Document:

Exhibit

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

STRATEGIC COLLABORATION, OPTION AND LICENSE AGREEMENT
BETWEEN
VERTEX PHARMACEUTICALS INCORPORATED
VERTEX PHARMACEUTICALS (EUROPE) LIMITED
AND
CRISPR THERAPEUTICS AG
CRISPR THERAPEUTICS LIMITED
CRISPR THERAPEUTICS, INC.
TRACR HEMATOLOGY LTD. 
STRATEGIC COLLABORATION, OPTION AND LICENSE AGREEMENT
This STRATEGIC COLLABORATION, OPTION AND LICENSE AGREEMENT (this “Agreement”) is entered into as of October 26, 2015 (the “Effective Date”) by and between, on the one hand, VERTEX PHARMACEUTICALS INCORPORATED, a corporation organized and existing under the laws of The Commonwealth of Massachusetts (“Vertex Parent”), and VERTEX PHARMACEUTICALS (EUROPE) LIMITED, a private limited liability company organized under the laws of England and Wales (“Vertex UK” and, together with Vertex Parent, “Vertex”) and, on the other hand, CRISPR THERAPEUTICS AG, a corporation organized under the laws of Switzerland (“CRISPR AG”), CRISPR THERAPEUTICS, INC., a corporation organized under the laws of the state of Delaware (“CRISPR Inc.”), CRISPR THERAPEUTICS LIMITED, a corporation organized under the laws of England and Wales (“CRISPR UK”) and TRACR HEMATOLOGY LTD, a UK limited company (“Tracr” and together with CRISPR AG,  CRISPR Inc. and CRISPR UK “CRISPR”).  Vertex and CRISPR each may be referred to herein individually as a “Party” or collectively as the “Parties.”  
RECITALS
WHEREAS, CRISPR possesses certain Patents, Know-How, technology and expertise with respect to the CRISPR/Cas System (as defined below);
WHEREAS, Vertex possesses expertise in developing and commercializing human therapeutics; 
WHEREAS, Vertex and CRISPR desire to enter into a strategic collaboration focused on exploring potential targets related to certain diseases and creating therapeutics using gene editing [***], including the CRISPR/Cas System, to treat such diseases; and
WHEREAS, simultaneously with the execution of this Agreement, the Parties are entering into a convertible debt instrument, pursuant to which Vertex will provide CRISPR AG with a total of $30,000,000 in funding, which funding will be converted into shares of CRISPR AG’s preferred stock in accordance with the terms thereof; 

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

NOW, THEREFORE, in consideration of the respective covenants, representations, warranties and agreements set forth herein, the Parties hereto agree as follows:
ARTICLE 1.

DEFINITIONS
For purposes of this Agreement, the following capitalized terms will have the following meanings:
		
	1.1.
	“Acceptance” means, with respect to an Approval Application filed for a Product, (a) in the United States, the receipt of written notice from the FDA that such Approval Application is officially “filed,” or (b) in the European Union, the receipt of written notice of acceptance by the EMA of such Approval Application for filing under the centralized European procedure in accordance with any feedback received from EU Regulatory Authorities; provided that if the centralized filing procedure is not used, then Acceptance will be determined upon the acceptance of such Approval Application by the applicable Regulatory Authority in a Major Market Country in the EU. 

		
	1.2.
	“Additional Research” has the meaning set forth in Section 2.12.

		
	1.3.
	“Additional Research Budget” has the meaning set forth in Section 2.12.

		
	1.4.
	“Additional Research Plan” has the meaning set forth in Section 2.12.

		
	1.5.
	“Adverse Event” has the meaning set forth in the Applicable Law for such term (or comparable term), and will generally mean any untoward medical occurrence in a subject in any Clinical Trial who has received a Licensed Agent or Product, medical device or placebo, and which does not necessarily have a causal relationship with such Licensed Agent, Product, medical device or placebo, including any unfavorable and unintended sign (including an abnormal laboratory finding), symptom or disease temporally associated with the use of the applicable Licensed Agent or Product, whether or not related to such Licensed Agent or Product.

		
	1.6.
	“Affiliate” means, as of any point in time and for so long as such relationship continues to exist with respect to any Person, any other Person that controls, is controlled by or is under common control with such Person.  A Person will be regarded as in control of another Person if it (a) owns or controls more than 50% of the equity securities of the subject Person entitled to vote in the election of directors (or, in the case of a Person that is not a corporation, for the election of the corresponding managing authority); provided, however, that the term “Affiliate” will not include subsidiaries or other entities in which a Person owns a majority of the ordinary voting power necessary to elect a majority of the board of directors or other governing board, but is restricted from electing such majority by contract or otherwise, until such time as such restrictions are no longer in effect, or (b) possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of an such Person (whether through ownership of securities or other ownership interests, by contract or otherwise).

		
	1.7.
	“Agreement” has the meaning set forth in the Preamble.

		
	1.8.
	“Agreement Term” means the period commencing on the Effective Date and ending on the expiration of this Agreement pursuant to Section 11.1, unless terminated earlier as provided herein.

2

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	1.9.
	“Alliance Manager” has the meaning set forth in Section 3.4.1.

		
	1.10.
	“Applicable Law” means all applicable laws, statutes, rules, regulations and other pronouncements having the effect of law of any federal, national, multinational, state, provincial, county, city or other political subdivision, agency or other body, domestic or foreign, including any applicable rules, regulations, guidelines, or other requirements of the Regulatory Authorities that may be in effect from time to time.

		
	1.11.
	“Approval Application” means a BLA, NDA or similar application or submission for a Product filed with a Regulatory Authority in a country or group of countries to obtain marketing approval for a biological or pharmaceutical product in that country or group of countries.

		
	1.12.
	“Audited Party” has the meaning set forth in Section 7.9.

		
	1.13.
	“Auditing Party” has the meaning set forth in Section 7.9.

		
	1.14.
	“Available” has the meaning set forth in Section 1.34.

		
	1.15.
	“BLA” means a Biological License Application that is submitted to the FDA for marketing approval for a Licensed Agent or Product pursuant to 21 C.F.R. § 601.2. 

		
	1.16.
	[***]. 

		
	1.17.
	[***]. 

		
	1.18.
	“Breaching Party” means the Party that is believed by the other Party to be in material breach of this Agreement.

		
	1.19.
	“Business Day” means a Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in Boston, Massachusetts are authorized or obligated to close. 

		
	1.20.
	“Calendar Quarter” means the respective periods of three consecutive calendar months ending on March 31, June 30, September 30 or December 31, during the Agreement Term, or the applicable part thereof during the first or last calendar quarter of the Agreement Term.

		
	1.21.
	“Calendar Year” means any calendar year ending on December 31, or the applicable part thereof during the first or last year of the Agreement Term.

		
	1.22.
	“cGMP” means current Good Manufacturing Practices as specified in the United States Code of Federal Regulations, ICH Guideline Q7A, or equivalent laws, rules, or regulations of an applicable Regulatory Authority at the time of manufacture.

		
	1.23.
	“Change of Control” means, with respect to a Party, (a) a merger or consolidation of such Party with a Third Party that results in the voting securities of such Party outstanding immediately prior thereto, or any securities into which such voting securities have been converted or exchanged, ceasing to represent more than 50% of the combined voting power of the surviving entity or the parent of the surviving entity immediately after such merger or consolidation, or (b) a transaction or series of related transactions in which a Third Party, together with its Affiliates, becomes the beneficial owner of more than 50% of the combined voting power of the outstanding securities of such Party, or (c) the sale or other transfer to a 

3

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

Third Party of all or substantially all of such Party’s business to which the subject matter of this Agreement relates.  Notwithstanding the foregoing, with respect to CRISPR, the term “Change of Control” will not include any sale of shares of capital stock of CRISPR, in a single transaction or series of related transactions in which CRISPR issues new securities solely to institutional investors for cash or the cancellation or conversion of indebtedness or a combination thereof where such transaction(s) are conducted primarily for bona fide equity financing purposes.  
		
	1.24.
	“Clinical Trial” means a study in humans that is conducted in accordance with GCP and is designed to generate data in support of an Approval Application. 

		
	1.25.
	“Collaboration Program” means, on a Collaboration Target-by-Collaboration Target basis, a Research program dedicated to the design, optimization and Research of Licensed Agents and Products directed to such Collaboration Target pursuant to a Research Plan and, upon Vertex’s exercise of the Option for a Collaboration Target, Vertex’s (or with respect to any Hemoglobinopathy Target [***], the Parties’) Research, Development, Manufacture and Commercialization of such Licensed Agents and Products. 

		
	1.26.
	“Collaboration Program Working Group” has the meaning set forth in Section 3.2. 

		
	1.27.
	“Collaboration Target” means a Vertex Target that Vertex has selected as the subject of a Research Plan in accordance with Section 2.3.3.  

		
	1.28.
	“Combination Product” has the meaning set forth in Section 1.117.

		
	1.29.
	“Commercialize” or “Commercializing” means to market, promote, distribute, offer for sale, sell, have sold, import, export or otherwise commercialize a product, to conduct activities, other than Research, Development and Manufacturing, in preparation for the foregoing activities, including obtaining Price Approval, and to conduct post-Marketing Approval studies (including Clinical Trials).  When used as a noun, “Commercialization” means any and all activities involved in Commercializing.

		
	1.30.
	“Commercially Reasonable Efforts” means with respect to the efforts to be expended by any Person, with respect to any objective, reasonable, diligent and good faith efforts to accomplish such objective. With respect to any objective relating to the Research, Development or Commercialization of a Licensed Agent or Product, “Commercially Reasonable Efforts” means [***], taking into account, without limitation, with respect to each Licensed Agent or Product, (a) [***], (b) [***], (c) [***], (d) [***], (e) [***], (f) [***], (g) [***], (h) [***], (i) [***] and (j) [***].  “Commercially Reasonable Efforts” shall be [***].

		
	1.31.
	“Competitive Infringement” has the meaning set forth in Section 8.6.1.

		
	1.32.
	“Competitive Program” has the meaning set forth in Section 1.33.

		
	1.33.
	“Competitor” means any pharmaceutical company that is conducting a research, development or commercial program for a product that is intended to (a) [***], (b) [***] or (c) [***] (each of (a)-(c), a “Competitive Program”).

		
	1.34.
	“Confidential Information” means, with respect to each Party, all Know-How or other information, including proprietary information (whether or not patentable) regarding or 

4

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

embodying such Party’s technology, products, business information or objectives, that is communicated in any way or form by or on behalf of the Disclosing Party to the Receiving Party or its permitted recipients, prior to, on or after the Effective Date, whether or not such Know-How or other information is identified as confidential at the time of disclosure.  The terms and conditions of this Agreement will be considered Confidential Information of both Parties, with both Parties deemed to be the Receiving Party of such Confidential Information.  The Vertex Target List and the identity of the Collaboration Targets hereunder will be the Confidential Information of both Parties; provided, that if Vertex exercises the Option for a Collaboration Target, the identity of such Collaboration Target will be Vertex’s Confidential Information and will no longer be CRISPR’s Confidential Information; and provided, further, [***] Notwithstanding any provision of this Section 1.34 to the contrary, Confidential Information does not include any Know-How or information that: (a) was already known by the Receiving Party (other than under an obligation of confidentiality to the Disclosing Party) at the time of disclosure by or on behalf of the Disclosing Party; (b) was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party; (c) became generally available to the public or otherwise part of the public domain after its disclosure to the Receiving Party, other than through any act or omission of the Receiving Party in breach of its obligations under this Agreement; (d) was disclosed to the Receiving Party, other than under an obligation of confidentiality, by a Third Party who had no obligation to the Disclosing Party not to disclose such information to the Receiving Party; or (e) was independently discovered or developed by or on behalf of the Receiving Party without the use of any Confidential Information belonging to the Disclosing Party; provided, in connection with the foregoing exclusions from protection, that specific Confidential Information shall not be deemed to be known, generally available, in the public domain, disclosed, independently discovered or developed (individually and collectively “Available”), merely because broader or related information is Available, nor shall combinations of elements or principles be considered to be Available merely because individual elements thereof are Available. 
		
	1.35.
	“Continuation Notice” has the meaning set forth in Section 2.6.

		
	1.36.
	“Continuation Research” has the meaning set forth in Section 2.6.

		
	1.37.
	“Control” or “Controlled” means with respect to any Know-How or Patent or other data, information or Materials, possession of the ability by a Party or its Affiliate(s) (whether by sole or joint ownership, license or otherwise, other than pursuant to this Agreement) to grant, without violating the terms of any agreement with a Third Party, a license, access or other right in, to or under such Know-How or Patent or other data, information or Materials.  Notwithstanding anything in this Agreement to the contrary, a Party will be deemed to not Control any Patents or Know-How that are owned or controlled by a Third Party described in the definition of “Change of Control,” or such Third Party’s Affiliates (other than an Affiliate of such Party prior to the Change of Control), (a) prior to the closing of such Change of Control, except to the extent that any such Patents or Know-How were developed prior to such Change of Control through the use of such Party’s technology, or (b) after such Change of Control to the extent that such Patents or Know-How are developed or conceived by such Third Party or its Affiliates (other than such Party) after such Change of Control without using or incorporating such Party’s technology. 

		
	1.38.
	“Cost Report” has the meaning set forth in Section 7.4.2.

5

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	1.39.
	“Cover,” “Covering” or “Covers” means, as to a product and Patent, that, in the absence of a license granted under, or ownership of, such Patent, the making, using, keeping, selling, offering for sale or importation of such product would infringe such Patent or, as to a pending claim included in such Patent, the making, using, selling, offering for sale or importation of such product would infringe such Patent if such pending claim were to issue in an issued patent without modification.

		
	1.40.
	“CREATE Act” means the Cooperative Research and Technology Enhancement Act of 2004, 35 U.S.C. § 103(c)(2)-(c)(3).

		
	1.41.
	“CRISPR” has the meaning set forth in the Preamble.

		
	1.42.
	“CRISPR Activities” means any and all Research activities other than Vertex Activities under any Research Plan.

		
	1.43.
	“CRISPR Agreement Breach” has the meaning set forth in Section 11.2.3(a).

		
	1.44.
	“CRISPR Background Know-How” means any Know-How, other than Joint Program Know-How and CRISPR Program Know-How, that (a) [***] and (b) [***].  On a Collaboration Target-by-Collaboration Target basis, CRISPR Background Know-How will exclude [***].  For the avoidance of doubt, the CRISPR Background Know-How includes the Know-How claimed or disclosed in the CRISPR Platform Technology Patents.

		
	1.45.
	“CRISPR Background Patents” means any Patent, other than a Joint Program Patent, CRISPR Program Patent or CRISPR Platform Technology Patent that (a) [***] and (b) [***].  On a Collaboration Target-by-Collaboration Target basis, CRISPR Background Patents will exclude [***].  

		
	1.46.
	“CRISPR Breach Event” has the meaning set forth in Section 11.2.3(a).

		
	1.47.
	“CRISPR Entity” means, when used in the singular, any one of CRISPR UK, CRISPR AG, CRISPR Inc. or Tracr.  “CRISPR Entities” means, when used in the plural, CRISPR UK, CRISPR AG, CRISPR Inc. and Tracr.

		
	1.48.
	“CRISPR Indemnified Party” has the meaning set forth in Section 10.1.

		
	1.49.
	“CRISPR In-License Agreements” has the meaning set forth in Section 7.6.1. 

		
	1.50.
	“CRISPR Platform Technology Patents” means all Patents that are owned, used, developed by, or licensed to CRISPR or its Affiliates, in each case to the extent Controlled by CRISPR or its Affiliates on the Effective Date or at any time during the Agreement Term, claiming [***].  For clarity, the CRISPR Platform Technology Patents (i) will not include [***] and (ii) will include all [***].   

		
	1.51.
	“[***] Patent” has the meaning set forth in Section 8.1.3(a).  

		
	1.52.
	 “CRISPR Program Breach” has the meaning set forth in Section 11.2.3(a).

		
	1.53.
	“CRISPR Program Know-How” has the meaning set forth in Section 8.1.2(a).

6

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	1.54.
	“CRISPR Program Patents” has the meaning set forth in Section 8.1.2(a).

		
	1.55.
	“CRISPR Program Technology” has the meaning set forth in Section 8.1.2(a).

		
	1.56.
	“CRISPR Reserved Target” means all Targets described or identified on Schedule A. 

		
	1.57.
	“CRISPR/Cas System” means a clustered regularly interspaced short palindromic repeats (CRISPR)/CRISPR-associated (Cas) protein system that comprises (a) [***] and (b) [***].

		
	1.58.
	“Development” means, with respect to a Licensed Agent, all clinical and non-clinical research and development activities conducted after filing of an IND for such Licensed Agent, including toxicology, pharmacology test method development and stability testing, process development, formulation development, delivery system development, quality assurance and quality control development, statistical analysis, Clinical Trials (other than post-Marketing Approval Clinical Trials), regulatory affairs, pharmacovigilance, Clinical Trial regulatory activities and obtaining and maintaining Regulatory Approval.  When used as a verb, “Develop” or “Developing” means to engage in Development. 

		
	1.59.
	“Disclosing Party” has the meaning set forth in Section 12.1.

		
	1.60.
	“Distracting Product” means a product containing (a) [***] or (b) [***].

		
	1.61.
	“Distributor” means a Third Party to whom Vertex grants a right to sell or distribute a Product, that does not make payments to Vertex that are calculated on the basis of a percentage of, or profit share on, such Third Party’s sales of Products.

