Document:

krys-ex1016_82.htm

EXECUTION COPY

Exhibit 10.16

 

Certain information indicated with [**] in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

 

 

 

LEASE DOCUMENTATION

 

 

 

 

 

 

 

	
 
	
TENANT:
	
 
	
KRYSTAL BIOTECH, INC.

	
 
	
 
	
 
	
 

	
 
	
ADDRESS:
	
 
	
2100 Wharton Street, Suite 701

	
 
	
 
	
 
	
Pittsburgh, PA  15203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXECUTION COPY

	
TABLE OF CONTENTS

	
 
	
 
	
 
	
 

	
1.
	
 
	
DEFINITIONS AND CERTAIN BASIC PROVISIONS
	
1

	
 
	
 
	
 
	
 

	
2.
	
 
	
FUNDAMENTAL EXHIBITS TO LEASE
	
4

	
 
	
 
	
 
	
 

	
3.
	
 
	
GRANT, PREMISES AND TERM
	
5

	
 
	
 
	
 
	
 

	
3.1.
	
 
	
Grant and Premises
	
5

	
3.2.
	
 
	
Park Common Areas
	
5

	
3.3.
	
 
	
Roof
	
6

	
3.4.
	
 
	
Term
	
6

	
 
	
 
	
 
	
 

	
4.
	
 
	
RENT; ADDITIONAL RENT; OTHER CHARGES
	
6

	
 
	
 
	
 
	
 

	
4.1.
	
 
	
Rent
	
6

	
4.2.
	
 
	
Additional Rent
	
7

	
4.3.
	
 
	
Operating Expenses
	
7

	
4.4.
	
 
	
Taxes
	
8

	
4.5.
	
 
	
Insurance
	
9

	
4.6.
	
 
	
Tenant’s Audit Rights
	
9

	
4.7.
	
 
	
Utilities
	
10

	
4.8.
	
 
	
Taxes – Other
	
10

	
4.9.
	
 
	
Renewal Rent
	
10

	
 
	
 
	
 
	
 

	
5.
	
 
	
SECURITY DEPOSIT
	
10

	
 
	
 
	
 
	
 

	
6.
	
 
	
USE AND OCCUPANCY
	
11

	
 
	
 
	
 
	
 

	
6.1.
	
 
	
Use of Premises
	
11

	
6.2.
	
 
	
Continuous Occupancy
	
11

	
 
	
 
	
 
	
 

	
7.
	
 
	
LANDLORD’S WORK
	
11

	
 
	
 
	
 
	
 

	
8.
	
 
	
REPAIRS
	
12

	
 
	
 
	
 
	
 

	
8.1.
	
 
	
Landlord Responsibility
	
12

	
8.2.
	
 
	
Tenant Responsibility
	
12

	
 
	
 
	
 
	
 

	
9.
	
 
	
ACCESS AND CONFIDENTIALITY
	
12

	
 
	
 
	
 
	
 

	
9.1.
	
 
	
Landlord Access
	
12

	
9.2.
	
 
	
Tenant Access
	
13

	
 
	
 
	
 
	
 

	
10.
	
 
	
ALTERATIONS TO PREMISES; SIGNS
	
13

	
 
	
 
	
 
	
 

	
11.
	
 
	
DAMAGE OR DESTRUCTION
	
14

	
 
	
 
	
 
	
 

	
11.1.
	
 
	
Damage or Destruction
	
14

	
11.2.
	
 
	
Rights of Termination
	
14

	
 
	
 
	
 
	
 

	
12.
	
 
	
INDEMNITY AND INSURANCE
	
15

	
 
	
 
	
 
	
 

	
12.1.
	
 
	
Indemnity
	
15

	
12.2.
	
 
	
Landlord’s Insurance
	
15

	
12.3.
	
 
	
Tenant’s Insurance
	
15

	
 
	
 
	
 
	
 

	
13.
	
 
	
WAIVER OF SUBROGATION
	
16

	
 
	
 
	
 
	
 

	
14.
	
 
	
LIENS
	
16

	
 
	
 
	
 
	
 

	
15.
	
 
	
ASSIGNMENT, SUBLETTING, MORTGAGING
	
16

	
 
	
 
	
 
	
 

	
16.
	
 
	
PRIORITY OF LEASE
	
17

	
 
	
 
	
 
	
 

	
17.
	
 
	
QUIET ENJOYMENT
	
18

	
 
	
 
	
 
	
 

	
18.
	
 
	
ESTOPPEL CERTIFICATE
	
18

	
 
	
 
	
 
	
 

	
19.
	
 
	
FIXTURES AND PERSONAL PROPERTY; SURRENDER
	
18

	
 
	
 
	
 
	
 

 

	
{S1415752.1}
	
i
	
 

 

 

	
19.1.
	
 
	
Surrendering of Premises
	
18

	
19.2.
	
 
	
Removal of Tenant Property
	
18

	
 
	
 
	
 
	
 

	
20.
	
 
	
DEFAULT AND REMEDY
	
19

	
 
	
 
	
 
	
 

	
20.1.
	
 
	
Tenant Default and Remedy
	
19

	
20.2.
	
 
	
Landlord Default and Remedy
	
20

	
20.3.
	
 
	
Warrant of Attorney to Confess Judgment
	
21

	
 
	
 
	
 
	
 

	
21.
	
 
	
NON-WAIVER OF DEFAULTS
	
21

	
 
	
 
	
 
	
 

	
22.
	
 
	
ENVIRONMENTAL / SITE REPRESENTATIONS AND INDEMNITIES
	
21

	
 
	
 
	
 
	
 

	
22.1.
	
 
	
Hazardous Material
	
21

	
22.2.
	
 
	
Environmental Laws
	
21

	
22.3.
	
 
	
Contamination
	
21

	
22.4.
	
 
	
Tenant Representations
	
22

	
22.5.
	
 
	
Landlord Representations
	
23

	
 
	
 
	
 
	
 

	
23.
	
 
	
HOLD OVER TENANCY
	
24

	
 
	
 
	
 
	
 

	
24.
	
 
	
CONDEMNATION
	
25

	
 
	
 
	
 
	
 

	
25.
	
 
	
TENANT’S LIMITED PURCHASE OPTION
	
25

	
 
	
 
	
 
	
 

	
26.
	
 
	
TENANT’S RIGHT OF FIRST OFFER TO PURCHASE
	
26

	
 
	
 
	
 
	
 

	
27.
	
 
	
NOTICES
	
27

	
 
	
 
	
 
	
 

	
28.
	
 
	
RIGHTS RESERVED BY LANDLORD / FORCE MAJEURE
	
27

	
 
	
 
	
 
	
 

	
29.
	
 
	
MISCELLANEOUS PROVISIONS
	
28

	
 
	
 
	
 
	
 

	
29.1.
	
 
	
Term "Landlord"
	
28

	
29.2.
	
 
	
Captions of Paragraphs
	
28

	
29.3.
	
 
	
Terms "Landlord" and "Tenant”
	
28

	
29.4.
	
 
	
Words "person" and "persons"
	
28

	
29.5.
	
 
	
Rights, Options, Election, Powers and Remedies
	
28

	
29.6.
	
 
	
Financial Statements
	
28

	
29.7.
	
 
	
Time
	
29

	
29.8.
	
 
	
Provisions Binding
	
29

	
29.9.
	
 
	
State Law
	
29

	
29.10.
	
 
	
Covenants and Agreements
	
29

	
29.11.
	
 
	
Invalid or Illegal Provisions
	
29

	
29.12.
	
 
	
Effective Date of Conditions, Covenants and Agreements
	
29

	
29.13.
	
 
	
Lease Commissions
	
29

	
29.14.
	
 
	
Relationship of Landlord and Tenant
	
29

	
29.15.
	
 
	
Recording of Memorandum of Lease
	
30

	
29.16.
	
 
	
Submission of Lease
	
30

	
29.17.
	
 
	
Counterparts
	
30

	
29.18.
	
 
	
Representations on Authority of Parties/Signatories
	
30

	
29.19.
	
 
	
Personal Liability
	
30

 

 

ii

EXECUTION COPY

LEASE AGREEMENT

 

THIS LEASE AGREEMENT “Lease” is entered into this 26th day of December 2019 (“Effective Date”), between NORTHFIELD I, LLC, an Ohio limited liability company (“Landlord”) and KRYSTAL BIOTECH, INC., a Delaware corporation (“Tenant”).

 

	
1.
	
DEFINITIONS AND CERTAIN BASIC PROVISIONS

 

	
1.1.
	
 
	
Landlord:
	
 
	
 
	
Northfield I, LLC

	
1.2.
	
 
	
Landlord's Address:
	
 
	
 
	
c/o Al. Neyer, LLC

	
 
	
 
	
 
	
 
	
 
	
302 West Third Street, Suite 800

	
 
	
 
	
 
	
 
	
 
	
Cincinnati, OH 45202

	
 
	
 
	
 
	
 
	
 
	
Attn: Legal Services

	
 
	
 
	
 
	
 
	
 
	
Email: lkoth@neyer.com

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
With copy to:
	
 
	
 
	
c/o Al. Neyer, LLC

	
 
	
 
	
 
	
 
	
 
	
302 West Third Street, Suite 800

	
 
	
 
	
 
	
 
	
 
	
Cincinnati, OH  45202

	
 
	
 
	
 
	
 
	
 
	
Attn: Asset Management

	
 
	
 
	
 
	
 
	
 
	
Email: jcheung@neyer.com

	
 
	
 
	
 
	
 
	
 
	
 

	
1.3.
	
 
	
Tenant:
	
Krystal Biotech, Inc.

	
 
	
 
	
 
	
 
	
 
	
 

	
1.4.
	
 
	
Tenant's Address:
	
2100 Wharton Street, Suite 701

	
 
	
 
	
 
	
 
	
 
	
Pittsburgh, PA 15203

	
 
	
 
	
 
	
 
	
 
	
Attn:  Tony Riley

	
 
	
 
	
 
	
 
	
 
	
Email: triley@krystalbio.com

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
and

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
2100 Wharton Street, Suite 701

	
 
	
 
	
 
	
 
	
 
	
Pittsburgh, PA 15203

	
 
	
 
	
 
	
 
	
 
	
Attn:  Josh Suskin

	
 
	
 
	
 
	
 
	
 
	
Email:  jsuskin@krystalbio.com

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
With copy to:
	
 
	
 
	
Jonathan P. Altman, Esq.

	
 
	
 
	
 
	
 
	
 
	
Sherrard, German & Kelly, P.C.

	
 
	
 
	
 
	
 
	
 
	
535 Smithfield Street, Suite 300

	
 
	
 
	
 
	
 
	
 
	
Pittsburgh, PA 15222

	
 
	
 
	
 
	
 
	
 
	
Email:  jpa@sgkpc.com

	
 
	
 
	
 
	
 
	
 
	
 

 

	
 
	
1.5.
	
Premises:  The Property (as defined below), together with a building to be constructed thereon containing approximately 100,000 rentable square feet of space (currently expected to be comprised of approximately 86,015 rentable square feet of industrial warehouse, production and distribution space and approximately 13,985 rentable square feet of office space) (“Building”), together with all improvements located on the Property (including, without limitation all utility systems located within or otherwise serving the Building and a parking lot containing at least 200 parking spaces located on the Property) and all appurtenances thereto, including but not limited to, rights of ingress, egress and regress to the Premises.  The Premises are shown on the site plan attached hereto as Exhibit A.  The rentable square footage contained within the Building shall be subject to confirmation after the Lease Commencement Date in accordance with the remeasurement provisions set forth in Section 3.1 below.

 

	
{S1415752.1}
	
1
	
 

 

EXECUTION COPY

	
 
	
1.6.
	
Property: Approximately 10 acres located on International Drive, Findlay Township, Allegheny County, Coraopolis, Pennsylvania, 15108, more fully described in the Legal Description attached hereto as Exhibit A-1.

 

	
 
	
1.7.
	
Lease Term:  The term of this Lease ("Lease Term") shall be for a period of Fifteen (15) years plus a part of a month, if any, from the Lease Commencement Date (as defined herein) to the first day of the first full calendar month in the Lease Term.

 

	
 
	
1.8.
	
Renewal Terms:  Tenant shall have three (3) consecutive renewal options (each a “Renewal Term”), the first two of which shall be for a period of five (5) years each, and the third of which shall be for a period of up to a maximum of four (4) years and eleven (11) months.  Each Renewal Term shall be exercisable upon Tenant providing Landlord with at least nine (9) months prior written notice.  The Base Rent for each Renewal Term shall be the Base Rent in the last year of the preceding Lease Term plus the increase in average annual CPI Increases (as defined below) for the prior three (3) years.  The annual escalations for each Renewal Term shall be equal to the CPI Increases established in the first year of the then current Renewal Term. The foregoing notwithstanding, in no event shall any Renewal Term Base Rent be less than the Base Rent in the last year of the preceding Lease Term.  As used herein, the phrase “CPI Increases” means the annual increase in The United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers (CPI-U), Midwest – Size Class B/C (December 1996=100).  

 

	
 
	
1.9.
	
Lease Commencement Date:  The Lease Term shall commence upon the date of Substantial Completion (“Lease Commencement Date”).  “Substantial Completion” shall mean the date Landlord delivers the Premises to Tenant with Landlord’s Work (as defined herein) substantially completed in accordance with the work letter attached hereto and made a part hereof as Exhibit B (“Work Letter”), except for Punch List Items (as defined in the Work Letter) and otherwise (a) in compliance with all applicable federal, state and local laws, statutes, ordinances, codes, orders rules, regulations and other requirements of governmental agencies having authority over the Property (collectively, “Applicable Law(s)”) and (b) in a condition that is suitable for a certificate of occupancy to be issued, subject only to the completion of Tenant’s Work. The Lease Commencement Date will be officially established by execution of a written statement in the form attached hereto as Exhibit C.  The “Estimated Lease Commencement Date” is November 1, 2020.

 

Should Landlord fail to (1) deliver the Premises to Tenant with the Initial Delivery Conditions (as defined on Exhibit B-4 attached hereto) satisfied (as applicable, the “Initial Delivery Date”) by August 24, 2020 (the “Estimated Initial Delivery Date”) or (2) to achieve Substantial Completion of Landlord’s Work by the Estimated Lease Commencement Date, in either case for reasons other than Force Majeure (defined in Section 28 below) or a Tenant Delay (defined below), Tenant shall be entitled to the following abatement rights: (i) one day of Rent for each calendar day of delay up to and including the sixtieth (60th) day of such delay; (ii) two days of Rent for each calendar day of delay, from the sixty-first (61st) day of such delay up to and including the one hundred twentieth (120th) day of such delay; and (iii) three days of Rent for each calendar day of delay from the one hundred twenty-first (121st) day of such delay and beyond, until the Initial Delivery Date or Lease Commencement Date (as applicable) occurs.

 

“Tenant Delay” means any actual delay that Landlord encounters in the performance of the Landlord’s Work, to the extent that such delay is caused by any act or omission by Tenant or its employees, agents, licensees, contractors or any other party acting on behalf of Tenant which substantially interferes with the performance of Landlord’s Work such that Landlord is delayed in the performance of Landlord’s Work as a direct result of such act or omission by Tenant or its employees, agents, licensees, contractors or any other party action on behalf of Tenant.  In order for Landlord to claim an event of Tenant Delay, Landlord must provide written notice to Tenant within ten (10) days of the date on which Landlord actually learns of the act or omission and the resulting delay, which notice specifies Landlord’s reasonable determination of the cause of the delay and (if known and completed) the duration of the delay.  In the event a Tenant Delay causes a delay in the Lease Commencement Date, Tenant shall commence payment of Rent on the date which would be the Lease Commencement Date if not for Tenant Delay.

 

2

EXECUTION COPY

	
 
	
1.10.
	
Early Access Period: Upon Tenant’s request to Landlord and Landlord’s approval, which approval shall not be unreasonably withheld, conditioned or delayed, and provided that Tenant’s access to the Premises shall not unreasonably interfere with Landlord’s performance of Landlord’s Work, Tenant shall have access to the Premises prior to the Lease Commencement Date for the purposes of commencing all work necessary for Tenant to open for business at the Premises (including, without limitation, all of the items enumerated on Exhibit B-3) (“Tenant’s Work”) including, but not limited to, MEP installation, and otherwise to install trade fixtures and personal property at the Premises (“Early Access Period”).  Tenant shall provide proof of Tenant’s Insurance as described in Section 12.3 of this Lease prior to entering the Premises to conduct any of Tenant’s Work.  No Base Rent or Additional Rent will be payable during the Early Access Period.

 

	
 
	
1.11.
	
Base Rent:  Base Rent shall be defined per the following schedule:

 

	
TIME PERIOD

(Months) 
	
ANNUAL BASE RENT
	
MONTHLY BASE RENT

	
1 – 12
	
 
	
$
	
763,000.00
	
 
	
$
	
63,583.33

	
13 – 24
	
 
	
$
	
778,260.00
	
 
	
$
	
64,855.00

	
25 – 36
	
 
	
$
	
793,825.20
	
 
	
$
	
66,152.10

	
37 – 48
	
 
	
$
	
809,701.70
	
 
	
$
	
67,475.14

	
49 – 60
	
 
	
$
	
825,895.74
	
 
	
$
	
68,824.64

	
61 – 72
	
 
	
$
	
842,413.65
	
 
	
$
	
70,201.14

	
73 – 84
	
 
	
$
	
859,261.93
	
 
	
$
	
71,605.16

	
85 – 96
	
 
	
$
	
876,447.16
	
 
	
$
	
73,037.26

	
97 – 108
	
 
	
$
	
893,976.11
	
 
	
$
	
74,498.01

	
109 – 120
	
 
	
$
	
911,855.63
	
 
	
$
	
75,987.97

	
121 – 132
	
 
	
$
	
930,092.74
	
 
	
$
	
77,507.73

	
133 – 144
	
 
	
$
	
948,694.60
	
 
	
$
	
79,057.88

	
145 – 156
	
 
	
$
	
967,668.49
	
 
	
$
	
80,639.04

	
157 – 168
	
 
	
$
	
987,021.86
	
 
	
$
	
82,251.82

	
169 – 180
	
 
	
$
	
1,006,762.30
	
 
	
$
	
83,896.86

 

	
 
	
1.12.
	
Base Rent Commencement Date:  The Base Rent shall commence on the Lease Commencement Date which is anticipated to be on or before November 1, 2020.  

 

	
 
	
1.13.
	
Additional Rent: Additional Rent for the first year of the Lease Term is estimated to be Two and 24/100 Dollars ($2.24) per rentable square foot per annum, payable in twelve (12) equal monthly installments as set forth in Section 4.2 of this Lease, and shall commence on the Lease Commencement Date.

 

	
 
	
1.14.
	
Security Deposit:  One Million Five Hundred Twenty-Six Thousand Dollars ($1,526,000.00).  Provided that no Tenant Default exists under any of the terms of this Lease, the then-remaining Security Deposit shall be released to Tenant as follows:

 

	
 
	
(a)
	
Within fifteen (15) days after the date upon which (i) the Initial Delivery Date has occurred and (ii) Tenant has caused the portion of the slab required to be installed by Tenant in accordance with item 17 set forth in Exhibit B-3 attached hereto, Landlord’s specifications therefor and accepted by Landlord, Landlord shall return Two Hundred Thousand Dollars ($200,000.00) of the Security Deposit to Tenant; 

3

EXECUTION COPY

	
 
	
(b)
	
Within fifteen (15) days after the date upon which Tenant has submitted evidence to Landlord of Tenant’s achievement  for at least twenty-four (24) consecutive months of (i) a Fixed Charge Coverage Ratio (as defined below) of at least 1.50 to 1.00 and (ii) a Debt to EBITDA Ratio (as defined below) of no more than 3.00 to 1.00, Landlord shall return an amount equal to (i) the Security Deposit remaining less (ii) an amount equal to the following six (6) months of Rent; and 

 

	
 
	
(c)
	
Any remaining Security Deposit shall be returned to Tenant upon Tenant’s achievement of a long-term credit rating of Baa3 or above from Moody’s Investor Service and BBB- from Standard & Poor’s Financial Services for a period of twenty-four (24) consecutive months.

 

As used herein, “Fixed Charge Coverage Ratio” means, as of the end of each calendar month, (i) the sum of EBITDA (as defined below) plus fixed charges before tax, divided by (ii) the sum of fixed charges before tax plus interest expense.

 

As used herein, “Debt to EBITDA Ratio” means, as of the end of each calendar month, the ratio of (i) the aggregate amount of Debt divided by (ii) EBITDA.  As used herein, “Debt” means, as of the end of each calendar month, the aggregate outstanding principal amount of all debt owed by Tenant.  As used herein, “EBITDA” means, as of the end of each calendar month, Tenant’s net profit before tax plus interest expense (net of capitalized interest expense), depreciation expense and amortization expense.

 

Each of the Fixed Charge Coverage Ratio and the Debt to EBITDA Ratio tests shall be calculated on a semi-annual basis, on June 30th and December 31st. Tenant shall furnish to Landlord within sixty (60) days of each testing date the calculation for each test, certified in writing by an authorized representative of Tenant as true, complete and correct.

 

	
 
	
1.15.
	
Permitted Use:  Tenant and its affiliates shall be permitted to utilize the Premises for any function related to the production, storage or distribution of pharmaceutical products and products ancillary thereto, and any administrative functions related thereto; provided such use conforms to all applicable zoning requirements of the appropriate governmental authority sufficient to entitle Tenant to an occupancy permit from such governmental authority.  Any use other than this must be approved in advance in writing by Landlord.  Tenant hereby represents and warrants to Landlord that Tenant will ensure compliance with all of the terms of this Lease by any Tenant affiliate utilizing the Premises.

 

Each of the foregoing definitions and basic provisions shall be construed in conjunction with and limited by the references thereto in the other provisions of this Lease.

	
2.
	
FUNDAMENTAL EXHIBITS TO LEASE

The following exhibits attached to this Lease are incorporated herein by this reference:

 

	
Exhibit A:
	
Site Plan of Premises

	
Exhibit A-1:
	
Property Legal Description

	
Exhibit B:
	
Work Letter

	
Exhibit B-1:
	
Plans and Specifications for Landlord’s Work

	
Exhibit B-2:
	
Schedule for Landlord’s Work

	
Exhibit B-3:
	
Description of Tenant’s Work

	
Exhibit B-4:
	
Initial Delivery Conditions

	
Exhibit C:
	
Lease Commencement Date Memorandum

	
Exhibit D:
	
Rules and Regulations

	
Exhibit E:
	
Landlord Ground Lease

	
Exhibit F:
	
Form of SNDA

	
Exhibit G:
	
Form of Landlord Ground Lease NDA

	
Exhibit H:
	
Form of Memorandum of Lease

 

4

EXECUTION COPY

	
3.
	
GRANT, PREMISES AND TERM

	
 
	
3.1.
	
Grant and Premises

Landlord leases to Tenant and Tenant leases from Landlord upon the terms and conditions set forth herein, the Premises more fully described in Section 1.5 of this Lease. Landlord leases the Property pursuant to a ground lease between Landlord and The Allegheny County Airport Authority (“Ground Lessor”) of even date herewith, a copy of which is attached hereto as Exhibit E (“Landlord Ground Lease”).  Tenant agrees that it shall not take any action that would violate or cause a default under the Landlord Ground Lease.  

This Lease is subject to, and contingent upon, Landlord’s ability to obtain committed financing in the amount of at least $5,929,328 (the “Financing Amount”) for its completion of the Landlord’s Work contemplated herein.  If Landlord is unable to obtain committed financing equal to or greater than the Financing Amount from a lender on commercially reasonable terms, Landlord shall have the right to terminate this Lease upon written notice to Tenant, which notice must be given to Tenant no later than January 15, 2020.  Landlord shall use its best efforts to satisfy this financing contingency on or before January 15, 2020.  Furthermore, if Landlord is unable to obtain final land use approvals from Findlay Township, which are required in order for Landlord to proceed with commencing construction of the Premises as contemplated by this Lease, on or before February 15, 2020, Landlord and/or Tenant shall have the right to terminate this Lease upon written notice to the other party, which notice must be given to the other party no later than February 20, 2020.  Landlord shall use its best efforts to satisfy this land use approval contingency on or before February 15, 2020.  Notwithstanding anything herein to the contrary, if Landlord or Tenant terminates this Lease in accordance with the terms set forth in this paragraph, (i) Landlord shall, at Tenant’s election, provide Tenant with a signed copy of a commercially reasonable assignment of the Landlord Ground Lease, within three (3) days after any written notice of termination is delivered hereunder, (ii) Landlord shall, at Tenant’s election and upon receipt of a commercially reasonable release and waiver executed by Tenant therefor, assign (or cause the assignment) to Tenant all plans, drawings and specifications related to Landlord’s Work, (iii) Landlord shall immediately return the Security Deposit to Tenant, (iv) Landlord shall cause the Escrow Agent (as defined in the Work Letter) to return Tenant’s Cash Contribution to Tenant within ten (10) business days after the date of such termination, and (v) Landlord shall (and shall cause its affiliate, Al. Neyer, LLC to) release Tenant from any and all liabilities and obligations otherwise contemplated by that certain Letter of Indemnification dated October 3, 2019 between Al. Neyer, LLC and Tenant.  This paragraph shall survive the termination of the Lease.

After construction of the Building, Landlord will direct a third-party architect, who is not affiliated with Landlord and who shall be jointly selected by Landlord and Tenant, to measure the square footage within Building utilizing the American National Institute Publication ANSI Z65.1-1998, as promulgated by the Building Owners and Managers Association. After such measurement is complete and accepted as accurate by Landlord and Tenant, the parties shall execute the Lease Commencement Date Memorandum in the form of Exhibit C, attached hereto and made a part hereof, confirming the rentable square footage of the Building, and, if the rentable square footage of the Building is less than 100,000, the Base Rent schedule (starting with $7.63 rate per RSF, with 2% annual increases) and the Purchase Price for Tenant’s exercise of the Purchase Option shall be adjusted accordingly.

	
 
	
3.2.
	
Park Common Areas

The Premises are leased together with the rights granted to Landlord under the Landlord Ground Lease to use, in common with other tenants in the Northfield Industrial Park (“Park”), and their respective agents, invitees and employees all exterior areas and facilities (including, without limitation, sidewalks, driveways and landscaped areas) in the Park which are made available by the owner of the Park  to Tenant and other tenants within the Park and/or to the general public, in common (“Park Common Areas”).  

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EXECUTION COPY

	
 
	
3.3.
	
Roof

Tenant shall have the non-exclusive right to place communications equipment such as an antenna, dish or other device on the roof of the Building on the following terms and conditions: (a) prior to installation, Landlord shall have the right to approve Tenant’s plans and proposed location for any such installation in Landlord’s reasonable discretion; (b) such installation shall not void any warranty relating to the roof of the Building, or if required by the warranty, Tenant shall use the roof contractor required by the warranty for such installation; and (c) at the end of the Lease Term, Tenant shall remove Tenant’s communications equipment and repair any damage to the roof of the Building caused by such removal.  Tenant shall have the right to use the roof of the Building, subject to Applicable Laws (if any) and subject to Landlord’s prior approval of Tenant’s plans for any such use, such approval not to be unreasonably withheld, conditioned or delayed, which approval may include a screening plan to be paid for by Tenant.  Landlord shall not grant any other party the right to use the rooftop for telecommunications equipment other than Tenant.  Tenant shall be solely responsible for and agrees to promptly make any repairs or replacements to the roof necessitated by any use of the roof by Tenant or any of Tenant’s agents, employees, contractors or invitees (collectively, "Tenant’s Agents”) pursuant to this Section 3.3.  In no event shall any party other than Tenant be permitted to place signage on the Building’s rooftop.

