which Agent is entitled to indemnification from such Lender under the immediately preceding sentence of this Section 13.6.

 

13.7                        Successor Agent.  Agent may resign at any time by delivering notice of such resignation to the Lenders and Borrower, effective on the date set forth in such notice.  If Agent delivers any such notice, the Required Lenders shall have the right to appoint a successor Agent.  If, after 30 days after the date of the retiring Agent’s notice of resignation, no successor Agent has been appointed by the Required Lenders that has accepted such appointment, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent from among the Lenders, provided that, if Agent shall notify Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice.  Effective immediately upon its resignation, (a) the retiring Agent shall be discharged from its duties and obligations under the Loan Documents, (b) the Lenders shall assume and perform all of the duties of Agent until a successor Agent shall have accepted a valid appointment hereunder and all payments, communications and determinations provided to be made by, to or through Agent shall instead be made by or to each Lender directly until such time as the Required Lenders appoint a successor Agent as provided for above in this paragraph, (c) the retiring Agent and its Related Persons shall no longer have the benefit of any provision of any Loan Document other than with respect to any actions taken or omitted to be taken while such retiring Agent was, or because such Agent had been, validly acting as Agent under the Loan Documents, and (d) subject to its rights under Section 13.2(b), the retiring Agent shall take such action as may be reasonably necessary to assign to the successor Agent its rights as Agent under the Loan Documents.  Effective immediately upon its acceptance of a valid appointment as Agent, a successor Agent shall succeed to, and become vested with, all of the rights, powers, privileges and duties of the retiring Agent under the Loan Documents.

 

13.8                        Setoff and Sharing of Payments.  In addition to any rights now or hereafter granted under any applicable requirement of law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default and subject to Section 13.9(d), each Lender is hereby authorized at any time or from time to time upon the direction of Agent, without notice to Borrower or any other Person, any such notice being hereby expressly waived, to setoff and to appropriate and to apply any and all balances held by it at any of its offices for the account of Borrower (regardless of whether such balances are then due to Borrower) and any other properties or assets at any time held or owing by that Lender or that holder to or for the credit or for the account of Borrower against and on account of any of the Obligations that are not paid when due.  Any Lender exercising a right of setoff or otherwise receiving any payment on account of the Obligations in excess of its Pro Rata Share thereof shall purchase for cash (and the other Lenders or holders shall sell) such participations in each such other Lender’s or holder’s Pro Rata Share of the Obligations as would be necessary to cause such Lender to share the amount so offset or otherwise received with each other Lender or holder in accordance with their respective Pro Rata Shares of the Obligations.  Borrower agrees, to the fullest extent permitted by law, that (a) any Lender may exercise its right to offset with respect to amounts in excess of its Pro Rata Share of the Obligations and may purchase participations in

 

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accordance with the preceding sentence and (b) any Lender so purchasing a participation in the Credit Extensions made or other Obligations held by other Lenders or holders may exercise all rights of offset, bankers’ lien, counterclaim or similar rights with respect to such participation as fully as if such Lender or holder were a direct holder of the Credit Extensions and the other Obligations in the amount of such participation.  Notwithstanding the foregoing, if all or any portion of the offset amount or payment otherwise received is thereafter recovered from the Lender that has exercised the right of offset, the purchase of participations by that Lender shall be rescinded and the purchase price restored without interest.

 

13.9                        Payments; Non-Funding Lenders; Actions in Concert.

 

(a)                                 Payments.  If Agent receives any payment for the account of any Lender on or prior to 2:00 p.m. (Eastern time) on any Business Day, Agent shall pay to the applicable Lender such payment on the next Business Day.  If Agent receives any payment for the account of any Lender after 2:00 p.m. (Eastern time) on any Business Day, Agent shall pay to the applicable Lender such payment on the second Business Day thereafter.

 

(b)                                 Return of Payments.

 

(i)                                    If Agent pays an amount to a Lender under this Agreement in the belief or expectation that a related payment has been or will be received by Agent from Borrower and such related payment is not received by Agent, then Agent will be entitled to recover such amount (including interest accruing on such amount at the rate otherwise applicable to such Obligation) from such Lender on demand without setoff, counterclaim or deduction of any kind.

 

(ii)                                If Agent determines at any time that any amount received by Agent under any Loan Document must be returned to Borrower or paid to any other Person pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of any Loan Document, Agent will not be required to distribute any portion thereof to any Lender.  In addition, each Lender will repay to Agent on demand any portion of such amount that Agent has distributed to such Lender, together with interest at such rate, if any, as Agent is required to pay to Borrower or such other Person, without setoff, counterclaim or deduction of any kind.

 

(c)                                  Non-Funding Lenders.