		
	1.62.
	“Divestiture” means, with respect to a Distracting Product, the sale, exclusive license or other transfer by the applicable Party and its Affiliates of all of their development and commercialization rights with respect to such Distracting Product to a Third Party without the retention or reservation of any development or commercialization obligation, interest or participation rights (other than solely an economic interest or the right to enforce customary terms and conditions contained in the relevant agreements effectuating such transaction).  When used as a verb, “Divest” means the to engage in a Divestiture.  

		
	1.63.
	“DOJ” has the meaning set forth in Section 4.1.2(a).

		
	1.64.
	“Effective Date” has the meaning set forth in the Preamble.

		
	1.65.
	“EMA” means the European Medicines Agency and any successor entity thereto.

		
	1.66.
	“Establishment of POC” with respect to a Product, [***] that [***] (a) [***] and (b) [***].  

		
	1.67.
	“European Commission” means the European Commission or any successor entity that is responsible for granting marketing approvals authorizing the sale of pharmaceuticals in the European Union.  

		
	1.68.
	“European Union” or “EU” means each and every country or territory that is officially part of the European Union.

		
	1.69.
	“Exclusive License” has the meaning set forth in Section 5.3.1.

7

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	1.70.
	“Executive Officers” means the Chief Scientific Officer of CRISPR AG, initially Sven Ante (Bill) Lundberg, and the Chief Scientific Officer of Vertex, initially David Altshuler; provided, that for purposes of Section 11.3.4(a), “Executive Officers” means the Chief Executive Officer of CRISPR AG, initially Rodger Novak, and the Chief Financial Officer of Vertex, initially Ian Smith. 

		
	1.71.
	“FDA” means the United States Food and Drug Administration and any successor entity thereto.

		
	1.72.
	“FD&C Act” means the United States Federal Food, Drug, and Cosmetic Act, as amended, and the rules and regulations promulgated thereunder.

		
	1.73.
	“Field” means the diagnosis, treatment or prevention of disease in humans or animals in [***].

		
	1.74.
	“Final Target Selection Period” means the [***] period following the Initial Target Selection Period. 

		
	1.75.
	“First Commercial Sale” means with respect to a Product, the first sale of such Product by Vertex, its Affiliate or its Sublicensee to a Third Party resulting in Net Sales in a particular country after any required Marketing Approval for the Product has been obtained in such country.

		
	1.76.
	“Force Majeure” means a condition, the occurrence and continuation of which is beyond the reasonable control of a Party, including an act of God, voluntary or involuntary compliance with any regulation, law or order of any government, war, civil commotion, labor strike or lock-out, epidemic, flood, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire, earthquake, storm or like catastrophe.

		
	1.77.
	“Foundational Intellectual Property Rights” means all rights, title and interest in [***]; and any worldwide patents and patent applications claiming priority thereto and all inventions covered or claimed by such patent applications (together with all provisionals, non-provisionals, substitutions, continuations, continuations-in-part, divisionals, renewals and all patents granted thereon, and all reissues, reexaminations, extensions, confirmations, revalidations, registrations and patents of addition thereof, including patent term extensions and supplementary protection certificates, international patent applications filed under the Patent Cooperation Treaty (PCT) and any foreign equivalents to any of the foregoing).

		
	1.78.
	“FTC” has the meaning set forth in Section 4.1.2(a).

		
	1.79.
	“FTE Rate” means, [***]; provided that such rates will increase or decrease on [***] over the twelve month period preceding each such January 1.

		
	1.80.
	“GAAP” means United States generally accepted accounting principles, consistently applied.

		
	1.81.
	“GCP” means good clinical practices, which are the then-current standards for Clinical Trials for pharmaceuticals, as set forth in the FD&C Act or other Applicable Law, and such standards of good clinical practice as are required by the Regulatory Authorities of the European Union and other organizations and governmental authorities in countries for which the applicable Licensed Agent is intended to be Developed, to the extent such standards are not less stringent than United States standards.

8

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	1.82.
	“[***] Joint Program Know-How” has the meaning set forth in Section 8.1.2(d).

		
	1.83.
	“[***] Joint Program Patents” has the meaning set forth in Section 8.1.2(d).

		
	1.84.
	“[***] Joint Program Technology” has the meaning set forth in Section 8.1.2(d).

		
	1.85.
	“[***]” means [***], including, but not limited to, [***], and any variation thereof, in each case [***].

		
	1.86.
	“Generic Product” means, with respect to a particular Product in a particular country, a product on the market in such country commercialized by any Third Party that is not a Sublicensee and that did not purchase such product in a chain of distribution that included any of Vertex or its Affiliates or Sublicensees, that (a) is approved by the applicable Regulatory Authority, under any then-existing laws and regulations in the applicable country pertaining to approval of generic or biosimilar biologic products, as a “generic” or “biosimilar” version of such Product, which approval uses such Product as a reference product and relies on or references pivotal safety or efficacy data in the Approval Application for such Product or (b) otherwise meets the criteria for constituting a “biosimilar” or “interchangeable” product pursuant to Section 351(k) of the Public Health Service Act (42 U.S.C. § 262(k)) or EMA Directive 2001/83/EC or any foreign equivalent thereof or successors thereto.

		
	1.87.
	“GLP” means the then-current good laboratory practice standards promulgated or endorsed by the FDA as defined in 21 C.F.R. Part 58 or the successor thereto, or comparable regulatory standards in jurisdictions outside of the United States, to the extent such standards are not less stringent than United States standards.

		
	1.88.
	“Governmental Authority” means any court, agency, department, authority or other instrumentality of any national, state, county, city or other political subdivision.

		
	1.89.
	“Hemoglobinopathy Target” means a Target related to the [***].

		
	1.90.
	“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

		
	1.91.
	“HSR Clearance Date” means the earliest date on which the Parties have actual knowledge that all applicable waiting periods under the HSR Act with respect to the transactions contemplated hereunder have expired or have been terminated.

		
	1.92.
	“HSR Filing” means a filing by Vertex and CRISPR with the FTC and the DOJ of a Notification and Report Form for Certain Mergers and Acquisitions (as that term is defined in the HSR Act) with respect to the matters set forth in this Agreement, together with all required documentary attachments thereto.

		
	1.93.
	“IND” means any Investigational New Drug application, filed with the FDA pursuant to Part 312 of Title 21 of the U.S. Code of Federal Regulations, including any supplements or amendments thereto.  References herein to IND will include, to the extent applicable, any comparable filings outside the United States.

		
	1.94.
	“Indemnified Party” has the meaning set forth in Section 10.3.

9

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	1.95.
	“Indemnifying Party” has the meaning set forth in Section 10.3.

		
	1.96.
	“Initial Collaboration Targets” means the Targets set forth on Schedule B under the heading “Initial Collaboration Targets.”

		
	1.97.
	“Initial Target Selection Period” means the first [***] of the Research Term.  

		
	1.98.
	“Initiation” or “Initiate” means, with respect to any Clinical Trial, dosing of the first human subject in such Clinical Trial.

		
	1.99.
	“Insolvency Event” has the meaning set forth in Section 11.2.5.

		
	1.100.
	“Joint Development & Commercialization Agreement” has the meaning set forth in Section 6.1.2(c).

		
	1.101.
	“Joint Program Know-How” means [***] Joint Program Know-How, [***] Joint Program Know-How and Other Joint Program Know-How. 

		
	1.102.
	“Joint Program Patents” means [***] Joint Program Patents, [***] Joint Program Patents and Other Joint Program Patents.

		
	1.103.
	“Joint Program Technology” means [***] Joint Program Technology, [***] Joint Program Technology and Other Joint Program Technology.

		
	1.104.
	“Joint Research Committee” or “JRC” has the meaning set forth in Section 3.1.1.

		
	1.105.
	“Know-How” means intellectual property, data, results, pre-clinical and clinical protocols and data from studies and Clinical Trials, chemical structures, chemical sequences, information, inventions, know-how, formulas, trade secrets, techniques, methods, processes, procedures and developments, whether or not patentable; provided that Know-How does not include Patents claiming any of the foregoing.  

		
	1.106.
	“Knowledge” means [***] of [***] after [***].

		
	1.107.
	“Liability” has the meaning set forth in Section 10.1.

		
	1.108.
	“Licensed Agent” means a product comprising (a) [***], where such [***], or any portion thereof is [***] or (b) [***] by such [***]. 

		
	1.109.
	“Licensed Know-How” means (a) CRISPR Background Know-How, (b) CRISPR Program Know-How and (c) CRISPR’s interest in the Joint Program Know-How. 

		
	1.110.
	“Licensed Patents” means (a) CRISPR Background Patents, (b) CRISPR Platform Technology Patents, (c) CRISPR Program Patents, (d) [***] Patents (until [***]) and (e) CRISPR’s interest in the Joint Program Patents.

		
	1.111.
	“Licensed Technology” means, subject to Section 5.3.2 and Section 7.6.6, any and all Licensed Patents and Licensed Know-How.  

		
	1.112.
	“Major Market Country” means any one of the following countries: [***].

10

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	1.113.
	“Manufacture” or “Manufactured” or “Manufacturing” means activities directed to making, having made, producing, manufacturing, processing, filling, finishing, packaging, labeling, quality control testing and quality assurance release, shipping or storage of a product.

		
	1.114.
	“Marketing Approval” means, with respect to a Product in a particular jurisdiction, all approvals, licenses, registrations or authorizations necessary for the Commercialization of such Product in such jurisdiction, including, with respect to the United States, approval of an Approval Application for such Product by the FDA and with respect to the European Union, approval of an Approval Application for such Product by the European Commission.  

		
	1.115.
	“Materials” means all biological materials or chemical compounds arising out of a Party’s activities under this Agreement or otherwise provided by a Party for use by the other Party to conduct activities pursuant to this Agreement, including Licensed Agents, Clinical Trial samples, cell lines, assays, viruses and vectors.  

		
	1.116.
	“NDA” means a new drug application that is submitted to the FDA for marketing approval for a Licensed Agent or Product, pursuant to 21 C.F.R. § 314.3.

		
	1.117.
	“Net Sales” means the gross invoiced price for Products sold by Vertex, its Affiliates or Sublicensees (the “Selling Party”) to Third Parties, less the following deductions from such gross amounts:

		
	(a)
	credits or allowances, if any are actually allowed, on account of price adjustments, recalls, claims, damaged goods, rejections or returns of items previously sold (including product returned in connection with recalls or withdrawals) and amounts written off by reason of uncollectible debt, provided that if the debt is thereafter paid, the corresponding amount shall be added to the Net Sales for the period during which it is paid; 

		
	(b)
	import taxes, export taxes, excise taxes (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)), sales taxes, value-added taxes, consumption taxes, duties or other taxes levied on, absorbed, determined or imposed with respect to such sales (excluding income or net profit taxes or franchise taxes of any kind), to the extent not reimbursed by a non-related party; 

		
	(c)
	insurance, customs charges, freight, shipping and other transportation costs incurred in shipping product to such non-related parties, to the extent incurred by a Selling Party and not reimbursed by a non-related party; 

		
	(d)
	reasonable discounts (including trade, quantity and cash discounts) actually allowed, cash and non-cash coupons, retroactive price reductions, and charge back payments and rebates granted to any non-related party (including to governmental entities or agencies, purchasers, reimbursers, customers, Distributors, wholesalers, and group purchasing organizations and managed care organizations (and other similar entities and institutions)); and  

		
	(e)
	rebates (or their equivalent), administrative fees, chargebacks and retroactive price adjustments and any other similar allowances granted to non-related Parties (including to Governmental Authorities, purchasers, reimbursers, 

11

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

customers, Distributors, wholesalers, and managed care organizations (and other similar entities and institutions)) which effectively reduce the gross invoiced sales price of the Product.
Generally, only items that are deducted from the Selling Party’s gross invoiced sales price of Product(s), as included in the Selling Party’s published financial statements and that are in accordance with GAAP, applied on a consistent basis, will be deducted from such gross invoiced sales price for purposes of the calculation of Net Sales. However, compulsory payments required by federal or state governments based upon sales volume or market share of Products (but for clarity excluding taxes on the Selling Party’s net income), to the extent borne by the Selling Party, will be deducted from “Net Sales” regardless of its classification in the Selling Party’s published financial statements; provided that any such deduction will be limited to that share of such compulsory payment proportional to the share of the total sales volume or market share of the Selling Party used to compute the compulsory payment represented by applicable Net Sales of Products.
A qualifying amount may be deducted only once regardless of the number of the preceding categories that describe such amount.  If a Selling Party makes any adjustment to such deductions after the associated Net Sales have been reported pursuant to this Agreement, the adjustments and payment of any royalties due will be reported with the next quarterly report.  Sales between or among Vertex, its Affiliates and Sublicensees will be excluded from the computation of Net Sales if such sales are not intended for end use, but Net Sales will include the subsequent final sales to Third Parties by Vertex or any such Affiliates or Sublicensees.  A Product will not be deemed to be sold if the Product is provided free of charge to a Third Party in reasonable quantities as a sample consistent with industry standard promotional and sample practices. For clarity, [***].
If a sale, transfer or other disposition with respect to Products involves consideration other than cash or is not at arm’s length, then the Net Sales from such sale, transfer or other disposition will be calculated on the [***].
Solely for purposes of calculating Net Sales, if Vertex or its Affiliates or any permitted Sublicensee sells a Product in the form of a combination product containing a Licensed Agent and one or more other therapeutically or prophylactically active ingredients or delivery devices (whether combined in a single formulation or package, as applicable, or formulated separately but packaged under a single label approved by a Regulatory Authority and sold together for a single price) (a “Combination Product”), Net Sales of such Combination Product for the purpose of determining the payments due to CRISPR pursuant to this Agreement will be calculated by multiplying actual Net Sales of such Combination Product as determined in the first paragraph of the definition of “Net Sales” by the fraction A/(A+B) where [***]. The weighted average invoice prices referenced above will be calculated with reference to the prevailing prices during the applicable Calendar Quarter in those top selling countries that equate to [***] of Net Sales of the applicable Product in the Territory, with the prices weighted in the calculation to reflect the actual relative sales value of the Product in each of the countries to which the calculation relates. If it is not possible to determine the fraction A/(A+B) based on the criteria specified in the preceding sentence (e.g., if a Product component is not sold separately), the Parties shall determine Net Sales for the Product in such Combination Product in good faith by mutual agreement [***]. 
		
	1.118.
	“[***]” has the meaning set forth in Section 7.6.2(a).

12

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	1.119.
	“Non-Breaching Party” means the Party that believes the other Party is in material breach of this Agreement.

		
	1.120.
	“Non-Disclosing Party” has the meaning set forth in Section 12.5.3.

		
	1.121.
	“Option” has the meaning set forth in Section 4.1.1.

		
	1.122.
	“Option Cap” has the meaning set forth in Section 4.1.1.

		
	1.123.
	“Option Deadline” has the meaning set forth in Section 4.1.1.

		
	1.124.
	“Option Exercise” means, with respect to a Collaboration Target, Vertex’s exercise of an Option as provided in Section 4.1.1; provided, that if Vertex notifies CRISPR that an HSR Filing is required as provided, in Section 4.1.1, Option Exercise will not occur until the HSR Clearance Date. 

		
	1.125.
	“Option Exercise Data Package” means, with respect to a Collaboration Program, a data package containing the information set forth on Schedule C.  

		
	1.126.
	“Other Joint Program Know-How” has the meaning set forth in Section 8.1.2(e).

		
	1.127.
	“Other Joint Program Patents” has the meaning set forth in Section 8.1.2(e).

		
	1.128.
	“Other Joint Program Technology” has the meaning set forth in Section 8.1.2(e).

		
	1.129.
	“Out-of-Pocket Costs” means, with respect to a Party, costs and expenses paid by such Party to Third Parties (or payable to Third Parties and accrued in accordance with GAAP), other than Affiliates or employees of such Party.

		
	1.130.
	“Party” or “Parties” has the meaning set forth in the Preamble.

		
	1.131.
	“Patent Coordinator” has the meaning set forth in Section 8.3.

		
	1.132.
	“Patent Costs” means the reasonable fees and expenses paid to outside legal counsel, and filing, maintenance, disbursement and other reasonable Out-of-Pocket Costs paid to Third Parties, in connection with the Prosecution and Maintenance of Patents.

		
	1.133.
	“Patents” means the rights and interests in and to issued patents and pending patent applications in any country, jurisdiction or region (including inventor’s certificates and utility models), including all provisionals, non-provisionals, substitutions, continuations, continuations-in-part, divisionals, renewals and all patents granted thereon, and all reissues, reexaminations, extensions, confirmations, revalidations, registrations and patents of addition thereof, including patent term extensions and supplementary protection certificates, international patent applications filed under the Patent Cooperation Treaty (PCT) and any foreign equivalents to any of the foregoing.

		
	1.134.
	“Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, incorporated association, joint venture or similar entity or organization, including a government or political subdivision or department or agency of a government. 

13

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	1.135.
	“Phase 2 Clinical Trial” means any human Clinical Trial conducted in patients that is intended to provide preliminary evidence suggesting effectiveness of the drug, including Clinical Trials described in 21 C.F.R. §312.21(b), or, with respect to a jurisdiction other than the United States, a similar Clinical Trial.