	
 
	
3.4.
	
Term

The Lease Term shall be for the period set forth in Section 1.7 of this Lease and the Lease Term shall begin on the Lease Commencement Date specified in Section 1.9 of this Lease.  When the Lease Commencement Date has been established, Landlord and Tenant shall execute, acknowledge and deliver a written statement specifying the dates of commencement and termination of the Lease Term in the form attached hereto as Exhibit C.

 

	
4.
	
RENT; ADDITIONAL RENT; OTHER CHARGES

	
 
	
4.1.
	
Rent

The term “Rent” shall include Base Rent, Additional Rent and any other amount due from Tenant to Landlord.  Tenant shall pay Base Rent to Landlord without notice of demand and (except as otherwise expressly set forth in this Lease) without setoff or deduction for any reason at Landlord’s address set forth in Section 1.2 of this Lease or at such other place, or by wire transfer of immediately available funds, as Landlord may, at its discretion, from time to time designate, as rental for the Premises.  In addition to the Base Rent, Tenant shall pay as Additional Rent during the Lease Term and any extension or renewal thereof, all Operating Expenses, Taxes and Landlord’s Insurance (as those terms are defined below) related to the Premises. In addition, Tenant shall pay any and all sums of money or charges required to be paid by Tenant under the terms of this Lease whether designated Additional Rent or not, and such amounts, if not paid when due, shall be collectible with the next installment of Base Rent thereafter falling due as provided herein and shall be subject to all provisions of this Lease and of Applicable Laws.  

 

Base Rent and Additional Rent shall be payable in advance on the first day of each calendar month during the Lease Term hereof commencing on the Lease Commencement Date.  Rent for partial months shall be prorated.  The first monthly payment of Base Rent shall include any prorated rental for the period from the Lease Commencement Date to the first day of the first full calendar month in the Lease Term.  If Tenant shall fail to timely pay the foregoing Rent to Landlord and such failure continues for more than ten (10) days after Tenant receives written notice thereof from Landlord, Landlord may, in addition to all other rights and remedies which Landlord may have, assess a "late charge" on such past-due amount equal 1.5% of the amount that is past-due for that month; provided, however, that Landlord shall not be required to give such written notice more than one (1) time per calendar year before assessing any such late charge.

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EXECUTION COPY

	
 
	
4.2.
	
Additional Rent

Tenant's obligation to pay Additional Rent shall commence on the Lease Commencement Date. Within ninety (90) days after the end of each calendar year, Landlord shall furnish Tenant with a statement of the actual amount of Tenant's Additional Rent reflecting the actually incurred Operating Expenses, Taxes and Landlord’s Insurance expenses for such period.  If the total amount paid by Tenant under this Section for any calendar year shall be less than the actual amount due for Tenant for such year as shown on such statement, Tenant shall pay to Landlord the difference between the amount paid by Tenant and the actual amount due, such deficiency to be paid within thirty (30) days after the furnishing of each such statement; and if the total amount paid by Tenant hereunder for any such calendar year shall exceed such actual amount due from Tenant for such calendar year, such excess shall be credited against the next installment(s) of Additional Rent.

	
 
	
4.3.
	
Operating Expenses

"Operating Expenses" shall mean all expenses, costs and disbursements of every kind and nature which Landlord shall pay or become obligated to pay because of, or in connection with, the ownership, operation, repair and maintenance of the Premises, including but not limited to: the maintenance and repair of the landscaping, parking, sidewalks and roadway facilities and retaining walls located in or on the Property, non-capitalized repairs, line painting, sealing, and removal of snow, ice, trash, rubbish and refuse from parking and roadway areas, parking area and walkway lighting and utilities for the same (if separately metered), repair and replacement of parking area lights (including the repair and replacement of light bulbs and poles) and walkway lights. 

 

Operating Expenses shall include, but not be limited to, all expenses incurred by Landlord in connection with the Landlord Ground Lease, including, but not limited to, the expenses associated with any detention pond utilized by the Premises.  Subject in all respects to the Landlord’s Construction Warranties (as defined in Section 7 below) and any warranties referred to in the Work Letter, Operating Expenses shall include Building-related maintenance, repair, cleaning, snow and ice removal, planting, replanting, landscaping, painting and power washing of exterior walls, tuck-pointing of exterior walls, glass panel sealing, exterior security lights and utilities for the same (if separately metered), gutters, downspouts, minor roof repair and maintenance and repair of lawn sprinkler systems, water and sewage charges for Building maintenance or operation (if separately metered), worker's compensation insurance, wages, unemployment taxes, social security taxes, employee benefits, personal property taxes, fees for required licenses and permits, supplies, reasonable depreciation of equipment, and a property management fee equal to two percent (2%) of the Base Rent payable by Tenant during any calendar year.  Operating Expenses shall further include amortization of the costs of capital expenditures and reasonable financing charges for (a) items that are primarily for the purpose of reducing or avoiding increases in Operating Expenses in Landlord’s good faith estimate, (b) replacing, modifying and/or adding improvements or equipment mandated by any Applicable Laws enacted or which take effect after the date of this Lease and any repairs, disposals or removals necessitated thereby (including, but not limited to, the cost of complying with Applicable Laws), or (c) any other cost or expense necessary to carry out Landlord’s maintenance, repair, replacement and other obligations under this Lease; provided, however, that the cost of any such permitted capital expenditure shall be amortized on a straight line basis, at a rate of six percent (6%), over the GAAP useful life thereof, and Landlord shall only pass through the annual amount stemming from such amortization.

 

Notwithstanding the foregoing, Operating Expenses shall not include any of the following expenses:  

 

	
 
	
(i)
	
costs for which Landlord is entitled to be reimbursed by a third-party (including, without limitation, by Ground Lessor or any insurer, tenant or condemnor) and is actually reimbursed by such third-party;

 

	
 
	
(ii)
	
costs incurred in connection with the sale, financing or refinancing (or attempted sale, financing or refinancing) of the Property or any other portion of the Park including, without limitation, commissions, marketing costs, interest, principal, points and fees on debts or amortization on any mortgage or mortgages or any other debt instrument encumbering the Property or any other portion of the Park or planned to encumber the Property or any other portion of the Park;

 

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(iii)
	
legal fees, accounting expenses, leasing commissions, allowances, buy-out amounts, tenant improvement costs, advertising expenses, promotional expenses, any management fee in excess of the amount set forth in the first paragraph of this Section 4.3 above, and other costs of a similar nature incurred in the leasing of space at the Property or elsewhere at the Park;

 

	
 
	
(iv)
	
ground rent or any other payments paid under any present or future ground or underlying lease (including but not limited to the Landlord Ground Lease) and/or grant affecting the Park, Property and/or the Premises (other than payments which, independent of such ground or underlying lease, would constitute an Operating Expense hereunder);

 

	
 
	
(v)
	
depreciation on any aspect or component of the Premises other than as expressly provided in this Section 4.3;

 

	
 
	
(vi)
	
legal fees arising out of disputes or negotiations with any tenant, if applicable;

 

	
 
	
(vii)
	
costs incurred due to a breach of this Lease by Landlord or any violation of any Applicable Laws by Landlord, unless directly related to Tenant’s use of the Premises;

 

	
 
	
(viii)
	
costs arising from the presence of any Hazardous Material or violation of Environmental Laws as of or prior to the Lease Commencement Date or otherwise caused by any party other than Tenant or any of Tenant’s Agents;

 

	
 
	
(ix)
	
costs for any structural or foundation repair or replacement that is not a capital repair or replacement pursuant to the first paragraph of this Section 4.3 above;

 

	
 
	
(x)
	
costs of roof replacement that is not a capital replacement pursuant to the first paragraph of this Section 4.3 above;

 

	
 
	
(xi)
	
tap-in fees, impact fees or fees or charges or which Landlord is solely responsible under this Lease;

 

	
 
	
(xii)
	
costs related to Landlord’s Work or the satisfaction of Landlord’s Construction Warranties;

 

	
 
	
(xiii)
	
costs incurred in connection with casualty or condemnation repairs or restorations; and/or

 

	
 
	
(xiv) 
	
should Landlord fail to maintain the insurance coverages required by this Lease, costs that have not been reimbursed to Landlord but would have been reimbursed to Landlord by an insurance provider had Landlord maintained the insurance coverages required by this Lease.

	
 
	
4.4.
	
Taxes

"Taxes" shall mean all taxes, fees, service payments and assessments levied upon the Premises and its appurtenances and upon the real property upon which the same are constructed, but shall not include: (a) any income, occupational, franchise, estate, inheritance or other taxes which shall not be denoted specifically as real estate taxes; or (b) any taxes applicable to a period of time before or after the Lease Term.  If at any time a tax or excise on rents, or other tax, however described, is levied or assessed against Landlord on account of the rent reserved hereunder, the same shall be included within the terms "Taxes" for the purposes hereof.  Taxes shall also include all reasonable costs and expenses incurred by Landlord in seeking a reduction of any taxes and assessments.  Tenant will pay all Taxes incurred by Landlord with respect to the Property.  Tenant shall have the right to appeal the assessed value of the Property and/or the Building throughout the Lease Term, at Tenant’s sole cost and expense.  Tenant may initiate proceedings to contest any Taxes.  If notice of any increased assessment relative to the Property or the Building is sent to or received by Landlord, Landlord shall immediately, but no later than thirty (30) days after its receipt, forward the notice to Tenant at both of the addresses set forth in Section 1.4 of this Lease.  If required by Applicable Law, Landlord shall join in any such proceedings initiated by Tenant, provided that Tenant shall pay all costs and expenses, charges, interest and penalties in connection therewith, including reasonable costs and expenses incurred by Landlord.  Tenant shall continue to reimburse Landlord under this Section for all Taxes which Landlord is or becomes obligated to pay during the pendency of any such proceedings.  Upon conclusion of such proceedings, Tenant shall be entitled to a credit for Tenant’s share of any Taxes refunded to Landlord as a result of any such proceedings.

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4.5.
	
Insurance

“Landlord’s Insurance” shall mean all premiums for fire and extended coverage, liability and property damage insurance maintained with respect to the Premises by Landlord pursuant to Section 12.2 below.  Notwithstanding the foregoing provisions, for each calendar year during the Lease Term, Tenant shall reimburse Landlord for Landlord’s Insurance premiums with respect to the Premises for such calendar year, which shall be paid in accordance with Section 12.2.  Tenant’s payment obligation for Landlord’s Insurance shall be conditioned upon Landlord’s delivery to Tenant of a copy of Landlord’s Insurance policies’ respective declaration pages documenting the type, amount and cost of Landlord’s Insurance being provided (broken out on a per location basis, as and to the extent necessary), and proof of payment for premiums due thereon.

	
 
	
4.6.
	
Tenant’s Audit Rights

(a)Tenant shall have the right, upon not less than thirty (30) days' written notice to Landlord, and not more than one time each calendar year, to audit at Tenant's cost, Landlord's books and records with respect to Operating Expenses, Taxes and/or Landlord’s Insurance for any given calendar year.  Landlord shall cooperate with Tenant in providing Tenant reasonable access to its books and records at the office where Landlord maintains its records of Operating Expenses, Taxes and/or Landlord’s Insurance (or shall provide such books and records to Tenant electronically, at Tenant’s option) during normal business hours for this purpose, upon at least thirty (30) days’ prior written notice delivered to Landlord.  Tenant shall pay the reasonable fees and expenses related to such audit, unless the audit determines that Landlord overstated Operating Expenses, Taxes and/or Landlord’s Insurance by more than four percent (4%), in which case Landlord, within thirty (30) days after demand from Tenant, shall pay such fees and expenses.

 

(b)In the event that any audit discloses an underpayment of Operating Expenses, Taxes and/or Landlord’s Insurance by Tenant, then Tenant, within thirty (30) days of such audit, shall remit the amount of the underpayment to Landlord.  In the event that any such audit discloses an overpayment by Tenant, then Tenant shall provide Landlord with a copy of such audit together with written request for Landlord to reimburse Tenant for such overpayment (together, a “True-Up Request”).  Landlord shall, within thirty (30) days of receiving any such True-Up Request from Tenant, either (i) remit the amount of overpayment to Tenant, or (ii) notify Tenant in writing (“Contest Notice”) of its election to contest the audit results set forth in such True-Up Request in accordance with Section 4.6(c) below.

 

(c)If Landlord timely delivers any Contest Notice in accordance with Section 4.6(b) above, Landlord and Tenant shall thereafter diligently and in good faith attempt to amicably determine the appropriate payments related to Operating Expenses, Taxes and/or Landlord’s Insurance with respect to the year for which Tenant has submitted a True-Up Request, for a period of thirty (30) days after Landlord’s delivery of such Contest Notice.  If, despite the parties’ diligent and good faith efforts, Landlord and Tenant have not reached agreement with respect to such matters within the aforementioned 30-day period, Landlord and Tenant shall thereafter proceed to a baseball-style arbitration, wherein Landlord and Tenant shall apply to the American Arbitration Association for the designation of a qualified third-party arbitrator (“Arbitrator”).  Within ten (10) days of the designation of the Arbitrator, Landlord and Tenant shall each submit a written proposal to the Arbitrator setting forth its calculation of the applicable Operating Expense, Taxes and/or Landlord’s Insurance true-up for the designated calendar year, as well as its calculation methodology for determining such Operating Expenses, Taxes and/or Landlord’s Insurance.  The Arbitrator shall select either the Landlord’s or the Tenant’s proposed calculation without modification.  The Arbitrator’s selection shall be final and binding on both Landlord and Tenant.  The fees of the Arbitrator, and any costs associated with applying the American Arbitration Association for designation of the Arbitrator, shall be equally split by Landlord and Tenant.  All notices required to be delivered pursuant to this Section shall be delivered in accordance with the notice requirements set forth in Section 27 below.

 

(d)If Landlord fails to remit the entire amount of any such overpayment to Tenant within thirty (30) days after the date such overpayment has either been deemed accepted by Landlord pursuant to Section 4.6(b) above or finally determined pursuant to Section 4.6(c) above, then Tenant may offset any such past-due amount set forth in such audit against the Base Rent payment(s) next coming due, until such past-due amount has been fully recouped by Tenant.

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4.7.
	
Utilities 

Beginning on the Lease Commencement Date and continuing during the Lease Term, Tenant shall transfer all utility service to Tenant’s name and Tenant shall be solely responsible for and shall promptly pay all charges for telephone service, electricity, gas, water, sewage and all other utilities used upon or furnished to the Premises and separately metered.  To the extent that any utility services supplied to the Premises are billed directly to Landlord, Tenant shall reimburse Landlord, within thirty (30) days after Landlord’s delivery to Tenant of an invoice therefor, for that portion of such utility services that is attributable directly to Tenant’s use of the particular utility service.  In no event shall Landlord be liable in damages or otherwise for any interruption or failure in the supply of such utilities, or if either the quantity or character of such utilities supplied is changed or is no longer available or suitable for Tenant's requirements.  

	
 
	
4.8.
	
Taxes – Other

Tenant shall pay before delinquency any and all taxes and assessments, licenses, sales, business, occupation or other taxes, fees or charges levied, assessed or imposed upon its business operations in the Premises during the Lease Term.  Tenant shall pay before delinquency any and all taxes and assessments levied, assessed or imposed upon its trade fixtures, leasehold improvements, merchandise and other personal property in, on or upon the Premises.  In the event any taxes, fees or charges referred to in this Section shall be assessed, levied or imposed upon or with the business or property of Landlord, such assessment, fees or charges shall be paid by Tenant to Landlord within thirty (30) days after receipt of Landlord's written request for such payment (which request shall be accompanied by a detailed invoice therefor).

	
 
	
4.9.
	
Renewal Rent

If Landlord and Tenant cannot agree on the Base Rent for a Renewal Term within thirty (30) days after negotiations begin, the parties agree to enter into a “Baseball Arbitration” process in which each will appoint an MAI real estate appraiser whose instruction shall be to agree to the accurate calculation of CPI Increases (as defined in Section 1.8 above).  Thereafter, if those two (2) appraisers are unable to agree within thirty (30) days on the applicable CPI Increases to be utilized for the calculation of Base Rent for any applicable Renewal Term, then they will jointly appoint a third appraiser, subject to the approval of Landlord and Tenant. The value determined by the third appraiser according to the factors set forth in Section 1.8 will be binding on Landlord and Tenant, unless it is either lower or higher than the lower or higher respectively of the other two (2) appraisals, in which case, the middle of the three (3) appraisals will control.  If appraisals are required, Landlord and Tenant will share the cost of all appraisals.  In no event shall the appraisal process exceed ninety (90) days after Tenant’s initial written notice to Landlord of Tenant’s election to renew.  

	
5.
	
SECURITY DEPOSIT

Within three (3) business days after the execution of this Lease, Tenant shall pay to Landlord the Security Deposit as set forth in Section 1.14 as security for the performance of Tenant’s obligations under this Lease, which Security Deposit shall be subject to scheduled decreases in accordance with Section 1.14.  In the event of a Tenant Default under this Lease, Landlord may apply such part of the Security Deposit as may be necessary to cure such Tenant Default.  Should Landlord so apply all or part of the Security Deposit, Landlord shall notify Tenant of such application at least ten (10) days in advance, and Tenant shall, within fifteen (15) days after receipt of Landlord’s written demand, redeposit with Landlord an amount equal to that so applied so that Landlord will have the full Security Deposit (less any amounts previously returned in accordance with Section 1.14 above) on hand.  Within thirty (30) days after any reduction set forth in Section 1.14 above, and provided a Tenant Default does not then exist, Landlord shall refund to Tenant the applicable portion of the Security Deposit.  In the event Landlord fails to refund to Tenant such applicable portion of the Security Deposit within such 30-day period and no dispute exists between Landlord and Tenant with regard to any Tenant Default and/or the Security Deposit, Tenant may elect to offset an amount equal to the applicable portion of the Security Deposit to be returned to Tenant against the next installment(s) of Base Rent owed hereunder, until such amount is fully recouped by Tenant.  In the event of a sale of the Premises, Landlord shall transfer the Security Deposit to the purchaser.  Following Landlord’s written notice to Tenant accompanied by documentation signed by Landlord and such purchaser evidencing that the Lease and Security Deposit have been assigned to and assumed by any such purchaser in writing, Landlord shall thereafter be released by Tenant from any liability for the return of the Security Deposit.

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6.USE AND OCCUPANCY

	
 
	
6.1.
	
Use of Premises

The Premises are to be used solely for the purposes set forth in Section 1.15 of this Lease and for no other business or purpose without the prior written consent of Landlord.  Tenant shall not do or permit to be done in or about the Premises anything which is illegal or unlawful.  Other than with respect to Landlord’s Work, Tenant shall obtain all permits, licenses, certificates or other authorizations and any renewals, extensions or continuances of the same required in connection with the lawful and proper use of the Premises and shall pay when due all taxes upon its merchandise, stock, fixtures, equipment and leasehold improvements in the Premises.  Neither a failure on the part of Tenant to procure such permits, licenses, certificates or other authorizations, nor the revocation of the same, shall in any way affect the liability of Tenant for payment of Rent herein reserved or the performance or observance of any of the covenants or conditions herein contained on Tenant's part to be performed and observed.  Tenant shall (and shall cause its affiliates and their respective employees to) observe the Rules and Regulations attached as Exhibit D or such other reasonable rules and regulations applicable to the Premises, as the same may be imposed by Landlord from time to time, but only to the extent that Landlord has provided a written copy of same to tenant at least thirty (30) days in advance.  Tenant shall comply with all Applicable Laws applicable to the use and occupancy of the Premises and Property.  Without limiting the generality of the foregoing, except as otherwise expressly permitted under the terms of this Lease, Tenant shall not display anything outside of the Premises nor operate any loud speakers without the specific written consent of Landlord.

 

Tenant shall be permitted to install, at Tenant’s sole cost and expense, access control equipment to limit and monitor access to the Premises during normal business hours and after-hours, provided, however, that Landlord shall always retain the ability to access the Premises in the case of an emergency situation. 

	
 
	
6.2.
	
Continuous Occupancy

Tenant shall have the right to vacate the Premises so long as Tenant continues to pay Rent as required hereunder and maintains the Premises in good condition as described in Section 8.2 herein.

 

	
7.
	
LANDLORD’S WORK

 

(a)Landlord shall perform, or cause to be performed, the work contemplated by Exhibits B, B-1 and B-2 (collectively, “Landlord’s Work”) at Landlord’s sole expense (except as otherwise expressly set forth in the Work Letter), and in compliance with all Applicable Laws.  Landlord shall be responsible, at its sole cost and expense, for obtaining all necessary permits for the performance of Landlord’s Work in compliance with all Applicable Laws.  Landlord and Tenant shall cooperate with each other in good faith to ensure that mutual access is coordinated between their agents or contractors in a reasonable manner to allow each to complete its Landlord’s Work and Tenant’s Work, respectively, without interference or delay.

 

(b)Landlord hereby warrants the Landlord’s Work as follows (collectively, “Landlord’s Construction Warranties”): (i) For a period of one (1) year beginning on the Lease Commencement Date, Landlord, at its sole cost and expense, shall warrant the Landlord’s Work has been constructed in a good and workmanlike manner, in compliance with the plans and specifications attached hereto and made a part hereof as Exhibit B-1 (“Plans and Specifications”), and in accordance with the Schedule attached hereto and made a part hereof as Exhibit B-2 (“Schedule”) and the same will be free of all defects; and (ii) For a period of eighteen (18) months beginning on the Lease Commencement Date, Landlord, at its sole cost and expense, shall warrant the paved areas of the Property from any defects in construction.  Notwithstanding anything to the contrary contained herein, Landlord’s Construction Warranties will not include any maintenance which is the responsibility of the Tenant as set forth in Section 8.2 below.  

 

(c)Unless otherwise agreed to in writing by Tenant, it is the Landlord’s responsibility to secure soil borings, topographical surveys, geotechnical and foundation recommendations and tests from licensed local professionals, including surveyors and engineers, as shall be necessary or appropriate to construct Landlord’s Work, using the best engineering practices and conforming to all requirements of Applicable Laws.

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8.
	
REPAIRS

	
 
	
8.1.
	
Landlord Responsibility

Landlord, at Landlord’s sole cost and expense, but subject to the provisions of Section 4.3 above and the Work Letter, shall keep or cause to be kept in as good repair as same are in upon Substantial Completion of Landlord’s Work or, with respect to the floor slab, upon Substantial Completion of Tenant’s Work (which may include the replacement of): the foundations, the roof and the structural soundness of the floors, and the exterior walls (excluding the interior surface of the exterior walls and excluding the exterior and interior portions of all windows, doors, plate glass and showcase); the exterior water, sewage, gas and electrical services up to the point of entry to the Building; the exterior areas of the Property including, without limitation, the sidewalks and parking areas; the base building heating and air conditioning systems (but not specialized HVAC systems installed by Tenant in support of specific business operations within the Building) whether located inside or outside of the Building, except for ordinary maintenance and repairs which shall be the responsibility of Tenant, as well as wiring and cabling servicing the Building (but only to the point where such cabling enters and connects to the Building, and not from such point of connection to the Tenant’s equipment); and Landlord shall make all repairs and restorations made necessary by fire or other peril covered by the standard extended coverage endorsement on fire insurance policies as further described in Section 12; provided, however, that Tenant shall reimburse Landlord upon demand for the cost of repairing any damage to the Premises or Building caused by the negligence or the willful misconduct of Tenant, its employees, agents or invitees.  Landlord shall cooperate with Tenant in connection with enforcing all third-party warranties on construction, materials and/or equipment, for the benefit of Tenant.  Notwithstanding the foregoing, (i) Landlord shall only be responsible for the portion of the floor slab installed by Landlord, and (ii) Landlord shall not be responsible for the repairs to the floor slab caused by Tenant or anyone acting on Tenant’s behalf.

	
 
	
8.2.
	
Tenant Responsibility

Except (a) to the extent covered pursuant to either of Landlord’s Construction Warranties or any insurance policy required to be maintained by Landlord pursuant to the terms of this Lease, or (b) repairs caused by the negligence or willful misconduct by Landlord, any of Landlord’s affiliates, or any of their respective agents, employees, invitees or contractors: Tenant shall, in all other respects, keep or cause to be kept in good repair and in a neat, clean and tenantable condition, normal wear, tear and casualty excepted, the interior of the Premises, including but not limited to the interior surface of the exterior walls, the exterior and interior portions of all windows, doors, plate glass and showcases, and all plumbing, lighting fixtures, pipes and equipment, floor coverings, ceilings, walls and plasterings.  Tenant shall provide ordinary maintenance for the heating and air conditioning systems and provide for maintenance service contracts on said systems which are reasonably satisfactory to Landlord; and to make all other repairs not specifically required to be made by Landlord under Section 8.1.  Landlord represents that, as of the Lease Commencement Date, the mechanical systems of the Premises installed by Landlord as part of Landlord’s Work shall be in good working condition and otherwise meet the standards set forth in the Work Letter.

	
9.
	
ACCESS AND CONFIDENTIALITY

	
 
	
9.1.
	
Landlord Access

Subject to Landlord’s Entrance Requirements (as defined below), Landlord has the right to enter the Premises periodically and shall have access to the Premises at reasonable hours for inspection or in connection with the improvement or repair of utility lines and related systems and HVAC systems or equipment serving the Premises.  As used herein, the phrase “Landlord’s Entrance Requirements” means: except in case of emergency, (a) Landlord shall provide Tenant with not less than 24 hours’ notice prior to any entrance by Landlord, (b) Landlord shall not materially interfere with Tenant’s operations on the Premises without first obtaining Tenant’s written consent, (c) Landlord shall have a Tenant representative escort Landlord or its representative(s) or agent(s) while in the Premises, and (d) at all times Landlord shall follow Tenant’s protocols established by Tenant to facilitate the physical safety of those in the Premises and to protect any proprietary information or trade secrets related to Tenant’s operations.  In all events Landlord shall use commercially reasonable best efforts to minimize any disruption to Tenant’s operations on the Premises.  All entrances of Landlord and any of its representatives and/or agents shall be subject to Landlord’s Entrance Requirements.

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9.2.
	
Tenant Access

Tenant shall have access to the Premises twenty-four (24) hours a day, seven (7) days a week

	
10.
	