 

(i)                                    Unless Agent shall have received notice from a Lender prior to the date of any particular Credit Extension that such Lender will not make available to Agent such Lender’s Pro Rata Share of such Credit Extension, Agent may assume that such Lender will make such amount available to it on the date of such Credit Extension in accordance with Section 2.1(b)(i), and Agent may (but shall not be obligated to), in reliance upon such assumption, make available a corresponding amount for the account of Borrower on such date.  If and to the extent that such Lender shall not have made such amount available to Agent, such Lender and Borrower severally agree to repay to Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the day such amount is made available to Borrower until the day such amount is repaid to Agent, at a rate per annum equal to the

 

30

 

interest rate applicable to the Obligation that would have been created when Agent made available such amount to Borrower had such Lender made a corresponding payment available.  If such Lender shall repay such corresponding amount to Agent, the amount so repaid shall constitute such Lender’s portion of the applicable Credit Extension for purposes of this Agreement.

 

(ii)                                To the extent that any Lender has failed to fund any Credit Extension or any other payments required to be made by it under the Loan Documents after any such Credit Extension is required to be made or such payment is due (a “Non-Funding Lender”), Agent shall be entitled to set off the funding short-fall against that Non-Funding Lender’s Pro Rata Share of all payments received from Borrower.  The failure of any Non-Funding Lender to make any Credit Extension or any payment required by it hereunder shall not relieve any other Lender (each such other Lender, an “Other Lender”) of its obligations to make such Credit Extension, but neither any Other Lender nor Agent shall be responsible for the failure of any Non-Funding Lender to make such Credit Extension or make any other payment required hereunder.  Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender shall not have any voting or consent rights under or with respect to any Loan Document or constitute a “Lender” (or be included in the calculation of the “Required Lenders” hereunder) for any voting or consent rights under or with respect to any Loan Document.  At Borrower’s request, Agent or a Person reasonably acceptable to Agent shall have the right with Agent’s consent and in Agent’s reasonable discretion (but Agent or any such Person shall have no obligation) to purchase from any Non-Funding Lender, and each Lender agrees that if it becomes a Non-Funding Lender it shall, at Agent’s request, sell and assign to Agent or such Person, all of the Term Loan Commitment Amount (if any) and all of the outstanding Credit Extensions of that Non-Funding Lender for an amount equal to the principal balance of all Credit Extensions held by such Non-Funding Lender and all accrued interest with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed assignment agreement.

 

(d)                                 Actions in Concert.  Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or enforce its rights arising out of any Loan Document (including exercising any rights of setoff) without first obtaining the prior written consent of Agent and the Required Lenders, it being the intent of the Lenders that any such action by a Lender to protect or enforce rights under any Loan Document shall be taken in concert and at the direction or with the consent of Agent and the Required Lenders.  Nothing contained herein shall be deemed to authorize Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender to authorize the Agent to vote in respect of the claim of any Lender or in any such proceeding.

 

[Signature Page Follows]

 

31

 

[Signature Page to Loan and Security Agreement]

 

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

 

	
 
    	
BORROWER:
    
	
 
    	
 
    
	
 
    	
KALA   PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mary Reumuth
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AGENT:
    
	
 
    	
 
    
	
 
    	
SQUARE   1 BANK
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   David B. Kho
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   B. Kho
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   
    	
Vice   President
    
	
 
    	
 
    	
 
    
	
 
    	
LENDERS:
    
	
 
    	
 
    
	
 
    	
SQUARE   1 BANK
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   David B. Kho
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   B. Kho
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   
    	
Vice   President
    
	
 
    	
 
    	
 
    
	
 
    	
ALEXANDRIA   EQUITIES, LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
Alexandria   Real Estate Equities, Inc., a Maryland corporation, managing member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Jennifer Banks
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:   
    	
Jennifer   Banks
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title:   
    	
EVP,   General Counsel
    
							

 

 

SCHEDULE 1

 

LENDERS

 

	
 

Lender
    	
 
    	
Term Loan
   Commitment
   Amount
    	
 
    	
Closing Date
   Pro Rata
   Share
    	
 
    	
Address
    
	
Square 1 Bank
    	
 
    	
$
    	
7,000,000
    	
 
    	
70
    	
%
    	
Square 1 Bank 

Attn: Loan Operations Manager 

406 Blackwell Street, Suite 240 

Durham, NC 27701 

 

With a copy to: 

Square 1 Bank 

Attn: Phil Gager 

101 Main Street, Suite 1210 

Cambridge, MA 02142
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Alexandria Equities, LLC
    	
 
    	
$
    	
3,000,000
    	
 
    	
30
    	
%
    	
Alexandria Equities, LLC 

Attn: Corporate Secretary 

385 E. Colorado Blvd., Suite 299 

Pasadena, CA 91101 

Fax: (626) 578-7252 

 

With a copy to: 

investments@are.com
    

 

 

EXHIBIT A

 

DEFINITIONS

 

“Accounts” means all presently existing and hereafter arising accounts, contract rights, payment intangibles and all other forms of obligations owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other technology) or the rendering of services by Borrower and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s Books relating to any of the foregoing.