		
	1.136.
	“Phase 3 Clinical Trial” means, with respect to a Product, a pivotal Clinical Trial in humans performed to gain evidence with statistical significance of the efficacy of such Product in a target population, and to obtain expanded evidence of safety for such Product that is needed to evaluate the overall benefit-risk relationship of such Product, to form the basis for approval of an Approval Application by a Regulatory Authority and to provide an adequate basis for physician labeling, as described in 21 C.F.R. 312.21(c), as amended from time to time, or the corresponding regulations in jurisdictions other than the United States.

		
	1.137.
	“Price Approval” means, in any country where a Governmental Authority authorizes reimbursement for, or approves or determines pricing for, pharmaceutical products, receipt (or, if required to make such authorization, approval or determination effective, publication) of such reimbursement authorization or pricing approval or determination.

		
	1.138.
	“Proceeding” means an action, suit or proceeding.

		
	1.139.
	“Product” means any pharmaceutical product, medical therapy, preparation, substance, or formulation comprising or employing, in whole or in part, a Licensed Agent.  All Products comprising the same Licensed Agent(s) (and no additional Licensed Agents) will be considered the same Product under this Agreement.  

		
	1.140.
	“[***] Claim” means a claim in any Patent that [***].

		
	1.141.
	“Product Development & Commercialization Plan” has the meaning set forth in Section 6.4.

		
	1.142.
	“Prosecution and Maintenance” or “Prosecute and Maintain” means, with regard to a Patent, the preparing, filing, prosecuting and maintenance of such Patent, as well as handling re-examinations and reissues with respect to such Patent, together with the conduct of interferences, the defense of oppositions and other similar proceedings with respect to the particular Patent.  For clarification, “Prosecution and Maintenance” or “Prosecute and Maintain” will not include any other enforcement actions taken with respect to a Patent.

		
	1.143.
	“[***] Patent” has the meaning set forth in Section 8.2.2.

		
	1.144.
	“Receiving Party” has the meaning set forth in Section 12.1.

		
	1.145.
	“Regulatory Approval” means the technical, medical and scientific licenses, registrations, authorizations and approvals (including approvals of Approval Applications, supplements and amendments, pre- and post- approvals, and labeling approvals) of any Regulatory Authority, necessary for the Research, Development, clinical testing, commercial manufacture, distribution, marketing, promotion, offer for sale, use, import, export or sale of a pharmaceutical product in a regulatory jurisdiction, including Marketing Approval.  

		
	1.146.
	“Regulatory Authority” means, with respect to a country in the Territory, any national (e.g., the FDA), supra-national (e.g., the European Commission, the Council of the European Union, or the EMA), regional, state or local regulatory agency, department, bureau, commission, 

14

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

council or other Governmental Authority involved in the granting of Regulatory Approvals or Price Approvals for pharmaceutical products in such country or countries.
		
	1.147.
	“Regulatory Filings” means, collectively: (a) all INDs, Approval Applications, establishment license applications, Drug Master Files, applications for designation as an “Orphan Licensed Product(s)” under the Orphan Drug Act, for “Fast Track” status under Section 506 of the FD&C Act (21 U.S.C. § 356) or for a Special Protocol Assessment under Section 505(b)(4)(B) and (C) of the FD&C Act (21 U.S.C. § 355(b)(4)(B)) and all other similar filings (including counterparts of any of the foregoing in any country or region in the Territory); (b) any applications for Regulatory Approval or Price Approval and other applications, filings, dossiers or similar documents submitted to a Regulatory Authority in any country for the purpose of obtaining Regulatory Approval or Price Approval from that Regulatory Authority; (c) all supplements and amendments to any of the foregoing; and (d) any correspondence with Regulatory Authorities in connection with any of the foregoing.

		
	1.148.
	“Research” means conducting research activities to discover and advance Licensed Agents and Products, including pre-clinical studies and optimization, but specifically excluding Development and Commercialization.  When used as a verb, “Researching” means to engage in Research.

		
	1.149.
	“Research Budget” has the meaning set forth in Section 2.2.

		
	1.150.
	“Research Costs” means the costs and expenses that are actually incurred by or on behalf of CRISPR and specifically identifiable or specifically allocable to the Research activities conducted under a Research Plan (including Continuation Research) or an Additional Research Plan, including: (a) CRISPR’s and its Affiliates fully absorbed internal costs with respect to such activities; and (b) all Out-of-Pocket Costs incurred by CRISPR or its Affiliates, including payments made to Third Parties with respect to such Research activities (except to the extent that such costs have been included in internal costs).  CRISPR’s fully absorbed internal costs will be determined at the [***].  All other costs will be determined from the books and records of CRISPR and its Affiliates maintained in accordance with GAAP.

		
	1.151.
	“Research Plan” means each plan meeting the requirements set forth in Section 2.2 to design and optimize Licensed Agents and Products for a specified Target and to generate the data and information required to prepare the applicable Option Exercise Data Package. 

		
	1.152.
	“Research Term” has the meaning set forth in Section 2.4.

		
	1.153.
	“Residual Knowledge” means knowledge, techniques, experience and Know-How that are (a) reflected in any Confidential Information owned or Controlled by the Disclosing Party and (b) retained in the unaided memory of any authorized representative of the Receiving Party after having access to such Confidential Information.  A Person’s memory will be considered to be unaided if the Person has not intentionally memorized the Confidential Information for the purpose of retaining and subsequently using or disclosing it.  In no event, however, will Residual Knowledge include any knowledge, techniques, experience and Know-How to the extent (at any time, for such time) within the scope of any valid patent claim owned or Controlled by the Disclosing Party.

		
	1.154.
	“Royalty Term” means, with respect to a Product in a country, the period commencing on the first sale of such Product in such country and ending upon the later of: (a) the expiration 

15

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

of the last Valid Claim of a Licensed Patent that Covers such Product in such country; (b) [***] after the First Commercial Sale of such Product in such country; or (c) expiration of all applicable regulatory exclusivity periods, including data exclusivity, in such country with respect to such Product.   
		
	1.155.
	“Safety Data Exchange Agreement” has the meaning set forth in Section 6.6.3.

		
	1.156.
	“Selling Party” has the meaning set forth in Section 1.117.

		
	1.157.
	“Setoff Amount” has the meaning set forth in Section 11.3.3.

		
	1.158.
	[***].

		
	1.159.
	“Shared Product” has the meaning set forth in Section 6.1.2(a).

		
	1.160.
	“Subcontractor” has the meaning set forth in Section 2.9.

		
	1.161.
	“Sublicense” means, directly or indirectly, to sublicense, grant any other right with respect to, or agree not to assert, any licensed right under any Patent, Know-How or other intellectual property right.  When used as a noun, “Sublicense” means any agreement to Sublicense.

		
	1.162.
	“Sublicensee” means an Affiliate or Third Party, other than a Distributor, to whom Vertex (or a Sublicensee or Affiliate) sublicenses any of the rights granted to Vertex hereunder during the Agreement Term.

		
	1.163.
	“Substitution Cap” has the meaning set forth in Section 2.3.2(a).

		
	1.164.
	“Target” means a [***] the [***] of which is associated with a human disease and which is to be edited, [***] in order to treat, ameliorate or prevent such disease. 

		
	1.165.
	“Target Cap” has the meaning set forth in Section 2.3.2(a). 

		
	1.166.
	“Target Selection Period” means the Initial Target Selection Period and the Final Target Selection Period.

		
	1.167.
	“[***] Joint Program Know-How” has the meaning set forth in Section 8.1.2(c).

		
	1.168.
	“[***] Joint Program Patents” has the meaning set forth in Section 8.1.2(c).

		
	1.169.
	“[***] Joint Program Technology” has the meaning set forth in Section 8.1.2(c).

		
	1.170.
	“Targeting” means [***] a Target or the [***] thereof.

		
	1.171.
	“Territory” means all countries of the world.

		
	1.172.
	“Third Party” means any Person other than Vertex, CRISPR or their respective Affiliates.

		
	1.173.
	“Third Party Obligations” means any non-financial encumbrances, obligations, restrictions, or limitations imposed by a CRISPR In-License Agreement or [***] that are required to be passed through to a sublicensee and relate to a Product or a Collaboration Target, including 

16

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

field or territory restrictions, covenants, diligence obligations or limitations pertaining to enforcement of intellectual property rights.
		
	1.174.
	“United States” or “U.S.” means the fifty states of the United States of America and all of its territories and possessions and the District of Columbia.

		
	1.175.
	“Valid Claim” means a claim (a) of any issued, unexpired United States or foreign Patent, which will not, in the country of issuance, have been donated to the public, disclaimed, nor held invalid or unenforceable by a court of competent jurisdiction in an unappealed or unappealable decision, or (b) of any United States or foreign patent application, which will not, in the country in question, have been cancelled, withdrawn or abandoned.  Notwithstanding the foregoing, on a country-by-country basis, a patent application pending for more than [***] years, or [***], will not be considered to have any Valid Claim for purposes of this Agreement unless and until a patent meeting the criteria set forth in clause (a) above with respect to such application issues.

		
	1.176.
	“Vertex” has the meaning set forth in the Preamble.

		
	1.177.
	“Vertex Activities” means, under any Research Plan, any and all Research activities that Vertex agrees to conduct and for which it is specifically designated as the responsible Party under the Research Plan.

		
	1.178.
	“Vertex Background Know-How” means any Know-How, other than Joint Program Know-How and Vertex Program Know-How, that (a) Vertex or any of its Affiliates Control as of the Effective Date or that comes into the Control of Vertex or any of its Affiliates during the Agreement Term and (b) [***].  

		
	1.179.
	“Vertex Background Patents” means any Patent, other than a Joint Program Patent or Vertex Program Patent that (a) Vertex or any of its Affiliates Control as of the Effective Date or that comes into the Control of Vertex or any of its Affiliates during the Agreement Term and (b) [***].  

		
	1.180.
	“Vertex Indemnified Party” has the meaning set forth in Section 10.2.

		
	1.181.
	“Vertex Parent” has the meaning set forth in the Preamble.

		
	1.182.
	“Vertex Program Know-How” has the meaning set forth in Section 8.1.2(b).

		
	1.183.
	“Vertex Program Patents” has the meaning set forth in Section 8.1.2(b).

		
	1.184.
	“Vertex Program Technology” has the meaning set forth in Section 8.1.2(b).

		
	1.185.
	“Vertex Share” has the meaning set forth in Section 7.6.4.

		
	1.186.
	“Vertex Target” has the meaning set forth in Section 2.3.1.

		
	1.187.
	“Vertex Target List” has the meaning set forth in Section 2.3.1.

17

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	1.188.
	“Vertex Technology” means (a) the Vertex Background Know-How, (b) the Vertex Background Patents, (c) the Vertex Program Technology, and (d) Vertex’s interest in any Joint Program Technology.  

		
	1.189.
	“Vertex UK” has the meaning set forth in the Preamble.

ARTICLE 2.     
RESEARCH
		
	2.1.
	Collaboration Overview. The Parties will collaborate by performing the activities set forth in each Research Plan for the purpose of designing and optimizing Licensed Agents and Products for Vertex (or with respect to the Shared Products, for the Parties) to advance through Clinical Trials and bring to patients as commercial products in the Field. 

		
	2.2.
	Research Plans.  During the Research Term CRISPR and Vertex will conduct Collaboration Programs, each under a separate Research Plan, focused on the design and optimization of Licensed Agents and Products for a specific Collaboration Target.  The components of the initial Research Plans to be developed for the Collaboration Targets are attached hereto as Schedule D.  Each Research Plan will be generally consistent with such initial Research Plans with respect to the scope and content thereof.  The Collaboration Program Working Group will update each ongoing Research Plan and submit the updated Research Plans to the JRC for its review and approval on an as-needed basis, but in no event less than once every [***].  Each Research Plan will include (a) a description of the process and criteria to be used by the Parties to design and optimize Licensed Agents to be used in Products directed to the applicable Collaboration Target, (b) projected timelines for activities under the Research Plan, (c) a budget for activities under such Research Plan (each, a “Research Budget”), (d) decision points and associated criteria for the Research Plan, including, without limitation, pre-specified criteria for establishing the elements of the Option Exercise Data Package for the applicable Collaboration Target, (e) a description of which Party will be responsible for each activity under the Research Plan; provided that unless otherwise specified in the applicable Research Plan, each Party will be responsible for the activities for which it is listed under the heading “Responsible Party” on Schedule C, and (f) the content of an Option Exercise Data Package, and, to the extent practicable, the specific criteria for acceptance of the Option Exercise Data Package (e.g., [***]).  

		
	2.3.
	Target Selection. 

		
	2.3.1.
	Vertex Target List.  The Collaboration Targets will be selected from a list of Targets selected by Vertex (each such Target, a “Vertex Target,” and collectively, the “Vertex Targets” and such list, the “Vertex Target List”).  As of the Effective Date, the initial Collaboration Targets and initial Vertex Targets are included on Schedule B.  

		
	2.3.2.
	Process to Update the Vertex Target List.  

		
	(a)
	Subject to Section 2.3.2(c), Vertex may [***] Targets as Vertex Targets on the Vertex Target List [***] a Target for a Vertex Target on the Vertex Target List (subject to the [***] Cap) upon written notice to CRISPR; provided that (i) [***], and (ii) [***] (the “Target Cap”). If the [***] to the Vertex Target List would cause the number of Vertex Targets on the Vertex Target List to [***] or 

18

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

if Vertex is [***] during the Final Target Selection Period, such notice also will specify the Vertex Target to be [***] on the Vertex Target List by such [***] Target.  Vertex shall be permitted to [***] of (A) [***] and (B) [***] ((A) or (B), as applicable, the “[***] Cap”). 
		
	(b)
	For the avoidance of doubt, (1) after the Initial Target Selection Period, Vertex may [***] Targets as Vertex Targets and (2) after the first [***] of the Final Target Selection Period Vertex may [***] Targets within the Vertex Target List, in each case, [***].  The Parties will in good faith discuss any request by Vertex during the Research Term to [***] Targets on the Vertex Target List made at any time when Vertex does not have the right to make such [***] under Section 2.3.2(a). 

		
	(c)
	If Vertex proposes to [***] a CRISPR Reserved Target to the Vertex Target List or [***] a CRISPR Reserved Target for a Vertex Target on the Vertex Target List pursuant to Section 2.3.2(a) above, such [***] shall not be effective, and CRISPR shall notify Vertex in writing within [***] after the date on which CRISPR receives notice of the proposed [***], that such Target is a CRISPR Reserved Target. CRISPR shall, if requested by Vertex in writing, [***] and, if CRISPR [***] that such Target is a [***] based, in whole or in part, on [***], it shall so notify Vertex.  If after providing [***] Vertex will so notify CRISPR, then CRISPR will, [***].  If CRISPR [***] that such Target is a [***] under [***], Vertex may [***]. The [***] shall promptly [***].  The [***]; provided, that if, notwithstanding [***], CRISPR believes that a Target is a CRISPR Reserved Target under paragraph 3 of Schedule A, CRISPR may pursue [***] solely with respect to [***].  If a proposed Target is not [***] due to the provisions of this Section 2.3.2(c), such Target will not count against the Substitution Cap (if applicable) and the Vertex Target on the Vertex Target List that was to be replaced by such Target shall remain on the Vertex Target List (if applicable).  If, during the Research Term, any Target excluded from the Vertex Target List pursuant to this Section 2.3.2(c) ceases to be a CRISPR Reserved Target, CRISPR will promptly notify Vertex that such Target is no longer a CRISPR Reserved Target, and, thereafter, Vertex may at its option (exercisable at any time within [***] of such notice) add such Target to the Vertex Target List, subject to the limitations set forth in this Section 2.3.2.  Vertex may remove Targets from the Vertex Target List upon written notice to CRISPR and thereafter such removed Target will no longer be a Vertex Target (unless such Target is later added again as a Vertex Target in accordance with this Section 2.3.2).  

		
	2.3.3.
	Collaboration Target Selection.  Vertex may elect to designate a Vertex Target as a Collaboration Target at any time during the Research Term upon written notice to CRISPR.  Within [***] after the designation of a Collaboration Target, the Collaboration Program Working Group will be formed and will provide the JRC an initial draft Research Plan for such Collaboration Target.  Subject to Section 3.1.3, the JRC will review such plan and agree upon a final Research Plan for such Collaboration Target. Collaboration Targets continue to be included as Vertex Targets for purposes of the Target Cap.

19

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	2.3.4.
	[***].  The Parties acknowledge that [***] is included as an Initial Collaboration Target [***]. During the Research Term, CRISPR will periodically disclose to Vertex any material findings generated by CRISPR in connection with CRISPR’s internal research supporting the conclusion [***].  Following Vertex’s receipt of such data, Vertex may elect to [***], as applicable.  If any such [***] (other than [***]) is [***], (a) Vertex will [***] and (b) the Collaboration Program Working Group will prepare a Research Plan for [***] and submit such plan to the JRC for its approval as provided in Section 2.3.3.  

		
	2.4.
	Research Term.  The term for the conduct of the Collaboration Programs (the “Research Term”) will begin on the Effective Date and will end on the earlier of (a) the date on which [***] and [***] with respect to six Collaboration Targets and (b) the [***] of the Effective Date; provided, however, that if any Research activities under a Research Plan (including any Continuation Research) are incomplete on such [***] (and Vertex has not [***]), the Parties will complete such activities in accordance with the applicable Research Plan, and the Research Term will be extended with respect to such Research Plan(s) for up to [***] to complete such activities or [***]; and provided further, that during any portion of the Research Term after the [***] of the Effective Date, the Vertex Target List will be dissolved and neither Party will have any further obligation under this Agreement (including under Section 2.13.1) with respect to any Vertex Target that was not selected as a Collaboration Target. 