ALTERATIONS TO PREMISES; SIGNS

(a)Material Structural Alterations.  Tenant shall not make any alterations, additions or improvements to the Premises which materially or adversely impact the roof or structure of the Building (each, a “Material Structural Alteration”) without first obtaining Landlord's written consent in accordance with the following:  Tenant shall notify Landlord of any Material Structural Alteration that Tenant wishes to complete (each, a “Alteration Notice”).  Landlord shall have ten (10) business days to review any such Alteration Notice and give consent to such Material Structural Alteration, which consent shall not be unreasonably withheld, conditioned or delayed.  If Landlord fails to provide Tenant with a written response to any Alteration Notice within the aforementioned 10-business day period, Landlord shall be deemed to have provided its consent thereto, Tenant may thereafter proceed with such Material Structural Alteration, and Landlord shall not be permitted to raise subsequent issues or requirements in respect of the Material Structural Alteration proposed by such Alteration Notice.  Landlord shall be deemed to have acted reasonably in withholding consent to an Alteration Notice only if the proposed Material Structural Alteration would: (i) void, in whole or in part, any warranty pertaining to any item for which Landlord is responsible to maintain pursuant to Section 8.1 above, as reasonably determined by Landlord in good faith and substantiated in writing to Tenant (unless Tenant uses Landlord’s contractor for such work, in which case this clause (i) shall not be a valid basis for Landlord to withhold, condition or delay consent); (ii) materially or adversely impact the structural soundness of the Building, as determined by Landlord’s structural engineer and substantiated in writing to Tenant; or (iii) violate any Applicable Law.

 

(b)All Other Alterations.  Except as otherwise expressly set forth in Section 10(a) above, Tenant, without Landlord’s prior consent and at its sole cost and expense, shall have the right, but shall not be obligated, prior to and during the Lease Term, to improve, alter and renovate the Premises in any manner which Tenant deems necessary or desirable to adapt the same for the conduct of its business operations, including, without limitation, the following items (which the parties agree are not Material Structural Alterations): painting; decorating; redecorating; installing non-load-bearing partitions, pass-through windows, counters, shelving, floor coverings, wall coverings, drop ceilings and/or light fixtures.  Tenant shall be responsible for ensuring ADA compliance within the Premises.  The parties further acknowledge and agree that Tenant’s business needs at the Premises may necessitate or otherwise make desirable the installation of additional HVAC units, installation of one or more generator(s), increasing electrical service, modifying plumbing service, and/or installing one or more new clean room(s).  Landlord hereby acknowledges and agrees that Tenant shall not be required to seek or obtain Landlord’s consent with respect to, nor shall Landlord have any rights in respect of evaluating, any of the items enumerated in the previous sentence, so long as they would not materially or adversely impact the roof or structure of the Building.

 

(c)Additional Requirements re: Alterations.  Tenant shall perform (or cause to be performed) all alterations, additions and improvements to the Premises (whether a Material Structural Alteration or otherwise) in a good and workmanlike manner, and otherwise in accordance with Applicable Laws.  All alterations, additions and improvements made by Tenant, whether or not such changes were approved by Landlord, shall become the property of Landlord upon the making thereof and shall be subject to the terms of Section 19.1 herein upon the expiration or earlier termination of this Lease.  Except as otherwise expressly set forth in Section 19.2 below, Tenant shall not be required to remove any alterations, additions or improvements at the expiration or earlier termination of this Lease, except for the following “Specialized Alterations”: (i) Tenant’s trade fixtures; (ii) Tenant’s interior and exterior signage; (iii) alterations which penetrate floor slabs by more than two (2) inches, or otherwise adversely affect any of the MEP systems serving the Building or any structural aspect of the Building; (iv) alterations which are likely to adversely affect the safety of the Building and/or future occupants; (v) alterations that are prohibited by any ground lease, mortgage, deed or other instrument encumbering the Premises; (vi) safes or vaults or other installations which would be unusually difficult or expensive to remove; and (vii) any other alteration, addition or improvement that Landlord notifies Tenant in writing, prior to the installation thereof, must be removed at the expiration or earlier termination of this Lease.  Any damage to the Premises in connection with the making of alterations, additions and improvements by Tenant or in connection with the placement, direction, maintenance, painting or removal of any signs on the Premises or Property shall be repaired by Tenant at Tenant’s sole cost and expense.

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(d)Signs.  Notwithstanding the foregoing, Tenant shall be permitted to install Tenant’s any signage it desires on the Premises, whether on the interior or outside of the Building (but not outside the Premises), provided (i) such signage shall comply in all respects with the requirements of Applicable Law and (ii) the size, location, materials, method of installation and method of removal of such signage shall be approved in advance by Landlord, whose approval shall not be unreasonably withheld, delayed or conditioned.  Electricity for such signage shall be separately metered to the Premises and paid by Tenant.  Upon termination of this Lease, Tenant shall be responsible for the removal of any Tenant signage and Tenant shall responsible for the cost to repair any damage as a result of the removal of Tenant signage, if applicable.

	
11.
	
DAMAGE OR DESTRUCTION

	
 
	
11.1.
	
Damage or Destruction

If the Building is damaged or destroyed by fire, earthquake, casualty or other risk required to be insured against pursuant to Section 12.2 below or as otherwise required by Applicable Law, Tenant shall give Landlord prompt notice of the occurrence of any such event.  Within thirty (30) days after the date Landlord receives notice from Tenant of the applicable casualty event, Landlord shall prepare a written estimate of the time period required to repair and restore the damaged portions of the Core and Shell of the Building (“Estimate”) and deliver such Estimate to Tenant.  Unless terminated pursuant to Section 11.2 below, this Lease shall remain in full force and effect, and Landlord, at its sole cost and expense, shall promptly repair the damage or destruction related to the Core and Shell of the Building and restore the Core and Shell of the Building to substantially that condition existing immediately prior to such damage or destruction.  If Tenant remains in occupancy of the Premises, Landlord shall exercise such repair and restoration efforts in a manner so as not to interfere unreasonably with the use and occupancy of the Premises by Tenant for the conduct of its business operations.  Until the completion of Landlord’s repair and restoration pursuant to this Section, Tenant’s obligation to pay Rent and other amounts payable by Tenant hereunder shall be abated as of the date of the damage or destruction in proportion to the extent that the value of the Premises for the use and occupancy thereof by Tenant for the conduct of its business operations shall be reduced, in Tenant’s reasonable judgment.  As used herein, the term “Core and Shell” means all items of Landlord’s Work, all external walls or the Building, the roof and roof membrane of the Building, all  utility lines serving the Building (stubbed into the Building (whether up through the slab or through the walls or roof of the Building), but not any lines within the interior of the Building), and the floor slab within the Building.

	
 
	
11.2.
	
Rights of Termination 

Landlord’s and Tenant’s respective rights to terminate this Lease pursuant to events described in Section 11.1 above shall be governed as follows:

(a)If the Premises shall be damaged or destroyed to the extent of more than fifty percent (50%) of the full replacement cost of the Core and Shell of the Building, and the repair and restoration of any such damage or destruction shall not be completed within 180 days after the date of the damage or destruction, then either party may elect to terminate this Lease by delivery of notice to the other party within thirty (30) days after the date of such damage or destruction.

(b)If Landlord fails to deliver an Estimate within the 30-day period set forth in Section 11.1 above, Tenant may elect to terminate this Lease by delivery of notice to Landlord within thirty (30) days after the expiration of the 30-day period set forth in Section 11.1 above; provided, however, that if Landlord provides an Estimate after such 30-day period set forth in Section 11.1 above but before Tenant exercises its right to terminate hereunder, Tenant shall not have the right to terminate this Lease pursuant to this Section 11.2(b).

(c)Upon delivery of any notice pursuant to Section 11.2(a) or Section 11.2(b) above, this Lease shall terminate as of the date of the damage or destruction unless otherwise provided in such notice, and Tenant and Landlord shall have no further liabilities or obligations hereunder other than Tenant’s obligation to pay Rent accrued hereunder as of the date of such termination.

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12.
	
INDEMNITY AND INSURANCE

	
 
	
12.1.
	
Indemnity

(a)To the fullest extent permitted by Applicable Law, and subject in all respects to Section 13 below, Tenant shall defend, indemnify and hold harmless the Landlord from and against all claims, losses, costs, expenses, fines, penalties including attorneys’ fees, court costs, consultant and expert expenses, arising out of or relating to any act, omission, breach of any provision of this Lease, or negligence or intentional act of Tenant or any of Tenant’s Agents or subtenants except to the extent that any of the foregoing is attributed to the negligence or intentional act of Landlord or any of its affiliates or any of their respective agents, employees, invitees or contractors.  

 

(b)To the fullest extent permitted by Applicable Law, and subject in all respects to Section 13 below, Landlord shall defend, indemnify and hold harmless the Tenant from and against all claims, losses, costs, expenses, fines, penalties including attorneys’ fees, court costs, consultant and expert expenses, arising out of or relating to any act, omission, breach of any provision of this Lease, or negligence or intentional act of Landlord or any of Landlord’s licensees, agents, employees, invitees or contractors except to the extent that any of the foregoing is attributed to the negligence or intentional act of Tenant or any of its affiliates or any of Tenant’s Agents.  

 

(c)The indemnification obligations created by this Section shall be expressly conditioned upon the indemnified party (i) delivering to the indemnifying party prompt notice of any event giving rise to such indemnification obligation and (ii) providing the indemnifying party the opportunity to defend itself from and against any losses which are the subject of such indemnification obligation.  Landlord and Tenant acknowledge and agree that the indemnification obligations of this Section shall survive the expiration or earlier termination of this Lease.

	
 
	
12.2.
	
Landlord’s Insurance

Landlord shall maintain throughout the Lease Term the following types of insurance:

 

	
a.
	
Commercial General Liability Insurance covering the Premises with limits of no less than $1,000,000 per occurrence and $2,000,000 aggregate for personal injury, bodily injury, sickness or death or for damage or destruction of property to the extent directly related to the Premises.  

	
b.
	
All Risk or Special Peril property insurance covering the full replacement cost value of the Premises and the potential loss of rental income for at least a six-month time period. 

Such insurance policies shall be issued by insurance companies authorized to do business in the Commonwealth of Pennsylvania, and each shall be rated at least A- by AM Best.  Such insurance coverages shall name Tenant as additional insured.  Landlord’s requirements to provide the aforementioned insurance in no way limits Landlord’s obligations to indemnify the Tenant pursuant to the indemnity provisions expressly set forth in this Lease.  Landlord shall furnish to Tenant, not less than fifteen (15) days before the date the insurance is to be obtained by Landlord hereunder, and thereafter at least fifteen (15) days before the expiration of each policy, evidence of insurance (on ACORD 25, ACORD 28 or other form reasonably acceptable to Tenant), showing Tenant as an additional insured thereunder, and evidence of payment of all premiums and other expenses owed in connection with said insurance policies.

	
 
	
12.3.
	
Tenant’s Insurance 

Tenant shall, at its own cost and expense, maintain throughout the Lease Term the following types of insurance:

 

(a)Automobile Liability including coverage for all owned, leased, hired and non-owned vehicles with a minimum limit of One Million and xx/100 Dollars ($1,000,000.00) per accident including Landlord, Landlord’s lender(s), and Al. Neyer, LLC, as additional insureds.

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(b)Commercial General Liability including Contractual Liability, Personal Injury Liability and Products/Completed Operations Liability with minimum limits of One Million and xx/100 Dollars ($1,000,000.00) per Occurrence, Three Million and xx/100 Dollars ($3,000,000.00) General Aggregate.  The required limit may be provided in a single policy or in combination with an Umbrella or Excess Liability Policy.  Landlord, Landlord’s lender(s) and Al. Neyer, LLC shall be included as additional insureds and such insurance shall be primary and non-contributing with any similar insurance available to the Landlord.

(c)All Risk or Special Peril property insurance covering the full replacement cost value of Tenant’s leasehold improvements and other property including property of others in or about the Premises and Tenant’s potential loss of income as a result of fire or other casualty.  Such insurance shall include the Landlord, Landlord’s lender(s) and Al. Neyer, LLC as additional insureds with respect to leasehold improvements made to the Property.

(d)Statutory Workers’ Compensation to comply with the laws of the Commonwealth of Pennsylvania.  Coverage shall also include Employers’ Liability Insurance with minimum limits of One Million and xx/100 Dollars ($1,000,000.00) per Occurrence for Bodily Injury, One Million and xx/100 Dollars ($1,000,000.00) per Occurrence for Bodily Injury by Disease and One Million and xx/100 Dollars ($1,000,000.00) Policy Limit for Disease.  The policy shall be endorsed to waive subrogation rights against the Landlord and Al. Neyer, LLC.

 

A certificate of insurance as evidence of the required coverage shall be provided to the Landlord prior to occupancy of the Premises.  At least ten (10) days prior to the expiration of any required coverage, a new certificate shall be provided to the Landlord.  The policies shall be endorsed to provide thirty (30) days prior written notice of cancellation, non-renewal or material change of any of the required coverages.  Such insurance shall be provided by insurance companies authorized to do business in the Commonwealth of Pennsylvania. The requirements to provide minimum amount of insurance in no way limit the liability of the Tenant for its obligations to indemnify the Landlord and Al. Neyer, LLC pursuant to the indemnity provisions expressly set forth in this this Lease.

	
13.
	
WAIVER OF SUBROGATION

Landlord and Tenant shall have no liability to one another, or to any insurer, by way of subrogation or otherwise, on account of any loss or damage to their respective property, regardless of whether such loss or damage is caused by the negligence of Landlord or Tenant, arising out of any of the perils or casualties insured against by the property insurance policies carried, or required to be carried, by the parties pursuant to this Lease.  The insurance policies obtained by Landlord and Tenant pursuant to this Lease shall permit waivers of subrogation that the insurer may otherwise have against the non-insuring party.

	
14.
	
LIENS

Tenant will keep the Premises and the Property free and clear of all mechanics' and materialmen's liens and other liens on account of work done for or by Tenant or persons claiming under it. Any such liens filed against the Premises or the Property shall be discharged by Tenant at its expense within thirty (30) days after Landlord’s notice to Tenant of either a filing thereof or within thirty (30) days of the actual filing if prior to the filing Landlord notifies Tenant that it has received a notice of intent to file a mechanics’ lien from Tenant’s contractor or any of its subcontractors.   Should any such lien be filed against the Premises or the Property, and Tenant has filed to discharge the same in accordance with the foregoing, Landlord may, upon prior written notice to Tenant, elect to obtain the release of such lien and any sums expended by Landlord shall be immediately repaid to Landlord by Tenant together with interest at the rate of eighteen percent (18%) per annum.

	
15.
	
ASSIGNMENT, SUBLETTING, MORTGAGING

(a)Except as otherwise expressly set forth herein, Tenant shall not voluntarily, involuntarily or by operation of law, assign, transfer, mortgage or otherwise encumber all or any part of Tenant's interest in this Lease, or sublet the Premises or any part thereof to a third party without first obtaining Landlord's prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), and any attempt to so assign, transfer, mortgage, encumber or sublet to a third party without Landlord's written consent shall be null and void; and if any such 

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assignment, transfer, mortgage or encumbrance is made with the written consent of Landlord, Tenant shall nevertheless remain liable to Landlord for payment of Rent and any other charges according to the terms hereof and for due performance of all the terms, covenants and conditions of this Lease.  If Tenant is a corporation, then any transfer of this Lease by merger, consolidation, dissolution, sale, acquisition or liquidation or any change in the ownership of, or power to vote the majority of, its outstanding voting stock, or a sale of substantially all of Tenant’s assets, shall constitute an assignment for the purposes of this paragraph and is permitted without consent of Landlord, but Tenant shall endeavor to provide Landlord with notice of such transfer.  If written consent is once given by Landlord to any such assignment or subletting, such consent shall not operate as a waiver of the necessity for obtaining Landlord's written consent to any subsequent assignment or subletting. Any request for Landlord’s consent to any proposed assignment or sublease (other than a permitted assignment) shall be accompanied by an administrative fee in the amount of One Thousand and 00/100 Dollars ($1,000.00), payable by Tenant, which shall be deemed sufficient to cover Landlord’s attorneys’ fees. Said fee shall be due and payable as Additional Rent, whether or not the request is approved.

 

Notwithstanding the foregoing, Tenant shall have the right, without Landlord’s consent but upon prior notice to Landlord to (i) assign this Lease to any affiliate or wholly owned subsidiary with an equal or greater net worth (tested as of the date of such proposed transfer), and/or (ii) sublet all or any portion of the Premises to an affiliate or wholly owned subsidiary.

 

Any profits resulting from a sublet or assignment by Tenant shall be retained 100% by Tenant.

 

(b)If Landlord conveys the Premises during the Lease Term, Landlord shall inform Tenant by notice given in accordance with Section 27 hereof. Tenant shall have no obligation to recognize a successor landlord unless and until such successor landlord shall have provided Tenant with a copy of the assignment and assumption of lease agreement in which the successor landlord assumes the obligations of the Landlord under the Lease.  Tenant shall have no obligation to pay to the successor landlord Rent or any other amounts coming due under the Lease unless and until such successor landlord shall have provided Tenant with a proper notice address and a completed IRS Form W-9, so that Tenant may make the necessary changes to its accounts payable system and other records to effect the new payee.  Landlord hereby agrees to remit to successor landlord any payments made by Tenant to Landlord subsequent to its transfer to the successor landlord but prior to Tenant’s modification of its accounts payable system, and indemnifies Tenant for any such payments made, received by Landlord and not remitted to successor landlord. Landlord hereby covenants to Tenant that it shall not sell all or any portion of the Premises prior to the Lease Commencement Date, other than as expressly contemplated in Section 25 below. 

	
16.
	
PRIORITY OF LEASE

Tenant covenants and agrees, on the terms and conditions provided in this Section, that this Lease shall be subordinate to the lien of any institutional mortgage or deed of trust (“Mortgage”) which may hereafter be made covering the Premises or any portion or portions thereof, provided that each mortgagee or beneficiary shall execute and deliver to Tenant a subordination, non-disturbance and attornment agreement (“SNDA”) substantially in the form attached hereto as Exhibit F, stating (in addition to other reasonable terms, if any) in substance that (a) if no Tenant Default exists hereunder, the right of possession of Tenant to the Premises shall not be affected or disturbed by any mortgagee in the exercise of any of its rights under a Mortgage or the note secured thereby, and any sale of the Premises pursuant to the exercise of any rights and remedies under a Mortgage or otherwise shall be made subject to Tenant’s right of possession to the Premises under this Lease; and (b) Tenant shall attorn to any mortgagee or purchaser at a foreclosure sale (a “Purchaser”) upon acquisition of title to the Premises by a mortgagee or Purchaser and notice to Tenant thereof, and this Lease shall continue in full force and effect between Tenant and such mortgagee or Purchaser.  Upon Tenant’s receipt and approval of the SNDA from a mortgagee or beneficiary from time to time, Tenant covenants and agrees to attorn to such mortgagee or beneficiary upon foreclosure and shall use reasonable efforts to execute the SNDA within thirty (30) days after Landlord’s request.  

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Without limiting the generality of the foregoing, within ten (10) days after the closing of Landlord’s financing on this Lease, but in no event later than the Lease Commencement Date, Landlord shall deliver to Tenant (i) an SNDA executed by Landlord and each mortgagee and beneficiary of each mortgage encumbering the Premises and (ii) a Non Disturbance and Attornment Agreement in the form attached hereto as Exhibit G (“NDA”) executed by Landlord and the Ground Lessor with respect to the Landlord Ground Lease.  If Landlord shall fail to obtain the SNDA or the NDA prior to the expiration of such thirty (30) day period, or if the form thereof shall not be reasonably acceptable to Tenant, then Tenant may deem such failure a Landlord Default (as defined in Section 20.2 below). 

	
17.
	
QUIET ENJOYMENT

Subject to the terms of the Landlord Ground Lease, Landlord covenants and agrees that Tenant shall have the peaceful and quiet possession, use and enjoyment of the Premises and every part thereof (not to be abrogated by any ground lease, mortgage or other matter to which this Lease is or shall become subordinate in accordance with the provisions of Section 16 above) for the conduct of its business operations during the Lease Term, in the whole of the Premises, without hindrance by Landlord or any party whatsoever.

	
18.
	
ESTOPPEL CERTIFICATE

Tenant shall from time to time, but not more often than twice per calendar year execute, acknowledge and deliver to Landlord, its lender(s), ground lessor or a purchaser of the Property, within thirty (30) days of receipt of Landlord’s written request therefor, a statement in writing certifying:  (a) that this Lease is unmodified and in full force and effect (or if there has been any modification hereof that the same is in full force and effect as modified and stating the nature of the modification or modifications); (b) that to the best of its knowledge Landlord is not in default under this Lease (or if any such default exists the specific nature and extent thereof); (c) the date to which Rent and other charges have been paid in advance, if any; and (d) any other information regarding this Lease or Tenant's occupancy of the Premises as required by a commercially reasonable estoppel certificate and reasonably requested by Landlord or its lender(s), ground lessor or a purchaser of the Property.  In the event Tenant fails to deliver such reasonably requested statement or estoppel certificate within thirty (30) days of receipt of such request, any such statement or estoppel certificate previously provided by Landlord in accordance with the above shall be deemed to be correct.

	
19.
	
FIXTURES AND PERSONAL PROPERTY; SURRENDER

	
 
	
19.1.
	
Surrendering of Premises

Upon the expiration or earlier termination of this Lease, Tenant shall surrender the Premises to Landlord in substantially the same condition that the Premises was delivered to Tenant as of the date of Substantial Completion (unless otherwise mutually agreed in writing between Landlord and Tenant) and with the floor slab (including the slab installed by Landlord and the slab installed by Tenant) in good condition and repair, normal wear and tear and casualty excepted; provided, however, Tenant agrees that it shall remove from the Premises (i) all movable fixtures, furniture and equipment as contemplated by Section 19.2 below, and (ii) any Specialized Alterations (whether performed as part of the Tenant’s Work or afterwards) required to be removed pursuant to Section 10 above.

	
 
	
19.2.
	
Removal of Tenant Property

Trade fixtures, furniture and other personal property installed or placed but not affixed in the Premises at the cost of Tenant shall be the property of Tenant unless otherwise specified in this Lease and Tenant shall remove the same prior to the termination of this Lease.  Tenant shall, at its own cost and expense, completely repair any and all damage to the Premises resulting from or caused by such removal.  If Tenant fails to remove all or any of such property, Landlord may, at Landlord's option, retain all or any of such property and title thereto shall thereupon vest in Landlord, or Landlord may remove from the Premises and dispose of in any manner all or any of such property, in which latter event Tenant shall, upon demand, pay to Landlord the actual expense of such removal and disposition and the cost of repair of any and all damage to the Premises resulting from or caused by such removal.

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20.
	
DEFAULT AND REMEDY

	
 
	
20.1.
	
Tenant Default and Remedy

If any one or more of the following events shall occur and be continuing (after the expiration of the applicable notice and cure period), each a “Tenant Default”: (a) Rent and any other charges due under this Lease, or any part thereof, shall at any time be past due in arrears and unpaid for more than ten (10) business days after receiving written notice from Landlord describing such failure, provided, however, Landlord shall not be required to give such written notice more than one (1) time per calendar year before late payment is considered a Tenant Default, or (b) Tenant shall default in the performance of any of the other covenants and agreements of this Lease, and shall fail to remedy such default within thirty (30) days after Tenant has received written notice of such default from Landlord, provided, however, if Tenant exercises good faith diligent efforts within such thirty (30) day period to cure the failure specified in Landlord’s notice, but shall not be able to do so because of Force Majeure, then any such failure shall not be considered to be a Tenant Default, so long as Tenant shall continue to exercise in good faith such diligent efforts to cure such failure and shall do so within a reasonable period of time, or (c) Tenant shall make an assignment for the benefit of its creditors, or (d) Tenant shall file a voluntary petition in bankruptcy, be adjudicated bankrupt or take the benefit of any insolvency act, or (e) Tenant shall be dissolved voluntarily or involuntarily, or (f) the interest of Tenant shall be sold under execution or other legal process, or (g) a receiver or trustee is appointed for the property of Tenant, then, and in any one or more of such events, Landlord, at its option, may do any one or more or all of the following:

	
 
	
(i)
	
Terminate this Lease and re-enter into and upon the Premises and have, repossess, and enjoy the same with all of the improvements then located thereon as if this Lease had not been made, in which event this Lease and everything therein contained on the part of Landlord to be kept and performed shall cease and be utterly void, without prejudice, however, to Landlord's right of action for unpaid Rent and/or breach of this Lease. 

	
 
	
(ii)
	
Without terminating this Lease, to relet all or any part of the Premises upon such terms as Landlord may, from time to time, elect, and apply the net proceeds towards Tenant's obligations hereunder; notwithstanding the foregoing, Tenant agrees, regardless of whether Landlord has relet the Premises, to (A) immediately vacate the Premises upon request from Landlord and (B) pay to Landlord the Rent herein agreed to be paid by Tenant, less the proceeds of reletting, if any, plus Landlord’s documented out-of-pocket cost of tenant improvements, leasing commissions and any and all other reasonable costs related to reletting the Premises.  Landlord shall be obligated in such event to exercise in good faith diligent efforts to mitigate its damages by reletting the Premises for the highest rent reasonably obtainable under the circumstances.

	
 
	
(iii)
	
Charge a late payment fee as expressly contemplated in Section 4.1 above.

	
 
	
(iv)
	
Seek to enjoin such default and/or have the right to invoke any right allowed at law or in equity, by statute or otherwise, as if re-entry, summary proceedings or other specific remedies were not provided for in this Lease.  The rights and remedies of Landlord upon a default by Tenant shall be cumulative and not exclusive of any other right or remedy available to Landlord.

Notwithstanding anything to the contrary set forth in this Lease, in the event of any monetary Tenant Default described in Section 20.1(a) above, Landlord shall not be permitted to exercise any of the remedies set forth in Sections 20.1(i), 20.1(ii) or 20.1(iv) above unless said Tenant Default remains uncured for more than five (5) business days after delivery of written notice to Tenant regarding any such Tenant Default.  For the sake of clarity, the aforementioned 5-business day notice and cure period shall apply to each and every monetary Tenant Default, and shall not be limited to any particular number of monetary Tenant Defaults occurring over the course of any particular period of time.

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Notwithstanding anything to the contrary in this Lease, (A) Landlord shall have no right to place a lien on any of Tenant’s personal property, furniture, fixtures or equipment, and (B) Landlord shall not be permitted to engage in any self-help remedies (even if permitted by Applicable Laws) to evict or “lock out” Tenant from the Premises, take possession of any of Tenant’s property or any similar action.  Landlord acknowledges and agrees that it may proceed to enforce any of its remedies under this Lease with the appropriate notice and cure periods provided herein.

Without limiting any of Landlord’s rights at law or in equity, should this Lease be terminated as provided herein:

	
 
	
(1)
	
Tenant shall pay to Landlord all Rent to the date upon which this Lease is terminated; and

	
 
	
(2)
	
Tenant shall be liable for and will pay to Landlord, as damages, any deficiency between:  (i) the Rent that would have been payable hereunder for the period which otherwise would have constituted the unexpired portion of the Lease Term; and (ii) the net amount, if any, of rents collected under any reletting effected pursuant to this Section 20 for any part of such period (first deducting from the rents collected under any such reletting all of Landlord's expenses in connection with the termination of this Lease or Landlord's re-entry, including all repossession costs, brokerage commissions, legal expenses, attorneys’ fees, alteration costs and other expenses of preparing the Premises for such reletting).  Such deficiency shall be paid in monthly installments by Tenant on the days specified in this Lease for the payment of installments of Base Rent, and if Tenant does not pay such deficiency by the due date, interest shall accrue on such amount (and Tenant shall pay to Landlord) at the highest rate allowed by law (but not to exceed eighteen percent (18%) per annum).  Landlord will be entitled to recover from Tenant each monthly deficiency as the same will arise and no suit to collect the amount of the deficiency for any month will prejudice Landlord's right to collect the deficiency for any prior or subsequent month by a similar proceeding or otherwise.  A suit or suits for the recovery of such deficiencies may be brought by Landlord from time to time at its election.