 

“Affiliate” means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common control with such Person, and each of such Person’s senior executive officers, directors, and general partners.

 

“Agent” has the meaning assigned in the preamble of this Agreement.

 

“Agreement” has the meaning assigned in the preamble of this Agreement.

 

“Authorized Officer” means someone designated as such in the corporate resolution provided by Borrower to Agent in which this Agreement and the transactions contemplated hereunder are authorized by Borrower’s board of directors.  If Borrower provides subsequent corporate resolutions to Agent after the Closing Date, the individual(s) designated as “Authorized Officer(s)” in the most-recently provided resolution shall be the only “Authorized Officers” for purposes of this Agreement.

 

“Availability End Date” means the date that is 12 months from the Closing Date.

 

“Borrower” has the meaning assigned in the preamble of this Agreement.

 

“Borrower’s Books” means all of Borrower’s books and records including:  ledgers; records concerning Borrower’s assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment containing such information.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in the State of North Carolina are authorized or required to close.

 

“Cash” means unrestricted cash and cash equivalents.

 

“Change in Control” means a transaction or series of transactions in which the stockholders of Borrower who were not stockholders immediately prior to the first such transaction own more than 49% of the voting stock of Borrower immediately after giving effect to such transaction or related series of such transactions; provided that, in any event, the following shall not constitute a Change in Control for purposes of this Agreement:  (a) an initial public offering of Borrower’s common stock (i) that is a QPO under Borrower’s Certificate of Incorporation, as the same may be amended from time to time, and (ii) in which Borrower receives aggregate gross proceeds of

 

 

not less than $30,000,000; or (b) a bona fide equity financing or series of financings on terms and from investors reasonably acceptable to Agent and the Required Lenders.

 

“Claims” has the meaning assigned in Section 12.2.

 

“Closing Date” means the date of this Agreement.

 

“Code” means the North Carolina Uniform Commercial Code as amended or supplemented from time to time.

 

“Collateral” means the property described on Exhibit B attached hereto and all Negotiable Collateral to the extent not described on Exhibit B, except to the extent any such property (a) is nonassignable by its terms without the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, § 25-9-406 and § 25-9-408 of the Code), (b) the granting of a security interest therein is contrary to applicable law, provided that, upon the cessation of any such restriction or prohibition, such property shall automatically become part of the Collateral, (c) constitutes the capital stock of a controlled foreign corporation (as defined in the IRC), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporations entitled to vote, or (d) property (including any attachments, accessions or replacements) that is subject to a Lien that is permitted pursuant to clauses (a) and (c) of the definition of Permitted Liens, if the grant of a security interest with respect to such property pursuant to this Agreement would be prohibited by the agreement creating such Permitted Lien or would otherwise constitute a default thereunder, provided that such property will be deemed “Collateral” hereunder upon the termination and release of such Permitted Lien.

 

“Collateral State” means the state where the Collateral is located, which is Massachusetts.

 

“Compliance Certificate” means a compliance certificate, in substantially the form of Exhibit D attached hereto, executed by a Responsible Officer of Borrower.

 

“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (a) any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (b) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (c) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business.  The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided,

 

 

however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.

 

“Copyrights” means any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held.

 

“Credit Extension” means each Term Loan or any other extension of credit by any Lender, to or for the benefit of Borrower hereunder.

 

“Equipment” means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.

 

“Event of Default” has the meaning assigned in Article 8.

 

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

 

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred purchase price of property or services, including without limitation reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations (as such term is understood under GAAP as in effect on the date hereof), and (d) all Contingent Obligations.

 

“Indemnified Person” has the meaning assigned in Section 12.2.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

 

“Intellectual Property” means:

 

(a)                                 Copyrights, Trademarks and Patents;

 

(b)                                 Any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or hereafter existing, created, acquired or held;

 

(c)                                  Any and all design rights which may be available to Borrower now or hereafter existing, created, acquired or held;

 

 

(d)                                 Any and all claims for damages by way of past, present and future infringement of any of the rights included above, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above;

 

(e)                                  All amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents; and

 

(f)                                   All other intellectual property.

 

“Interest-Only End Date” means May 31, 2016.

 

“Inventory” means all present and future inventory in which Borrower has any interest.