		
	2.5.
	Research Activities.  Following the JRC’s approval of a Research Plan, each Party will use Commercially Reasonable Efforts to perform activities for which such Party is responsible under such Research Plan in accordance with the timelines set forth therein.  Vertex will be responsible for carrying out all Vertex Activities under a Research Plan, and CRISPR will be responsible for carrying out all CRISPR Activities under each Research Plan. Each Party will, and will require its Affiliates and Subcontractors to, comply with all Applicable Laws in its and their conduct of the activities under a Research Plan, including where appropriate cGMP, GCP and GLP (or similar standards). No more than [***] Research Plans shall be conducted at any given time during the Initial Target Selection Period and no more than [***] Research Plans shall be conducted at any given time during the Final Target Selection Period.  CRISPR will dedicate such number of FTEs as is reasonably required to perform the CRISPR Activities under the Research Plans during the Target Selection Period, which CRISPR currently anticipates will be no fewer than an average of [***] FTEs to the performance of Research Plans during the Initial Target Selection Period and no fewer than an average of [***] FTEs to the performance of Research Plans during the Final Target Selection Period.  

		
	2.6.
	Option Exercise Data Package.  Within [***] after completion of activities under a Research Plan, CRISPR will provide Vertex with an Option Exercise Data Package for the relevant Collaboration Program.  Following Vertex’s receipt of the Option Exercise Data Package for a Collaboration Program, Vertex may exercise the Option for the relevant Collaboration Target as provided in Section 4.1; provided, that if, within [***] after receipt of the Option Exercise Data Package, Vertex notifies the JRC [***] that [***] with respect to [***] should be [***] of such [***] (such notice, a “[***]” and such [***]), and either (a) the requested [***] can reasonably be [***] within [***] following the initiation thereof through the use of [***] or (b) the requested [***] cannot reasonably be [***] within [***] following the initiation thereof, but the Parties mutually agree to [***], the Collaboration Program Working Group will meet and in good faith determine such amendments to the Research Plan as are required to define the activities to be conducted in connection with such Continuation Research and will submit 

20

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

such amendments to the JRC for approval.  Following the JRC’s approval of such amendment, (i) the Parties will conduct the Continuation Research in accordance with Section 2.5, subject to any limitations or conditions that may be agreed to by the Parties in agreeing to conduct the Continuation Research under the foregoing clause (b), (ii) Vertex will fund such activities as provided in Section 2.10 and (iii) the Collaboration Program Working Group will monitor performance of such Continuation Research and meet no less than [***] (or more frequently as determined by the JRC) to discuss the status thereof.  Within [***] following the completion of the Continuation Research, CRISPR will provide Vertex with a revised Option Exercise Data Package reflecting the results of the Continuation Research.  CRISPR will provide to Vertex any additional Know-How or data Controlled by CRISPR relating to the applicable Collaboration Target as Vertex may reasonably request after delivery of the Option Exercise Data Package.  For clarity, the preceding sentence shall not impose any obligation on CRISPR to generate additional Know-How or data.
		
	2.7.
	End of Research Term.  At the end of the Research Term, (a) neither CRISPR nor Vertex will have an obligation to perform any additional activities under any Research Plan and (b) CRISPR’s obligations and Vertex’s rights under this Agreement with respect to any Vertex Target that has not been designated as a Collaboration Target will terminate and the Vertex Target list will be dissolved.  For clarity, the expiration of the Research Term will not affect Vertex’s rights or CRISPR’s obligations with respect to any Collaboration Target for which Vertex has exercised its Option as provided in Section 4.1 or for which the Option Deadline has not occurred. 

		
	2.8.
	Briefing the JRC.  At each regularly scheduled meeting of the JRC, which shall be no less frequent than [***], each Party will provide detailed progress updates on activities conducted under each Research Plan along with a summary of data associated with such Research activities under such Research Plans, which updates and summaries will be provided to JRC members at least [***] in advance of any JRC meeting. The agenda for meetings of the JRC will be set by the JRC representatives.  Each Collaboration Program will be reviewed by the JRC at minimum every [***].

		
	2.9.
	Subcontractors. CRISPR may engage consultants, subcontractors, or other vendors (each, a “Subcontractor”) to perform any work under a Research Plan with Vertex’s prior written consent; provided, that [***] or (b) identified on Schedule E.  Vertex may engage Subcontractors to perform Vertex Activities.  Each contract between a Party and a Subcontractor will be consistent with the provisions of this Agreement (including ARTICLE 8 and ARTICLE 12).  Each Party will be responsible for the effective and timely management of and payment of its Subcontractors.  The engagement of any Subcontractor in compliance with this Section 2.9 will not relieve the applicable Party of its obligations under this Agreement or the Research Plan.  Each Party will be solely responsible for any taxes, including income, withholding, payroll, VAT, sales tax or the like, that arise from the use of a Subcontractor. 

		
	2.10.
	Research Costs.  Vertex will reimburse CRISPR for Research Costs incurred by CRISPR in accordance with Section 7.4.  All costs incurred by Vertex in connection with Vertex Activities will be borne solely by Vertex.  

		
	2.11.
	Transfer of Materials.  To facilitate the conduct of activities under each Research Plan, each Party will provide any Materials required by the Research Plan to be transferred to the other 

21

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

Party, and each Party may provide to the other Party certain other Materials.  All Materials (a) will remain the sole property of the supplying Party, (b) will be used only in the fulfillment of the receiving Party’s obligations or exercise of rights under this Agreement, (c) will remain solely under the control of the receiving Party, (d) will not be used or delivered by the receiving Party to or for the benefit of any Third Party (other than a permitted Subcontractor or Sublicensee) without the prior written consent of the supplying Party, and, (e) except with respect to any Materials provided by CRISPR to Vertex hereunder for use in a Clinical Trial, will not be used in research or testing involving human subjects, unless expressly agreed.  Subject to Section 9.2, all Materials supplied under this Section 2.11 are supplied “as is”, with no warranties of fitness for a particular purpose and must be used with prudence and appropriate caution in any experimental work, since not all of their characteristics may be known. 
		
	2.12.
	Additional Research.  At any time following exercise of an Option for a Collaboration Target, Vertex may request that CRISPR provide additional Research services to Vertex, with respect to such Collaboration Target (“Additional Research”).  Upon such request, the Parties will meet and discuss in good faith whether CRISPR is able to provide those services and a mutually-agreeable plan (the “Additional Research Plan”), including a timeline, and budget, which will be subject to the approval of the JRC (the “Additional Research Budget”) therefor; provided that CRISPR may, in its sole discretion, refuse to perform Additional Research.  Vertex will reimburse CRISPR for Research Costs incurred in performing activities under the Additional Research Plan as provided in Section 7.4.  CRISPR will provide Vertex with the results of any Additional Research promptly following the completion thereof.

		
	2.13.
	Exclusivity Covenants.  

		
	2.13.1.
	[***].  Subject to Section 2.13.4(a) and Section 2.13.5, during [***], each Party agrees that, except in the performance of its obligations or exercise of its rights under this Agreement, [***] with respect to the discovery, research, development, manufacture or commercialization in the Field of (a) [***] or (b) [***].  For the avoidance of doubt, each Party’s obligations under this Section 2.13.1 will terminate (i) with respect to [***] and (ii) with respect to [***]. 

		
	2.13.2.
	[***]. Subject to Section 2.13.4(a) and Section 2.13.5, during [***], each Party agrees that, except in the performance of its obligations or exercise of its rights under this Agreement, [***] with respect to the discovery, research, development, manufacture or commercialization in the Field of (a) [***] or (b) [***]. For the avoidance of doubt, each Party’s obligations under this Section 2.13.2 will terminate with respect to a [***] upon [***].    

		
	2.13.3.
	[***]. Subject to Section 2.13.4(a) and Section 2.13.5, commencing on the Effective Date and [***] hereunder, [***] with respect to the discovery, research, development, manufacture or commercialization in the Field of (a) [***] or (b) [***]; provided, however, that notwithstanding the foregoing, during such period, [***]. 

		
	2.13.4.
	Cystic Fibrosis.  

		
	(a)
	Notwithstanding anything to the contrary contained herein, the provisions of Sections 2.13.1, 2.13.2 and 2.13.3 will not apply with respect to the discovery, 

22

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

research, development, manufacture or commercialization of any product for the treatment of cystic fibrosis by Vertex or its Affiliates and Vertex and its Affiliates will not be restricted from conducting such activities. 
		
	(b)
	During the Agreement Term, CRISPR agrees that neither it nor any of its Affiliates will work independently or for the benefit of or with any Third Party (including the grant of any license to any Third Party) with respect to the discovery, research, development, manufacture or commercialization of any product containing (a) [***] or (b) [***], provided that there is [***]. 

		
	2.13.5.
	Delivery Technology.  Notwithstanding the provisions of Sections 2.13.1, 2.13.2, 2.13.3 and 2.13.4(b), either Party may, independently or for the benefit of or with any Third Party, discover, research, develop, manufacture or commercialize technology for use in [***].

		
	2.13.6.
	Acquisition of Distracting Product. Notwithstanding the provisions of Sections 2.13.1, 2.13.2, 2.13.3 and 2.13.4(b), if a Party or any of its Affiliates (such Party, the “Distracted Party”) acquires rights to research, develop or commercialize a Distracting Product in the Field as the result of a merger, acquisition or combination with or of a Third Party other than a Change of Control (each, an “Acquisition Transaction”) and, on the date of the completion of such Acquisition Transaction, such Distracting Product is being researched, developed or commercialized and such activities would, but for the provisions of this Section 2.13.6, constitute a breach of Section 2.13.1, 2.13.2, 2.13.3 or 2.13.4(b), as applicable, then the Distracted Party or such Affiliate will, within [***] after the completion of such Acquisition Transaction notify the other Party of such acquisition and either: 

		
	(a)
	request that such Distracting Product be included in this Agreement on terms to be negotiated, in which case, the Parties will discuss the matter in good faith for a period of no less than [***] (or such longer period as may be agreed by the Parties) and, if unable to reach agreement on the terms on which such Distracting Product would be included hereunder within such period, the Distracted Party will elect to take the action specified in either clause (b) or (c) below; provided that the time periods specified in such clauses will be tolled for so long as the Parties are engaged in discussion under this clause (a);

		
	(b)
	notify the other Party that the Distracted Party or its Affiliate will Divest its rights to such Distracting Product, in which case, within [***] after the completion of the Acquisition Transaction, the Distracted Party or its Affiliate will Divest such Distracting Product; or

		
	(c)
	notify the other Party in writing that it is ceasing all such research, development and commercialization activities with respect to the Distracting Product, in which case, within [***] thereafter the Distracted Party and its Affiliates will cease all such activities.  

During the discussion period under clause (a), prior to the time of Divestiture pursuant to clause (b) or prior to the termination of activities pursuant to clause (c), as applicable, 

23

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

the Distracted Party and its Affiliates will use Commercially Reasonable Efforts to segregate all research, development or commercialization activities relating to the Distracting Product from Research, Development and Commercialization with respect to Licensed Agents or Products under this Agreement, including using Commercially Reasonable Efforts to ensure that (i) no personnel involved in performing the research, development or commercialization of such Distracting Product have access to non-public plans or information relating to the Research, Development or Commercialization of Products (provided that management personnel may review and evaluate plans and information regarding the Research, Development and Commercialization of Products in connection with portfolio decision-making) and (ii) no personnel involved in performing the Development or Commercialization of Products have access to non-public plans or information relating to the Development or Commercialization of such Distracting Product (provided that management personnel may review and evaluate plans and information regarding the Development and Commercialization of such Distracting Product in connection with portfolio decision-making).  

		
	2.13.7.
	Change of Control.  If there is a Change of Control involving a Party (where such Party is the acquired entity), the obligations of Sections 2.13.1, 2.13.2, 2.13.3 and 2.13.4(b), as applicable, will not apply to any product containing a (a) a [***] or (b) a [***], in each case, that is Controlled by the relevant acquirer or its Affiliates that exists prior to the closing of such Change of Control; provided that (i) the acquired Party and the acquirer and its Affiliates existing immediately prior to the effective date of such Change of Control establish and enforce internal processes, policies, procedures and systems to segregate information relating to any such product from any Confidential Information related to the Licensed Agents and Products under this Agreement, (ii) the acquirer and its Affiliates existing immediately prior to the effective date of such Change of Control do not use, directly or indirectly, any Patents, Know-How or Confidential Information of the acquired Party (including any Patents, Know-How or Confidential Information licensed or acquired from the other Party under this Agreement) in connection with such product, and (iii) no personnel who were employees or consultants of the acquired Party or its Affiliates at any time prior to or after the Change of Control will conduct any activities relating to such product.

ARTICLE 3.    
GOVERNANCE

		
	3.1.
	Joint Research Committee.  

		
	3.1.1.
	Formation.  Within 30 days after the Effective Date, the Parties will establish a joint research committee (the “Joint Research Committee” or “JRC”) to oversee and coordinate activities under this Agreement.  The JRC will be comprised of [***] representatives from each Party, with one such representative to have [***].  The JRC will conduct its responsibilities hereunder in good faith and with reasonable care and diligence.  The JRC will meet in person at least once each Calendar Quarter on such dates and at such times and places as agreed to by the members of the JRC. The purpose of the JRC will be to provide the members periodic updates regarding progress of activities 

24

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

pursuant to this Agreement and to address the matters set forth in Section 3.1.2.  Each Party will be responsible for its own expenses relating to attendance at or participation in JRC meetings.
		
	3.1.2.
	Responsibilities.  The JRC will: 

		
	(a)
	review and approve any initial or amended Research Plan, including the corresponding Research Budget, the planned content of an Option Exercise Data Package, and, to the extent practicable, the specific criteria for acceptance of the Option Exercise Data Package;

		
	(b)
	prioritize the performance of activities under the Research Plans (including Continuation Research) for Collaboration Targets;

		
	(c)
	provide comments and recommendations to each Party with respect to the conduct of activities under each Research Plan; 

		
	(d)
	assist in planning and facilitating the transfer of Research responsibility and activities from CRISPR to Vertex upon Option Exercise as needed;

		
	(e)
	provide a forum for the Parties to discuss the objectives and progress under each Research Plan and to exchange and review scientific information and data relating to the activities being conducted under each Research Plan; 

		
	(f)
	during the [***], discuss the [***]; 

		
	(g)
	during the [***], discuss the [***]; and

		
	(h)
	perform such other duties as are specifically assigned to the JRC under this Agreement.

		
	3.1.3.
	Decision-Making.  The JRC members will use reasonable efforts to reach agreement on any and all matters that the JRC has the authority to decide and endeavor to reach consensus on all such matters, taking into consideration the views of each Party.  If the JRC is unable to reach consensus with respect to any such matter within [***], the matter will be referred to the Executive Officers, who will use reasonable efforts to reach agreement on such matter. If such Executive Officers are unable to reach consensus with respect to such matter with [***] after such matter is first referred to such Executive Officers, then [***] will have the right to make the final decision with respect to the relevant matter; provided that [***] (i) will take into reasonable consideration the recommendations and concerns raised by [***], (ii) will make such decisions in good faith using reasonable business judgment, which will not be unreasonably delayed, and (iii) will not have the right to: (A) amend, modify or waive compliance with any term or condition of this Agreement; (B) make any decision that is expressly stated to require the mutual agreement of the Parties; (C) resolve any claim or dispute regarding whether or in what amount a payment is owed under this Agreement; (D) exercise its final decision-making authority in a manner that would require [***] to perform any act that [***] reasonably believes would constitute a violation of an Applicable Law; (E) make a determination that a Party is in material breach of any obligation under this Agreement or (F) amend or modify a Research Plan if such amendment or modification would require [***] to expend additional resources, whether internal or external, including capital expenditures for which [***] as provided herein.  

25

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	3.1.4.
	Discontinuation of the JRC.  The JRC’s authority with respect to a given Collaboration Program will continue to exist until the first to occur of (a) the Parties mutually agreeing to terminate the JRC’s authority with respect to such Collaboration Program and (b) the completion of all activities under the Research Plan for such Collaboration Program.  The JRC will disband when it ceases to have authority over any Collaboration Program pursuant to the preceding sentence.  

		
	3.2.
	Collaboration Program Working Group.  Within [***] after Vertex designates a Vertex Target as a Collaboration Target as provided in Section 2.3.3 (or with respect to the Initial Collaboration Targets, within [***] after the Effective Date), the Parties will form a working group (a “Collaboration Program Working Group”) comprised of an equal number of representatives from each Party having relevant expertise with respect to the given Collaboration Program.  The Collaboration Program Working Group shall be chaired by a project leader from [***], whose appointment shall be subject to the reasonable approval by [***].  The Collaboration Program Working Group will create the initial Research Plan and Research Budget, the planned content of an Option Exercise Data Package, and, to the extent practicable, the specific criteria for acceptance of the Option Exercise Data Package for the applicable Collaboration Program.  The Collaboration Program Working Group will also oversee and coordinate the performance of activities under the Research Plan for such Collaboration Program and perform such other activities as the JRC may delegate to the Collaboration Program Working Group from time to time. Any disputes arising out of the Collaboration Program Working Group will be escalated to the JRC for resolution. 