	
 
	
20.2.
	
Landlord Default and Remedy

Landlord shall in no event be in default in the performance of any of the covenants, conditions or provisions in this Lease unless and until Landlord shall have failed to perform such obligation within thirty (30) days (or such additional time as is reasonably required to correct any such default and Landlord diligently prosecutes said cure to completion) after notice by Tenant to Landlord properly specifying wherein Landlord has failed to perform any such covenant, condition or provision. Upon a Landlord default, Tenant shall have all rights and remedies afforded Tenant hereunder or by law or equity.  Notwithstanding the foregoing, if any such Landlord default relating to an issue with the roof of the Building creates a material disruption to Tenant’s business operations at the Premises or otherwise creates a condition that is dangerous to person or property, following a second written notice to Landlord and email notice to lkoth@neyer.com, Tenant may, no sooner than twenty-four (24) hours of Landlord cure any such Landlord default and bill Landlord for its reasonable out-of-pocket costs incurred in connection therewith (the “Cure Costs”).  If, within thirty (30) days after Landlord’s receipt of Tenant’s invoice for the Cure Costs, Landlord fails to (a) in good faith dispute the Cure Costs invoiced to Landlord or (b) reimburse Tenant for the Cure Costs, then upon at least fifteen (15) days’ prior written notice to Landlord, Tenant shall be permitted to offset an amount equal to the Cure Costs against the next installment(s) of Base Rent owed by Tenant hereunder until such Cure Costs have been fully recouped by Tenant.  If Landlord does in good faith contest the Cure Costs, then Tenant shall not have the right to offset the undisputed portion of the Cure Costs until a court of applicable jurisdiction determines the correct amount of such Cure Costs, provided, however, that all the equitable portion of Tenant’s costs related to such filing with, and determination of, the court, including reasonable attorney’s fees, (collectively, “Tenant’s Enforcement Costs”) shall be added to the Cure Costs which Tenant may offset.  

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20.3.
	
Warrant of Attorney to Confess Judgment

Tenant hereby authorizes and empowers any attorney or attorneys of any Court of the Commonwealth of Pennsylvania, upon the happening of any Tenant Default hereunder and if such Tenant Default remains uncured for more than fifteen (15) days after Landlord provides Tenant with a separate written notice that Landlord intends to confess judgement hereunder, to appear for Tenant and as attorney for Tenant to sign an agreement for entering an amicable action of ejectment for possession of the Premises, and to confess judgment therein against Tenant in favor of Landlord, whereupon a Writ of Possession may immediately be issued for the possession of the Premises, without any prior writ or proceeding whatsoever and for so doing, this Lease or a copy hereof verified by affidavit shall be a sufficient warrant.  Landlord may bring such amicable action of ejectment before or after the institution of any other litigation arising out of this Lease.

	
21.
	
NON-WAIVER OF DEFAULTS

No waiver of any default by Landlord or Tenant hereunder shall be implied from any omission by Tenant or Landlord to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver, and that only for the time and to the extent therein stated.  The acceptance by Landlord of Rent, and the payment by Tenant of Rent, in either case with knowledge of the breach of any of the covenants of this Lease by the other party, shall not be deemed a waiver of any such breach.  One or more waivers of any breach of any covenant, term or condition of this Lease shall not be construed as a waiver of any subsequent breach of the same covenant, term or condition.  The consent or approval by Landlord to or of any act by Tenant requiring Landlord's consent or approval shall not be deemed to waive or render unnecessary Landlord's consent or approval to or of any subsequent similar acts by Tenant.

	
22.
	
ENVIRONMENTAL / SITE REPRESENTATIONS AND INDEMNITIES

	
 
	
22.1.
	
Hazardous Material

“Hazardous Material” means: (i) “hazardous substances” or “toxic substances” as those terms are defined by the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. ϶ 9601, et seq., or the Hazardous Materials Transportation Act, 49 U.S.C. ss 1801, all as currently amended and amended after this date;  (ii) “hazardous wastes,” as that term is defined by the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. ϶϶ 6901, et seq., as currently amended and amended after this date;  (iii) crude oil or any faction thereof which is liquid at standard conditions of temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute);  (iv) any radioactive material, including any source, special nuclear or by-product material as defined at 42 U.S.C. ϶϶ 2011, et seq., as currently amended and amended after this date;  (v) asbestos in any form or condition; and  (vi) polychlorinated byphenyls (PCB’s) or substances or compounds containing PCB’s.

	
 
	
22.2.
	
Environmental Laws

“Environmental Laws” shall mean all applicable federal, state, and local laws, regulations, and ordinances relating to public health and safety and protection of the environment, including those statutes, laws, regulation and ordinances identified in Section 22.1 all as amended and modified from time to time.

	
 
	
22.3.
	
Contamination

“Contamination” means the presence of Hazardous Material(s) in concentrations which require remediation under applicable Environmental Laws.

 

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22.4.
	
Tenant Representations

Tenant represents, warrants and covenants the following to Landlord that as of the Lease Commencement Date and during the entre Lease Term:

 

(a)Other than the initial certificate of occupancy and related permits, Tenant shall have obtained and complied, and will continue to obtain and comply with, all governmental permits required by applicable Environmental Laws relating to the use or operation of the Premises.

 

(b)Tenant shall not have permitted and will not permit to occur any release or disposal of Hazardous Material, on, in, under, or from the Premises.  Tenant, however, will be permitted to generate, manufacture, store, treat and transport, in compliance with all Environmental Laws, those Hazardous Materials used in Tenant’s business.  Tenant agrees to provide Landlord with Material Safety and Data Sheets for all Hazardous Materials used in Tenant’s business.

 

(c)Tenant will notify Landlord of all written complaints, claims, citations, demands, inquiries, reports, notices or spills or releases of Hazardous Materials relating to compliance with Environmental Laws within five (5) business days of Tenant’s receipt thereof.  To the extent possible, Tenant will promptly cure and resolve any such actions and proceedings that result from any Contamination caused solely by Tenant or any of Tenant’s Agents.  Tenant will keep the Premises free of any lien imposed pursuant to any Environmental Law for any Contamination caused solely by Tenant or Tenant’s Agents.

 

(d)If Tenant fails to undertake to cure a violation of any of the foregoing warranties, representations, and covenants within a reasonable time, Landlord may cause the removal of any Contamination from the Premises in accordance with Environmental Laws.  As to Contamination caused solely by Tenant or Tenant’s Agents, the reasonable costs of any remediation of said Contamination required by Environmental Laws will be Additional Rent under this Lease, and such reasonable costs will become due and payable within thirty (30) days after written demand by Landlord, but only if Tenant fails to undertake to comply with this paragraph within a reasonable time.

 

(e)Tenant agrees to indemnify, defend, and hold Landlord and Landlord’s affiliates, shareholders, directors, officers, employees, and agents free and harmless from and against all losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, costs, judgments, suits, proceedings, damages (including consequential damages), disbursements or expenses of any kind (including reasonable attorneys’ fees and investigation costs, whether defending or prosecuting any litigation, claim or proceeding) that may at any time be imposed upon, incurred by, or asserted or awarded against Landlord in connection with or arising from or out of:

 

	
 
	
1.
	
any Contamination which has been caused solely by Tenant or Tenant’s Agents on, in, or under or affecting all or any portions of the Premises;

 

	
 
	
2.
	
any misrepresentation, inaccuracy or breach of any warranty, covenant or agreement contained (other than (e)(1) above) or referred to in this Section of the Lease by Tenant;

 

	
 
	
3.
	
any violation or claim of violation by Tenant or Tenant’s Agents of any Environmental Law (other than (e)(1) or (e)(2) above) that Tenant does not diligently undertake to resolve within a reasonable time.

 

This indemnification shall survive the termination of this Lease and shall be in full force and effect for five (5) years after the termination of the Lease, after which time, it shall be null, void, and of no force and effect.

 

The acts set forth in (e)(1), (e)(2), and (e)(3) for which indemnification is provided are hereinafter referred to as “Predicate Acts”.  To the extent that any of the Predicate Acts are caused, in whole or in part, by the acts or omissions of Landlord or any other person or party (other than Tenant or Tenant’s Agents), then Tenant’s obligation under this paragraph providing for indemnity shall be limited to the degree and percent that Tenant’s acts or omissions contributed to the Predicate Acts and Tenant shall be responsible only for that portion of the costs which would not otherwise have been incurred were it not for Tenant’s Predicate Acts, and Tenant shall not be liable for any consequential damages of any kind.  As of execution of the Lease, Landlord represents that to the best of its knowledge the Premises are not in violation of the above referenced hazards.

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22.5.
	
 Landlord Representations

Landlord represents, warrants and covenants to Tenant, and each of its respective officers, directors, employees, affiliates and successors (collectively, “Tenant Entities”), as follows: 

 

(a)Landlord currently leases the Property pursuant to the Landlord Ground Lease and, upon completion, Landlord shall own the Building and Improvements pursuant to and subject to the Landlord Ground Lease and the easements, restrictions and encumbrances of record pertaining to the Property;

 

(b)Landlord shall timely pay, when and as due, all base rent, additional rent and other charges payable by Landlord to Ground Lessor under the Landlord Ground Lease.

 

(c) Except as otherwise expressly provided herein, Landlord shall fully and timely perform its covenants and obligations under the Landlord Ground Lease, including, but not limited to keeping in full force and effect all insurance required of Landlord as tenant under the Landlord Ground Lease.

 

(d) Landlord hereby grants to Tenant the right to receive all of the benefits with respect to the Premises which are to be provided by Ground Lessor under the Landlord Ground Lease (if any). The parties contemplate that Ground Lessor shall, in fact, perform its obligations under the Landlord Ground Lease and in the event of any default or failure of such performance by Ground Lessor, Landlord agrees that it will, upon notice from Tenant, make demand upon Ground Lessor to perform its obligations under the Landlord Ground Lease and Landlord will take appropriate legal action to enforce the Ground Lease.

 

(e)Landlord grants and demises to Tenant the non-exclusive use and benefit of all easements, licenses, rights-of-way, and privileges granted to Landlord under the Landlord Ground Lease. Landlord shall not agree to an amendment or modification to the Landlord Ground Lease which would have a material adverse effect on this Lease, Tenant’s occupancy of the Premises or its use of the Premises, unless Landlord shall first obtain Tenant’s prior written approval thereof.  Tenant’s prior written approval shall not be required for an amendment or modification to the Landlord Ground Lease which would make an immaterial and non-economic change or correct an error. In addition, in the event an amendment or modification would have any material adverse effect on Tenant, Landlord shall not, without Tenant’s prior written consent, (i) waive any of its rights under the Landlord Ground Lease, or (ii) grant any consents thereunder. In no event shall Landlord subordinate the Landlord Ground Lease to any future mortgage, deed of trust or ground lease, without the prior written consent of Tenant.  Tenant agrees that Landlord may obtain leasehold financing on the Landlord Ground Lease so long as Tenant receives the NDA as contemplated by Section 16 prior to closing on any such financing. If Landlord shall default under this Section then, in addition to all other rights and remedies of Tenant as a result thereof, shall include, without limitation, the right to bring suit in the name of Landlord and/or Tenant to enforce the Landlord Ground Lease and Landlord shall cooperate with Tenant in so doing.

 

(f)Landlord has full power and authority to enter into this Lease and to lease the Premises to Tenant.

 

(g) The Premises will be suitable for Tenant’s Permitted Use and Landlord’s Work shall be performed in a good and workmanlike manner in accordance with all Applicable Laws, and in accordance with all applicable zoning regulations and any covenants binding the owner personally or running with the Property upon which the Building is to be constructed. 

 

(h) To the best of Landlord’s knowledge, there is no physical or environmental condition existing in, on, under or surrounding the Premises that violates applicable Environmental Laws.

 

(i) To the best of Landlord’s knowledge, there has been no release or threatened release of Hazardous Materials in, on, under or onto the Premises.

 

(j) To the best of Landlord’s actual knowledge, there is no Contamination in, on, under or surrounding the Premises, including, without limitation, Contamination relating to the presence of PCBs, solvents, mold or microbial matter.

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(k) To the best of Landlord’s knowledge, there is no asbestos, asbestos-containing material or lead-based paint in, on or under the Premises or any of the structures situated thereon.

 

(l) To the best of Landlord’s knowledge, there is no condition existing in, on, under or surrounding the Premises that could reasonably be expected to result in a soil vapor intrusion or other indoor air quality in any present or future structure(s) on the Premises.

 

Landlord agrees to indemnify, defend, and hold Tenant and Tenant Entities free and harmless from and against all losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, costs, judgments, suits, proceedings, damages (including consequential damages), disbursements or expenses of any kind (including reasonable attorneys’ fees and investigation costs, whether defending or prosecuting any litigation, claim or proceeding) that may be imposed upon, incurred by, or asserted or awarded against Tenant in connection with or arising from or out of (i) any physical or environmental condition existing in, on, under or surrounding the Premises as of the Effective Date or the Lease Commencement Date, including, without limitation the presence of any Contamination or Hazardous Materials, (ii) any breach by Landlord of any covenant or obligation contained in this Section 22.5 and/or (iii) any Contamination or violation of any Environmental Law not directly caused by Tenant, the Tenant Entities or one acting on Tenant’s behalf and at Tenant’s direction.

	
23.
	
HOLD OVER TENANCY

Provided that no Tenant Default then exists, if, without the execution of a new lease or nine (9) months prior written extension notice to  Landlord, Tenant shall hold over after the expiration of the Lease Term, Tenant shall have the right to retain possession of the Premises for up to one hundred thirty-five (135) days after expiration of the Lease Term without the possibility of eviction and upon the same terms and conditions of the Lease; provided, however, that during such tenancy, Tenant agrees to pay to Landlord 125% of the monthly installment of Base Rent which was payable in the month immediately preceding the month in which the expiration or termination occurs (“Preceding Rent”).  If Tenant remains in possession of the Premises after such 135-day holdover period, Tenant shall pay, as liquidated damages for each day of such hold over period, 150% of the Preceding Rent and the hold over period will constitute a month-to-month tenancy which may be terminated by Landlord or Tenant upon thirty (30) days prior written notice to the other.  Notwithstanding anything herein to the contrary, if: (i) Tenant holds over after the expiration or termination of the Term for a period of time in excess of the aforementioned 135-day period; and (ii) Landlord has executed a lease with another tenant (“Replacement Tenant”) whereby Landlord has agreed to lease some or all of the Premises to such Replacement Tenant; and (iii) Landlord provides written notice to Tenant, prior to the expiration of the aforementioned 135-day period, that a lease has been fully executed with a Replacement Tenant for some or all of the Premises; and (iv) such Replacement Tenant terminates its lease with Landlord as a direct consequence of Tenant’s holding over at the Premises beyond the one hundred thirty-fifth (135th) day after the expiration or earlier termination of the Term; then, in the event each of the foregoing criteria are met, Tenant shall be liable to Landlord for liquidated damages in an amount equal to the “base rent” payable by Replacement Tenant to Landlord for the first six (6) months (without taking into account any free rent or other tenant concessions) of the lease that was terminated by Replacement Tenant due to Tenant’s holding over at the Leased Premises beyond such 135-day period.  Tenant acknowledges that (x) Landlord shall suffer an adverse impact on its business if a Replacement Tenant terminates a lease for some or all of the Premises as a result of Tenant’s holding over in excess of such 135-day period, and (y) the resulting damages to Landlord may not be susceptible of precise determination (in particular, as the period of time that the Premises may remain vacant after a Replacement Tenant terminates its lease, and the eventual rent to be received by Landlord in a future lease for some or all of the Premises, are unable to be ascertained with certainty).  Tenant therefore acknowledges that the liquidated damages described above is a reasonable approximation of Landlord’s damages for such holding over, and such liquidated damages shall not be deemed to be a penalty.  No such holding over shall be deemed to constitute a renewal or extension of the Lease Term.

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24.
	
CONDEMNATION

If the whole or any part of the Premises shall be taken under the power of eminent domain, then the Lease shall terminate as to the part taken on the day when Tenant is required to yield possession thereof, and Landlord, to the extent of the condemnation award, shall, using its best efforts to minimize the interference with Tenant’s business operations, make such repairs and alterations as may be necessary in order to restore the part not taken to useful condition.  The Base Rent shall be reduced proportionately as to the part of the Premises taken, the reduction to be effective on the date that Tenant is required to yield possession.  If the amount of the Premises so taken is such as to impair substantially the usefulness of the Premises for the purposes for which the same are hereby leased, then either party shall have the option to terminate this Lease as of the date when Tenant is required to yield possession. All compensation awarded for such taking of the fee and the leasehold shall belong to and be the property of Landlord; provided, however, that Tenant shall be entitled to such award as may be allowed for moving expenses, fixtures and other equipment installed by it (specifically excluding fixtures, alterations, additions and other components of the Leased Premises which under this Lease or by law are or at the expiration or earlier termination of the Lease Term will become the property of Landlord) and any other compensation allowed under the laws of the Commonwealth of Pennsylvania, but only if such award or other compensation shall be in addition to the award otherwise available to or for the benefit of Landlord.

	
25.
	
TENANT’S LIMITED PURCHASE OPTION

(a)So long as a Tenant Default does not then exist, Tenant (or an affiliate of Tenant) shall have the option (“Purchase Option”) to purchase the Building and the Improvements and take a corresponding assignment of Landlord’s rights under the Landlord Ground Lease (“Option Property”) for $[**] which Purchase Option may be exercised by Tenant at any time prior to the date that is [**] ([**]) days after the Initial Delivery Date (the “Outside Exercise Date”) by delivering written notice of Tenant’s exercise of the Purchase Option (“Purchase Notice”) to Landlord.  In the event Tenant does not provide a written Purchase Notice on or before the Outside Exercise Date, it shall be deemed that Tenant has waived its Purchase Option and Landlord shall then have the right to market and sell or transfer any or all of the Option Property at its sole discretion; provided, however, that Landlord’s right to then market and sell or transfer any or all of the Option Property is subject in all respects to Tenant’s ROFO described in Section 26 below.

 

(b)If Tenant provides Landlord with the Purchase Notice in accordance with Section 25(a) above, Landlord and Tenant shall, within [**] ([**]) days after Tenant’s delivery of the Purchase Notice, enter into a commercially reasonable purchase and sale agreement containing typical representations and warranties for the sale of commercial property to be prepared by Tenant or its counsel and which shall reflect, among other things:

 

(i)the purchase price set forth in Section 25(a) above;

 

(ii)that Tenant’s Security Deposit and the dollar value of any Rent abatements rights accrued under the second paragraph of Section 1.9 above shall be applied toward the purchase price for the Option Property; 

 

(iii)that Landlord shall convey title to the Option Property via commercially reasonable assignment and sale documents, free and clear of all objectionable title encumbrances as reasonably determined by Tenant and its title insurer (provided, however, that the Landlord Ground Lease shall not be considered an objectionable title encumbrance); 

 

(iv)Tenant shall have thirty (30) days after execution of the purchase agreement for the Option Property to perform due diligence on the Option Property; 

 

(v)that the closing on Tenant’s acquisition of the Option Property shall occur on the later to occur of (1) the date that is [**] ([**]) days after the conclusion of Tenant’s due diligence period review period set forth in such purchase and sale agreement and (2) the date upon which Landlord achieves Substantial Completion of the Landlord’s Work (subject to the completion of any Punch List Items, which may be completed after such closing in accordance with the terms set forth in the Work Letter);

 

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(vi)that Landlord and Tenant shall each be responsible for one half of any and all transfer taxes incurred in connection with the closing on Tenant’s acquisition of the Option Property; 

 

(vii)that Landlord and Tenant shall pro rate all Taxes related to the Option Property and other items customarily pro-rated at the closing of similar real estate transactions in Allegheny County, Pennsylvania; and 

 

(viii) upon the closing of this sale transaction, this Lease shall terminate and the parties shall have no further rights, duties or responsibilities hereunder, except as otherwise expressly provided herein.

 

(c)If Landlord either fails to keep, observe, and perform any terms, covenants, conditions or provisions of this Section 25, such failure could irreparably harm Tenant’s business interests and shall be deemed to be a “Landlord Default” under this Lease.  Upon the occurrence of a Landlord Default under this Section 25(c) then, in addition to the remedies set forth in Section 20.2 above, Tenant shall be entitled to seek specific performance of Landlord’s obligations set forth in this Section 25, and Landlord shall reimburse Tenant for all costs and expenses incurred in connection with Tenant’s pursuit of specific performance hereunder.

	
26.
	
TENANT’S RIGHT OF FIRST OFFER TO PURCHASE

Beginning after the expiration of the [**] ([**]) complete calendar month of the Lease Term and continuing until the expiration of the Lease Term (“ROFO Period”), so long as a Tenant Default does not then exist, Tenant, together with its successors, assigns and affiliates, shall have the ongoing right of first offer to assume the Landlord Ground Lease and purchase the Option Property (“ROFO”) on the following terms and conditions:

(a)If, during the ROFO Period, Landlord decides to offer to sell (or is otherwise in the process of offering or selling) the Option Property or any portion thereof to a third party (excluding the Landlord Transferees defined herein, a “Third Party Buyer”) or receives an unsolicited bona fide offer to purchase the Option Property from a Third Party Buyer, including by means of a sale directly or indirectly of the partnership interests, membership interests, stock, or other equity interests of Landlord or by means of a merger of Landlord, Landlord shall send written notice to Tenant (“Offer”), which Offer shall set forth the terms on which Landlord would be willing to consummate the sale of the Option Property, including all material economic terms and conditions thereof (“Material Terms”), and which Material Terms shall include, without limitation, the proposed sale price, the proposed timing for sale and the property which will be offered for sale (as applicable, “Offer Property”).  Landlord agrees to bargain in good faith on any terms not stated in the Offer.  

(b)Within [**] ([**]) days after receipt of the Offer, Tenant shall reply by written notice to Landlord either accepting to purchase the Offer Property on the Material Terms set forth in the Offer or rejecting the Offer.  Tenant’s failure to respond within such [**]-day period shall be deemed a rejection of the Offer.  If Tenant timely accepts the Offer for the Offer Property, then Landlord and Tenant shall endeavor to promptly, but in any case within [**] ([**]) days after Tenant’s notice of acceptance of the Material Terms set forth in the Offer, execute a commercially reasonable purchase and sale contract incorporating the Material Terms set forth in the Offer.  If Tenant rejects, or is deemed to have rejected, such Offer, Landlord shall have the right to consummate a sale with a Third Party Buyer for the Offer Property within the [**]-day period commencing on the date that Tenant rejects (or is deemed to have rejected) the Offer, upon the Material Terms set forth in the Offer and for a purchase price not less than [**] ([**]) of the purchase price stated in the Offer, free and clear of Tenant’s ROFO set forth in this Section 26; provided, however, that any such transfer shall be subject to this Lease.  If, however, a sale of the Offer Property is not consummated with a Third Party Buyer within the [**]-day period commencing on the date that Tenant rejects (or is deemed to have rejected) the Offer, Landlord shall provide written notice to Tenant of such fact and Tenant’s ROFO set forth in this Section 26 shall automatically be revived and thereafter continue in full force and effect, and Landlord shall thereafter re-offer the applicable Offer Property to Tenant upon any subsequent decision by Landlord to offer to sell the Option Property or any portion thereof to a Third Party Buyer.  Furthermore, if, during any such [**]-day period, Landlord offers the Offer Property to a Third Party Buyer (i) for a sales price that is less than [**] ([**]) of the purchase price stated in the Offer, or (ii) upon terms or conditions that are more favorable to a Third Party Buyer than the Material Terms set forth in the Offer as determined by Tenant in its reasonable discretion, then in either event Landlord shall re-offer the Offer Property to Tenant on the terms offered to such Third Party Buyer and said re-offering shall constitute a new “Offer” and trigger the procedures and timelines set forth above as if said re-offer was a new Offer for purposes of this Section 26.  

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(c)In the event Tenant rejects or is deemed to have rejected any Offer provided to Tenant in accordance with Section 26(b) above, in no event shall such rejection or deemed rejection constitute a waiver with respect to (i) Tenant’s right to receive written notices from Landlord with respect to a sale not consummated within the [**]-day period described above or with respect to a re-offering required pursuant to the terms set forth above, or (ii) Tenant’s ongoing ROFO to purchase all or any portion of the Option Property in accordance with the terms set forth in this Section 26.

(d)Notwithstanding anything to the contrary in this Section, nothing in this Section shall restrict Landlord from transferring the Landlord Ground Lease or transferring or selling the entire Option Property at any time to a wholly owned subsidiary of Landlord or the parent of Landlord, or for purposes of placing a mortgage or deed of trust on the Premises in connection with financing or refinancing of the Premises by Landlord (any of which is a “Landlord Transferee”). 

 

(e)If Landlord either fails to keep, observe, and perform any terms, covenants, conditions, or provisions of this Section 26, such failure could irreparably harm Tenant’s business interests and shall be deemed to be a “Landlord Default” under this Lease.  Upon the occurrence of a Landlord Default under this Section 26(e) then, in addition to the remedies set forth in Section 20.2 above, Tenant shall be entitled to seek specific performance of Landlord’s obligations set forth in this Section 26, and Landlord shall reimburse Tenant for all costs and expenses incurred in connection with Tenant’s pursuit of specific performance hereunder. 

	
27.
	
NOTICES

Whenever in this Lease it shall be required or permitted that notice, approval, advice, consent or demand be given or served by either party to this Lease to or on the other, such notice or demand shall not be deemed to have been duly given or served unless in writing and forwarded by certified or registered mail, or by a nationally recognized overnight or locally recognized same-day delivery service to the Landlord's and Tenant's addresses set forth in Sections 1.2, and 1.4, respectively, of this Lease (or such other address as may be given by one party to the other pursuant to this Section), or upon the receipt of an email during normal business hours, addressed in all cases to the party at his or its address set forth in Section 1.2 and Section 1.4 above.

 

	
28.
	
RIGHTS RESERVED BY LANDLORD / FORCE MAJEURE

Subject in all respects to the other terms set forth in this Lease (including, without limitation, in Section 9 above), Landlord reserves the following rights, each of which Landlord may exercise with notice to Tenant and without liability to Tenant, and the exercise of any such rights shall not be deemed to constitute an eviction or disturbance of Tenant's use or possession of the Premises and shall not give rise to any claim for set-off or abatement of Rent or any other claim:  (a) to retain at all times, and to use in appropriate instances, keys to the main entry doors within and into the Premises; (b) to inspect the Premises at reasonable times and upon reasonable notice; (c) to install, use and maintain in and through the Premises, pipes, conduits, wires and ducts serving the Building, provided that such installation, use and maintenance does not unreasonably interfere with Tenant's use of the Premises; and (d) to take any other reasonable action in connection with the Landlord’s performance of its obligations set forth in this Lease.