 

“Investment” means any beneficial ownership of (including stock, partnership or limited liability company interest or other securities) any Person, or any loan, advance or capital contribution to any Person.

 

“Investment Agreement” means, collectively, Borrower’s stock purchase and other agreement(s) pursuant to which Borrower most recently issued its preferred stock.

 

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

 

“Lender Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees and expenses, whether generated in-house or by outside counsel) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents;  reasonable Collateral audit fees; and Agent’s and the Lenders’ reasonable attorneys’ fees and expenses (whether generated in-house or by outside counsel) incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought.

 

“Lender Transfer” has the meaning assigned in Section 12.1.

 

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.

 

“Loan Documents” means, collectively, this Agreement, any note or notes executed by Borrower, and any other document, instrument or agreement entered into in connection with this Agreement, all as amended or extended from time to time.

 

“Material Adverse Effect” means a material adverse effect on (a) the operations, business or financial condition of Borrower and its Subsidiaries taken as a whole, (b) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents, or (c) Borrower’s interest in, or the value, perfection or priority of Agent’s security interest in the Collateral.

 

“Mucus Penetrating Delivery Technology” means microparticle and nanoparticle technologies for delivering pharmaceutical agents, including, without limitation, microparticles and

 

 

nanoparticles for use in delivering therapeutic or prophylactic agents to or through mucus, mucin or mucosal barriers or tissues.

 

“Negotiable Collateral” means all of Borrower’s present and future letters of credit of which it is a beneficiary, drafts, instruments (including promissory notes), securities, documents of title, and chattel paper, and Borrower’s Books relating to any of the foregoing.

 

“New Subsidiary” has the meaning assigned in Section 6.8.

 

“Non-Funding Lender” has the meaning assigned in Section 13.9(c).

 

“Obligations” means all debt, principal, interest, Lender Expenses and other amounts owed to Agent or any Lender by Borrower pursuant to this Agreement or any other agreement, whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing from Borrower to others that Agent or any Lender may have obtained by assignment or otherwise.  Notwithstanding the foregoing, “Obligations” shall not include any obligations under the Warrants (other than Lender Expenses incurred in connection therewith).

 

“Other Lender” has the meaning assigned in Section 13.9(c).

 

“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

 

“Periodic Payments” means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to any Lender pursuant to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrower and Agent and/or any Lender.

 

“Permitted Indebtedness” means:

 

(a)                                 Indebtedness of Borrower in favor of the Lenders arising under this Agreement or any other Loan Document;

 

(b)                                 Indebtedness existing on the Closing Date and disclosed in the Schedule;

 

(c)                                  Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;

 

(d)                                 Indebtedness not to exceed $250,000 in the aggregate at any time secured by a lien described in clause (c) of the defined term “Permitted Liens,” provided that such Indebtedness does not exceed at the time it is incurred the lesser of the cost or fair market value of the property financed with such Indebtedness;

 

(e)                                  Subordinated Debt;

 

 

(f)                                   Indebtedness to trade creditors incurred in the ordinary course of business;

 

(g)                                 Reimbursement obligations with respect to Square 1 letters of credit and credit cards;

 

(h)                                 Indebtedness permitted under clause (d) of Permitted Investments; and

 

(i)                                    Extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased or the terms modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.

 

“Permitted Investment” means:

 

(a)                                 Investments existing on the Closing Date disclosed in the Schedule;

 

(b)                                 (i) Marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (iii) Square 1’s certificates of deposit maturing no more than one year from the date of investment therein, (iv) Square 1’s money market or other securities accounts, (v) Investments in regular deposit or checking accounts held with Square 1 or as otherwise permitted by, and subject to the terms and conditions of, Section 6.6 of this Agreement, and (vi) Investments consistent with any investment policy adopted by Borrower’s board of directors;

 

(c)                                  Investments accepted in connection with Permitted Transfers;

 

(d)                                 Investments (i) of Subsidiaries in or to other Subsidiaries (which are co-Borrowers or secured guarantors and, for Subsidiaries created or acquired after the date hereof, with respect to which Borrower and its Subsidiaries have fully complied with Section 6.8 hereof) or Borrower and Investments by Borrower in Subsidiaries (which are co-Borrowers or secured guarantors and, for Subsidiaries created or acquired after the date hereof, with respect to which Borrower and its Subsidiaries have fully complied with Section 6.8 hereof) and (ii) of Subsidiaries in or to other Subsidiaries (which are not co-Borrowers or secured guarantors) and Investments by Borrower in Subsidiaries (which are not co-Borrowers or secured guarantors) not to exceed $100,000 in the aggregate in any fiscal year;

 

(e)                                  Investments not to exceed $250,000 outstanding in the aggregate at any time consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plan agreements approved by Borrower’s Board of Directors;

 

(f)                                   Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business;

 

 

(g)                                 Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business, provided that this subparagraph (h) shall not apply to Investments of Borrower in any Subsidiary;

 

(h)                                 Joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by Borrower in another Person do not exceed $100,000 in the aggregate in any fiscal year;

 

(i)                                    Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and

 

(j)                                    Investments permitted under Section 7.3.