		
	3.3.
	Other Committees.  The Parties may, by mutual agreement, form such other committees or working groups as may be necessary or desirable to facilitate the activities under this Agreement.  Any dispute arising from such committees or working groups will be escalated to the JRC for resolution. 

		
	3.4.
	Alliance Managers.  

		
	3.4.1.
	Appointment.  Within [***] following the Effective Date each Party will appoint (and notify the other Party of the identity of) a representative of such Party to act as its alliance manager under this Agreement (each an “Alliance Manager”).  Each Party may replace its Alliance Manager at any time by written notice to the other Party.

		
	3.4.2.
	Specific Responsibilities.  The Alliance Managers may be, but will not be required to be, members of the JRC.  The Alliance Managers will serve as the primary contact point between the Parties for the purpose of providing each Party with information regarding the other Parties’ activities pursuant to this Agreement and will have the following responsibilities:

		
	(a)
	schedule meetings of the JRC and circulate draft written minutes from each meeting within [***] after each such meeting; 

		
	(b)
	facilitate the flow of information and otherwise promoting communication, coordination and collaboration between the Parties;

26

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	(c)
	coordinate the various functional representatives of each Party, as appropriate, in developing and executing strategies and plans for Licensed Agents and Products;

		
	(d)
	provide a single point of communication for seeking consensus both internally within the respective Party’s organization and between the Parties regarding key strategy and planning issues;

		
	(e)
	coordinate and facilitate budget, finance and billing activities as overseen by the JRC; and

		
	(f)
	perform such other functions as requested by the JRC.

ARTICLE 4.    
EXCLUSIVE OPTION
		
	4.1.
	Option. 

		
	4.1.5.
	Option and Option Deadline.  CRISPR hereby grants to Vertex and its Affiliates an exclusive option to obtain the Exclusive License with respect a maximum of six Collaboration Targets (each, an “Option,” and such six Collaboration Target maximum, the “Option Cap”).  Within [***] after Vertex’s receipt of an Option Exercise Data Package for the applicable Collaboration Program (the “Option Deadline”), Vertex will notify CRISPR as to whether or not Vertex is exercising the applicable Option; provided, that if, following receipt of the applicable Option Exercise Data Package, Vertex delivers a [***] to the JRC, the Option Deadline will be extended until the date that is [***] after Vertex’s receipt of a revised Option Exercise Data Package reflecting the results of the Continuation Research as provided in Section 2.6.  If Vertex or its designated Affiliate notifies CRISPR in writing that it wishes to exercise the applicable Option, CRISPR will, and hereby does, grant to Vertex or its designated Affiliate the Exclusive License with respect to Licensed Agents and Products directed to such Collaboration Target and, except with respect to Collaboration Targets that are [***] with respect to such Collaboration Target; provided, however, if Vertex determines that an HSR Filing is required to be made under the HSR Act to exercise an Option and notifies CRISPR of such determination within [***] after Vertex’s receipt of the complete Option Exercise Data Package, the Parties will promptly file an HSR Filing in accordance with Section 4.1.2(a) and Vertex’s election to exercise the applicable Option will not be effective (and Vertex will not be obligated to make any payment under Section 7.3.1) until the HSR Clearance Date.  If Vertex fails to timely exercise an Option in accordance with this Section 4.1.1, the Option shall expire and be of no further force or effect, both Party’s obligations under Section 2.13.1 shall terminate with respect to the relevant Collaboration Target, such Collaboration Target shall no longer be a Collaboration Target nor a Vertex Target and Vertex shall be deemed to have terminated the relevant Collaboration Program for purposes of ARTICLE 11 of this Agreement.  

		
	4.1.6.
	HSR Compliance.

		
	(a)
	HSR Filing.  If Vertex notifies CRISPR pursuant to Section 4.1.1 that an HSR Filing is required for Vertex to receive the Exclusive License with respect to a Collaboration Target, each of Vertex and CRISPR will, within [***] after such 

27

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

notice from Vertex (or such later time as may be agreed to in writing by the Parties), file with the United States Federal Trade Commission (“FTC”) and the Antitrust Division of the United States Department of Justice (“DOJ”), any HSR Filing required with respect to the transactions contemplated hereby.  The Parties will cooperate with one another to the extent necessary in the preparation of any such HSR Filing.  Each Party will be responsible for its own costs and expenses (other than filing fees, which Vertex will pay) associated with any HSR Filing.
		
	(b)
	HSR Clearance.  In furtherance of obtaining clearance for an HSR Filing filed pursuant to this Section 4.1.2, CRISPR and Vertex will use their respective Commercially Reasonable Efforts to resolve as promptly as practicable any objections that may be asserted with respect to this Agreement or the transactions contemplated by this Agreement under any antitrust, competition or trade regulatory law.  In connection with obtaining such HSR clearance from the FTC, the DOJ or any other governmental authority, Vertex and its Affiliates will not be required to (i) sell, divest (including through a license or a reversion of licensed or assigned rights), hold separate, transfer or dispose of any assets, operations, rights, product lines, businesses or interest therein of Vertex or any of its Affiliates (or consent to any of the foregoing actions); or (ii) litigate or otherwise formally oppose any determination (whether judicial or administrative in nature) by a governmental authority seeking to impose any of the restrictions referenced in clause (i) above.

ARTICLE 5.     
LICENSE GRANTS 
		
	5.1.
	Non-Exclusive Research License from CRISPR to Vertex.  Subject to the terms and conditions of this Agreement, CRISPR and, following the Subsidiary Transfer, the CRISPR Subsidiary, hereby grants Vertex UK and its Affiliates a non-exclusive, royalty-free, fully paid-up, worldwide license, with no right to grant sublicenses except to permitted Subcontractors under Section 2.9, to use the Licensed Technology solely to perform the Vertex Activities during the Research Term.  

		
	5.2.
	Non-Exclusive Research and Development License from Vertex to CRISPR.  Subject to the terms and conditions of this Agreement, Vertex hereby grants to CRISPR a non-exclusive, royalty-free, fully paid-up, worldwide license, with no right to grant sublicenses except to permitted Subcontractors under Section 2.9, under the Vertex Technology solely to perform Research under the Research Plan for each Collaboration Program during the Research Term.  

		
	5.3.
	License Grants to Vertex. 

		
	5.3.1.
	Development and Commercialization Licenses. Subject to the terms and conditions of this Agreement, on a Collaboration Target-by-Collaboration Target basis, effective upon Vertex’s exercise of the Option for a particular Collaboration Target in accordance with this Agreement, CRISPR and, following the Subsidiary Transfer, the CRISPR Subsidiary, grants to Vertex UK and its Affiliates an exclusive (subject to Section 6.1.2(b)), royalty-bearing, license under CRISPR’s and its Affiliates’ interest in the Licensed Technology 

28

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

to Research, Develop, Manufacture, have Manufactured, use, keep, sell, offer for sale, import, export and Commercialize Licensed Agents and Products directed to the relevant Collaboration Target in the Field in the Territory (such license, the “Exclusive License”).  Vertex may grant sublicenses through multiple tiers of sublicense to one or more Sublicensees of any and all rights granted to Vertex by CRISPR under the Exclusive License; provided that Vertex shall only be permitted to grant a Sublicense to conduct any Commercialization activities with respect to a Licensed Agent or Product [***] with CRISPR’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed; and provided, further, that no such consent will be needed with respect to any Sublicense (a) granted to a Third Party to conduct Commercialization activities with respect to a Licensed Agent or Product in [***] (and not any other [***]), (b) any Sublicense granted to a Distributor or other Third Party conducting activities on Vertex’s behalf or (c) any Sublicensee granted to a Third Party to Manufacture Licensed Agent or Product on Vertex’s behalf.  Each such Sublicense will be subject and subordinate to, and consistent with, the terms and conditions of this Agreement and will require such Sublicensee to comply with all applicable terms of this Agreement and all Third Party Obligations. Vertex shall promptly provide CRISPR with a copy of the fully executed Sublicense agreement covering any sublicense granted hereunder (which copy may be redacted to remove provisions which are not necessary to monitor compliance with this Section 5.3.1).  Notwithstanding the grant of any Sublicense, Vertex shall remain primarily liable to CRISPR for the performance of all of Vertex’s obligations under, and Vertex’s compliance with all provisions of, this Agreement.
		
	5.3.2.
	License Conditions; Limitations.  Subject to Section 7.6, any rights and obligation hereunder, including the rights granted pursuant to any Exclusive License with respect to a Collaboration Target, are subject to and limited by any applicable Third Party Obligations to the extent the provisions of such obligations or agreements are specifically disclosed to Vertex in writing (or via electronic data room) (a) with respect to Third Party Obligations existing as of the Effective Date, prior to the Effective Date, (b) with respect to Third Party Obligations arising between the Effective Date and the delivery of the relevant Option Exercise Data Package, at the time of delivery of the Option Exercise Data Package and (c) with respect to Third Party Obligations arising after the date the applicable Exclusive License is granted hereunder, on or prior to the date on which such Third Party Obligations arise.  Vertex will have the right to [***] any Third Party Patents and Know-How to which such Third Party Obligations [***] by providing CRISPR [***] (with respect to any Third Party Obligations existing at the time the relevant Option Exercise Data Package is delivered) or [***], in which case, such Third Party Patents and Know-How [***] this Agreement.  If Vertex does not provide CRISPR [***] Third Party Patents and Know-How as provided above, such Third Party Patents and Know-How [***] under this Agreement and Vertex will be subject to the Third Party Obligations [***].

		
	5.4.
	Licenses to Improvements. 

29

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	5.4.1.
	License to CRISPR.  Subject to the terms and conditions of this Agreement, Vertex hereby grants to CRISPR a perpetual, irrevocable, non-exclusive, royalty-free, fully paid-up, worldwide, sublicensable, license to all improvements or modifications to the CRISPR Platform Technology Patents, CRISPR Background Patents (to the extent existing on the Effective Date or otherwise claiming the CRISPR Background Know-How set forth on Schedule F), [***] or CRISPR Background Know-How set forth on Schedule F (as may be supplemented by mutual written agreement of the Parties  from time to time), whether or not patentable, that arise in the course of performing activities under a Research Plan or in the course of Developing and Commercializing a Licensed Agent or Product and are Controlled by Vertex or its Affiliates to make, have made, use, sell, keep, offer for sale and import products other than Licensed Agents and Products.  

		
	5.4.2.
	License to Vertex.  Subject to the terms and conditions of this Agreement, CRISPR, and, following the Subsidiary Transfer, to the extent necessary, the CRISPR Subsidiary, hereby grants to Vertex a perpetual, irrevocable, non-exclusive, royalty-free, fully paid-up, worldwide, sublicensable, license to all improvements or modifications to the Vertex Background Know-How or Vertex Background Patents, whether or not patentable, that arise in the course of performing activities under a Research Plan and are Controlled by CRISPR or its Affiliates to make, have made, use, sell, keep, offer for sale and import products other than Licensed Agents and Products.  

		
	5.5.
	Technology Transfer after Option Exercise.  

		
	5.5.1.
	Transition Agreement.  Upon each exercise by Vertex of an Option, the Parties will negotiate and execute an agreement setting forth the Parties’ respective obligations with respect to the transfer of data and Materials relating to the relevant Collaboration Target from CRISPR to Vertex, all in accordance with this Section 5.5. 

		
	5.5.2.
	Licensed Know-How.  On a Collaboration Target-by-Collaboration Target basis, CRISPR will promptly, but no later than [***] after Vertex exercises its Option for such Collaboration Target hereunder, make available and, at Vertex’s request, deliver to Vertex or one or more designated Affiliates all documented Licensed Know-How in CRISPR’s possession that has not previously been provided hereunder, for use in accordance with the exercise of the applicable Exclusive License.  To assist with the transfer of such Licensed Know-How, CRISPR will make its personnel reasonably available to Vertex during normal business hours to transfer such Licensed Know-How under this Section 5.5.2 and Vertex will reimburse CRISPR for the reasonable costs of such assistance at the FTE Rate within 30 days after its receipt of an invoice therefor. 

		
	5.5.3.
	Transfer of Manufacturing Know-How and Materials.  Without limiting CRISPR’s obligations under Section 5.5.2, within [***] following the exercise of an Option, and thereafter, promptly following Vertex’s request, CRISPR will, or will cause the applicable Third Party (including any contract manufacturing organization engaged by CRISPR to Manufacture any Licensed Agent or 

30

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

Product) to, transfer to Vertex (a) all Licensed Know-How that is necessary or useful to enable the Manufacture of each Licensed Agent or Product for the applicable Collaboration Target, and not previously transferred to Vertex under this Agreement, by providing copies or samples of relevant documentation, materials and other embodiments of such Licensed Know-How, and by making available its, or the applicable Third Party’s, qualified technical personnel on a reasonable basis to consult with Vertex with respect to such Licensed Know-How and (b) at Vertex’s request, any Materials used by CRISPR or its Affiliates or Subcontractors in the Manufacture of such Licensed Agent or Product. 
		
	5.5.4.
	Transfer of Regulatory Filings and Data.  On a Collaboration Target-by-Collaboration Target basis and effective as of the date on which Vertex is granted the Exclusive License for a Collaboration Target, CRISPR will, and hereby does, assign to Vertex any and all Regulatory Filings or any other rights or permissions granted by any Regulatory Authority to Vertex related to any Licensed Agent or Product directed to such Collaboration Target, together with all Research, Development and Manufacturing data relating to such Collaboration Target, in each case, not previously assigned by CRISPR to Vertex. Further, CRISPR will take all actions and provide all assistance reasonably requested by Vertex to effect the assignments in this Section 5.5.4. 

		
	5.5.5.
	Right of Reference.  Vertex hereby grants to CRISPR the right to rely upon and a right to copy, access, and otherwise use, all Adverse Event information pertaining to each Product as reasonably required in connection with the Development and Commercialization (subject to Section 2.13) of products, and Vertex shall, if requested by CRISPR, provide a signed statement that CRISPR may rely on, and the Regulatory Authority may access, in support of CRISPR’s application for Regulatory Approval of such products.   

		
	5.6.
	No Implied Licenses.  All rights in and to Licensed Technology not expressly licensed or assigned to Vertex under this Agreement are hereby retained by CRISPR or its Affiliates.  All rights in and to any Vertex Technology not expressly licensed to CRISPR under this Agreement, are hereby retained by Vertex or its Affiliates.  Except as expressly provided in this Agreement, no Party will be deemed by estoppel or implication to have granted the other Party any licenses or other right with respect to any intellectual property. 

ARTICLE 6.     
PROFIT/LOSS SHARING, DEVELOPMENT, MANUFACTURING AND COMMERCIALIZATION
		
	6.1.
	CRISPR Profit/Loss Sharing.

		
	6.1.3.
	Profit/Loss Sharing.  CRISPR will jointly (with Vertex or Affiliate(s) designated by Vertex) Research, Develop and Commercialize Products containing (a) any Licensed Agent directed to a Collaboration Target that is a Hemoglobinopathy Target or (b) [***] and, in each case, for which Vertex has obtained the Exclusive License, as provided herein, unless, in each case, CRISPR exercises an Opt-Out in accordance with Schedule G. 

31

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	6.1.4.
	Effects of Co-Commercialization.  For each Collaboration Target set forth in clauses (a) or (b) of Section 6.1.1:

		
	(c)
	each Product for the relevant Collaboration Target will be deemed a “Shared Product”; 

		
	(d)
	the Exclusive License with respect to the relevant Collaboration Target will become co-exclusive (with CRISPR); 

		
	(e)
	within [***] after Vertex has exercised the Option to obtain the Exclusive License for such Collaboration Target, CRISPR and Vertex (or any Affiliates designated by Vertex) will enter into an agreement (the “Joint Development & Commercialization Agreement”), which the Parties will negotiate in good faith and which will include appropriate plans and budgets, for the joint Development and Commercialization of Shared Products (or provisions for establishing such plans) and will include (i) terms and conditions that are substantially the same as those set forth in Schedule G and (ii) other reasonable and customary provisions for transactions of this type as the Parties may agree.  If the terms of this Agreement conflict with the terms of the Joint Development & Commercialization Agreement, the terms of the Joint Development & Commercialization Agreement will control with respect to the Collaboration Program that is the subject thereof and the terms of this Agreement will control with respect to all other matters; and 

		
	(f)
	[***].  

		
	6.2.
	Responsibility.  Following an Option Exercise, Vertex will be solely responsible for all Research, Development, Manufacturing and Commercialization of Licensed Agents and Products for the relevant Collaboration Target that are performed after the date on which the Option was exercised and for all costs and expenses associated therewith, except (a) as may be otherwise provided in a Joint Development & Commercialization Agreement, (b) with respect to any incomplete activities under the relevant Research Plan or any agreed-upon Additional Research and (c) for the transfer of activities to Vertex as contemplated by Section 5.5.

		
	6.3.
	Vertex Diligence. 

		
	6.3.3.
	Development Diligence.  Except with respect to Shared Products, following Vertex’s exercise of the Option for a Collaboration Target, Vertex (acting directly or through one or more Affiliates or Sublicensees) will use Commercially Reasonable Efforts to Develop, obtain Marketing Approvals for [***] in [***]. 

		
	6.3.4.
	Commercial Diligence.  Except with respect to Shared Products, Vertex (acting directly or through one or more Affiliates or Sublicensees) will use Commercially Reasonable Efforts to Commercialize, including seeking Price Approval on appropriate terms, [***] in [***].