 

The term “Force Majeure” as used in this Lease means and refers to acts of God, riots, labor strikes (other than strikes of workers, contractors, and suppliers), acts of a public enemy, governmental embargo restrictions, or other events or delays that are beyond Landlord’s or Tenant’s (as the case may be) reasonable control, including, but not limited to, actions or inactions on the part of public utilities or local, state or federal governmental authorities, provided that Landlord or Tenant (as the case may be) has timely made appropriate applications or requests of and to such authorities and has diligently pursued the same.  The term Force Majeure will not, however, include any lack of available funds that may otherwise be required for performance of any obligation hereunder.

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29.
	
MISCELLANEOUS PROVISIONS

	
 
	
29.1.
	
Term "Landlord"

The term "Landlord" as used in this Lease so far as covenants or obligations on the part of Landlord are concerned shall be limited to mean and include only landlord at the time in question of the Premises and in the event of any transfer or transfers of the title to the Premises, upon Tenant’s receipt of documentation signed by any such new landlord, evidencing that any such new landlord has assumed, in writing, all of Landlord’s obligations and liabilities under this Lease, Landlord herein named (and in case of any subsequent transfers or conveyances, the then Landlord) shall be automatically freed and relieved from and after the date of such transfer or conveyance of all liability as respect to the performance of any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed.

	
 
	
29.2.
	
Captions of Paragraphs

The captions of the paragraphs in this Lease are for convenience only and shall not be considered or referred to in resolving questions of interpretation or construction.

	
 
	
29.3.
	
Terms "Landlord" and "Tenant”

The terms "Landlord" and "Tenant" wherever used herein shall be applicable to one or more persons, as the case may be, and the singular shall include the plural, and the neuter shall include the masculine and feminine, and if there be more than one, the obligations hereof shall be joint and several.

	
 
	
29.4.
	
Words "person" and "persons"

Both the word "person" and the word "persons" wherever used in this Lease shall include individuals, partnerships, firms, associations and corporations or any other form of business entity.  In the event that two or more individuals, corporations, partnerships or other business associations (or any combination of two or more thereof) shall sign this Lease as Tenant, the liability of each such individual, corporation, partnership or other business association to pay Rent and perform all other obligations hereunder shall be deemed to be joint and several.  In like manner, in the event that Tenant named in this Lease shall be a partnership or other business association the members of which are, by virtue of statute or general law, subject to personal liability, then in the event, the liability of each such member shall be deemed to be joint and several.

	
 
	
29.5.
	
Rights, Options, Election, Powers and Remedies

The various rights, options, elections, powers and remedies contained in this Lease shall be construed as cumulative and no one of them shall be exclusive of any of the others, or of any other legal or equitable remedy which either party might otherwise have in the event of breach or default in the terms hereof, and the exercise of one right or remedy by such party shall not impair its right to any other right or remedy until all obligations upon the other party have been fully performed.

	
 
	
29.6.
	
Financial Statements

Tenant hereby acknowledges that it has provided Landlord with the ability to publicly access Tenant’s financial statement(s) prior to the date hereof as a primary inducement to Landlord’s agreement to lease the Premises to Tenant, and that Landlord has relied on the accuracy of said financial statement(s) in entering into this Lease.  Tenant represents to the best of its knowledge and belief that the information contained in said financial statement(s) is true, complete and correct in all material aspects.  Only in the event Tenant is no longer a publicly traded company or Tenant’s financial statements are not publicly available to Landlord at no cost, during the Lease Term, within ten (10) business days of receipt by Tenant of Landlord written request therefor, Tenant shall furnish to Landlord a balance sheet of Tenant as of the end of the most current fiscal period and a statement of income and expense for that same period, along with a certificate of the chief financial officer, owner or partner of Tenant to the effect that to the best of their knowledge and belief the financial statements have been prepared in conformity with generally accepted accounting principles consistently applied and fairly present the financial condition and results of operations of Tenant as of and for the period covered.  Landlord agrees to keep confidential and not disclose to any person or entity any financial information furnished by Tenant, except that Landlord may disclose such information to its attorneys, lenders, potential purchasers, partners and financial advisors.

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29.7.
	
Time

Time is of the essence with respect to the performance of each of the covenants and agreements under this Lease.

	
 
	
29.8.
	
Provisions Binding

Each and all the provisions of this Lease shall be binding upon and inure to the benefit of the parties hereto and, except as otherwise specifically provided elsewhere in this Lease, their respective heirs, executors, administrators, successors and assigns, subject at all times, nevertheless, to all agreements and restrictions contained elsewhere in this Lease with respect to the assignment, transfer, encumbering or subletting of all or any part of Tenant's interest in this Lease.

	
 
	
29.9.
	
State Law

This Lease shall be interpreted in accordance with the laws of the Commonwealth of Pennsylvania.

	
 
	
29.10.
	
Covenants and Agreements

This Lease contains all covenants and agreements between Landlord and Tenant relating in any manner to the rental, use and occupancy of the Premises and the other matters set forth in this Lease.  No prior agreement or understanding pertaining to the same shall be valid or of any force or effect, and the covenants and agreements of this Lease cannot be altered, changed, modified or added to except in writing signed by Landlord and Tenant.  No representation, inducement, understanding or anything of any nature whatsoever made, stated or represented on Landlord's behalf, either orally or in writing (except as expressly set forth in this Lease), has induced Tenant to enter into this Lease.

	
 
	
29.11.
	
Invalid or Illegal Provisions

Any provision or provisions of this Lease which shall prove to be invalid, void or illegal shall in no way affect, impair or invalidate any other provision hereof, and the remaining provisions hereof shall nevertheless remain in full force and effect.

	
 
	
29.12.
	
Effective Date of Conditions, Covenants and Agreements

Except with respect to those conditions, covenants and agreements of this Lease which by their nature could only be applicable after the commencement of, during or throughout the Lease Term, all of the other conditions, covenants and agreements of this Lease shall be deemed to be effective as of the Effective Date.

	
 
	
29.13.
	
Lease Commissions

Tenant and Landlord each represents and warrants for the benefit of the other that they have not engaged any broker, finder or other person, other than CBRE, Inc. (“CBRE”) representing both Landlord and Tenant as a dual agent.  Landlord shall be responsible for the payment of any commission or fee to CBRE in respect of the negotiation, execution of delivery of this Lease, and Landlord and Tenant shall each indemnify the other against loss, cost, liability or expense incurred by either party as a result of any claim asserted by any broker, finder or other person on the basis of any arrangement or agreement made or alleged to have been made by or on behalf of the other party.  

	
 
	
29.14.
	
Relationship of Landlord and Tenant

Nothing contained herein will be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership or of joint venture between the parties hereto, it being understood and agreed that neither the method of computation of Rent, nor any other provision contained herein nor any acts of the parties herein, shall be deemed to create any relationship between the parties hereto other than the relationship of Landlord and Tenant.

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29.15.
	
Recording of Memorandum of Lease

Landlord and Tenant each hereby agrees that it will not record this Lease; however, a Memorandum of Lease in the form attached hereto as Exhibit H (“MOL”) shall be executed by Landlord and Tenant simultaneously with this Lease and Landlord will, at its expense, thereafter promptly cause the MOL to be recorded in the Allegheny County Department of Real Estate (in any case within seven (7) days of the Effective Date).  Failure by Landlord to timely record such MOL shall be Landlord Default hereunder, without application of any cure period in respect thereof.

	
 
	
29.16.
	
Submission of Lease

The submission of this Lease, whether in blank form or with all or some of the blanks herein completed, shall not vest in Tenant any rights with respect to the Premises or the Building or be deemed, in any respect, to be binding upon Landlord.   Until both Landlord and Tenant have executed this Lease, Tenant shall not be deemed to have acquired any rights with respect to the Premises or the Building.

	
 
	
29.17.
	
Counterparts

This Lease may be executed and delivered in counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument.  Furthermore, the undersigned agree that electronic transmission of this Lease by e-mail, facsimile or telecopy shall be deemed transmission of the original Lease for all purposes.

 

	
 
	
29.18.
	
Representations on Authority of Parties/Signatories

Each person signing this Lease represents and warrants that he or she is duly authorized and has legal capacity to execute and deliver this Lease. Each party represents and warrants to the other that the execution and delivery of the Lease and the performance of such party’s obligations hereunder have been duly authorized and that the Lease is a valid and legal agreement binding on such party and enforceable in accordance with its terms.

 

	
 
	
29.19.
	
Personal Liability

Landlord, and any person, firm, or corporation comprising Landlord shall not have any personal liability with respect to any of the provisions of this Lease.  Tenant's sole recourse shall be against the Building, and the real and personal property comprising the same for the satisfaction of any of the Tenant's claims and remedies.  No partner, member or shareholder of Tenant, nor any director, officer, employee or other party with interests in Tenant or any such partner, member or shareholder of Tenant shall be subject to personal liability hereunder.  

 

[SIGNATURE PAGES FOLLOW]

 

30

EXECUTION COPY

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease to be effective as of the above date, but actually on the dates set forth below.

 

	
LANDLORD:

	
 

	
NORTHFIELD I, LLC,

	
an Ohio limited liability company

	
 

	
By:
	
 
	
Al. Neyer, LLC

	
 
	
 
	
an Ohio limited liability company,

	
 
	
 
	
its Manager

	
 
	
 
	
 

	
 
	
 
	
By:
	
 
	
 

	
 
	
 
	
 
	
 
	
Stephanie P. Gaither,

	
 
	
 
	
 
	
 
	
Sr. Vice President & CFO

 

	
STATE OF OHIO
	
)
	
 

	
 
	
)
	
SS:

	
COUNTY OF HAMILTON
	
)
	
 

 

The foregoing instrument was acknowledged before me this ___ day of December, 2019, by Stephanie P. Gaither, Sr. Vice President & CFO, of Al. Neyer, LLC, an Ohio limited liability company, the Manager of Northfield I, LLC, an Ohio limited liability company, on behalf of such company.

 

	
 
	
 

	
Notary Public
	
 

 

 

 

 

 

[TENANT’S SIGNATURE PAGE FOLLOWS]

31

EXECUTION COPY

	
TENANT:

	
 
	
 
	
 

	
KRYSTAL BIOTECH, INC.,

	
a Delaware corporation

	
 
	
 
	
 

	
 
	
 
	
 

	
By: 
	
 
	
 

	
 
	
 
	
Krish S. Krishnan,

	
 
	
 
	
President and Chief Executive Officer

 

 

 

	
STATE OF 
	
 
	
 
	
 
	
)

	
 
	
 
	
 
	
)
	
SS:

	
COUNTY OF
	
 
	
 
	
 
	
)

 

The foregoing instrument was acknowledged before me this ____ day of December, 2019, by Krish S. Krishnan, President and Chief Executive Officer of Krystal Biotech, Inc., a Delaware corporation, on behalf of such corporation.

 

	
 
	
 

	
Notary Public
	
 

 

 

 

32

EXECUTION COPY

EXHIBIT A

 

Site Plan of Premises

 

[See attached.]

 

 

 

 

A-1

EXECUTION COPY

EXHIBIT A-1

 

Property Legal Description

 

All that certain lease area being a part of lands now or formerly of The Allegheny County Airport Authority, situate in the Township of Findlay, County of Allegheny and Commonwealth of Pennsylvania, being more particularly bounded and described as follows:

 

Beginning at a point on the southerly line of Halverson Road, a sixty-eight (68) foot road, said point being the northerly corner of the parcel herein conveyed and intersection with lands now or formerly of The Allegheny County Airport Authority; thence from beginning through lands now or formerly The Allegheny County Airport Authority the following four (4) courses and distances:

 

	
 
	
1.
	
S 84°13’31” E a distance of 76.33 feet to a point;

 

	
 
	
2.
	
S 03°26’54” E a distance of 921.81 feet to a point;

 

	
 
	
3.
	
N 86°26’37” W a distance of 558.89’ feet to a point;

 

	
 
	
4.
	
N 03°26’54” E a distance of 723.36 feet to a point on the southerly line of Halverson Road;

 

thence along Halverson Road S 86°33’46” E a distance of 192.68 feet to a point; thence by same with an arc having a curve to the left, having a radius of 309.00 feet, an arc length of 375.10 feet to a point the northerly corner of the parcel, at the point of beginning.

 

Containing an area of 10 acres.

 

A-1-1

EXECUTION COPY

EXHIBIT B

 

WORK LETTER

The terms, definitions, and other provisions of the Lease are hereby incorporated into this Work Letter by reference as if set forth in full. In the event of any inconsistencies between this Work Letter and the provisions of the Lease, the provisions of this Work Letter shall control. Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to such terms in the Lease.

IN CONSIDERATION OF the execution of the Lease and the mutual covenants and conditions hereinafter set forth, the parties agree that this Work Letter and the terms hereof shall apply to the completion of Landlord’s Work.

1.CONSTRUCTION OF THE BUILDING

Landlord, by and through Al. Neyer, LLC, an Ohio limited liability company (“Contractor”), shall promptly construct the Building in an effort to achieve Substantial Completion on or before the Estimated Lease Commencement Date.

2.LANDLORD’S WORK

Landlord’s Work shall include the planning, designing and construction of the Landlord’s Work, including the Building, in accordance with the Plans and Specifications attached hereto as Exhibit B-1 and in accordance with all Applicable Laws including, but not limited to, all applicable building codes.  In addition, Landlord’s Work shall include the (i) procurement of all permits and approvals necessary for the development and construction of the Landlord’s Work required by any governmental agency having jurisdiction over the development and construction of the Landlord’s Work; (ii) coordination of architectural and engineering services necessary for the construction of the Building; (iii) site preparation, construction and providing labor, supplies, materials and equipment and such other services required to be furnished and performed in accordance with the Plans and Specifications necessary to complete the Landlord’s Work; and (iv) if not precluded by the scope of Tenant’s Work remaining to be completed as of the time Landlord has achieved Substantial Completion of Landlord’s Work, procurement of a certificate of occupancy from the applicable governmental authorities permitting Tenant to occupy the Premises upon Substantial Completion of the Landlord’s Work.

3.COST OF LANDLORD’S WORK

Landlord’s Work shall be completed at Landlord’s sole cost and expense, except that Tenant shall fund Tenant’s Cash Contribution (as defined below) in accordance with the following:

a.On or before the date Landlord closes on its construction loan with respect to the Premises, and in any case upon no less than ten (10) days’ prior written notice from Landlord to Tenant, Tenant shall deposit with TriState Capital Bank (the “Escrow Agent”) the sum of Two Million Four Hundred Thousand Dollars ($2,400,000.00) (“Tenant’s Cash Contribution”), which amount shall be applied against the first $2,400,000.00 of hard costs associated with Landlord’s Work.

b.Landlord and Tenant agree that, on or before the date Landlord closes on its construction loan with respect to the Premises, Landlord, Tenant and the Escrow Agent shall enter into a commercially reasonable escrow agreement (the “Escrow Agreement”) pursuant to which an escrow account shall be established with the Escrow Agent, for the collection of Tenant’s Cash Contribution and disbursement thereof for the first $2,400,000.00 of hard costs associated with Landlord’s Work.  In no event shall Tenant be obligated to make Tenant’s Cash Contribution until the Escrow Agreement has been fully executed by Landlord, Tenant and the Escrow Agent, and a fully executed copy thereof has been provided to Tenant.  The Escrow Agreement shall provide, among other things, the manner in which draws may be made from the escrow account established thereby.

c.Landlord and Tenant hereby acknowledge and agree that Tenant’s Cash Contribution shall not cover the entire cost of Landlord’s Work, but rather is intended to reduce the amount of Landlord’s equity and debt required in order to accomplish the construction of Landlord’s Work hereunder.

B-1

EXECUTION COPY

4.PLANS; CHANGES TO PLANS

a.Construction Plans: Landlord’s Work shall be constructed in accordance with the Plans and Specifications.

b.Changes to Plans and Specifications: 

i.No material change to the Plans and Specifications shall be made by Landlord or Tenant unless such change is first approved in writing by both parties, which approval shall not be unreasonably withheld, conditioned or delayed (“Change Order”).   Provided a Change Order is reasonably acceptable to Landlord, Landlord shall prepare and submit promptly to Tenant a memorandum setting forth the impact on cost and the Schedule resulting from said Change Order ("Change Order Memorandum").  Tenant shall, within three (3) days following Tenant's receipt of a Change Order Memorandum, either (a) execute and return the Change Order Memorandum to Landlord, (b) retract its request for the Change Order, or (c) revise the original request for the Change Order.  

ii.At Landlord's option, Tenant shall pay to Landlord (or Landlord's designee), within thirty (30) days following Landlord's request, any increase in the cost of Landlord’s Work resulting from a Change Order, as set forth in the applicable Change Order Memorandum.

iii.In the event of any decrease in the cost of Landlord’s Work resulting from a Change Order, as set forth in the applicable Change Order Memorandum, Base Rent will proportionately adjust to account for any such decreases, which adjustment shall be equal to the product of (x) a rent constant equal to Eight and 25/100 Percent (8.25%) multiplied by (y) the amount of the actual decrease to the cost to perform Landlord’s Work due to any such Change Order.  All adjustments to Base Rent resulting from Change Orders that decrease the cost of Landlord’s Work – as well as the corresponding adjustment to the Purchase Price for Tenant’s exercise of the Purchase Option – shall be memorialized in the Lease Commencement Date Memorandum attached to the Lease as Exhibit C.

iv.Landlord shall not be obligated to commence any work set forth in a Change Order until such time as Tenant has delivered to Landlord the executed Change Order Memorandum associated with such Change Order and Tenant has paid Landlord in full, at Landlord’s discretion, for said Change Order.

v.Upon receipt of a request from Tenant to Landlord to make a material change to the Plans and Specifications (“Proposed Tenant Change”), Landlord shall cause the Contractor, within fourteen (14) days of receipt of same, to promptly estimate the effect on cost and schedule in completing the Proposed Tenant Change, if any, and to report such estimate to Landlord who is responsible for in turn reporting the estimate to Tenant. Prior to Landlord implementing a Change Order for the purpose of effectuating a Proposed Tenant Change, Tenant must agree, in writing, within three (3) business days after delivery of the estimated cost and delay from Landlord, to pay any increased costs of Landlord’s Work associated with such Proposed Tenant Change.  Contractor shall proceed with Landlord’s Work, excluding any Proposed Tenant Change, pending the consideration of said Proposed Tenant Change. Any actual delay in Landlord’s Work caused by a Proposed Tenant Change shall constitute a Tenant Delay. No Proposed Tenant Change shall be deemed approved until Tenant notifies Landlord in writing of Tenant’s willingness to accept responsibility for a Tenant Delay, if any, which arises from such Proposed Tenant Change as specifically delineated by Landlord. Tenant shall have the right to withdraw any requested Proposed Tenant Change if Tenant is unwilling to pay any increased costs or accept responsibility for a Tenant Delay associated with the Proposed Tenant Change.

vi.If a Change Order is necessitated by Landlord’s failure to complete the Landlord’s Work in accordance with the Plans and Specifications or any other act or omission of Landlord or Contractor, Landlord shall be responsible for all of the reasonable costs associated with such Change Order and the delay resulting from such Change Order, if applicable.

B-2

EXECUTION COPY

4.PUNCHLIST

The term “Punch List Items” shall mean details of construction, decoration, and mechanical adjustment which, in the aggregate, are minor in character and do not interfere with the Tenant’s use or enjoyment of the Premises.  Punch List Items shall be identified by Tenant within a reasonable time after Substantial Completion and completed by Landlord as soon as reasonably practical and no later than thirty (30) days after Tenant identifies the Punch List Items.  Landlord shall be granted reasonable rights of access to the Premises after Substantial Completion for the purposes of completing such Punch List Items provided that Landlord shall use its reasonable efforts to cause as little interference with Tenant’s Work, and otherwise with Tenant’s use and occupancy of the Premises, as reasonably possible. All Punch List Items shall be completed by Landlord (or Contractor, at Landlord’s direction) to the reasonable satisfaction of Tenant, irrespective of whether said Punch List Items have been completed as of the date upon which Tenant closes on its acquisition of the Option Property in accordance with Section 25 of the Lease, if applicable.  

5.COOPERATION

Throughout the entire process of completing the construction of the Building, Landlord and Tenant shall cooperate with the other to promptly provide any additional information and details and to respond promptly to any requests reasonably requested by the other party regarding such construction. Each party shall consider reasonable alternatives and solutions to any disputed elements in the construction and act in a timely manner with reasonable cooperation to provide maximum flexibility in completing the construction.

6.DRAWINGS AND AUTOCAD FILES

Landlord shall provide Tenant with electronic files of all architectural, construction and subcontractor drawings of the leased Premises within Sixty (60) days following the Commencement Date.  These files may be used solely in connection with the Building and the Premises. Landlord shall provide Tenant with a complete set of the Plans and Specifications and as-built drawings (including space planning, architectural, mechanical, engineering, electrical and plumbing) with respect to the Premises within thirty (30) day of the Lease Commencement Date.

 

B-3

EXECUTION COPY

EXHIBIT B-1

 

Plans and Specifications for Landlord’s Work

 

Items defined below as specific scope items relative to the Base Building are considered scope that is included in Base Building cost and not part of the $60/SF TI Office Allowance.  Any unused portion of allowance could be used to offset other Tenant related FFE.

 

Included in this project are the following:

 

	
1.
	
Complete plans and specifications.

	
 
	
a.
	
Architectural (for Base Building – TI Design will be part of TI Allowance)

	
 
	
b.
	
Structural engineering

	
 
	
c.
	
Civil engineering

	
 
	
d.
	
Design build mechanical and electrical engineering (for Base Building – TI Design will be part of TI Allowance)

 

	
2.
	
Building permit and tap fees for potable and sanitary service.  Additional Electrical and Gas related fees (if any) associated with Utility Company evaluation/installation of enhanced Gas or Electric Service are not included.

 

	
3.
	
General condition items:

	
 
	
a.
	
Field and office supervision

	
 
	
b.
	
Temporary facilities and controls

	
 
	
c.
	
Progress and final clean up

	
 
	
d.
	
Liability insurance including Builder’s Risk

	
 
	
e.
	
Layout

 

	
4.
	
Excavation & Site Utilities

	
 
	
a.
	
Al. Neyer will perform all cut/fill soil operations and fine grading to bring grades from existing condition to proposed grades.

	
 
	
b.
	
On site utilities 

	
 
	
1)
	
Storm piping and structures piped to existing storm detention system.

	
 
	
2)
	
Water (for fire protection and domestic) shall enter the building at a point to be determined by the engineer.

	
 
	
3)
	
Sanitary sewer shall enter the building from existing sanitary manhole on site. Invert Elevation for Sanitary will allow for Sanitary to be run approximately midway through the building at 1% slope.  More remote sanitary can be accommodated with 8 inch line run at 0.5% slope. Final design to be coordinated with Tenant.

	
 
	
4)
	
Gas piping to be extended by the service provider into the building. People’s Gas – See note above on fees.

	
 
	
5)
	
Electric and phone/data shall enter the building on the dock side.

 

	
5.
	
Asphalt paving

	
 
	
a.
	
Heavy duty for main drive and entire paved dock area.  Heavy duty design is made of 8” of limestone subbase + 4” asphalt binder course + 1.5” asphalt wearing course.

	
 
	
b.
	
Light duty is included for the parking lot and road connecting to main drive. Light duty design is made of 6” of limestone subbase + 2.5” asphalt binder course + 1.5” asphalt wearing course.  

 

	
6.
	
Landscaping per Township requirements.

 

	
7.
	
Concrete building foundations shall consist of conventional perimeter strip footings, and isolated column pads using 3,000psi concrete.  

B-1-1

EXECUTION COPY

 

	
8.
	
Exterior concrete.

	
 
	
a.
	
7” unreinforced concrete over 4” of compacted gravel base extending 60’ from the dock wall of the building.

	
 
	
b.
	
4” concrete sidewalk with turn down curb as shown.

	
 
	
c.
	
Asphalt wedge curb at car parking lot only.  There are no curbs around perimeter of concrete paving.

	
 
	
d.
	
Concrete Equipment Pad 52’ x 52’, including concrete drive aisle as well as a 12’ tall privacy fence and access via two-man gates and two large equipment swing gates – Design of Slab will support 23,000 lb storage tank.  

 

	
9.
	
The building slab-on-grade at the office space includes 7” concrete reinforced with poly fibers at a rate of 1.5 #/cy on a 6” compacted limestone base. The SOG will receive an Ashford Sealer or equal 10 mil vapor barrier at the office areas. 13,985 sf of concrete is included for the office area.  The rest of the slab on grade will be left out for future installation by tenant.  The cement stabilized subbase will be prepared at 13 inches below finished floor to allow for Tenant utility rough in work followed by 6” of stone and 7’ inches of concrete by Tenant 

 

	
10.
	
Load bearing nominal 8” precast concrete wall panels per elevations finished with a textured paint system on exterior face.  Interior face of concrete walls to remain unpainted.  All exposed exterior wall joints shall be caulked.  Exterior precast walls to have R-13 insulation and Building envelope will be designed to meet current Energy Code (Fabcon verscore + green panels).

 

	
11.
	
Conventional steel framing system consisting of steel columns, girders, joists and deck; using approximately 50’-0” x 50’-0” bay spacing or as shown on floor plans:

	
 
	
a.
	
Single slope roof draining to dock side. 

	
 
	
b.
	
Tube columns.

	
 
	
c.
	
Bar joists and joist girders.

	
 
	
d.
	
Metal roof deck (underside) to be prime painted white.

	
 
	
e.
	
40’ clear height in warehouse area (40 ft clear height will begin 61 ft in from dock wall – or 39’-0” clear from dock wall to, one-foot past speed bay column line). 

	
 
	
f.
	
Joists are designed as KCS for allowance of up to 30psf worth of hanging loads. The 30PSF collateral can be applied up to a 2,000-pound point from bottom chord of joist. The quantity of points loads on an individual joist can exceed the uniform 30 PSF load. 30 PSF design applied to entire building with exception of current and future office area location and at dock bay.

	
 
	
g.
	
Four (4) roof frames for HVAC rooftop units.

	
 
	
h.
	
One (1) roof ladder with cage to be coordinated with Tenant at an interior location.

	
 
	
i.
	
Bollards to protect drive-in doors.

	
 
	
j.
	
(2) two galvanized dock stairs.

	
 
	
k.
	
(3) three dock pit frames.

 

	
12.
	
The roof shall be a mechanically fastened .060” mechanically attached EPDM roof membrane system with a manufacturer’s 15-year material and labor warranty over R-30 (or, as required by code) 3.8” polyiso insulation.  Roofing shall include prefinished gutters and downspouts draining at rear dock elevations as indicated on drawings. 

 

	
13.
	
Exterior insulated hollow metal egress doors and frames with medium duty hardware as shown on plans.  Doors requiring vision lights to be coordinated with Tenant.

 

	
14.
	
Aluminum framed storefront system as shown on elevations consisting of anodized aluminum finish, medium stile, and 1” tempered clear glass. Approximately 2,300 SF of glass is included.

 

B-2

EXECUTION COPY

	
15.
	
Painting includes:

a.Exterior of precast wall panels to include one (1) coat of LOXON primer + one (1) coat of textured medium Sherwin Williams finish paint.

b.Paint all HM doors and frames.