 

“Permitted Licenses” means the following:

 

(a)                                 non-exclusive licenses or sublicenses and similar arrangements, partnerships and joint ventures on commercially reasonable terms for the use of the property of Borrower or its Subsidiaries in the ordinary course of business;

 

(b)                                 exclusive licenses or sublicenses on commercially reasonable terms of Borrower’s Mucus Penetrating Delivery Technology for any use (including the treatment of diseases and conditions of the eye) with a third-party proprietary therapeutic product candidate or group of third-party proprietary therapeutic product candidates or with a limited set of third-party proprietary drug targets targeting a specific disease or organ system, provided that any such license (i) does not include rights to any pre-clinical or clinical product candidate or drug target of Borrower (including without limitation where the active pharmaceutical ingredient is loteprednol etabonate or an RTKi developed by Borrower) and (ii) could not result in a legal transfer of title of the licensed property;

 

(c)                                  exclusive licenses or sublicenses on commercially reasonable terms only as to discrete geographical areas outside of the United States, provided that any such license could not result in a legal transfer of title of the licensed property; and

 

(d)                                 licenses or sublicenses existing on the Closing Date and disclosed on the Schedule;

 

provided, in each case, that, consistent with the terms of such license, Borrower’s interest in such license would be included in the Collateral and Agent (for the benefit of the Lenders) would obtain a security interest therein.

 

“Permitted Liens” means the following:

 

(a)                                 Any Liens existing on the Closing Date and disclosed in the Schedule (excluding Liens to be satisfied with the proceeds of the Credit Extensions) or arising under this Agreement, the other Loan Documents, or any other agreement in favor of Agent;

 

 

(b)                                 Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings and for which Borrower maintains adequate reserves;

 

(c)                                  Liens not to exceed $250,000 in the aggregate at any time (i) upon or in any Equipment (other than Equipment financed by a Credit Extension) acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such Equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such Equipment, or (ii) existing on such Equipment at the time of its acquisition, in each case provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such Equipment;

 

(d)                                 Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (a) through (c) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase;

 

(e)                                  Liens securing Subordinated Debt;

 

(f)                                   Permitted Licenses;

 

(g)                                 Liens securing reimbursement obligations regarding Square 1 letters of credit and credit cards;

 

(h)                                 Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed $25,000.00 and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;

 

(i)                                    Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business (other than Liens imposed by ERISA); and

 

(j)                                    Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 8.4 (attachment) or 8.7 (judgments).

 

“Permitted Transfer” means the conveyance, sale, lease, transfer or disposition by Borrower or any Subsidiary of:

 

(a)                                 Inventory in the ordinary course of business;

 

(b)                                 Transfers that constitute Permitted Investments;

 

(c)                                  Transfers that constitute Permitted Licenses;

 

 

(d)                                 worn-out, surplus or obsolete Equipment; and

 

(e)                                  grants of security interests and other Liens that constitute Permitted Liens.

 

“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency.

 

“Prepayment Fee” has the meaning assigned in Section 2.4(c).

 

“Prime Rate” means the variable rate of interest, per annum, most recently announced by Square 1, as its “prime rate,” whether or not such announced rate is the lowest rate available from Square 1.

 

“Pro Rata Share” means a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the original principal amount of a Lender’s Credit Extensions to Borrower under this Agreement, and the denominator of which is the aggregate original principal amount of all Credit Extensions to Borrower under this Agreement, and, for clarity, as of the date hereof, means the percentage set forth on Schedule 1 hereto.

 

“Related Persons” means, with respect to any Person, each Affiliate of such Person and each director, officer, employee, agent, trustee, representative, attorney, accountant and each insurance, environmental, legal, financial and other advisor and other consultants and agents of or to such Person or any of its Affiliates.

 

“Representative” of Borrower, Agent or any Lender means, collectively, with respect to such party, its directors, officers, employees, agents or advisers (including, without limitation, attorneys, accountants, consultants, bankers and financial advisers).