		
	6.4.
	Product Development & Commercialization Plan.  On a Collaboration Program-by-Collaboration Program basis, Vertex will prepare a Development and Commercialization plan setting forth in reasonable detail (which detail shall be at least sufficient for CRISPR to evaluate 

32

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

Vertex’s compliance with its obligations under this Agreement) Vertex’s plans for (a) the Development of each Product for the relevant Collaboration Target through Clinical Trials designed to show Establishment of POC, (b) starting after Establishment of POC, the Development of each Product through Marketing Approval and (c) starting upon Marketing Approval for a Product and continuing thereafter until the expiration of the applicable Royalty Term, Commercialization for the Product, as appropriate for the stage of the Product, including a launch plan for each Major Market Country (each, an “Product Development & Commercialization Plan”).  If Vertex is Developing or Commercializing more than one Product directed to a Collaboration Target, the Product Development & Commercialization Plan will include the foregoing information for each such Product.  Vertex will prepare the initial Product Development & Commercialization Plan for a Collaboration Program no later than [***] after Option Exercise by performing the activities set forth in each Research Plan for the relevant Collaboration Target.  Once Vertex has prepared such Product Development & Commercialization Plan, Vertex will update such plan no less than [***] so that such Product Development & Commercialization Plan is an accurate reflection of Vertex’s then-current plans with respect to the Development and Commercialization of the relevant Product and Vertex will provide such updates to CRISPR for its review.  All Product Development & Commercialization Plans are provided solely for informational purposes, and Vertex’s failure to follow a Product Development & Commercialization Plan will not constitute a breach of this Agreement.  Notwithstanding the foregoing, Vertex will have no obligation under this Section 6.4 with respect to any Shared Product.
		
	6.5.
	Applicable Laws.  Each Party will, and will require its Affiliates, Sublicensees and Subcontractors to, comply with all Applicable Law in its and their Research, Development, Manufacture and Commercialization of Products, including where appropriate cGMP, GCP and GLP (or similar standards).

		
	6.6.
	Regulatory Matters; Safety Data Exchange Agreement. 

		
	6.6.1.
	Responsibilities.  Vertex or its designated Affiliates and Sublicensees will have the sole authority to prepare and file Regulatory Filings, each in its own name, and applications for Regulatory Approval and Price Approval for any and all Licensed Agents and Products directed to each Collaboration Target, and will have the sole responsibility for communicating with any Regulatory Authority both prior to and following Regulatory Approval and Price Approval, including all communications and decisions with respect to (a) pricing of Products and (b) the negotiation of Product pricing with Regulatory Authorities and other Third Parties. 

		
	6.6.2.
	Ownership.  Ownership of all right, title and interest in and to any and all Regulatory Filings, Regulatory Approvals and Price Approvals directed to any Licensed Agent or any Product directed to each Collaboration Target in each country of the Territory will be held in the name of Vertex, its Affiliate, designee or Sublicensee.

		
	6.6.3.
	Pharmacovigilance. Upon Vertex’s request, the Parties will negotiate and enter into a separate safety data exchange agreement (a “Safety Data Exchange Agreement”).  The Safety Data Exchange Agreement will set forth guidelines and procedures for the receipt, investigation, recording, review, communication, 

33

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

reporting and exchange between the Parties of adverse event reports (which, for purposes of information exchange between the Parties, will include adverse events and serious adverse events, and any other information concerning the safety of any Product or Licensed Agent and, with respect to information provided by CRISPR, concerning the safety of products containing a [***] or [***]). Without limiting the foregoing, the Parties will meet to establish a safety oversight working group comprised of members of both Parties, which, except as otherwise provided in the Safety Data Exchange Agreement, will discuss processes and procedures for sharing information needed to support each Party’s regulatory responsibilities and to comply with applicable regulatory pharmacovigilance requirements. Any such procedures will not be construed to restrict either Party’s ability to take any action that it deems to be appropriate or required of it under the applicable regulatory requirements, if permitted by Applicable Laws.  Vertex (a) will maintain a unified worldwide adverse event database for Products, and be responsible for reporting adverse events and serious adverse events to the applicable Regulatory Authorities and (b) will be responsible for all signal detection and risk management activities and will develop and approve the contents of all safety communications to Regulatory Authorities, including but not limited to expedited non-clinical and clinical safety reports and aggregate reports to health authorities, institutional review boards and ethics committees.
		
	6.7.
	Commercialization.  

		
	6.7.1.
	General. Vertex will have sole and exclusive control over all matters relating to the Commercialization of Products, except as may be otherwise provided in a Joint Development & Commercialization Agreement.

		
	6.7.2.
	Branding.  Vertex or its designated Affiliates or Sublicensees will select and own all trademarks used in connection with the Commercialization of any and all Products.  CRISPR will not use nor seek to register, anywhere in the world, any trademark that is confusingly similar to any trademark used by or on behalf of Vertex, its Affiliates or Sublicensees in connection with any Product.

		
	6.8.
	Manufacturing.  Vertex will have the exclusive right to Manufacture and supply Licensed Agents and Products itself or through one or more Affiliates or Third Parties selected by Vertex in its sole discretion.  The Parties may share information relating to the Manufacture of Products, and other products to be commercialized by CRISPR, to determine whether and how to leverage their respective manufacturing efforts, but shall have no obligation hereunder to enter into an agreement with respect thereto.

ARTICLE 7.     
FINANCIAL PROVISIONS
		
	7.1.
	Up-Front Fee to CRISPR AG (Switzerland).  Within four Business Days following the Effective Date, Vertex UK will pay CRISPR AG a one-time, non-refundable, non-creditable, up-front fee of $75,000,000 payable by wire transfer of immediately available funds.  

34

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	7.2.
	[***].  If Vertex [***], Vertex will [***] within [***] after Vertex notifies CRISPR that it is [***].  The [***] that are [***].

		
	7.3.
	Milestone Payments.  

		
	7.3.6.
	Development Milestones. Subject to Section 7.3.4, Vertex will pay CRISPR the milestone payments set forth in this Section 7.3.1 with respect to each Collaboration Target [***], whether such milestone event is achieved by CRISPR, Vertex or their respective Affiliates or any Sublicensees. Each milestone payment set forth below, is payable only once per Collaboration Target, regardless of the number of Products directed to such Collaboration Target that achieve the relevant milestone event.  

	
			
	Milestone Number
	Milestone Event
	Milestone Payment

	1
	[***]
	[***]

	2
	[***]
	[***]

	3
	[***]
	[***]

	4
	[***]
	[***]

	5
	[***]
	[***]

	6
	[***]
	[***]

	7
	[***]
	[***]

	8
	[***]
	[***]

	9
	[***]
	[***]

	10
	[***]
	[***]

	11
	[***]
	[***]

		
	7.3.7.
	Commercial Milestones.  Subject to Section 7.3.4, Vertex will pay CRISPR the milestone payments set forth in this Section 7.3.2 with respect to each Collaboration Target [***], whether such milestone event is achieved by Vertex or its Affiliates or any of their Sublicensees. Each milestone payment set forth below, is payable only once per Collaboration Target, regardless of the number of Products directed to such Collaboration Target that achieve the relevant milestone event or the number of times Product(s) achieve such milestone event.  

	
			
	Milestone Number
	Milestone Event
	Milestone Payment

	12
	[***]
	[***]

	13
	[***]
	[***]

		
	7.3.8.
	Notice; Payment; Skipped Milestones.  Vertex will provide CRISPR with written notice upon the achievement of each of the milestone events set forth in Section 7.3.1 or 7.3.2, such notice to be provided, (a) with respect to milestones under Section 7.3.1, within [***] after achievement, and (b) with respect to milestones under Section 7.3.2, [***] for the Calendar Quarter in which such milestone is first achieved.  Following receipt of such notice, CRISPR will promptly invoice Vertex for the applicable milestone and Vertex 

35

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

will make the appropriate milestone payment within [***] after receipt of such invoice.  The milestones numbered [***] as set forth in Section 7.3.1 are intended to be successive; if a Product for a Collaboration Target is not required to undergo the event associated with any such milestone event, such skipped milestone will be deemed to have been achieved upon the achievement by such Product of the next successive milestone event.  Payment for any such skipped milestone that is owed in accordance with the provisions of the foregoing sentence with respect to a given Product will be due concurrently with the payment for the next successive milestone event by such Product, it being agreed that if a Product for a Collaboration Target is not required to undergo the milestone numbered [***], the corresponding payment will be made upon the first to occur of the milestones numbered [***].  
		
	7.3.9.
	Failure to Obtain Necessary Agreements.  If, at the time any milestone event under Section 7.3.1 or Section 7.3.2 is achieved, CRISPR has not obtained all necessary consents and agreements and taken all actions provided for under Section 9.3.10, [***].

		
	7.4.
	Research Costs.  

		
	7.4.1.
	As soon as practicable, but in any event within [***] after the end of each [***], CRISPR will provide Vertex with a flash report estimating reimbursable Research Cost, if any, incurred by it and its Affiliates during the just-ended [***].

		
	7.4.2.
	Within [***] after the end of each [***], CRISPR will submit to Vertex an itemized report of Research Costs, if any, incurred by CRISPR and its Affiliates during such [***] (the “Cost Report”), including reasonable supporting documentation.

		
	7.4.3.
	Vertex will reimburse CRISPR for all Research Costs in accordance with the applicable Research Budget or Additional Research Budget within [***] after its receipt of the applicable Cost Report.  If the Research Costs for a Research Plan or Additional Research Plan exceed the applicable Research Budget or Additional Research Budget, CRISPR may include such excess costs in the applicable Cost Report, and Vertex will reimburse such excess costs, [***].  

		
	7.4.4.
	Notwithstanding anything to the contrary contained herein, except as may be otherwise provided in a Joint Development & Commercialization Agreement, Vertex will not be obligated to reimburse CRISPR for any Research Costs incurred in connection with the Research of a Shared Product following Option Exercise for the relevant Collaboration Program.  

		
	7.5.
	Royalties.

		
	7.5.4.
	Royalty Rates.  Subject to Sections 7.5.2, 7.5.3 and 7.5.4, on a Product-by-Product and country-by-country basis, Vertex will pay CRISPR royalties based on the aggregate Net Sales of each Product sold by Vertex, its Affiliates or Sublicensees in the Field in the Territory during a Calendar Year at the rates set forth in the table below; provided, that Vertex will have no obligation under 

36

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

this Section 7.5.1 with respect to any Shared Product. The obligation to pay royalties will be imposed only once with respect to the same unit of a Product. 
	
		
	Calendar Year Net Sales (in Dollars) for such  
Product in the Territory
	Royalty Rates as a Percentage (%) of Net Sales

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

		
	7.5.5.
	Royalty Term.  Vertex will pay royalties to CRISPR under this Section 7.5 on a Product-by-Product and a country-by-country basis during the Royalty Term.  Upon the expiration of the Royalty Term for a given Product in a given country, the Exclusive License with respect to such Product will become fully-paid, perpetual and irrevocable. 

		
	7.5.6.
	[***]Generic Competition. If one or more Generic Products with respect to a Product is marketed and sold in a given country by one or more Third Parties during any Calendar Quarter during the Royalty Term and the [***] of such Product sold during such Calendar Quarter have [***] relative to average quarterly sales ([***]) of such Product in such country during the [***] Calendar Quarters immediately prior to the Calendar Quarter during which such Generic Product(s) was first marketed and sold in such country, then the royalty rate for such Product in such country, on a Product-by-Product and country-by-country basis, will thereafter be [***] of the applicable royalty rate set forth in Section 7.5.1 for so long as such reduction in [***] persists. 

		
	7.5.7.
	Third Party Licenses.  Vertex may [***] from the royalties payable to CRISPR under this Section 7.5 the following amounts: (a) [***]; (b) [***]; and (c) [***]; provided, however, that in no event will the royalties that would otherwise be payable to CRISPR, as reduced by Section 7.5.3 [***] under this Section 7.5.4; and provided further, that Vertex will be entitled to [***] any amounts with respect to which Vertex would have been [***] pursuant to this Section 7.5.4 but [***] in this Section 7.5.4.  

		
	7.5.8.
	[***].  If, at the time any royalties are payable pursuant to Section 7.5, [***]. 

		
	7.5.9.
	Royalty Reports.  During the Agreement Term, following the first sale of a Product (other than a Shared Product) giving rise to Net Sales, within [***] after the end of each Calendar Quarter, Vertex will deliver a report to CRISPR specifying on a Product-by-Product and country-by-country basis: (a) gross sales in the relevant Calendar Quarter, (b) Net Sales in the relevant Calendar Quarter, including an accounting of deductions applied to determine Net Sales; (c) a summary of the then-current exchange rate methodology then in use by 

37

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

Vertex, and (d) royalties payable on such Net Sales.  All royalty payments due under Section 7.5 for each Calendar Quarter will be due and payable within [***] after Vertex’s delivery of the applicable report under this Section 7.5.5. 
		
	7.6.
	CRISPR In-License Agreements; [***].  

		
	7.6.3.
	CRISPR In-License Agreements.  Certain of the Licensed Technology Controlled by CRISPR or CRISPR Affiliates as of the Effective Date was in-licensed or acquired by CRISPR under the agreements with Third Party licensors or sellers listed on Schedule H (such agreements, together with each consent and agreement obtained by CRISPR pursuant to Section 9.3.10, the “CRISPR In-License Agreements”).  Subject to Section 10.1, [***].  

		
	7.6.4.
	[***].  

		
	(a)
	Certain Licensed Technology [***] during the Term pursuant to [***].  For any [***] pursuant to which [***], CRISPR will use Commercially Reasonable Efforts to ensure that [***] with the same [***] (including the right for Vertex [***] would be [***] and [***], [***] and other potential or actual [***].  If CRISPR is [***], (a) CRISPR will so notify Vertex, and the Parties will [***] and (b) CRISPR will not [***].  

		
	(b)
	Notwithstanding anything to the contrary contained herein, if, following Vertex’s exercise of the Option for a particular Collaboration Target, Vertex believes, in its reasonable judgment, that it may be necessary to obtain rights under any Patent  having claims  which Cover Licensed Agents or Products that are the subject of the Option, Vertex shall have the right to negotiate a license to such Patent.  

		
	7.6.5.
	[***].  Vertex shall [***] by Vertex, its Affiliates or Sublicensees.  If the [***] based on the [***] across such [***] by Vertex, its Affiliates or Sublicensees.  [***] with and to the extent [***].

		
	7.6.6.
	[***].  Subject to Section [***], [***] arising under any [***].  [***] shall take into consideration the [***].  [***], the matter shall [***].  [***] if and when such [***].  

		
	7.6.7.
	[***].  If CRISPR [***] which provides [***] set forth on [***], then, [***], [***]. 

		
	7.6.8.
	[***].  Notwithstanding the foregoing provisions of this Section 7.6, Vertex may [***] with respect to one or more [***] and, thereafter, [***]. 

		
	7.7.
	Payment Method; Currency.  

		
	7.7.1.
	All payments under this Agreement will be paid in U.S. Dollars, by wire transfer to an account designated by CRISPR (which account CRISPR may update from time to time in writing). 

38

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	7.7.2.
	If any amounts that are relevant to the determination of amounts to be paid under this Agreement or any calculations to be performed under this Agreement are denoted in a currency other than U.S. Dollars, then such amounts will be converted to their U.S. Dollar equivalent using Vertex’s then-current standard procedures and methodology, including its then-current standard exchange rate methodology for the translation of foreign currency expenses into U.S. Dollars or, in the case of Sublicensees, such similar methodology, consistently applied.

		
	7.8.
	Withholding Tax. Where any sum due to be paid to CRISPR hereunder is subject to any withholding or similar tax, Vertex will pay such withholding or similar tax to the appropriate Government Authority and deduct the amount paid from the amount then due CRISPR, in a timely manner and promptly transmit to CRISPR an official tax certificate or other evidence of such withholding sufficient to enable CRISPR to claim such payment of taxes.  The Parties agree to cooperate with one another and use reasonable efforts to reduce or eliminate tax withholding or similar obligations in respect of royalties, milestone payments, and other payments made by Vertex to CRISPR under this Agreement.  CRISPR will provide Vertex any tax forms that may be reasonably necessary in order for Vertex not to withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty.  Each Party will provide the other with reasonable assistance to enable the recovery, as permitted by Applicable Laws, of withholding taxes, value added taxes, or similar obligations resulting from payments made under this Agreement, such recovery to be for the benefit of the Party bearing such withholding tax or value added tax.

		
	7.9.
	 Records.  During the Agreement Term, Vertex will keep and maintain accurate and complete records regarding Net Sales during the [***] preceding Calendar Years and CRISPR will keep and maintain accurate and complete records regarding the Research Cost covering the [***] preceding Calendar Years. Upon [***] prior written notice from the other Party (the “Auditing Party”), the Party required to maintain such records (as applicable, the “Audited Party”) will permit an independent certified public accounting firm of internationally recognized standing, selected by the Auditing Party and reasonably acceptable to the Audited Party, to examine the relevant books and records of the Audited Party and its Affiliates, as may be reasonably necessary to verify the royalty reports submitted by Vertex in accordance with Section 7.5.5, or Research Cost reported by CRISPR in accordance with Section 7.4, as applicable. An examination by the Auditing Party under this Section 7.9 will occur not more than [***] in any Calendar Year and will be limited to the pertinent books and records for any Calendar Year ending not more than [***] before the date of the request. The accounting firm will be provided access to such books and records at the Audited Party’s facility or facilities where such books and records are normally kept and such examination will be conducted during the Audited Party’s normal business hours. The Audited Party may require the accounting firm to sign a customary non-disclosure agreement before providing the accounting firm access to its facilities or records. Upon completion of the audit, the accounting firm will provide both the Auditing Party and the Audited Party a written report disclosing whether the reports submitted by Vertex, or the Research Cost reported by CRISPR, as applicable, are correct or incorrect and the specific details concerning any discrepancies. No other information will be provided to the Auditing Party. If the report or information submitted by the Audited Party results in an underpayment or overpayment, the Party owing underpaid or overpaid amount will promptly pay such amount to the other Party, and, if, as a result of such inaccurate report or information, such amount is more than [***] of the amount that was owed the Audited Party 

39

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

will reimburse the Auditing Party for the reasonable expense incurred by the Auditing Party in connection with the audit.
		