 

	
16.
	
Overhead doors and equipment include:

	
 
	
a.
	
Five (5) 9’ x 10’ insulated manual overhead dock door capable of air curtain in the future.

	
 
	
b.
	
Two (2) 12’ x 14’ insulated automatic overhead drive in doors.

	
 
	
c.
	
Three (3) dock seals.

	
 
	
d.
	
Three (3) 40” double arm incandescent dock lights.

	
 
	
e.
	
Three (3) 6’ x 8’, 30,000 lb mechanical dock levelers.

	
 
	
f.
	
Three (3) dock locks.

 

	
17.
	
Plumbing system includes:

	
 
	
a.
	
Approximately 600 lineal feet of 8” sanitary piping run underground along 1st interior column bay with clean outs every 50 feet.  Final configuration TBD.

	
 
	
b.
	
Approximately 660 lineal feet 4” insulated water line run overhead from a point 1’-0” AFF in the meter room located on the south side and then extended up to the underside of the roof deck above.  Includes two hose bibs.  Final configuration TBD.  

	
 
	
c.
	
Gas piping, 3 “ (3 psig)  run from the meter inside the building, up to the roof.

 

	
18.
	
Fire protection system shall be installed in the new warehouse as an ESFR K-17 system with a fire pump. A fire hydrant is included on the office side of the building and a wall hydrant is included for the dock side of the building. Fire protection for Office space will be part of TI Allowance

	
 
	
a.
	
Water storage tank for increased water pressure is not included.

 

	
19.
	
Warehouse Heating and Ventilation:

	
 
	
a.
	
Provide unit heaters (Reznor type or equivalent) adequate to maintain 50 deg F indoor air temperature with 0 deg F outside air temperature.

	
 
	
b.
	
Includes gas piping to heaters.

 

	
20.
	
Electric consists of the following:

	
 
	
a.
	
Electric service to be 5,000 amp, 480/277V, 3 phase, 4-wire service with copper conductors from the utility in the street to the main electrical distribution panel located in the building.  Ground bar to be provided. Provide a separate panel for exterior lighting. 

	
 
	
b.
	
Primary and secondary conduit to consist of (2) 5” conduit for electric, and (3) 5” for data/phone.

	
 
	
c.
	
Warehouse interior lighting shall consist of one hi bay fixture per bay based on an open floor plan.

	
 
	
d.
	
Power for unit heaters.

	
 
	
e.
	
Power for two (2) overhead door operators.  

	
 
	
f.
	
Exterior lighting consisting of wall packs to meet zoning requirements and will be controlled by photocell.  Light poles are included on the parking side of the building as required by code and controlled by Photocell and/or timer.

	
 
	
g.
	
Emergency and exit lighting as required by code.

	
 
	
h.
	
Fire alarm and/or sprinkler monitoring system as required by code.

 

Tenant Specifications for Krystal Biotech included:

 

	
 
	
a.
	
100,000 SF Warehouse which includes 13,985 sf interior office fit-out.

	
 
	
b.
	
200 car parking spots.

	
 
	
c.
	
Office finish allowance of $839,100 included.

	
 
	
d.
	
Pipe bollard protection included at overhead doors.

	
 
	
e.
	
Levelers, bumpers, seals included on dock doors.

	
 
	
f.
	
5,000 amps at 277/480 volt - 3 phase power to be provided.

B-3

EXECUTION COPY

	
 
	
g.
	
Clear height of 40 feet

	
 
	
h.
	
LED Lighting included in warehouse, at 1 fixture per bay.

	
 
	
i.
	
Unit heaters included in warehouse sufficient to heat entire building including above office space.

 

Clarifications

	
1.
	
No interior tenant improvements other than outlined above. 

	
2.
	
Auxiliary Power Systems (UPS and Generator) are not included.

	
3.
	
No special process related items are included.

	
4.
	
Phone and data wiring are considered part of TI costs – Landlord provided TI will include Phone/data conduit rough in to be coordinated with Tenant.

 

 

B-4

EXECUTION COPY

 

 

 

 

B-5

EXECUTION COPY

EXHIBIT B-2

 

Schedule for Landlord’s Work

 

[See attached.]

 

 

B-2-1

EXECUTION COPY

EXHIBIT B-3

 

Description of Tenant’s Work

 

Tenant’s work in the Building shall generally include (but not be limited to) the construction or installation of the following items:

 

	
 
	
1.
	
Approximately 15,000 – 20,000 square feet of structural steel mechanical mezzanine with walkable ceiling system.

 

	
 
	
2.
	
Approximately 300 lineal feet of internal demising walls separating Tenant’s Phase I build out area from the future planned Phase II expansion area.

 

	
 
	
3.
	
Secondary employee entrance with access control system.

 

	
 
	
4.
	
Production employee locker rooms, gowning area, and break room; and three restrooms for each such area.

 

	
 
	
5.
	
Production team offices as needed.

 

	
 
	
6.
	
Clean room structures.

 

	
 
	
7.
	
Dry fire suppression system in process areas.

 

	
 
	
8.
	
Air handling equipment and air filtration systems.

 

	
 
	
9.
	
Water purification and distribution system.

 

	
 
	
10.
	
Potable and sanitary water system.

 

	
 
	
11.
	
Effluent purification system.

 

	
 
	
12.
	
UPS and backup generator systems.

 

	
 
	
13.
	
Process gas and LN2 tanks and piping.

 

	
 
	
14.
	
Air compressor and air line systems.

 

	
 
	
15.
	
Boiler system.

 

	
 
	
16.
	
Trash compactor.

 

	
 
	
17.
	
Concrete floor slab in areas of the Building other than the office area being constructed by Landlord.

 

B-3-1

EXECUTION COPY

EXHIBIT B-4

 

Initial Delivery Conditions

 

Each of the following aspects of Landlord’s Work shall be completed in accordance with the Plans and Specifications:

 

	
 
	
1.
	
Building shell complete, including all exterior walls, roof and roof membrane fully installed and in working condition sufficient to allow Tenant to commence (or cause the commencement of) Tenant’s Work.

 

	
 
	
2.
	
Landlord shall have completed the portion of interior slab on grade related to the office portion of the Premises as described in Exhibit B-1; Landlord shall have completed the remainder of the Premises with subbase prepared in accordance with Exhibit B-1.

 

	
 
	
3.
	
All exterior doors and aluminum façade of the Building installed so the Building is capable of being secured.

 

 

 

B-4-1

EXECUTION COPY

EXHIBIT C

 

Commencement Date Memorandum 

 

THIS COMMENCEMENT DATE MEMORANDUM is entered into on _______________, 202__ between NORTHFIELD I, LLC, an Ohio limited liability company (“Landlord”) and KRYSTAL BIOTECH, INC., a Delaware corporation (“Tenant”).

 

On December ___, 2019 Landlord and Tenant entered into a lease ("Lease") covering certain Premises described in the Lease.

 

In accordance with Sections 3.1 and 3.4 of the Lease, Landlord and Tenant are executing, acknowledging and delivering this Agreement for the purposes of specifying (a) the dates of the commencement and termination of the Lease Term[ and][,] (b) the final rentable square footage of the Building[, (c) an updated Base Rent table, and (d) an updated Purchase Price for the Option Property, relative to Tenant’s Purchase Option].  Any terms capitalized herein, but no defined herein shall have the meanings ascribed to them in the Lease.

 

	
 
	
1.
	
The Lease Term commenced on __________, 202__ (“Lease Commencement Date”), and shall terminate on ____________________.

 

	
 
	
2.
	
The approximate number of square feet of the Building is ________ rentable square feet.

 

	
 
	
3.
	
Tenant's Base Rent obligation under the Lease shall commence on the Lease Commencement Date. 

 

	
 
	
4.
	
[The Base Rent table set forth in Section 1.11 of the Lease is hereby amended and restated as follows:]

 

			
	
TIME PERIOD

(Months) 
	
ANNUAL BASE RENT
	
MONTHLY BASE RENT

	
1 – 12
	
$     [________] 
	
$     [________]

	
13 – 24
	
$     [________]
	
$     [________]

	
25 – 36
	
$     [________]
	
$     [________]

	
37 – 48
	
$     [________]
	
$     [________]

	
49 – 60
	
$     [________]
	
$     [________]

	
61 – 72
	
$     [________]
	
$     [________]

	
73 – 84
	
$     [________]
	
$     [________]

	
85 – 96
	
$     [________]
	
$     [________]

	
97 – 108
	
$     [________]
	
$     [________]

	
109 – 120
	
$     [________]
	
$     [________]

	
121 – 132
	
$     [________]
	
$     [________]

	
133 – 144
	
$     [________]
	
$     [________]

	
145 – 156
	
$     [________]
	
$     [________]

	
157 – 168
	
$     [________]
	
$     [________]

	
169 – 180
	
$     [________]
	
$     [________]

 

	
 
	
5.
	
[The Purchase Price set forth in Section 25(a) of the Lease is hereby amended and restated to be $[______].]

 

	
 
	
6.
	
Payment of Additional Rent shall commence on the Lease Commencement Date.  

C-1

EXECUTION COPY

 

	
 
	
7.
	
The Landlord has Substantially Completed all of Landlord’s Work in accordance with the Work Letter, and has fulfilled all other items designated as Landlord’s obligation under the Lease which were to be completed prior to the Lease Commencement Date (excluding punch list items as agreed upon by Landlord and Tenant), and Tenant has accepted the Premises as of the Lease Commencement Date.

 

	
 
	
8.
	
The execution of this memorandum shall not constitute the exercise by Tenant of any option it may have to extend the Lease Term.

 

	
 
	
9.
	
The Lease is in full force and effect and is hereby ratified and confirmed.

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

	
{S1415752.1}
	
C-2
	
 

 

EXECUTION COPY

IN WITNESS WHEREOF, Landlord and Tenant have executed two (2) originals hereof on the above date.

 

	
LANDLORD:

	
 

	
NORTHFIELD I, LLC, 

	
an Ohio limited liability company

	
 
	
 
	
 

	
By:
	
 
	
Al. Neyer, LLC

	
 
	
 
	
an Ohio limited liability company,

	
 
	
 
	
its Manager

	
 
	
 
	
 

	
 
	
 
	
By:
	
 

	
 
	
 
	
Name:
	
 

	
 
	
 
	
Title:
	
 
	
 

	
 
	
 
	
Date:
	
 
	
 

 

	
TENANT:

	
 

	
KRYSTAL BIOTECH, INC.,

	
a Delaware corporation

	
 
	
 
	
 

	
By:
	
 
	
 

	
Name:
	
 
	
 
	
 

	
Title:
	
 
	
 

	
Date:
	
 
	
 

 

 

 

 

C-3

EXECUTION COPY

EXHIBIT D

 

RULES AND REGULATIONS

 

Tenant covenants and agrees to comply with the following rules and regulations as they may be modified or amended during the Lease Term.  

	
 
	
1.
	
The sidewalks, entrances and passages of the Park Common Areas shall not be obstructed by Tenant or used for any purpose other than ingress and egress to and from the Premises. 

	
 
	
2.
	
Tenant shall be responsible for maintaining ADA compliance within the Premises. 

	
 
	
3.
	
Tenant shall not use handbills for advertising at the Property.

	
 
	
4.
	
Landlord agrees that at any time during Tenant's occupancy, Tenant shall have the right to install & maintain an antenna or communications device or similar equipment on the roof of the Premises or at any other location at the Property; in-building wireless antennas; an uninterruptible power supply (UPS) in the Premises; and any generator and generator pad necessary for Tenant’s operations in the Premises so long as such installation and maintenance does not in any way void, in whole or in part, the roof warranty or any other warranty for the Premises.  Prior to vacating the Premises, Tenant must remove Tenant’s equipment which has been installed on the roof and make repairs to the roof as necessary to bring it back to its original condition in accordance with Section 3.3 of the Lease.

	
 
	
5.
	
Tenant shall not suffer, allow, or permit any vibration, light, or other effect to emanate from the Premises, or from any machine or other installation therein, or otherwise suffer, allow, or permit the same to constitute a nuisance or otherwise interfere with the safety, comfort, or convenience of other tenants at the Park.  Upon notice by Landlord to Tenant that any of the aforesaid is occurring, Tenant agrees to forthwith remove or take reasonable steps to control the same.

	
 
	
6.
	
Canvassing, soliciting and peddling in the Park Common Areas are prohibited and Tenant shall cooperate to prevent the same.

	
 
	
7.
	
Tenant shall, at Tenant’s cost, use such pest extermination contractor as Landlord may direct at such intervals as Landlord may reasonably require, provided the cost thereof is competitive to any similar service available to Tenant. 

	
 
	
8.
	
Tenant, upon termination of its tenancy, shall deliver to the Landlord all keys of offices, rooms and toilet rooms which have been furnished to Tenant or which Tenant shall have had made, or in the event of loss of any such keys so furnished, shall pay Landlord therefor.  Tenant shall provide Landlord with a key to access the main entrance of the Premises in accordance with Section 9 of the Lease. 

	
 
	
9.
	
Smoking is prohibited anywhere inside the Building.  Smoking shall be permitted only in the exterior “designated smoking” areas, where refuse receptacles have been made available for the proper disposal of all discarded tobacco products.  Tenant and its authorized representatives or invitees shall not throw litter of any kind in or about the Building, except in receptacles placed in it for that purpose.

	
 
	
10.
	
No animals or birds may be brought in or kept in or about the Building or Premises, except for bona fide service animals.

	
 
	
11.
	
Disposal of trash and other materials shall be done in compliance with all governmental requirements.

	
 
	
12.
	
No foreign substances shall be disposed of in toilets, urinals, or wash bowls.  Any expense incurred by Landlord resulting from violation of this rule shall be borne by Tenant.

	
 
	
13.
	
In order to maintain an environment that is safe and free of violence, except for professionally licensed security personnel hired by Landlord or Tenant, Landlord prohibits the wearing, transporting, storage, presence or use of weapons on any part of the Property, regardless of whether the person is licensed to carry the weapon. Tenant shall at all times observe this policy and take all actions necessary or appropriate to enforce this policy with respect to its employees, agents, contractors, subcontractors, invitees, licensees and customers.  Tenant must further ensure that: (i) any agent, employee, contractor or subcontractor who violates this policy will be subject to disciplinary action, up to and including dismissal, and (ii) any of Tenant’s agents, employees, 

D-1

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contractors, subcontractors, invitees, licensees or customers who violate this policy will be immediately removed from the Property and reported to the police authorities.  Landlord shall have no obligation to ensure, and Tenant shall be solely responsible for ensuring, that said Tenant and its respective agents, employees, contractors, subcontractors, invitees, licensees and customers comply with this policy and any further rules and regulations with respect to the presence of a weapon on the Property.  The terms and provisions of this section shall be in accordance with 18 PA C.S.A. sec.6102 et seq.

	
 
	
14.
	
Landlord may waive any one or more of these rules and regulations, but no waiver by Landlord will be construed as a waiver of those rules and regulations as a whole, nor prevent Landlord from enforcing any rules and regulations.

	
 
	
15.
	
Landlord may, at Landlord's option, amend or add new rules and regulations for the use and care of the Premises, but only to the extent that Landlord has provided a written copy of same to Tenant at least thirty (30) days in advance.

 

 

 

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EXHIBIT E

 

Landlord Ground Lease

 

[See attached.]

 

 

 

E-1

EXECUTION COPY

EXHIBIT F

 

Form of SNDA

 

[To be provided.]

 

 

 

 

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EXHIBIT G

 

Form of Landlord Ground Lease NDA

 

 

GROUND LANDLORD'S NON-DISTURBANCE AGREEMENT

 

The undersigned, Allegheny County Airport Authority, a body politic, organized under the Municipal Authorities Act of 1945 ("Ground Landlord"), for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, represents, warrants, covenants and agrees to and with KRYSTAL BIOTECH, INC., a Delaware corporation ("Tenant") as follows with respect to that certain Lease Agreement between Tenant and NORTHFIELD I, LLC, an Ohio limited liability company ("Landlord"), dated December 26, 2019 ("Lease") pertaining to the lease of certain real property consisting of approximately 10 acres located on that certain land in Findlay Township, Pennsylvania described on Exhibit A attached hereto, together with all rights, privileges and easements appurtenant thereto and a building to be constructed thereon, as more particularly described in the Lease (collectively, "Premises"):  

1.Ground Landlord and Landlord are parties to that certain Ground Lease Agreement, dated December 26, 2019 ("Ground Lease"), of which the Lease is subject and subordinate.  

2.Tenant shall not be disturbed in its possession of the Premises by Ground Landlord, or any person acting by, through or under Ground Landlord, for so long as Tenant is not in default under the Lease.

3.In the event that the Ground Lease is repudiated, disclaimed, or terminated at any time prior to the expiration or earlier termination of the term of the Lease, including without limitation as a result of Landlord's default, bankruptcy, insolvency or dissolution, and Tenant is not then in default of its obligations under the Lease, then Ground Landlord agrees that the Lease shall automatically continue in full force and effect, and Ground Landlord shall continue to honor the terms of the Ground Lease and Lease, as modified by, and with respect to, this Landlord's Consent, as though Tenant were the direct tenant of Ground Landlord, and Tenant's interest in the Premises shall continue without interruption.  

4.Landlord forever waives (i) any right provided by law or otherwise to obtain, foreclose upon, execute upon or otherwise benefit from a lien or other encumbrance against the Personal Property (as defined in the Lease) located at the Premises for rent or other sums due Ground Landlord, whether under the Ground Lease or Lease, or any other obligation of Tenant to Ground Landlord, and (ii) any right provided by law or otherwise to distraint or distress the Personal Property of Tenant located on the Premises.  

 

 

 

	
5.
	
With respect to the Lease, Ground Landlord represents, warrants and covenants to Tenant as follows: 

(A)Tenant's intended use of the Premises for industrial manufacturing, warehouse, distribution, storage, office and ancillary uses related to the foregoing uses is permitted under the Ground Lease.

(B)The term of the Ground Lease expires on ________________.

(C)The Ground Lease is presently in full force and effect.

(D)Landlord is in possession and full occupancy of all of the Premises.

(E)To Ground Landlord's knowledge, Landlord has not subleased or licensed to any other person or entity any of the Premises.

(F)As of the Effective Date, no "Lessor" or "Lessee" default is continuing under the terms of the Ground Lease, and no event has occurred which with notice or the passage of time or both would constitute a "Lessor" or "Lessee" default under the terms of the Lease.

(G)All obligations on the part of Landlord as "Lessee" under the terms of the Ground Lease through the Effective Date have been fully performed to the satisfaction of Ground Landlord.    

6.Ground Landlord represents and warrants to Tenant that it has full power and authority to enter into and grant this Non-Disturbance Agreement.  This Non-Disturbance Agreement shall be binding upon and shall inure to the benefit of Tenant and Tenant's successors and assigns.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Ground Landlord has signed this Non-Disturbance Agreement this ____ day of December, 2019.

 

	
 
	
 
	
GROUND LANDLORD:

	
ATTEST/WITNESS:
	
 
	
THE ALLEGHENY COUNTY AIRPORT 

	
 
	
 
	
AUTHORITY

 

	
By:
	
 
	
 
	
 
	
By:
	
 
	
 

	
Name:
	
 
	
 
	
 
	
Name:
	
 
	
 

	
Title:
	
 
	
 
	
 
	
Title:
	
 
	
 

	
Date:
	
 
	
December ___, 2019
	
 
	
Date:
	
 
	
December ___, 2019

 

APPROVED AS TO FORM:

______________________________

Jeffrey W. Letwin, Esquire, Solicitor

 

	
COMMONWEALTH OF PENNSYLVANIA
	
 
	
 
	
)

	
 
	
 
	
 
	
)
	
SS:

	
COUNTY OF
	
 
	
 
	
 
	
)

 

 

The foregoing instrument was acknowledged before me this ___ day of December, 2019, by __________________, the __________________ of The Allegheny County Airport Authority, a body politic under the Municipal Authorities Act of 1945.

 

	
 
	
 

	
Notary Public
	
 

 

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EXECUTION COPY

EXHIBIT A

TO

GROUND LANDLORD'S NON-DISTURBANCE AGREEMENT

 

Legal Description of the Property

 

All that certain lease area being a part of lands now or formerly of The Allegheny County Airport Authority, situate in the Township of Findlay, County of Allegheny and Commonwealth of Pennsylvania, being more particularly bounded and described as follows:

 

Beginning at a point on the southerly line of Halverson Road, a sixty-eight (68) foot road, said point being the northerly corner of the parcel herein conveyed and intersection with lands now or formerly of The Allegheny County Airport Authority; thence from beginning through lands now or formerly The Allegheny County Airport Authority the following four (4) courses and distances:

 

	
 
	
1.
	
S 84°13’31” E a distance of 76.33 feet to a point;

 

	
 
	
2.
	
S 03°26’54” E a distance of 921.81 feet to a point;

 

	
 
	
3.
	
N 86°26’37” W a distance of 558.89’ feet to a point;

 

	
 
	
4.
	
N 03°26’54” E a distance of 723.36 feet to a point on the southerly line of Halverson Road;

 

thence along Halverson Road S 86°33’46” E a distance of 192.68 feet to a point; thence by same with an arc having a curve to the left, having a radius of 309.00 feet, an arc length of 375.10 feet to a point the northerly corner of the parcel, at the point of beginning.

 

Containing an area of 10 acres.

 

 

 

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EXHIBIT H

 

Form of Memorandum of Lease

 

MEMORANDUM OF LEASE

 

THIS MEMORANDUM OF LEASE is made and entered into as of the ____ day of December 2019, between NORTHFIELD I, LLC, an Ohio limited liability company (the “Landlord”), and KRYSTAL BIOTECH, INC., a Delaware corporation (the “Tenant”).

 

RECITALS

 

	
A.
	
Pursuant to that certain Lease Agreement dated as of December ___, 2019 between Landlord and Tenant (the “Lease”), Landlord leased and demised to Tenant, and Tenant leased from Landlord, the Premises (as hereinafter defined).

 

	
B.
	
Landlord and Tenant desire to enter into this Memorandum of Ground Lease pursuant to the provisions of the Act of June 2, 1959, P.L. 454 (21 P.S. §404 et seq.).

 

	
C.
	
Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Lease.

 

NOW, THEREFORE, intending to be legally bound, Landlord and Tenant hereby set forth the following information with respect to the Lease and the Premises:

 

	
 
	
1.
	
The name of the Landlord is NORTHFIELD I, LLC, an Ohio limited liability company.  

 

	
 
	
2.
	
The name of the Tenant is KRYSTAL BIOTECH, INC., a Delaware corporation.

 

	
 
	
3.
	
The addresses set forth in the Lease as addresses of the parties are as follows:

 

H-1

EXECUTION COPY

 

	
Landlord's Address:
	
 
	
c/o Al. Neyer, LLC

	
 
	
 
	
 
	
 
	
302 West Third Street, Suite 800

	
 
	
 
	
 
	
 
	
Cincinnati, OH 45202

	
 
	
 
	
 
	
 
	
Attn: Legal Services

	
 
	
 
	
 
	
 
	
Email: lkoth@neyer.com

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
with copy to:
	
 
	
c/o Al. Neyer, LLC

	
 
	
 
	
 
	
 
	
302 West Third Street, Suite 800

	
 
	
 
	
 
	
 
	
 
	
Cincinnati, OH  45202

	
 
	
 
	
 
	
 
	
 
	
Attn: Asset Management

	
 
	
 
	
 
	
 
	
 
	
Email: jcheung@neyer.com

	
 
	
 
	
 
	
 
	
 
	
 

	
Tenant's Address:
	
 
	
2100 Wharton Street, Suite 701

	
 
	
 
	
 
	
 
	
Pittsburgh, PA 15203

	
 
	
 
	
 
	
 
	
Attn:  Tony Riley

	
 
	
 
	
 
	
 
	
Email: triley@krystalbio.com

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
and

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
2100 Wharton Street, Suite 701

	
 
	
 
	
 
	
 
	
Pittsburgh, PA 15203

	
 
	
 
	
 
	
 
	
Attn:  Josh Suskin

	
 
	
 
	
 
	
 
	
Email:
	
jsuskin@krystalbio.com 

	
 
	
 
	
 
	
 
	
 
	
 

	
with copy to:
	
 
	
 
	
 
	
Jonathan P. Altman, Esq.

	
 
	
 
	
 
	
 
	
Sherrard, German & Kelly, P.C.

	
 
	
 
	
 
	
 
	
 
	
535 Smithfield Street, Suite 300

	
 
	
 
	
 
	
 
	
 
	
Pittsburgh, PA 15222

	
 
	
 
	
 
	
 
	
 
	
Email:  jpa@sgkpc.com

 

 

 

	
4.
	
The Lease is dated as of December ___, 2019.

 

	
5.
	
The description of the “Premises” leased from Landlord to Tenant under the Lease is (a) the Property described on Exhibit A attached hereto, together with (b) all improvements located on the Property (including, without limitation, a Building to be constructed containing approximately 100,000 rentable square feet of space, and all utility systems located within or otherwise serving the Building, and a parking lot containing at least 200 parking spaces), and (c) all appurtenances thereto, including but not limited to, rights of ingress, egress and regress to the Property and the Building.

 

	
6.
	
The initial Term of the Lease shall commence upon Substantial Completion of the Landlord’s Work (the “Lease Commencement Date”) and shall expire on the last day of the one hundred eightieth (180th) complete calendar month thereafter.

 

	
7.
	
The Tenant shall have three (3) consecutive renewal options, the first two of which shall be for a period of five (5) years each, and the third of which shall be for a period of up to a maximum of four (4) years and eleven (11) months.

 

EXECUTION COPY

 

	
8.
	
As more particularly set forth in the Lease, the Tenant has an option to purchase the Building and Improvements and take a corresponding assignment of Landlord’s rights under the Landlord Ground Lease, to be exercised at any time prior to the date that is thirty (30) days after the Initial Delivery Date (as defined in the Lease). 

 

	
9.
	
As more particularly set forth in the Lease, commencing after the expiration of the twenty-fourth (24th) complete calendar month after the Lease Commencement Date, and continuing until the expiration of the Lease Term, Tenant shall have an ongoing right of first offer to purchase the Building and Improvements and take a corresponding assignment of Landlord’s rights under the Landlord Ground Lease; provided, however, that Tenant’s right of first offer shall not apply to any sale of the Premises to an Affiliate of Landlord, but Tenant’s right of first offer shall continue in full force and effect for any subsequent sale by any and all such Affiliates of Landlord.

 

	
10.
	
It is the intention of this instrument to give notice of the existence of the Lease and certain terms and conditions thereof, and is not intended to supersede, diminish, add to or change any of the terms or conditions of the Lease.  All of the terms and conditions of the Lease are incorporated herein by this reference to the same extent as if set forth herein at length, and the failure to include any such terms or conditions shall not prejudice the rights of the Landlord or Tenant with respect thereto.

 

	
11.
	
This Memorandum may be executed in counterparts or with counterpart signature pages, all of which taken together shall constitute one integrated agreement.  

 

[SIGNATURE PAGES FOLLOW]

 

 

 

EXECUTION COPY

IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of Lease as of the day and year first above written.