 

“Required Lenders” means (a) for so long as all of the Persons that are Lenders on the Closing Date (each an “Original Lender”) have not assigned or transferred any of their interests in their respective Credit Extensions, Lenders holding 100% of the aggregate outstanding principal balance of the Credit Extensions, or (b) at any time from and after any Original Lender has assigned or transferred any interest in its Credit Extensions, all Lenders meeting the criteria of at least one of the clauses below:

 

(i)                                     each Original Lender that has not assigned or transferred any portion of its respective Credit Extensions,

 

(ii)                                  each assignee of an Original Lender provided (A) such assignee was assigned or transferred and continues to hold 100% of the assigning Original Lender’s interest in the Credit Extensions and (B) Agent has consented in writing to such assignee being a Required Lender by virtue of this clause (ii) of clause (b), except that no consent shall be required with respect to a Lender Transfer to the transferring Lender’s Affiliate, another Lender or an Affiliate of another Lender, and

 

(iii)                               in the event that the Required Lenders under clauses (i) and (ii) of this clause (b) collectively hold less than 66-2/3% of the aggregate outstanding principal

 

 

balance of the Credit Extensions, such other Lenders, when aggregated with the Required Lenders under clause (i) or (ii) of this clause (b), holding 66-2/3% or more of the aggregate outstanding principal balance of the Credit Extensions.

 

For purposes of this definition only, a Lender shall be deemed to include itself, and any Lender that is an Affiliate of such Lender.

 

“Responsible Officer” means each of the following, if applicable:  the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, the Senior Director of Finance, the Interim President and Chief Business Officer and the Controller of Borrower, as well as any other officer or employee identified as an Authorized Officer in the corporate resolution delivered by Borrower to Agent in connection with this Agreement.

 

“Schedule” means the schedule of exceptions attached hereto and approved by Agent and the Lenders, if any.

 

“SOS Reports” means the official reports from the Secretaries of State of each Collateral State, the state where Borrower’s chief executive office is located, the state of Borrower’s formation and other applicable federal, state or local government offices identifying all current security interests filed in the Collateral and Liens of record as of the date of such report.

 

“Square 1” has the meaning assigned in the preamble of this Agreement.

 

“Subordinated Debt” means any debt incurred by Borrower that is subordinated in writing to the debt owing by Borrower to the Lenders on terms reasonably acceptable to Agent and the Required Lenders (and identified as being such by Borrower, Agent and the Required Lenders).

 

“Subsidiary” means any corporation, partnership or limited liability company or joint venture in which (a) any general partnership interest or (b) more than 50% of the stock, limited liability company interest or joint venture of which by the terms thereof ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any determination is being made, is owned by Borrower, either directly or through an Affiliate.

 

“Term Loan Commitment Amount” means the dollar amount set forth on Schedule 1 hereto, as amended from time to time.

 

“Term Loan Maturity Date” means December 1, 2018.

 

“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.

 

“Transfer” has the meaning assigned in Section 7.1.

 

 

EXHIBIT B

 

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

 

	
DEBTOR
    	
KALA   PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
SECURED   PARTY:
    	
SQUARE   1 BANK, AS AGENT FOR THE LENDERS
    

 

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:

 

(a)                                 all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), financial assets, general intangibles, goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records;

 

(b)                                 any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment.  All terms above have the meanings given to them in the North Carolina Uniform Commercial Code, as amended or supplemented from time to time, including revised Division 9 of the Uniform Commercial Code-Secured Transactions.

 

Notwithstanding the foregoing, the Collateral shall not include any (i) property expressly excluded from Collateral under that certain Loan and Security Agreement dated as of November 20, 2014 by and among Square 1 Bank, as agent, the lenders party thereto, and Kala Pharmaceuticals, Inc. (the “Loan and Security Agreement”) or (ii) Intellectual Property (as defined in the Loan and Security Agreement), in any medium, of any kind or nature whatsoever, now or hereafter owned or acquired or received by Borrower, or in which Borrower now holds or hereafter acquires or receives any right or interest (collectively, the “Intellectual Property”); provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the “Rights to Payment”).

 

Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of November 20, 2014, include the Intellectual Property to the extent and only to the extent necessary to permit perfection of Agent’s security interest in the Rights to Payment, and further provided, however, that Agent’s enforcement rights with respect to any security interest in the Intellectual Property shall be absolutely limited to the Rights to Payment only, and Agent shall have no recourse whatsoever with respect to the underlying Intellectual Property.

 

 

EXHIBIT C

 

LOAN ADVANCE / PAYDOWN REQUEST FORM

 

 

EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

 

SCHEDULE OF EXCEPTIONS

 

Permitted Indebtedness (Exhibit A)

 

1.              Irrevocable Standby Letter of Credit No. SVBSF008707, dated January 2, 2014 in the amount of $86,697.37 (Beneficiary: ARE-MA Region No. 9, LLC)

 

2.              Borrower’s credit cards with Silicon Valley Bank in an amount up to $35,000 in the aggregate.

 

Permitted Investments (Exhibit A) — None.