	7.10.
	Late Payment.  Any payments or portions thereof due hereunder that are not paid when due will accrue interest from the date due until paid at an annual rate equal to [***] (or the maximum allowed by Applicable Law, if less). 
 
INTELLECTUAL PROPERTY

		
	7.11.
	Ownership; Assignment.  For the avoidance of doubt, the rights and obligations of the Parties under this ARTICLE 8 are subject to and limited by any applicable Third Party Obligations to the extent the provisions of such obligations or agreements are specifically disclosed to Vertex in writing (or via electronic data room) (a) with respect to Third Party Obligations existing as of the Effective Date, prior to the Effective Date, (b) with respect to Third Party Obligations arising between the Effective Date and the delivery of the relevant Option Exercise Data Package, at the time of delivery of the Option Exercise Data Package and (c) with respect to Third Party Obligations arising after the date the applicable Exclusive License is granted hereunder, on or prior to the date on which such Third Party Obligations arise.

		
	7.11.1.
	CRISPR Technology and Vertex Technology.  As between the Parties, CRISPR will own and retain all of its rights, title and interest in and to the CRISPR Background Know-How, CRISPR Background Patents and CRISPR Platform Technology Patents and Vertex will own and retain all of its rights, title and interest in and to any Vertex Background Know-How and Vertex Background Patents, subject to any assignments, rights or licenses expressly granted by one Party to the other Party under this Agreement.

		
	7.11.2.
	Agreement Technology. 

		
	(a)
	As between the Parties, CRISPR will be the sole owner of any Know-How discovered, developed, invented or created solely by CRISPR or its Affiliates or Third Parties acting on their behalf in connection with activities under this Agreement (“CRISPR Program Know-How”) and any Patents that cover or claim such Know-How (“CRISPR Program Patents” and together with the CRISPR Program Know-How, the “CRISPR Program Technology”), and will retain all of its rights, title and interest thereto, subject to any assignment, rights or licenses expressly granted by CRISPR to Vertex under this Agreement.  

		
	(b)
	As between the Parties, Vertex will be the sole owner of any Know-How discovered, developed, invented or created solely by Vertex or its Affiliates or Third Parties acting on their behalf in connection with activities under this Agreement (“Vertex Program Know-How”) and any Patents that cover or claim Vertex Program Know-How (“Vertex Program Patents” and together with the Vertex Program Know-How, the “Vertex Program Technology”), and will retain all of its rights, title and interest thereto, subject to any rights or licenses expressly granted by Vertex to CRISPR under this Agreement.  

		
	(c)
	(i) [***]: Any Know-How discovered, developed, invented or created jointly under this Agreement by both (a) Vertex, its Affiliates or Third Parties acting on Vertex’s behalf and (b) CRISPR, its Affiliates or Third Parties acting on 

40

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

CRISPR’s behalf,  while conducting activities under this Agreement, to the extent [***] (“[***] Joint Program Know-How”), and any Patents that [***] (“[***] Joint Program Patents,” and together with the [***] Joint Program Know-How, the “[***] Joint Program Technology”), will be owned [***], including all rights, title and interest thereto, subject to any assignment, rights or licenses expressly granted by one Party to the other Party under this Agreement.  Except as expressly provided in this Agreement, [***] with respect to, or to [***] Joint Program [***], and each Party hereby [***].
 

 
(ii) [***]:  All [***] Joint Program Know-How, [***] Joint Program Patents, and [***] Joint Program Technology, in each case to the extent pertaining to [***], will be [***].  Within [***], [***] will, and hereby [***], [***] or [***] designated Affiliates, [***] Joint Program Patents. [***] will take all actions and provide [***] with all [***] and will [***].  
 

		
	(d)
	Any Know-How discovered, developed, invented or created jointly under this Agreement by both (a) Vertex, its Affiliates or Third Parties acting on Vertex’s behalf and (b) CRISPR, its Affiliates or Third Parties acting on CRISPR’s behalf,  while conducting activities under this Agreement, to the extent pertaining to [***] but not exclusively pertaining to [***] (“[***] Joint Program Know-How”), and any Patents that claim or cover such [***] Joint Program Know-How (“[***] Joint Program Patents,” and together with the [***] Joint Program Know-How, the “[***] Joint Program Technology”), will be [***].  [***] will, and hereby does, assign to [***] or one or more of its designated Affiliates, [***] ownership interest in all [***] Joint Program Patents.  Within [***], [***]will take all actions and provide [***] with all reasonably requested assistance to effect such assignment and will execute any and all documents necessary to perfect such assignment.  Any Patents [***] under this Section [***].  In addition, [***].  

		
	(e)
	Any Know-How discovered, developed, invented or created jointly under this Agreement by both (a) Vertex, its Affiliates or Third Parties acting on Vertex’s behalf and (b) CRISPR, its Affiliates or Third Parties acting on CRISPR’s behalf,  while conducting activities under this Agreement, that is not [***] Joint Program Know-How or [***] Joint Program Know-How (the “Other Joint Program Know-How”), and any Patents that solely claim or cover such Other Joint Program Know-How (the “Other Joint Program Patents,” and together with the Other Joint Program Know-How, the “Other Joint Program Technology”), will be [***], including all rights, title and interest thereto, subject to any assignment, rights or licenses expressly granted by one Party to the other Party under this Agreement. Except as expressly provided in this Agreement, neither Party will have any obligation [***] with respect to, or to [***], Other Joint Program Technology by reason of [***] thereof, and each Party [***] the laws of any jurisdiction [***].  If such [***], each Party [***] to the [***] without [***] other Party.  Notwithstanding the foregoing, if either Party [***] such Other Joint Program Technology, it shall [***] of the other Party, such [***].  

41

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	(f)
	CRISPR will promptly disclose to Vertex in writing, and will cause its Affiliates to so disclose, the discovery, development, invention or creation of any CRISPR Program Technology under this Agreement. In addition, each Party will promptly disclose to the other Party in writing, and will cause its Affiliates to so disclose, the discovery, development, invention or creation of any Joint Program Technology under this Agreement.

		
	7.11.3.
	[***] CRISPR Product-Specific Patents to [***].  

		
	(d)
	Within [***] following the exercise of an Option by Vertex, if not previously completed by [***], CRISPR will [***], including without limitation a [***] as defined below, or as a new case to be determined by [***], consisting of [***] for the [***] that are [***] (each such [***]).  Upon Vertex’s exercise of an Option, all [***] will no longer be [***] and will thereafter be [***]. 

		
	(e)
	Effective upon and following Vertex’s exercise of the Option for a particular Collaboration Target, CRISPR will, and hereby does, [***] related to [***] that are [***] (whether [***]), and thereafter [***] will have [***].  CRISPR will take all actions and provide Vertex with [***] and will [***].  Any [***] under this Section 8.1.3(b) will be excluded [***] but will be included in the [***] for purposes of determining the [***].

		
	7.11.4.
	[***] CRISPR.  Effective upon [***] pursuant to Section 8.1.3, Vertex will, [***], [***] any such [***] to (a) conduct activities [***], (b) conduct [***] and (c) [***].

		
	7.12.
	Prosecution and Maintenance of Patents.  The Parties hereby agree as follows with respect to the Prosecution and Maintenance of certain Patents, for the avoidance of doubt, in each case, subject to Third Party Obligations. 

		
	7.12.1.
	CRISPR Platform Technology Patents.  Anything herein to the contrary notwithstanding, and subject to Section 8.2.5, CRISPR will control and be responsible for all aspects of the Prosecution and Maintenance of the CRISPR Platform Technology Patents. 

		
	7.12.2.
	CRISPR Patents. CRISPR will control and be responsible for all aspects of the Prosecution and Maintenance of CRISPR Background Patents, CRISPR Program Patents, [***] Patents and [***] Program Patents.  CRISPR will use Commercially Reasonable Efforts to Prosecute and Maintain all CRISPR Background Patents, CRISPR Program Patents, [***] Patents, other Joint Program Patents if applicable, and [***] Joint Program Patents, in each case to the extent Covering Licensed Agents or Products directed to particular Collaboration Targets using counsel reasonably acceptable to Vertex.  In advance of Option Exercise for a particular Collaboration Target (i.e., during the course of and in connection with each Research Plan conducted by the Parties under this Agreement), (a) CRISPR will undertake the Prosecution and Maintenance of one or more patent applications which could claim [***] Claims to the extent permitted by applicable law (each such Patent a “[***] Patent”) and (b) prior to the filing of any Patent application that Covers Licensed Agents or Products, the Patent Coordinators will meet and in good faith discuss the best 

42

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

strategy for such filing (which, for clarity may [***] Patents).  The Parties will use good faith efforts to agree on such strategy, with the goal of maximizing the value of the Parties’ respective patent portfolios.  
		
	7.12.3.
	Vertex Patents.  Vertex will control and be responsible for all aspects of the Prosecution and Maintenance of all Vertex Background Patents, Vertex Program Patents, [***] and [***] Joint Program Patents. Vertex will use Commercially Reasonable Efforts to Prosecute and Maintain all [***] Patents and [***] Joint Program Patents, if applicable, using counsel reasonably acceptable to CRISPR.

		
	7.12.4.
	Other Joint Program Patents.  The Parties will discuss and agree upon an allocation of responsibility for the prosecution and maintenance of the Other Joint Program Patents.  

		
	7.12.5.
	Other Matters Pertaining to Prosecution and Maintenance of Patents.

		
	(a)
	Each Party will keep the other Party informed through their respective Patent Coordinators as to material developments with respect to the Prosecution and Maintenance of the CRISPR Platform Technology Patents, CRISPR Background Patents, CRISPR Program Patents, [***] Patents and Joint Program Patents for which such Party has responsibility for Prosecution and Maintenance pursuant to this Section 8.2, including by providing copies of any office actions or office action responses or other correspondence that such Party provides to or receives from any patent office, including notice of all interferences, reissues, re-examinations, or oppositions, and all patent-related filings, and by providing the other Party the timely opportunity to have reasonable input into the strategic aspects of such Prosecution and Maintenance.

		
	(b)
	If, during the Agreement Term, Vertex intends to abandon patent applications for any Patent that Vertex is responsible for Prosecuting and Maintaining under Section 8.2.3 (excluding Vertex Background Patents and Vertex Program Patents that Cover technology other than Licensed Agents and Products, but including, for the avoidance of doubt, [***] Patents) in a particular country, then Vertex will so notify CRISPR of such intention at least [***] before such Patent will become abandoned, and CRISPR will have the right, but not the obligation, to assume responsibility for the Prosecution and Maintenance thereof at its own expense with counsel of its own choice. 

		
	(c)
	If, during the Agreement Term, CRISPR intends to abandon any CRISPR Background Patent (excluding any CRISPR Platform Technology Patents), CRISPR Program Patent, [***] Patent, [***] Joint Program Patent or Other Joint Program Patent Covering a Licensed Agent or Product that CRISPR is responsible for Prosecuting and Maintaining in a particular country, then, if Vertex’s right to obtain an Exclusive License to such Patent or have such Patent assigned pursuant to Section 8.1.3, as applicable, has not expired or terminated, CRISPR will notify Vertex of such intention at least [***] before such Patent will become abandoned, and Vertex will have the right, but not the obligation, to assume responsibility for the Prosecution and Maintenance thereof at its own expense with counsel of its own choice. 

43

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	7.13.
	Patent Coordinators.  Each Party will appoint a patent coordinator reasonably acceptable to the other Party (each, a “Patent Coordinator”) to serve as such Party's primary liaison with the other Party on matters relating to the Prosecution and Maintenance and enforcement of Licensed Patents and Joint Program Patents. The Patent Coordinators will meet in person or by means of telephone or video conference at least once each Calendar Quarter during the Agreement Term. Each Party may replace its Patent Coordinator at any time by providing notice in writing to the other Party.  The initial Patent Coordinators will be:

For Vertex:  Kerry Flynn
For CRISPR:  Tyler Dylan-Hyde
		
	7.14.
	Patent Costs.  Patent Costs arising after the Effective Date will be borne by the Parties as provided in Schedule K for the relevant period (i.e., before or after Option Exercise) except as otherwise set forth in the Joint Development & Commercialization Agreement.

		
	7.15.
	Defense of Claims Brought by Third Parties.  If a Third Party initiates a Proceeding against either Party claiming a Patent owned by or licensed to such Third Party is infringed by the Research, Development, Manufacture or Commercialization of a Licensed Agent or Product, each Party that is named as a defendant in such Proceeding will have the right to defend itself in such Proceeding.  The other Party will reasonably assist the defending Party in defending such Proceeding and cooperate in any such litigation at the request and expense of the defending Party.  The defending Party will provide the other Party with prompt written notice of the commencement of any such Proceeding and will keep the other Party apprised of the progress of such Proceeding and will promptly furnish the other Party with a copy of each communication relating to the alleged infringement that is received by such Party.  If both Parties are named as defendants in any Proceeding, both Parties may defend such Proceeding and the Parties will reasonably cooperate with respect to such defense. 

		
	7.16.
	Enforcement of Patents Against Competitive Infringement.

		
	7.16.1.
	Duty to Notify of Competitive Infringement.  If either Party learns of an infringement, unauthorized use, misappropriation or threatened infringement by a Third Party with respect to any Licensed Patents by reason of the making, using, offering to sell, selling or importing of (a) a product containing [***] or (b) the resulting [***] by such [***] (a “Competitive Infringement”) or any other infringement, unauthorized use, misappropriation or threatened infringement by a Third Party with respect to any CRISPR Platform Technology Patent, such Party will promptly notify the other Party in writing and will provide such other Party with available information regarding such Competitive Infringement or other infringement. 

		
	7.16.2.
	Prior to License Grant.  For any Competitive Infringement with respect to a Licensed Agent or Product pertaining to a Collaboration Target that is then subject to an Option, which Competitive Infringement occurs after the Effective Date but before the date Vertex is granted the Exclusive License with respect to such Licensed Agent or Product, CRISPR will have the first right, but not the obligation, to institute, prosecute, and control a Proceeding with respect thereto, by counsel of its own choice.  Vertex will have the right to engage 

44

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

counsel of its own choice in connection with such Proceeding at its own expense but shall not be permitted to become party to such Proceeding unless required by Applicable Law.  CRISPR will provide Vertex with prompt written notice of the commencement of any such Proceeding, and CRISPR will keep Vertex apprised of the progress of such Proceeding.    Notwithstanding anything the contrary contained herein, CRISPR will at all times have the sole right to institute, prosecute, and control any Proceeding under this Section 8.6.2 to the extent involving any CRISPR Platform Technology Patents but will (a) keep Vertex reasonably apprised of the progress of such Proceeding, (b) reasonably consider Vertex’s comments with respect to the conduct of such Proceeding and (c) not enter a settlement, consent judgment or other voluntary final disposition of a Proceeding that disclaims, limits the scope of, admits the invalidity or unenforceability of, or grants a license, covenant not to sue or similar immunity that has an adverse effect on Vertex’s rights hereunder with respect to, a CRISPR Platform Technology Patent without Vertex’s prior written consent, not to be unreasonably withheld.  
		
	7.16.3.
	Following License Grant.  For any Competitive Infringement with respect to a particular Licensed Agent or Product occurring after the date Vertex is granted the Exclusive License with respect to such Licensed Agent or Product, Vertex will have the first right, but not the obligation, to institute, prosecute, and control a Proceeding with respect to such Competitive Infringement by counsel of its own choice at its own expense, and CRISPR will have the right, at its own expense, to be represented in that action by counsel of its own choice; provided that in such Proceeding, Vertex shall reasonably consider CRISPR’s comments with respect to which Patents to seek to enforce against such infringing party, taking into consideration the overall value of the Patents Covering the relevant Licensed Agent or Product to CRISPR and its licensees.  If Vertex fails to initiate a Proceeding within a period of [***] after written notice of such Competitive Infringement is first provided by a Party under Section 8.6.1, CRISPR will have the right to initiate and control a Proceeding with respect to such Competitive Infringement by counsel of its own choice, and Vertex will have the right to be represented in any such action by counsel of its own choice at its own expense; provided, that if Vertex notifies CRISPR during such [***] period that it is electing in good faith not to institute any Proceeding against such Competitive Infringement for strategic reasons intended to maintain the commercial value of the relevant Patent and any Licensed Agent or Product Covered thereby, CRISPR will not have the right to initiate and control any Proceeding with respect to such Competitive Infringement.  Notwithstanding anything to the contrary contained herein, CRISPR will at all times have the sole right to institute, prosecute, and control any Proceeding under this Section 8.6.3 to the extent involving any CRISPR Platform Technology Patents but will (a) keep Vertex reasonably apprised of the progress of such Proceeding, (b) reasonably consider Vertex’s comments with respect to the conduct of such Proceeding and (c) not enter a settlement, consent judgment or other voluntary final disposition of a Proceeding that disclaims, limits the scope of, admits the invalidity or unenforceability of, or grants a license, covenant not to sue or similar immunity that has an adverse effect on Vertex’s rights hereunder with respect to, a CRISPR 

45

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

Platform Technology Patent without Vertex’s prior written consent, not to be unreasonably withheld.  
		