 

	
LANDLORD:

	
 

	
NORTHFIELD I, LLC,

	
an Ohio limited liability company

	
 

	
By:
	
 
	
Al. Neyer, LLC

	
 
	
 
	
an Ohio limited liability company,

	
 
	
 
	
its Manager

	
 
	
 
	
 

	
 
	
 
	
By:
	
 
	
 

	
 
	
 
	
 
	
 
	
Stephanie P. Gaither,

	
 
	
 
	
 
	
 
	
Sr. Vice President & CFO

 

	
STATE OF OHIO
	
 
	
)
	
 

	
 
	
 
	
 
	
)
	
SS:

	
COUNTY OF HAMILTON
	
 
	
)
	
 

 

The foregoing instrument was acknowledged before me this ___ day of December, 2019, by Stephanie P. Gaither, Sr. Vice President & CFO, of Al. Neyer, LLC, an Ohio limited liability company, the Manager of Northfield I, LLC, an Ohio limited liability company, on behalf of such company.

 

	
	
Notary Public

 

 [LANDLORD’S SIGNATURE PAGE TO MEMORANDUM OF LEASE]

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of Lease as of the day and year first above written.

 

	
TENANT:

	
 
	
 
	
 

	
KRYSTAL BIOTECH, INC.,

	
a Delaware corporation

	
 
	
 
	
 

	
 
	
 
	
 

	
By: 
	
 
	
 

	
 
	
 
	
Krish S. Krishnan,

	
 
	
 
	
President and Chief Executive Officer

 

 

	
STATE OF 
	
 
	
 
	
 
	
)

	
 
	
 
	
 
	
)
	
SS:

	
COUNTY OF
	
 
	
 
	
 
	
)

 

 

 

The foregoing instrument was acknowledged before me this ___ day of December, 2019, by Krish S. Krishnan, President and Chief Executive Officer of Krystal Biotech, Inc., a Delaware corporation, on behalf of such corporation.

 

	
 
	
 

	
Notary Public
	
 

 

 

 

 

 

 

 

 

 

 

[TENANT’S SIGNATURE PAGE TO MEMORANDUM OF LEASE]

 

 

 

 

 

EXHIBIT A

TO

MEMORANDUM OF LEASE

 

Legal Description of the Property

 

All that certain lease area being a part of lands now or formerly of The Allegheny County Airport Authority, situate in the Township of Findlay, County of Allegheny and Commonwealth of Pennsylvania, being more particularly bounded and described as follows:

 

Beginning at a point on the southerly line of Halverson Road, a sixty-eight (68) foot road, said point being the northerly corner of the parcel herein conveyed and intersection with lands now or formerly of The Allegheny County Airport Authority; thence from beginning through lands now or formerly The Allegheny County Airport Authority the following four (4) courses and distances:

 

	
 
	
1.
	
S 84°13’31” E a distance of 76.33 feet to a point;

 

	
 
	
2.
	
S 03°26’54” E a distance of 921.81 feet to a point;

 

	
 
	
3.
	
N 86°26’37” W a distance of 558.89’ feet to a point;

 

	
 
	
4.
	
N 03°26’54” E a distance of 723.36 feet to a point on the southerly line of Halverson Road;

 

thence along Halverson Road S 86°33’46” E a distance of 192.68 feet to a point; thence by same with an arc having a curve to the left, having a radius of 309.00 feet, an arc length of 375.10 feet to a point the northerly corner of the parcel, at the point of beginning.

 

Containing an area of 10 acres.Exhibit

EXHIBIT 10.1
CARTER VALIDUS MISSION CRITICAL REIT II, INC. 

AMENDED AND RESTATED 
2014 RESTRICTED SHARE PLAN
as of March 6, 2020
1PURPOSE
The purpose of this Plan is to promote the interests of the Company by providing the opportunity to purchase or receive shares of the Company’s Class A common stock, par value $0.01 per share (“Shares”) or to receive compensation that is based upon the value of Shares in order to attract and retain Eligible Recipients and providing Eligible Recipients an incentive to work to increase the value of Shares and a stake in the future of the Company that corresponds to the stake of each of the Company’s stockholders. The Plan provides for the grant of Restricted Stock Awards and Deferred Stock Awards to aid the Company in obtaining these goals.
2    DEFINITIONS
Each term set forth in this Section shall have the meaning set forth opposite such term for purposes of this Plan and any Stock Incentive Agreements under this Plan (unless noted otherwise), and for purposes of such definitions, the singular shall include the plural and the plural shall include the singular, and reference to one gender shall include the other gender. Note that some definitions may not be used in this Plan, and may be inserted here solely for possible use in Stock Incentive Agreements issued under this Plan.
2.1    Board means the Board of Directors of the Company.
2.2    Affiliate means, with respect to a Person:
(a)    any other Person directly or indirectly owning, controlling or holding, with power to vote, 10% or more of the outstanding voting securities of such Person,
(b)    any other Person, 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with power to vote, by such Person,
(c)    any other Person, directly or indirectly controlling, controlled by or under common control with such Person,
(d)    any executive officer, director, trustee or general partner of such Person, and
(e)    any legal entity for which such Person acts as an executive officer, director, trustee or general partner.
With respect to the Company, an Affiliate shall include, but not be limited to, Carter Validus REIT Management Company II, LLC, Carter Validus Operating Partnership II, LP, Carter Real Estate Management Services II, LLC, Carter Validus Advisors II, LLC, Strategic Capital Management Holdings, LLC, Strategic Capital Advisory Services, LLC and SC Distributors, LLC.
2.3    Business means the business of investing in income-producing commercial real estate in the healthcare and data center sectors.

1

2.4    Cause shall mean an act or acts by an Eligible Recipient involving (a) the use for profit or disclosure to unauthorized Persons of confidential information or trade secrets of the Company or an Affiliate, (b) the breach of any contract with the Company or an Affiliate, (c) the violation of any fiduciary obligation to the Company or an Affiliate, (d) the unlawful trading in the securities of the Company or an Affiliate, or of another corporation based on information gained as a result of the performance of services for the Company or an Affiliate, (e) a felony conviction or the failure to contest prosecution of a felony, or (f) willful misconduct, dishonesty, embezzlement, fraud, deceit or civil rights violations, or other unlawful acts.
2.5    Change of Control means either of the following:
(a)    any transaction or series of transactions pursuant to which the Company sells, transfers, leases, exchanges or disposes of all or substantially all (i.e., at least eighty-five percent (85%)) of its assets for cash or property, or for a combination of cash and property, or for other consideration, other than a sale, transfer, lease, exchange or disposition by the Company of all or substantially all of its assets to an entity in which the stockholders of the Company immediately prior to such transaction have, directly or indirectly, a controlling (i.e., fifty percent (50%) or more) voting interest immediately after the transaction; 
(b)    any transaction pursuant to which Persons who are not current stockholders of the Company acquire by merger, consolidation, reorganization, division or other business combination or transaction an interest in the Company so that, after such transaction, the stockholders of the Company immediately prior to such transaction no longer have, directly or indirectly a controlling (i.e., fifty percent (50%) or more) voting interest in the Company (or the surviving entity or, if the Company or the entity surviving such transaction is then a subsidiary, the ultimate parent thereof), excluding such a transaction effected to implement a recapitalization of the Company (or similar transaction) in which no Person or more than one Person acting as a group (as that term is used in Section 13(d) or 14(d) of the Exchange Act) becomes the owner, directly or indirectly, of a controlling (i.e., fifty percent (50%) or more) voting interest in the Company (or the surviving entity or, if the Company or the entity surviving such transaction is then a subsidiary, the ultimate parent thereof); or 
(c)    any Person or more than one Person acting as a group (as that term is used in Section 13(d) or 14(d) of the Exchange Act) becomes the owner, directly or indirectly, of a controlling (i.e., fifty percent (50%) or more) voting interest in the Company (other than pursuant to a transaction described in subsection 2.5(b)), except that “Person” for this purposes shall not include (i) the Company, (ii) any employee benefit plan of the Company or any Affiliate of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Affiliate of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) any Person owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
However, notwithstanding the foregoing, in no event shall an Initial Public Offering of the Company’s Common Stock constitute a Change of Control.
2.6    Code means the Internal Revenue Code of 1986, as amended.
2.7    Committee means any committee appointed by the Board to administer the Plan, as specified in Section 5 hereof. Any such committee shall be comprised entirely of Directors.
2.8    Company means Carter Validus Mission Critical REIT II, Inc., a Maryland corporation, and any successor to such organization.
2.9    Common Stock means the common stock of the Company.

2

2.10    Confidential Information means (a) information of the Company, to the extent not considered a Trade Secret under applicable law, that (i) relates to the business of the Company, (ii) possesses an element of value to the Company, (iii) is not generally known to the Company’s competitors, and (iv) would damage the Company if disclosed, and (b) information of any third party provided to the Company which the Company is obligated to treat as confidential, including, but not limited to, information provided to the Company by its licensors, suppliers, Customers, or Prospective Customers. Confidential Information includes, but is not limited to, (i) future business plans, (ii) the composition, description, schematic or design of products, future products or equipment of the Company or any third party, (iii) communication systems, audio systems, system designs and related documentation, (iv) advertising or marketing plans, (v) information regarding independent contractors, employees, clients, licensors, suppliers, Customers, Prospective Customers, or any third party, including, but not limited to, Customer lists and Prospective Customer lists compiled by the Company, and Customer and Prospective Customer information compiled by the Company, and (vi) information concerning the Company’s or a third party’s financial structure and methods and procedures of operation. Confidential Information shall not include any information that (i) is or becomes generally available to the public other than as a result of an unauthorized disclosure, (ii) has been independently developed and disclosed by others without violating the legal rights of any party, or (iii) otherwise enters the public domain through lawful means.
2.11    Contact means, with respect to a Participant, any interaction between such Participant and a Customer or Prospective Customer which takes place in an effort to establish, maintain, and/or further a business relationship on behalf of the Company.
2.12    Continuous Service means the absence of any interruption or termination of service as an Employee or Key Person. Continuous Service shall not be considered interrupted in the case of (i) sick leave; (ii) military leave; (iii) any other leave of absence as approved by the Board or the chief executive officer of the Company provided that such leave is for a period of not more than ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; or (iv) transfers between locations of the Company or between Company or an Affiliate, or any successors to such organization. However, notwithstanding anything in the foregoing to the contrary, the Board shall have complete and absolute discretion to determine whether an Employee or Key Person is in the Continuous Service of the Company or an Affiliate at any time.
2.13    Customer means any Person or entity to whom the Company has sold its products or services.
2.14    Deferred Stock Award means a contractual right granted to a Participant under this Plan to receive a Share that is subject to restrictions of this Plan and the applicable Stock Incentive Agreement.
2.15    Director means a member of the Board.
2.16    Eligible Recipient means an Employee and/or a Key Person.
2.17    Employee means a common law employee of the Company or an Affiliate.
2.18    ERISA means the Employee Retirement Income Security Act of 1974, as amended.
2.19    Exchange Act means the Securities Exchange Act of 1934, as amended.
2.20    Fair Market Value of each Share on any date means the price determined below as of the close of business on such date (provided, however, if for any reason, the Fair Market Value per Share cannot be ascertained or is unavailable for such date, the Fair Market Value per Share shall be determined as of the nearest preceding date on which such Fair Market Value can be ascertained):

3

(a)    If the Share is listed or traded on any established stock exchange or a national market system, including without limitation the National Market of the National Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”) System, its Fair Market Value shall be the closing sale price for the Share (or the mean of the closing bid and ask prices, if no sales were reported), on such exchange or system on the date of such determination or, if the stock exchange or national market on which the Shares trade is not open on the date of determination, the last business day prior to the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; or
(b)    If the Share is not listed or traded on any established stock exchange or a national market system, its Fair Market Value shall be the average of the closing dealer “bid” and “ask” prices of a Share as reflected on the NASDAQ interdealer quotation system of the National Association of Securities Dealers, Inc. on the date of such determination; or
(c)    In the absence of an established public trading market for the Share, the Fair Market Value of a Share will be equal to the most recently determined net asset value per Share.
2.21    Forfeiture Activities means, with respect to a Participant, any of the following:
(a)    Trade Secrets & Confidential Information. Such Participant (i) uses, discloses, or reverse engineers the Trade Secrets or the Confidential Information for any purpose other than the Company’s Business, except as authorized in writing by the Company; (ii) during the Participant’s employment with the Company, uses, discloses, or reverse engineers (a) any confidential information or trade secrets of any former employer or third party, or (b) any works of authorship developed in whole or in part by the Participant during any former employment or for any other party, unless authorized in writing by the former employer or third party; or (iii) after the Participant’s cessation of services for the Company, (a) retains Trade Secrets or Confidential Information, including any copies existing in any form (including electronic form), which are in Participant’s possession or control, or (b) destroys, deletes, or alters the Trade Secrets or Confidential Information without the Company’s prior written consent. The Forfeiture Activities under this subsection (a) shall: (i) with regard to the Trade Secrets, remain in effect and be applicable as long as the information constitutes a Trade Secret under applicable law, and (ii) with regard to the Confidential Information, remain in effect and be applicable during the Forfeiture Period.
(b)    Solicitation of Customers. During the Forfeiture Period of such Participant, the Participant directly or indirectly solicits any Customer of the Company for the purpose of selling or providing any products or services competitive with the Business, provided that such Participant had Contact with such Customer during the period in which the Participant was employed by or performed services for the Company. Nothing in this subsection (b) shall be construed to include any Customer of the Company (i) to which such Participant never sold or provided any products or services while employed by or providing services to the Company, (ii) that explicitly severed its business relationship with the Company unless such Participant, directly or indirectly, caused or encouraged the Customer to sever the relationship, or (iii) to which Participant is selling or providing products or services the Company no longer offers.
(c)    Solicitation of Prospective Customers. During the Forfeiture Period of such Participant, the Participant, directly or indirectly, solicits any Prospective Customer of the Company for the purpose of selling or providing any products or services competitive with the Business, provided that such Participant had Contact with such Prospective Customer during the last year of the period in which Participant was employed by or performed services for the Company (or during such period if employed or providing services for less than a year). Nothing in this subsection (c) shall be construed to include Prospective Customers of the Company to which Participant is selling or providing any products or services which the Company no longer offers.

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(d)    Solicitation of Forfeiture Period Employees. During the Forfeiture Period of such Participant, the Participant, directly or indirectly, solicits, recruits or induces any Forfeiture Period Employee to (a) terminate his employment or service relationship with the Company or (b) work for any other Person or entity engaged in the Business. This subsection (d) shall only apply to Forfeiture Period Employees (i) with whom such Participant had Material Interaction, or (ii) such Participant, directly or indirectly, supervised.
(e)    Non-Disparagement. During the Forfeiture Period of such Participant, the Participant makes any disparaging or defamatory statements, whether written or oral, regarding the Company. This shall not preclude the Participant from responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding.
2.22    Forfeiture Period means, with respect to a Participant, the time period during which such Participant is employed with, or is performing services for, the Company, and for a period of two (2) years thereafter.
2.23    Forfeiture Period Employee means any Person who (a) is employed by or providing services to the Company at the time Participant ceases to perform services for the Company, or (b) was employed by or providing services to the Company during the last year in which Participant performed services for the Company (or during the period in which the Participant performed services for the Company if the Participant performed services for the Company for less than a year).
2.24    Good Reason shall exist if (i) the Company, without the consent of a Participant who is performing services for the Company, materially (a) diminishes such Participant’s base compensation, (b) diminishes such Participant’s authority, duties or responsibilities, (c) changes the geographic location at which such Participant must perform the services, or (d) breaches, whether by action or inaction, the agreement under which such Participant provides services; (ii) such Participant provides written notice to the Company of the existence of such condition described in subsection (i) of this paragraph within thirty (30) days of the initial existence of such condition and provides the Company with thirty (30) days to remedy such condition (the “Cure Period”); (iii) the Company fails to remedy such condition within the Cure Period; and (iv) Participant elects to resign within thirty (30) days of the expiration of the Cure Period.
2.25    Independent Director means a Director who is not, and within the last two (2) years has not been, directly or indirectly associated with the “Sponsor” (as that term is defined in the Company’s Charter, as amended) or the “Advisor” (as that term is defined in the Company’s Charter, as amended) by virtue of (a) ownership of an interest in the Sponsor, the Advisor or any of their Affiliates, (b) employment by the Sponsor, the Advisor or any of their Affiliates, (c) services as an officer or director of the Sponsor, the Advisor or any of their Affiliates, (d) performance of services, other than as a Director, for the Company, (e) services as a director or trustee of more than three REITs organized by the Sponsor or advised by the Advisor or (f) maintenance of a material business or professional relationship with the Sponsor, the Advisor or any of their Affiliates. For this purpose, a business or professional relationship is considered “material” if the aggregate gross revenue derived by the Director from the Sponsor, the Advisor and their Affiliates exceeds five percent (5%) of either the Director’s annual gross income, derived from all sources, during either of the last two (2) years or the Director’s net worth on a fair market value basis. An indirect association with the Sponsor or the Advisor shall include circumstances in which a Director’s spouse, parent, child, sibling, mother-in-law, father-in-law, son-in-law, or daughter-in-law, or brother-in-law or sister-in-law is or has been associated with the Sponsor, the Advisor, any of their Affiliates or the Company.
2.26    Initial Public Offering means the Company’s initial public offering of any class or series of the Company’s equity securities pursuant to an effective registration statement filed by the Company under the 1933 

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Act, and includes any subsequent follow-on public offerings of the Company’s equity securities pursuant to an effective registration statement filed by the Company under the 1933 Act.
2.27    Insider means an individual who is, on the relevant date, an officer, director or ten percent (10%) beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act.
2.28    Key Person means (a) a member of the Board or a member of management of an Affiliate who is not an Employee, or (b) a consultant or advisor of the Company or an Affiliate; provided, however, that such consultant or advisor must be a natural person who is providing or will be providing bona fide services to the Company or an Affiliate, with such services (i) not being in connection with the offer or sale of securities in a capital-raising transaction, and (ii) not directly or indirectly promoting or maintaining a market for securities of the Company or an Affiliate, within the meaning of the general instructions to SEC Form S-8.
2.29    Material Interaction means, with respect to a Participant, any interaction between such Participant and a Forfeiture Period Employee which relates or related, directly or indirectly, to the performance of such Participant’s duties or the Forfeiture Period Employee’s duties for the Company.
2.30    Outside Director means a Director who is not an Employee and who qualifies as a “non‐employee director” under Rule 16b-3(b)(3) under the 1934 Act, as amended from time to time.
2.31    Participant means an individual who receives a Stock Incentive hereunder.
2.32    Person means any individual, partnership, corporation, association, trust, limited liability company or other legal entity.
2.33    Plan means the Carter Validus Mission Critical REIT II, Inc. 2014 Restricted Share Plan, as may be amended from time to time.
2.34    Prospective Customer means any Person to which the Company has solicited to sell its products or services.
2.35    Restatement Effective Date means the “Restatement Effective Date” as set forth in Section 4 of this Plan.
2.36    Restricted Stock Award means an award of Shares granted to a Participant under this Plan whereby the Participant has immediate rights of ownership in the Shares underlying the award, but such Shares are subject to restrictions in accordance with the terms and provisions of this Plan and the Stock Incentive Agreement pertaining to the award and may be subject to forfeiture by the Participant until the earlier of (a) the time such restrictions lapse or are satisfied, or (b) the time such Shares are forfeited, pursuant to the terms and provisions of the Stock Incentive Agreement pertaining to the award.
2.37    Separation from Service means a “separation from service” within the meaning of Treas. Reg. §1.409A-1(h) (without giving effect to any elective provisions that may be available under such provisions).
2.38    Specified Employee means a “specified employee” as defined in Treas. Reg. §1.409A-1(i) using the identification methodology selected by the Company from time to time.
2.39    Share has the meaning set forth in Section 1 of this Plan.
2.40    Stock Incentive means a Restricted Stock Award or a Deferred Stock Award.

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2.41    Stock Incentive Agreement means an agreement between the Company, and a Participant evidencing an award of a Stock Incentive.
2.42    Trade Secrets means information of the Company, and its licensors, suppliers, clients and customers, without regard to form, including, but not limited to, technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, a list of actual Customers, clients, licensors, or suppliers, or a list of Prospective Customers, clients, licensors, or suppliers which is not commonly known by or available to the public and which information (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other Persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
3    SHARES SUBJECT TO STOCK INCENTIVES
3.1    Maximum Aggregate Shares Issuable Pursuant to Stock Incentives. The total number of Shares that may be issued pursuant to Stock Incentives under this Plan shall not exceed 5,000,000 Share, as adjusted pursuant to Section 10. Such Shares shall be reserved, to the extent that the Company deems appropriate, from authorized but unissued Shares, from Shares which have been reacquired by the Company, and Shares withheld by or tendered to the Company for payment of taxes.
3.2    Determination of Maximum Aggregate Shares Issuable. Any Shares subject to a Stock Incentive that remain un-issued after the cancellation, expiration, lapse or exchange of such Stock Incentive thereafter shall again become available for use under this Plan.  Shares withheld by or tendered to the Company for payment of taxes relating to a Stock Incentive shall again become available for use under the Plan.
4    EFFECTIVE DATE AND RESTATEMENT EFFECTIVE DATE
An amendment and restatement of the Plan was approved by the Board on March 6, 2020 (the “Restatement Effective Date”). 
5    ADMINISTRATION
5.1    General Administration. This Plan shall be administered by the Board. The Board, acting in its complete and absolute discretion, shall exercise all such powers and take all such action as it deems necessary or desirable to carry out the purposes of this Plan. The Board shall have the power to interpret this Plan and, subject to the terms and provisions of this Plan, to take such other action in the administration and operation of the Plan as it deems equitable under the circumstances. The Board’s actions shall be binding on the Company, on each affected Eligible Recipient, and on each other Person directly or indirectly affected by such actions.
5.2    Authority of the Board. Except as limited by law or by the Articles of Incorporation or Bylaws of the Company, and subject to the provisions herein, the Board shall have full power to select Eligible Recipients who shall participate in the Plan, to determine the sizes and types of Stock Incentives in a manner consistent with the Plan, to determine the terms and conditions of Stock Incentives in a manner consistent with the Plan, to construe and interpret the Plan and any agreement or instrument entered into under the Plan, to establish, amend or waive rules and regulations for the Plan’s administration, and to amend the terms and conditions of any outstanding Stock Incentives as allowed under the Plan and such Stock Incentives. Further, the Board may make all other determinations that may be necessary or advisable for the administration of the Plan.

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5.3    Delegation of Authority. The Board may delegate its authority under the Plan, in whole or in part, to a Committee appointed by the Board consisting of not less than one (1) Director or to one or more other individuals to whom the powers of the Board hereunder may be delegated in accordance with applicable law. The members of the Committee and any other individuals to whom authority has been delegated shall be appointed from time to time by, and shall serve at the discretion of, the Board. The Committee or other delegate (if appointed) shall act according to the policies and procedures set forth in the Plan and to those policies and procedures established by the Board, and the Committee or other delegate shall have such powers and responsibilities as are set forth by the Board. Reference to the Board in this Plan shall specifically include reference to the Committee or other delegate where the Board has delegated its authority to the Committee or other delegate, and any action by the Committee or other delegate pursuant to a delegation of authority by the Board shall be deemed an action by the Board under the Plan. Notwithstanding the above, the Board may assume the powers and responsibilities granted to the Committee or other delegate at any time, in whole or in part. With respect to Committee appointments and composition, only a Committee comprised solely of Outside Directors may grant Stock Incentives to Insiders that will be exempt from Section 16(b) of the Exchange Act.
5.4    Decisions Binding. All determinations and decisions made by the Board (or its delegate) pursuant to the provisions of this Plan and all related orders and resolutions of the Board shall be final, conclusive and binding on all Persons, including the Company, its stockholders, Directors, Eligible Recipients, Participants, and their estates and beneficiaries.
5.5    Indemnification for Decisions. No member of the Board or the Committee (or a subcommittee thereof) shall be liable in connection with or by reason of any act or omission performed or omitted to be performed on behalf of the Company in such capacity, provided, that the Board has determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company. Service on the Committee (or a subcommittee thereof) shall constitute service as a Director of the Company so that the members of the Committee (or a subcommittee thereof) shall be entitled to indemnification and reimbursement as Directors of the Company pursuant to its articles of incorporation, bylaws and applicable law. In addition, the members of the Board, Committee (or a subcommittee thereof) shall be indemnified by the Company against the following losses or liabilities reasonably incurred in connection with or by reason of any act or omission performed or omitted to be performed on behalf of the Company in such capacity, provided, that the Board has determined, in good faith, that the course of conduct which caused the loss or liability was in the best interests of the Company: (a) the reasonable expenses, including attorneys’ fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, any Stock Incentive granted hereunder, and (b) against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such individual is liable for gross negligence or misconduct in the performance of his duties, provided that within sixty (60) days after institution of any such action, suit or proceeding a Committee member or delegatee shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same. The Company shall not indemnify or hold harmless the member of the Board or the Committee (or a subcommittee thereof) if: (a) in the case of a Director (other than an independent Director of the Company), the loss or liability was the result of negligence or misconduct by the Director, or (b) in the case that the Director is an independent Director of the Company, the loss or liability was the result of gross negligence or willful misconduct by the Director or would not be allowed under applicable law. Any indemnification of expenses or agreement to hold harmless may be paid only out of the net assets of the Company, and no portion may be recoverable from the stockholders of the Company.