 

Permitted Licenses (Exhibit A)

 

1.              Exclusive License Agreement between The Johns Hopkins University and Kala Pharmaceuticals, Inc. (formerly known as Hanes Newco, Inc.) dated November 10, 2009, as amended by a First Amendment dated November 19, 2012, as further amended by a Second Amendment dated May 22, 2014, and as again amended by a Third Amendment dated August 26, 2014.

 

2.              Settlement and License Agreement, dated October 24, 2014, by and between The Johns Hopkins University, Kala Pharmaceuticals, Inc., and GrayBug, LLC

 

3.              Side Agreement, dated October 24, 2014, by and between The Johns Hopkins University, Kala Pharmaceuticals, Inc., and GrayBug, LLC

 

Permitted Liens (Exhibit A)

 

1.              That certain Irrevocable Standby Letter of Credit No. SVBSF008707, dated January 2, 2014 in the amount of $86,697.37 (Beneficiary: ARE-MA Region No. 9, LLC) disclosed above is secured by cash collateral in an amount equal to the dollar value of the letter of credit.

 

2.              Bank Services Pledge Agreement (Cash-Secured), dated December 19, 2013, between Silicon Valley Bank and Kala Pharmaceuticals, Inc. with respect to deposit account no.          relating to the letter of credit described in item 1 (“Pledge Agreement for Deposit Account No.               “).

 

3.              Borrower’s credit cards with Silicon Valley Bank disclosed above are secured by cash collateral in an amount equal to $35,000 in the aggregate.

 

4.              Bank Services Pledge Agreement (Cash-Secured), dated August 27, 2012, between Silicon Valley Bank and Kala Pharmaceuticals, Inc. with respect to deposit account no.              relating to the credit cards described in item 3 (“Pledge Agreement for Deposit Account No.                “).

 

Collateral (Section 5.3)

 

1.              Certain property of Borrower is subject to Liens as described in items 1 and 2 of Schedule 7.5 and certain licenses and agreements to which Borrower is a party are subject to restrictions on transfer and/or pledge as described in Schedule 7.5.

 

Intellectual Property (Section 5.4)

 

1.              Borrower’s patent family identified as Kala reference number KP003 is jointly owned by Borrower and The John’s Hopkins University.  This patent family includes U.S. Provisional Patent Application Serial No.                       , filed May 3, 2012 (now expired), U.S. Patent Application Serial No.

 

 

                      , filed May 3, 2013, and PCT International Application No.                                             , filed May 3, 2013, and any applications filed in the future claiming benefit of any of the foregoing.

 

2.              Borrower is actively engaged in performing feasibility studies with a number of parties under the terms of feasibility study agreements (“FSA”), wherein Borrower is applying its platform technology to active pharmaceutical ingredients (API) provided by the other party to an FSA.  In these arrangements, new inventions created in the course of that work (excluding inventions relating to the platform) are jointly owned by Borrower and the other party, and the parties cannot practice joint inventions without entering into a definitive license agreement.

 

3.              The ‘433 Patent (as defined in Schedule 5.6) was revoked as described in Schedule 5.6.

 

Prior Names (Section 5.5)

 

1.              Hanes Newco, Inc.

 

Litigation (Section 5.6)

 

1.              On November 16, 2011, Vectura Limited (“Vectura”) filed an opposition at the European Patent Office (the “Vectura Opposition”) against European Patent No. 2061433 (the “‘433 Patent”) owned by The Johns Hopkins University and licensed to Kala Pharmaceuticals, Inc.  Vectura sought to have all granted claims revoked.  An Oral Hearing was held at the European Patent Office on April 23, 2013, at which the ‘433 Patent was revoked.  A notice of appeal of the European Patent Office’s decision was filed July 16, 2013, and the statement of grounds of appeal was submitted on September 17, 2013. Vectura filed its reply to appeal on February 7, 2014.  The appeal is pending, and the Company is awaiting further communication or action by the European Patent Office.

 

Inbound Licenses; Other Agreements (Section 5.12)

 

1.              Exclusive License Agreement between The Johns Hopkins University and Kala Pharmaceuticals, Inc. (formerly known as Hanes Newco, Inc.) dated November 10, 2009, as amended by a First Amendment dated November 19, 2012, as further amended by a Second Amendment dated May 22, 2014, and as again amended by a Third Amendment dated August 26, 2014.

 

2.              Borrower is prohibited and/or restricted from granting a security interest in the licenses and agreements set forth in item 3 of Schedule 7.5.

 

Encumbrances (Section 7.5)

 

1.              Deposit Account No.          is subject to that certain Pledge Agreement described in item 2 of the Permitted Liens schedule.

 

2.              Deposit Account No.          is subject to that certain Pledge Agreement described in item 4 of the Permitted Liens schedule.

 

3.              The following licenses and agreements contain restrictions on transfer and/or pledge:

 

a.              Exclusive License Agreement between The Johns Hopkins University and Kala Pharmaceuticals, Inc. (formerly known as Hanes Newco, Inc.) dated November 10, 2009, as amended by a First Amendment dated November 19, 2012, as further amended by a Second Amendment dated May 22, 2014, and as again amended by a Third Amendment dated August 26, 2014.

 

 

b.              Settlement and License Agreement, dated October 24, 2014, by and between The Johns Hopkins University, Kala Pharmaceuticals, Inc., and GrayBug, LLC

 

c.               Side Agreement, dated October 24, 2014, by and between The Johns Hopkins University, Kala Pharmaceuticals, Inc., and GrayBug, LLC

 

d.              Lease Agreement, dated September 30, 2013, between ARE-MA Region No. 9, LLC and Kala Pharmaceuticals, Inc.

 

Locations (Section 7.10)

 

1.              Michigan

 

2.              California

 

3.              New Jersey

 

4.              Pennsylvania

 

5.              New Hampshire

 

 

USA PATRIOT ACT
 NOTICE
 OF
 CUSTOMER IDENTIFICATION

 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

 

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

 

WHAT THIS MEANS FOR YOU:  when you open an account, we will ask your name, address, date of birth, and other information that will allow us to identify you.  We may also ask to see your driver’s license or other identifying documents.

 

 

	
SQUARE   1 BANK
    	
 
    
	
 
    	
AUTOMATIC   DEBIT AUTHORIZATION
    
	
Member   FDIC
    	
 
    

 

To:  Square 1 Bank, as agent for the Lenders

 

Re:  Loan #                                                                     

 

You are hereby authorized and instructed to charge account No.                                        in the name of KALA PHARMACEUTICALS, INC.

 

for facility fees, principal, interest and other payments due on above-referenced loan as set forth below and credit the loan referenced above.

 

x                                  Debit the Facility Fee as it becomes due according to the terms of the Loan and Security Agreement and any renewals or amendments thereof.

 

x                                  Debit each interest payment as it becomes due according to the terms of the Loan and Security Agreement and any renewals or amendments thereof.

 

x                                  Debit each principal payment as it becomes due according to the terms of the Loan and Security Agreement and any renewals or amendments thereof.

 

x                                  Debit each payment for Lender Expenses as it becomes due according to the terms of the Loan and Security Agreement and any renewals or amendments thereof.

 

This Authorization is to remain in full force and effect until revoked in writing.

 

	
Borrower Signature
    	
 
    	
Date
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

 

CLIENT MARKETING AUTHORIZATION

 

We are excited to have you as a Square 1 Bank client and want to spread the word about your success!

 

From press releases to mentions on social media sites, and all points in between, Square 1’s marketing and communications team is constantly seeking new opportunities to promote our clients and to connect them to prospects, existing customers, and the larger entrepreneurial/venture capital community.

 

If you complete the authorization below and return it to us, you are authorizing us to reference and/or include your company as part of our marketing and advertising efforts without further review or advance approval by you. Please select all areas that you approve.

 

o                        All items listed below

 

o                        List company as a Square 1 Bank customer on social media sites, including Twitter, LinkedIn, Facebook, Square 1 Bank corporate blog, or any other social media site

 

o                        Press release including your company as a Square 1 Bank client (to include company name and description only; may appear alongside other clients)

 

o                        Press release including your company as a Square 1 Bank client (general press release not focused on your company, but referring to your company as a client, and including your company’s name, description, and editorial comments; may appear alongside other clients)

 

o                        Provide quote for inclusion in a Square 1 Bank press release

 

o                        Use of company name and logo in Square 1 Bank marketing materials including corporate marketing collateral, website, social media sites, and other advertising campaigns

 

o                        Provide quotes for inclusion in Square 1 Bank marketing materials including corporate marketing collateral, website, social media sites, and other advertising campaigns

 

o                        Customer case study/application brief (success story to be posted on website, included in press kits and/or pitched to publications as potential articles)

 

o                        Willing to participate in a video testimonial highlighting your banking relationship and experiences with Square 1 Bank

 

o                        Other (please describe):

 

If you have questions, please contact your Square 1 banker, or our Marketing + Communications department at marketing@square1bank.com.

 

Please acknowledge your authorization by signing below:

 

	
Company   Name:
    	
KALA   PHARMACEUTICALS, INC.
    	
 
    
	
Authorized   Signer:
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    
	
Date:

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