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5.6    Majority Rule. A majority of the members of the Board (or its delegate) shall constitute a quorum, and any action taken by a majority at a meeting at which a quorum is present, or any action taken without a meeting evidenced by a writing executed by all the members of the Board (or its delegate), shall constitute action of the Board.
6    ELIGIBILITY
Eligible Recipients selected by the Board shall be eligible for the grant of Stock Incentives under this Plan, but no Eligible Recipient shall have the right to be granted a Stock Incentive under this Plan merely as a result of his or her status as an Eligible Recipient.
7    TERMS OF STOCK INCENTIVES
7.1    Terms & Conditions of All Stock Incentives.
(a)    Grants of Stock Incentives. The Board, in its complete and absolute discretion, shall grant Stock Incentives under this Plan from time to time and shall have the right to grant new Stock Incentives in exchange for outstanding Stock Incentives. Stock Incentives shall be granted to Eligible Recipients selected by the Board, and the Board shall be under no obligation whatsoever to grant any Stock Incentives, or to grant Stock Incentives to all Eligible Recipients, or to grant all Stock Incentives subject to the same terms and conditions.
(b)    Shares Subject to Stock Incentives. The number of Shares as to which a Stock Incentive shall be granted shall be determined by the Board in its complete and absolute discretion, subject to the provisions of Section 3 as to the total number of Shares available for grants under the Plan.
(c)    Stock Incentive Agreements. Each Stock Incentive shall be evidenced by a Stock Incentive Agreement executed by the Company or an Affiliate, and the Participant, which shall be in such form and contain such terms and conditions as the Board in its complete and absolute discretion may, subject to the provisions of the Plan, from time to time determine.
(d)    Date of Grant. The date a Stock Incentive is granted shall be the date on which the Board (1) has approved the terms and conditions of the Stock Incentive Agreement, (2) has determined the recipient of the Stock Incentive and the number of Shares covered by the Stock Incentive, (3) has taken all such other action necessary to direct the grant of the Stock Incentive, and (4) if applicable, any conditions imposed on such grant by the Board have been fulfilled.
7.2    Terms & Conditions of Restricted Stock Awards.
(a)    Grants of Restricted Stock Awards. Shares awarded pursuant to Restricted Stock Awards shall be subject to such restrictions (if any) as determined by the Board for periods determined by the Board. Restricted Stock Awards issued under the Plan may have restrictions which lapse based upon the service of a Participant, or based upon the attainment (as determined by the Board) of performance goals relating to any criteria that the Board may determine appropriate. Shares awarded pursuant to a Restricted Stock Award may be forfeited to the extent that a Participant fails to satisfy the applicable conditions or restrictions during the period of restriction. The Company may retain the certificates representing Shares subject to a Restricted Stock Award in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied. The Board may require a cash payment from the Participant in exchange for the grant of a Restricted Stock Award or may grant a Restricted Stock Award without the requirement of a cash payment; provided, however, if the Participant holding a Restricted Stock Award receives a hardship distribution from a Code §401(k) plan of the Company or an Affiliate, 

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the Participant may not pay any amount for such Restricted Stock Award during the six (6) month period following the hardship distribution, unless the Company determines that such payment would not jeopardize the tax-qualification of the Code §401(k) plan.
(b)    Acceleration of Award. The Board shall have the power to permit, in its complete and absolute discretion, an acceleration of the expiration of the applicable restrictions or the applicable period of such restrictions with respect to any part or all of the Shares awarded to a Participant as part of a Restricted Stock Award.
(c)    Necessity of Stock Incentive Agreement. Each grant of a Restricted Stock Award shall be evidenced by a Stock Incentive Agreement that shall specify the terms, conditions and restrictions regarding the Shares awarded to a Participant, and shall incorporate such other terms and conditions as the Board, acting in its complete and absolute discretion, deems consistent with the terms of this Plan. The Board shall have complete and absolute discretion to modify the terms and provisions of Restricted Stock Awards in accordance with Section 12 of this Plan.
(d)    Restrictions on Shares Awarded. Shares awarded pursuant to Restricted Stock Awards shall be subject to such restrictions as determined by the Board for periods determined by the Board. The Board may impose such restrictions on any Shares acquired pursuant to a Restricted Stock Award as it may deem advisable, including, without limitation, vesting or performance-based restrictions, voting restrictions, investment intent restrictions, restrictions or limitations or other provisions that would be applied to stockholders under any applicable agreement among the stockholders, and restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and/or under any blue sky or state securities laws applicable to such Shares.
(e)    Transferability of Restricted Stock Awards. A Restricted Stock Award may not be transferred by the holder Participant, except (A) upon the death of the holder Participant, a Restricted Stock Award may be transferred by will or by the laws of descent and distribution, (B) a Restricted Stock Award may, unless the applicable Stock Incentive Agreement provides otherwise, be transferred at any time as a bona fide gift or through a domestic relations order to any “family member” (as determined by the Board) of the Participant; provided, however, that the transferee must be bound by all terms and provisions of the underlying Restricted Stock Award, and (C) a Restricted Stock Award may be transferred at any time following the lapse of all restrictions on transferability of the Restricted Stock Award. Notwithstanding the foregoing, a Stock Incentive Agreement may provide for more limited transferability than is described above.
(f)    Voting, Dividend & Other Rights. Unless the applicable Stock Incentive Agreement expressly provides otherwise, holders of Restricted Stock Awards shall, with respect to the Shares subject to such Stock Incentive Agreement, be entitled (1) to vote such Shares, and (2) to receive any dividends declared upon such Shares, during any period of restriction imposed by the Stock Incentive Agreement, but shall not be entitled (1) to vote such Shares, or (2) to receive any dividends declared upon such Shares, on or after the date on which Shares are forfeited pursuant to such Stock Incentive Agreement.
7.3    Terms & Conditions of Deferred Stock Awards.
(a)    Grants of Deferred Stock Awards. A Deferred Stock Award shall entitle the Participant to receive one Share at such future time and upon such terms as specified by the Board in the Stock Incentive Agreement evidencing such award. Deferred Stock Awards issued under the Plan may have restrictions which lapse based upon the service of a Participant, or based upon other criteria that the Board may determine appropriate. The Board may require a cash payment from the Participant in exchange for the grant of Deferred Stock Awards or may grant Deferred Stock Awards without the requirement of a cash payment; provided, however, if a Participant holding a Deferred Stock Award receives a hardship distribution from a Code §401(k) plan of the Company or an Affiliate, no 

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payment for the Deferred Stock Award may be made by the Participant during the six (6) month period following the hardship distribution, unless the Company determines that such payment would not jeopardize the tax-qualification of the Code §401(k) plan. A Participant’s right to Shares based upon a Deferred Stock Award shall be an unfunded, unsecured obligation of the Company until such time as Shares are actually issued to the Participant pursuant to the terms and provisions of the Stock Incentive Agreement evidencing such Deferred Stock Award, and such Participant shall have no right to any specific assets of the Company prior thereto.
(b)    Vesting of Deferred Stock Awards. The Board may establish a vesting schedule applicable to a Deferred Stock Award and may specify the times, vesting and performance goal requirements that may be applicable to a Deferred Stock Award. Until the end of the period(s) of time specified in any such vesting schedule and/or the satisfaction of any such performance criteria, the Deferred Stock Awards subject to such Stock Incentive Agreement shall remain subject to forfeiture.
(c)    Acceleration of Award. The Board shall have the power to permit, in its complete and absolute discretion, an acceleration of the applicable restrictions or the applicable period of such restrictions with respect to any part or all of the Deferred Stock Awards awarded to a Participant.
(d)    Necessity of Stock Incentive Agreement. Each grant of Deferred Stock Award(s) shall be evidenced by a Stock Incentive Agreement that shall specify the terms, conditions and restrictions regarding the Participant’s right to receive Share(s) in the future, and shall incorporate such other terms and conditions as the Board, acting in its complete and absolute discretion, deems consistent with the terms of this Plan. The Board shall have complete and absolute discretion to modify the terms and provisions of Deferred Stock Award(s) in accordance with Section 12 of this Plan.
(e)    Transferability of Deferred Stock Awards. Except as otherwise provided in a Participant’s Deferred Stock Award, no Deferred Stock Award granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated by the holder Participant, except upon the death of the holder Participant by will or by the laws of descent and distribution. Notwithstanding the foregoing, a Stock Incentive Agreement may provide for more limited transferability than is described above.
(f)    Voting, Dividend & Other Rights. Unless the applicable Stock Incentive Agreement provides otherwise, holders of Deferred Stock Awards shall not be entitled to vote or to receive dividends until they become owners of the Shares pursuant to their Deferred Stock Awards.
(g)    Code §409A Requirements. A Deferred Stock Award must meet certain restrictions contained in Code §409A if it is to avoid taxation under Code §409A as a “nonqualified deferred compensation plan.” Grants of Deferred Stock Awards under this Plan should be made with consideration of the impact of Code §409A with respect to such grant upon both the Company and the recipient of the Deferred Stock Award.
(h)    No ERISA Employee Benefit Plan Created. Except to the extent that the Board expressly determines otherwise in resolutions, a Deferred Stock Award must contain terms and provisions designed to ensure that the Deferred Stock Award will not be considered an “employee benefit plan” as defined in ERISA §3(3).
(i)    Restrictions on Shares Awarded. Shares awarded pursuant to Deferred Stock Awards shall be subject to such restrictions as determined by the Board for periods determined by the Board. The Board may impose such restrictions on any Shares acquired pursuant to a Deferred Stock Award as it may deem advisable, including, without limitation, vesting or performance-based restrictions, voting restrictions, investment intent restrictions, restrictions on transfer, restrictions or limitations or other provisions that would be applied to stockholders under any applicable agreement among the stockholders, and restrictions under applicable federal securities laws, under the 

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requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and/or under any blue sky or state securities laws applicable to such Shares.
8    SECURITIES REGULATION
Each Stock Incentive Agreement may provide that, upon the receipt of Shares pursuant to a Stock Incentive, the Participant shall, if so requested by the Company, hold such Shares for investment and not with a view of resale or distribution to the public and, if so requested by the Company, shall deliver to the Company a written statement satisfactory to the Company to that effect. Each Stock Incentive Agreement may also provide that, if so requested by the Company, the Participant shall make a written representation to the Company that he or she will not sell or offer to sell any of such Shares unless a registration statement shall be in effect with respect to such Shares under the Securities Act of 1933, as amended (“1933 Act”), and any applicable state securities law or, unless he or she shall have furnished to the Company an opinion, in form and substance satisfactory to the Company, of legal counsel acceptable to the Company, that such registration is not required. Certificates representing the Shares transferred pursuant to a Stock Incentive granted under this Plan may at the complete and absolute discretion of the Company bear a legend to the effect that such Shares have not been registered under the 1933 Act or any applicable state securities law and that such Shares may not be sold or offered for sale in the absence of an effective registration statement as to such Shares under the 1933 Act and any applicable state securities law or an opinion, in form and substance satisfactory to the Company, of legal counsel acceptable to the Company, that such registration is not required. The Company shall not be required to issue any Shares under any Stock Incentive if the issuance of such Shares would constitute a violation by the Participant, the Company or any other Person of any provisions of any law or regulation of any governmental authority, including any federal or state securities laws or regulations. The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act. The Company shall not be obligated to take any affirmative action in order to cause the issuance of Shares pursuant hereto or pursuant to a grant of a Stock Incentive to comply with any law or regulation of any governmental authority. As to any jurisdiction that expressly imposes the requirement that Shares may not be issued pursuant to a Stock Incentive unless and until the Shares covered by such grant are registered or are exempt from registration, the issuance of Shares pursuant to such grant (under circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption.
9    LIFE OF PLAN
No Stock Incentive shall be granted under this Plan on or after the earlier of:
9.1    the tenth (10th) anniversary of the Restatement Effective Date, or
9.2    the date on which all of the Shares available for issuance under Section 3 of this Plan have (as a result of the lapse of all restrictions under Restricted Stock Awards granted under this Plan, or vesting and payment of all Deferred Stock Awards granted under this Plan) been issued or no longer are available for use under this Plan.
After such date, this Plan shall continue in effect with respect to any then-outstanding Stock Incentives until (1) all Restricted Stock Awards have vested or been forfeited, and (2) all Deferred Stock Awards have vested and been paid or been forfeited.
10    ADJUSTMENT
Notwithstanding anything in Section 12 to the contrary, the number of Shares reserved under Section 3 of this Plan, and the number of Shares subject to Stock Incentives granted under this Plan may be adjusted by the 

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Board in its complete and absolute discretion in an equitable manner to reflect any change in the capitalization of the Company, including, but not limited to, such changes as stock dividends or stock splits; provided, however, that the Board shall be required to make such adjustments if such change in the capitalization of the Company constitutes an “equity restructuring” as defined in FASB ASC §718-10-20. If any adjustment under this Section creates a fractional Share or a right to acquire a fractional Share, such fractional Share shall be disregarded, and the number of Shares reserved under this Plan and the number subject to any Stock Incentives granted under this Plan shall be the next lower number of Shares, rounding all fractions downward. An adjustment made under this Section by the Board shall be conclusive and binding on all affected Persons and, further, shall not constitute an increase in the number of Shares reserved under Section 3.
11    CHANGE OF CONTROL OF COMPANY
11.1    General Rule for Deferred Stock Awards. Except as otherwise provided in a Stock Incentive Agreement, if a Change of Control occurs, and if the agreements effectuating the Change of Control do not provide for the assumption or substitution of all Deferred Stock Awards granted under this Plan, with respect to any Deferred Stock Award granted under this Plan that is not so assumed or substituted (a “Non-Assumed DSA”), the Committee, in its complete and absolute discretion, may, with respect to any or all of such Non-Assumed DSAs (including the possibility of different treatment with respect to different Participants) take any or all of the following actions to be effective as of the date of the Change of Control (or as of any other date fixed by the Committee occurring within the twenty-five (25) day period ending on the date of the Change of Control, but only if such action remains contingent upon the effectuation of the Change of Control) (such date referred to as the “Action Effective Date”) and only if such action does not cause the affected Non-Assumed DSA to fail to comply with Code §409A or to fail to be exempt from Code §409A, notwithstanding any provision of Section 12 of this Plan:
(a)    Accelerate (in whole or in part) the vesting of such Non-Assumed DSA on or before a specified Action Effective Date; and/or
(b)    Unilaterally cancel all or any portion of any such Non-Assumed DSA which has not vested as of a specified Action Effective Date; and/or
(c)    Unilaterally cancel all or any portion of such Non-Assumed DSA as of a specified Action Effective Date in exchange for:
(1)    whole and/or fractional Shares (or for whole Shares and cash in lieu of any fractional Share) that are equal to the number of Shares subject to such Non-Assumed DSA determined as of such Action Effective Date (taking into account vesting); and/or
(2)    cash or other property equal in value to the Fair Market Value of the Shares (or fractional Shares) subject to such Non-Assumed DSA determined as of such Action Effective Date (taking into account vesting); and/or
(d)    Unilaterally cancel all or any portion of such Non-Assumed DSA as of a specified Action Effective Date and notify the holder of such Non-Assumed DSA of such action, but only if the Fair Market Value of the Shares that were subject to such Non-Assumed DSA determined as of the Action Effective Date (taking into account vesting) is zero.
However, notwithstanding the foregoing, to the extent that the Participant holding a Non-Assumed DSA is an Insider, payment of cash in lieu of whole or fractional Shares or shares of a successor may only be made to the extent that such payment (1) has met the requirements of an exemption under Rule 16b-3 promulgated under the 

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Exchange Act, or (2) is a subsequent transaction the terms of which were provided for in a transaction initially meeting the requirements of an exemption under Rule 16b-3 promulgated under the Exchange Act. Unless a Stock Incentive Agreement provides otherwise, the payment of cash in lieu of whole or fractional Shares or in lieu of whole or fractional shares of a successor shall be considered a subsequent transaction approved by the original grant of a DSA.
11.2    General Rule for Other Stock Incentive Agreements. If a Change of Control occurs, then, except to the extent otherwise provided in the Stock Incentive Agreement pertaining to a particular Stock Incentive or as otherwise provided in this Plan, each Stock Incentive shall be governed by applicable law and the documents effectuating the Change of Control. Also, if a Change of Control occurs, the Committee, in its complete and absolute discretion, may, with respect to Restricted Stock Awards, accelerate the vesting and/or exercisability of any such Restricted Stock Awards as of the date of the Change of Control (or as of any other date fixed by the Committee occurring within the twenty-five (25) day period ending on the date of Change of Control, but only if such action remains contingent upon the effectuation of the Change of Control).
12    AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent that the Board deems necessary or appropriate; provided, however, stockholder approval of an amendment to the Plan may be necessary in order for the Plan to comply with rules promulgated by an established stock exchange or a national market system, and, in all cases, the Board shall determine whether approval by the stockholders shall be requested and/or required in its complete and absolute discretion after due consideration of such matters. The Board also may suspend the granting of Stock Incentives under this Plan at any time and may terminate this Plan at any time. The Company shall have the right to modify, amend or cancel any Stock Incentive after it has been granted if (a) the modification, amendment or cancellation does not diminish the rights or benefits of the Participant under the Stock Incentive (provided, however, that a modification, amendment or cancellation that results solely in a change in the tax consequences with respect to a Stock Incentive shall not be deemed as a diminishment of rights or benefits of such Stock Incentive), (b) the Participant consents in writing to such modification, amendment or cancellation, (c) there is a dissolution or liquidation of the Company, (d) this Plan and/or the Stock Incentive Agreement expressly provides for such modification, amendment or cancellation, or (e) the Company would otherwise have the right to make such modification, amendment or cancellation by applicable law. 
13    PERFORMANCE CRITERIA
13.1    Performance Goals.  The receipt, vesting and/or payment of a Stock Incentive may be based on achievement of any performance goals or objectives that the Board or the Committee may select in its complete and absolute discretion.
13.2    Discretion in Formulation of Performance Goals. Unless an applicable Stock Incentive Agreement expressly provides otherwise, the Board shall have the complete and absolute discretion to adjust the determinations of the degree of attainment of the pre-established performance goals.
13.3    Payment upon Achievement of Performance Goals. The Committee may provide, either in connection with the grant of the Stock Incentive or by an amendment thereafter, that achievement of such performance goals will be waived upon the death or disability of the Participant receiving such Stock Incentive, upon a Change of Control of the Company or upon such other event as the Committee may determine.
13.4    Performance Periods. The Board shall have the complete and absolute discretion to determine the period during which any performance goal must be attained with respect to a Stock Incentive.

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14    MISCELLANEOUS
14.1    Stockholder Rights. No Participant shall have any rights as a stockholder of the Company as a result of the grant of a Stock Incentive to him or to her under this Plan until the Shares subject to such Stock Incentive have been recorded on the Company’s official stockholder records as having been issued and transferred to such Participant. Upon the grant of a Stock Incentive and, if applicable, grant of Shares thereunder, the Company will have a reasonable period in which to issue and transfer the Shares to the Participant, and the Participant will not be treated as a stockholder for any purpose whatsoever prior to such issuance and transfer.
14.2    No Guarantee of Continued Relationship. The grant of a Stock Incentive to a Participant under this Plan shall not constitute a contract of employment or a contract to perform services and shall not confer on a Participant any rights upon his or her termination of employment or relationship with the Company in addition to those rights, if any, expressly set forth in the Stock Incentive Agreement that evidences his or her Stock Incentive.
14.3    Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company as a condition precedent for the fulfillment of any Stock Incentive, an amount sufficient to satisfy Federal, state and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan and/or any action taken by a Participant with respect to a Stock Incentive. Whenever Shares are to be issued to a Participant upon satisfaction of conditions under a Deferred Stock Award, or grant of (if a Code §83(b) election is properly made) or substantial vesting of a Restricted Stock Award, the Company shall have the right to require the Participant to remit to the Company, as a condition to the fulfillment of the Deferred Stock Award, or as a condition to the grant (if a Code §83(b) election is properly made) or substantial vesting of the Restricted Stock Award, an amount in cash (or, unless the Stock Incentive Agreement provides otherwise, in Shares) sufficient to satisfy federal, state and local withholding tax requirements at the time of such satisfaction of conditions, or grant (if a Code §83(b) election is properly made) or substantial vesting. However, notwithstanding the foregoing, to the extent that a Participant is an Insider, satisfaction of withholding requirements by having the Company withhold Shares may only be made to the extent that such withholding of Shares (1) has met the requirements of an exemption under Rule 16b-3 promulgated under the Exchange Act, or (2) is a subsequent transaction the terms of which were provided for in a transaction initially meeting the requirements of an exemption under Rule 16b-3 promulgated under the Exchange Act. Unless the Stock Incentive Agreement provides otherwise, the withholding of shares to satisfy federal, state and local withholding tax requirements shall be a subsequent transaction approved by the original grant of a Stock Incentive. Notwithstanding the foregoing, in no event shall payment of withholding taxes be made by a retention of Shares by the Company that have a Fair Market Value in excess of the maximum individual statutory tax rate for an employee in the applicable jurisdiction or such lesser amount as may be designated by the Board or the Committee or as may be required to avoid adverse accounting treatment.
14.4    Unfunded Plan. To the extent that cash or property is payable to a participant under this Plan, such cash or property will be paid by the Company from its general assets, and any Person entitled to such a payment under the Plan will have no rights greater than the rights of any other unsecured general creditor of the Company. Shares to be distributed hereunder will be issued directly by the Company from its authorized but unissued or “treasury” stock or a combination thereof. The Company will not be required to segregate on its books or otherwise establish any funding procedure for the amount to be used for the payment of benefits under the Plan. If, however, the Company determines to reserve Shares or other assets to discharge its obligations hereunder, such reservation will not be deemed to create a trust or other funded arrangement.
14.5    No Fiduciary Relationship. Nothing contained in this Plan and no action taken pursuant to the Plan shall create or be construed to create a trust of any kind or any fiduciary relationship between the Company or 

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an Affiliate and any Participant or executor, administrator, or other personal representative or designated beneficiary of such Participant or any other Persons.
14.6    Relationship to Other Compensation Plans. The adoption of this Plan shall not affect any other stock option, incentive, or other compensation plans in effect for the Company or an Affiliate, nor shall the adoption of this Plan preclude the Company or an Affiliate from establishing any other form of incentive or other compensation plan for Employees or Key Persons of the Company or an Affiliate.
14.7    Governing Law. The granting of Stock Incentives under this Plan and the issuance of Shares shall be subject to all applicable laws, rules, and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required by applicable law. Specifically, the laws of the State of Maryland shall govern this Plan and any Stock Incentive Agreement issued hereunder. If Maryland’s conflict of law rules would apply another state’s laws, the laws of the State of Maryland shall still govern.
15    SPECIAL PROVISIONS APPLICABLE TO DEFERRED COMPENSATION AWARDS
15.1    Interpretation of Deferred Compensation Awards. A Stock Incentive granted under this Plan shall be interpreted and administered in a manner so that any amount or benefit payable thereunder shall be paid or provided in a manner that is exempt from Code §409A if at all possible. However, to the extent that a Stock Incentive granted under this Plan constitutes deferred compensation subject to Code §409A, the Stock Incentive Agreement shall be interpreted to be compliant with the requirements of Code §409A and applicable Internal Revenue guidance and Treasury Regulations issued thereunder. The term “payment” as used in this Section 15 shall refer to any lapse of a substantial risk of forfeiture with respect to a transfer of property which was subject to such a substantial risk of forfeiture, or any other transfer of cash, Shares or other consideration pursuant to a Stock Incentive granted hereunder subject to federal income taxation.
15.2    No Guarantee of Tax Treatment. The tax treatment of the benefits provided under any Stock Incentive granted under this Plan is not warranted or guaranteed. Neither the Company, nor its directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties, or other monetary amounts owed by a Participant as a result of the application of the Code (including Code §409A) or any state tax law.
15.3    Separation from Service Required. To the extent that a Stock Incentive granted under this Plan to a Participant provides deferred compensation subject to Code §409A, then, notwithstanding anything in this Plan or in the Stock Incentive Agreement pertaining to such Stock Incentive to the contrary, any payment of such deferred compensation that is required by reason of the termination of employment of, or the cessation of services by, such Participant, shall not be payable to the Participant by reason of such termination or cessation unless the circumstances giving rise to such termination or cessation constitute a Separation from Service of such Participant. If this Section 15.3 prevents the payment or distribution of any amount, such amount shall be paid on the date, if any, on which an event occurs that constitutes a Separation from Service, or such later date as may be required by Section 15.4 below.
15.4    Six Month Delay for Specified Employees. To the extent that a Stock Incentive granted under this Plan to a Participant provides deferred compensation subject to Code §409A, then, notwithstanding anything in this Plan or in the Stock Incentive Agreement pertaining to such Stock Incentive to the contrary, any payment of such deferred compensation subject to Code §409A by reason of such Participant’s Separation from Service occurring during a period in which such Participant is a Specified Employee shall be subject to the following:

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(a)    Lump Sum Payments. If the payment is payable in a lump sum, the Participant’s right to receive the payment of such deferred compensation will be delayed until the earlier of the Participant’s death or the first day of the seventh (7th) month following the Participant’s Separation from Service.
(b)    Payments over Time. If the payment is payable over time, the amount of such deferred compensation that would otherwise be payable during the six-month period immediately following the Participant’s Separation from Service will be accumulated and the Participant’s right to receive payment of such accumulated amount will be delayed until the earlier of (i) a date no later than thirty (30) days after the Participant’s death, or (ii) the first day of the seventh (7th) month following the Participant’s Separation from Service, whereupon the accumulated amount will be paid to the Participant on such date and the normal payment schedule for any remaining payments will resume.
15.5    Series of Payments. To the extent that a Stock Incentive granted under this Plan to a Participant provides deferred compensation subject to Code §409A, then, notwithstanding anything in this Plan or in the Stock Incentive Agreement pertaining to such Stock Incentive to the contrary, any right to a series of installment payments under such Stock Incentive shall, for purposes of Code §409A, be treated as a right to a series of separate payments.
15.6    No Acceleration of Payments. To the extent that a Stock Incentive granted under this Plan to a Participant provides deferred compensation subject to Code §409A, then, notwithstanding anything in this Plan or in the Stock Incentive Agreement pertaining to such Stock Incentive to the contrary, no amount that would be payable pursuant to the Stock Incentive and the terms of this Plan may be accelerated if such acceleration is not permitted under Section 409A. The provisions of this Section 15.6 shall not preclude the acceleration of vesting of a Stock Incentive, nor the forfeiture of a Stock Incentive. However, notwithstanding the foregoing, it is intended that the discretion of the Company pursuant to the provisions of Treas. Reg. §1.409A-3(j)(4)(ii) through (xiv) shall apply with respect to Stock Incentives granted under this Plan to a Participant to the extent that such Stock Incentives provide deferred compensation subject to Code §409A.
15.7    Unfunded Unsecured Obligations. To the extent that a Stock Incentive granted under this Plan to a Participant provides deferred compensation subject to Code §409A, then, notwithstanding anything in this Plan or in the Stock Incentive Agreement pertaining to such Stock Incentive to the contrary, any obligation of payment required with respect to such deferred compensation shall be a mere unfunded, unsecured obligation of the Company, and shall not provide any Participant a right to any specific asset of the Company.
15.8    Application of Certain Plan Provisions. To the extent that a Stock Incentive granted under this Plan to a Participant provides deferred compensation subject to Code §409A, then, notwithstanding anything in this Plan or in the Stock Incentive Agreement pertaining to such Stock Incentive to the contrary, any provisions of this Plan (other than those set forth in this Section 15) that would modify the timing of a payment of such deferred compensation to such Participant holding such Stock Incentive shall be ignored and shall be deemed not applicable. For example, the provisions of this Plan that would result in an acceleration of payment (for example, Section 11) providing the Board the ability to accelerate payment by unilateral cancelation of a Deferred Stock Award) shall not be applicable to a Stock Incentive to the extent that it provides for deferred compensation subject to Code §409A notwithstanding any provision of this Plan or any Stock Incentive to the contrary.  Additionally, to the extent necessary to comply with Section 409A, a Change of Control shall be deemed to have occurred for purposes of a Stock Incentive that provides for deferred compensation subject to Code §409A only if the transaction or event constituting the Change of Control also constitutes a “change in control event,” as that term is used in Treas. Reg. §1.409A‐3(i)(5)(i).  However, notwithstanding the foregoing, it is intended that the discretion of the Company pursuant to the provisions of Treas. Reg. §1.409A‐3(j)(4)(ii) through (xiv) shall apply with respect to Stock 

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Incentives granted under this Plan to a Participant to the extent that such Stock Incentives provide deferred compensation subject to Code §409A. 
15.9    Non-Transferable. To the extent that a Stock Incentive granted under this Plan to a Participant provides deferred compensation subject to Code §409A, then, notwithstanding anything in this Plan or in the Stock Incentive Agreement pertaining to such Stock Incentive to the contrary, such Stock Incentive may not be encumbered or transferred in any manner, other than by will or by the laws of descent and distribution.

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