	7.16.4.
	Joinder.

		
	(a)
	If a Party initiates a Proceeding in accordance with this Section 8.6 or Section 8.7 the other Party agrees to be joined as a party plaintiff where necessary and to give the first Party reasonable assistance and authority to file and prosecute the Proceeding.  Subject to Section 8.6.5, the costs and expenses of each Party incurred pursuant to this Section 8.6.4 will be borne by the Party initiating such Proceeding.  CRISPR agrees to use Commercially Reasonable efforts to cause Third Parties to be joined as a party plaintiff where necessary. 

		
	(b)
	If one Party initiates a Proceeding in accordance with this Section 8.6, the other Party may join such Proceeding as a party plaintiff where necessary for such other Party to seek lost profits with respect to such infringement.

		
	7.16.5.
	Share of Recoveries.  Any damages or other monetary awards recovered with respect to a Proceeding brought pursuant to this Section 8.6 will be shared as follows:

		
	(a)
	the amount of such recovery will first [***]; then

		
	(b)
	any remaining proceeds constituting direct or actual damages for acts of infringement occurring prior to the date Vertex is granted the Exclusive License with respect to the relevant Licensed Agent or Product [***];

		
	(c)
	any remaining proceeds constituting direct or actual damages for acts of infringement occurring after the date Vertex is granted the Exclusive License with respect to the relevant Licensed Agent or Product [***]; and

		
	(d)
	any remaining proceeds constituting punitive or treble damages will be allocated between the Parties as follows: [***].

Notwithstanding the foregoing, any Out-of Pocket Costs incurred in connection with a Proceeding with respect to a Shared Product shall be included in the Other-Out-of-Pocket Costs (as defined in Schedule G) and the proceeds of such proceeding shall be deemed Net Sales for purposes of determining the Net Profit or Net Loss (each, as defined in Schedule G).
		
	7.16.6.
	Settlement.  Notwithstanding anything to the contrary under this ARTICLE 8, neither Party may enter a settlement, consent judgment or other voluntary final disposition of a suit under this ARTICLE 8 that disclaims, limits the scope of, admits the invalidity or unenforceability of, or grants a license, covenant not to sue or similar immunity under a Patent Controlled by the other Party or its Affiliates without first obtaining the written consent of the Party that Controls the relevant Patent; provided that the foregoing limitation shall not apply to CRISPR’s rights with respect to the CRISPR Platform Technology Patents (subject to the restriction set forth in Sections 8.6.2 and 8.6.3). 

46

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	7.17.
	Other Infringement.

		
	7.17.1.
	Joint Program Patents.  With respect to the infringement of a Joint Program Patent that is not a Competitive Infringement, the Parties will cooperate in good faith to bring suit together against such infringing party or the Parties may decide to permit one Party to solely bring suit.  Any damages or other monetary awards recovered with respect to a Proceeding brought pursuant to this Section 8.7.1 will be shared as follows: (a) the amount of such recovery [***]; then (b) any remaining proceeds will be allocated as follows: (i) [***]; and (ii) [***].

		
	7.17.2.
	Patents Solely Owned by CRISPR.  CRISPR will retain all rights to pursue an infringement of any Patent solely owned by CRISPR that is not a Competitive Infringement and CRISPR will retain all recoveries with respect thereto.

		
	7.17.3.
	Patents Solely Owned by Vertex.  Vertex will retain all rights to pursue an infringement of any Patent solely owned by Vertex and Vertex will retain all recoveries with respect thereto.

		
	7.18.
	Patent Listing.  Following Vertex’s exercise of the Option for a Collaboration Target, Vertex will have the sole right, but not the obligation, to submit to all applicable Regulatory Authorities patent information pertaining to each applicable Product pursuant to 21 U.S.C. § 355(b)(1)(G) (or any amendment or successor statute thereto), any similar statutory or regulatory requirement enacted in the future regarding biologic products, or any similar statutory or regulatory requirement in any non-U.S. country or other regulatory jurisdiction; provided that Vertex shall not be permitted to provide any such information with respect to CRISPR Platform Technology Patents without CRISPR’s prior written consent.

		
	7.19.
	CREATE Act.  Notwithstanding anything to the contrary in this ARTICLE 8, neither Party will have the right to make an election under the CREATE Act when exercising its rights under this ARTICLE 8 without the prior written consent of the other Party, which will not be unreasonably withheld, conditioned or delayed.  With respect to any such permitted election, the Parties will use reasonable efforts to cooperate and coordinate their activities with respect to any submissions, filings or other activities in support thereof.  The Parties acknowledge and agree that this Agreement is a “joint research agreement” as defined in the CREATE Act.

		
	7.20.
	Additional Right and Exceptions.  Notwithstanding any provision of this ARTICLE 8, CRISPR retains the sole right to Prosecute and Maintain CRISPR Platform Technology Patents and to control any enforcement of CRISPR Platform Technology Patents, subject to the restrictions set forth in Sections 8.6.2 and 8.6.3.

		
	7.21.
	Patent Term Extension.  The Parties will cooperate with each other in obtaining patent term restoration in any country in the Territory under any statute or regulation equivalent or similar to 35 U.S.C. § 156, where applicable to a Product.  After the date Vertex is granted the Exclusive License with respect to a Product, [***] Vertex Background Patents, [***] Patents, Vertex Program Patents, [***] Joint Program Patents, Joint Program Patents and [***] Joint Program Patents [***]. CRISPR will abide by Vertex’s determination and cooperate, as reasonably requested by Vertex, in connection with the foregoing (including by providing appropriate information and executing appropriate documents).

47

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	7.22.
	Recording.  If Vertex deems it necessary or desirable to register or record this Agreement or evidence of this Agreement with any patent office or other appropriate Governmental Authority in one or more jurisdictions in the Territory, CRISPR will reasonably cooperate to execute and deliver to Vertex any documents accurately reflecting or evidencing this Agreement that are necessary or desirable, in Vertex’s reasonable judgment, to complete such registration or recordation.  Vertex will reimburse CRISPR for all reasonable Out-of-Pocket Costs, including attorneys’ fees, incurred by CRISPR in complying with the provisions of this Section 8.12.

ARTICLE 8.     
REPRESENTATIONS AND WARRANTIES
		
	8.1.
	Representations and Warranties of Vertex.  Vertex hereby represents and warrants to CRISPR, as of the Effective Date, that:

		
	8.1.5.
	each of Vertex Parent and Vertex UK are duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;

		
	8.1.6.
	each of Vertex Parent and Vertex UK (a) has the requisite power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder and (b) has taken all requisite action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder;  

		
	8.1.7.
	each of Vertex Parent and Vertex UK has the requisite resources and expertise to perform its obligations hereunder;

		
	8.1.8.
	this Agreement has been duly executed and delivered on behalf of each of Vertex Parent and Vertex UK, and constitutes a legal, valid and binding obligation, enforceable against each of Vertex Parent and Vertex UK in accordance with the terms hereof;

		
	8.1.9.
	the execution, delivery and performance of this Agreement by each of Vertex Parent and Vertex UK will not constitute a default under or conflict with any agreement, instrument or understanding, oral or written, to which either entity is a party or by which either entity is bound, or violate any law or regulation of any court, governmental body or administrative or other agency having jurisdiction over Vertex Parent or Vertex UK; and

		
	8.1.10.
	each of Vertex Parent and Vertex UK has obtained all necessary consents, approvals and authorizations of all Governmental Authorities and other Persons or entities required to be obtained by it in connection with the execution and delivery of this Agreement.

		
	8.2.
	Representations and Warranties of CRISPR.  Each of the CRISPR Entities, jointly and severally, hereby represents and warrants to Vertex, as of the Effective Date, that, except as otherwise set forth on Schedule L: 

48

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	8.2.10.
	Each of CRISPR AG, CRISPR Inc., CRISPR UK and Tracr are duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;

		
	8.2.11.
	Each of CRISPR AG, CRISPR Inc., CRISPR UK and Tracr (a) has the requisite power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder and (b) has taken all requisite action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder;  

		
	8.2.12.
	[***], each of CRISPR AG, CRISPR Inc., CRISPR UK and Tracr has the requisite resources and expertise to perform its obligations hereunder;

		
	8.2.13.
	this Agreement has been duly executed and delivered on behalf of CRISPR, and constitutes a legal, valid and binding obligation, enforceable against it in accordance with the terms hereof;

		
	8.2.14.
	the execution, delivery and performance of this Agreement by CRISPR will not constitute a default under or conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it is bound, or violate any law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it; 

		
	8.2.15.
	CRISPR has obtained all necessary consents, approvals and authorizations of all Governmental Authorities and other Persons or entities required to be obtained by CRISPR in connection with the execution and delivery of this Agreement;

		
	8.2.16.
	the Licensed Technology constitutes all of the Patents and Know-How Controlled by CRISPR that are necessary to Research, Develop, Manufacture or Commercialize Licensed Agents and Products contemplated under the Collaboration Programs in the Field;  

		
	8.2.17.
	CRISPR is the sole and exclusive owner or exclusive licensee of the [***], all of which are free and clear of any liens, charges and encumbrances, and, as of the Effective Date, neither any license granted by CRISPR to any Third Party, nor any license granted by any Third Party to CRISPR conflicts with the license grants to Vertex hereunder (or the Exclusive License to be granted to Vertex upon Option Exercise) and CRISPR is entitled to grant all rights and licenses (or sublicenses, as the case may be) under such Patents it purports to grant to Vertex under this Agreement and the Exclusive Licenses to be granted to Vertex upon Option Exercise;

		
	8.2.18.
	Schedule L sets forth a true, correct and complete list of all CRISPR Platform Technology Patents and CRISPR Background Patents as of the Effective Date and indicates (a) whether each such Patent is a [***] or a [***] and (b) whether such Patent is owned by CRISPR or licensed by CRISPR from a Third Party and if so, identifies the licensor or sublicensor from which the Patent is licensed;

49

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	8.2.19.
	CRISPR has independently developed all Licensed Technology or otherwise has a valid right to use, and to permit Vertex, Vertex’s Affiliates and Vertex’s Sublicensees to use, the Licensed Technology for all permitted purposes under this Agreement;

		
	8.2.20.
	the CRISPR Background Know-How is free and clear of liens, charges or encumbrances other than licenses granted to Third Parties that are not inconsistent with the rights and licenses granted to Vertex hereunder;   

		
	8.2.21.
	the CRISPR Platform Technology Patents and CRISPR Background Patents, are, or, upon issuance, will be, valid and enforceable patents and no Third Party [***], (a)  is infringing any such Patents or (b) has challenged the extent, validity or enforceability of such Patents (including by way of example through the institution or written threat of institution of interference, nullity or similar invalidity proceedings before the United States Patent and Trademark Office or any analogous foreign Governmental Authority);  

		
	8.2.22.
	it has complied with all Applicable Laws, including any disclosure requirements of the United States Patent and Trademark Office or any analogous foreign Governmental Authority, in connection with the Prosecution and Maintenance of the CRISPR Platform Technology Patents and CRISPR Background Patents and has timely paid all filing and renewal fees payable with respect to any such Patents for which it controls Prosecution and Maintenance;

		
	8.2.23.
	it has obtained assignments from the inventors of all inventorship rights relating to the [***] and [***] that it owns, and all such assignments of inventorship rights relating to such Patents are valid and enforceable; 

		
	8.2.24.
	except for the CRISPR In-License Agreements, there is no agreement between CRISPR (or any of its Affiliates) and any Third Party pursuant to which CRISPR has acquired Control of any of the Licensed Technology, and no Third Party has any right, title or interest in or to, or any license under, any of the Licensed Technology. All CRISPR In-License Agreements are in full force and effect and have not been modified or amended (except for amendments provided to Vertex prior to the Effective Date).  Neither CRISPR nor, [***], the Third Party licensor in a CRISPR In-License Agreement is in default with respect to a material obligation under such CRISPR In-License Agreement, and neither such party has claimed or has grounds upon which to claim that the other party is in default with respect to a material obligation under, any CRISPR In-License Agreement;

		
	8.2.25.
	CRISPR and its Affiliates have taken commercially reasonable measures consistent with industry practices to protect the secrecy, confidentiality and value of all CRISPR Background Know-How that constitutes trade secrets under Applicable Law (including requiring all employees, consultants and independent contractors to execute binding and enforceable agreements requiring all such employees, consultants and independent contractors to maintain the confidentiality of such CRISPR Background Know-How) and, [***], such CRISPR Background Know-How has not been used, disclosed to or discovered by any Third Party except pursuant to such confidentiality 

50

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

agreements and there has not been a breach by any party to such confidentiality agreements;  
		
	8.2.26.
	no Licensed Technology is subject to any funding agreement with any government or governmental agency;

		
	8.2.27.
	[***], the Research, Development, Manufacture, use, sale, offer for sale, supply or importation by CRISPR or Vertex (or their respective Affiliates or Sublicensees) of a Licensed Agent or Product does not and will not infringe any issued patent of any Third Party or, if and when issued, any claim within any patent application of any Third Party;

		
	8.2.28.
	there are no judgments or settlements against or owed by CRISPR [***], [***], pending or threatened claims or litigation, in either case relating to the Licensed Technology; 

		
	8.2.29.
	there is no action, claim, demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity, pending [***], [***], threatened against CRISPR, any of its Affiliates or any Third Party, in each case in connection with the Licensed Technology or relating to the transactions contemplated by this Agreement; and

		
	8.2.30.
	CRISPR has not employed (and, [***], has not used a contractor or consultant that has employed) any Person debarred by the FDA (or subject to a similar sanction of EMA or foreign equivalent), or any Person that is the subject of an FDA debarment investigation or proceeding (or similar proceeding of EMA or foreign equivalent), in any capacity in connection with this Agreement.

		
	8.3.
	CRISPR Covenants.  Each of the CRISPR Entities, jointly and severally, hereby covenants to Vertex that, except as expressly permitted under this Agreement:

		
	8.3.5.
	CRISPR will maintain and not breach any CRISPR In-License Agreements [***] that provide a grant of rights from such Third Party to CRISPR that are Controlled by CRISPR and are licensed or may become subject to a license from CRISPR to Vertex for a Licensed Agent or Product under this Agreement;

		
	8.3.6.
	CRISPR will promptly notify Vertex of any material breach by one or more CRISPR Entities or a Third Party of any CRISPR In-License Agreements or [***] that provides a grant of rights from such Third Party to one or more CRISPR Entities and are licensed or may become subject to a license from CRISPR to Vertex to conduct Vertex Activities or for a Licensed Agent or Product under this Agreement, and in the event of a breach by [***], will [***]. CRISPR will [***] as soon as possible, but in no event later than the date on which [***];

		
	8.3.7.
	it will not amend, modify or terminate any CRISPR In-License Agreement or [***] in a manner that would have an adverse effect on Vertex’s rights hereunder without first obtaining Vertex’s written consent, which consent may be withheld in Vertex’s sole discretion;

51

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	8.3.8.
	it will not enter into any new agreement or other obligation with any Third Party, or amend an existing agreement with a Third Party, in each case that adversely restricts, limits or encumbers the rights granted to Vertex under this Agreement or the additional rights or licenses Vertex would acquire upon Option Exercise;

		
	8.3.9.
	it will not, and will cause its Affiliates not to (a) license, sell, assign or otherwise transfer to any Person any Licensed Technology (or agree to do any of the foregoing), except as provided in Section 8.1.3 or except as will not adversely restrict, limit or encumber the rights granted to Vertex under this Agreement or the additional rights or licenses Vertex would acquire upon Option Exercise, or (b) incur or permit to exist, with respect to any Licensed Technology, any lien, encumbrance, charge, security interest, mortgage, liability, grant of license to Third Parties or other restriction (including in connection with any indebtedness);

		
	8.3.10.
	it will use Commercially Reasonable Efforts to obtain and maintain the requisite resources and expertise to perform its obligations hereunder; 

		
	8.3.11.
	all employees and Subcontractors of CRISPR performing Research or Development activities hereunder on behalf of CRISPR will be obligated to assign to CRISPR all right, title and interest in and to any inventions developed by them, whether or not patentable, or, solely with respect to Subcontractors, grant exclusive license rights to CRISPR with a right to grant sublicenses through multiple tiers; 

		
	8.3.12.
	it will not engage, in any capacity in connection with this Agreement any Person who either has been debarred by the FDA, is the subject of a conviction described in Section 306 of the FD&C Act or is subject to any such similar sanction; 

		
	8.3.13.
	CRISPR will inform Vertex in writing promptly if it or any Person engaged by CRISPR or any of its Affiliates who is performing services under this Agreement or any ancillary agreements is debarred or is the subject of a conviction described in Section 306 of the FD&C Act, or if any action, suit, claim, investigation or legal or administrative proceeding is pending or, to CRISPR’s Knowledge, is threatened, relating to the debarment or conviction of CRISPR, any of its Affiliates or any such Person performing services hereunder or thereunder;

		
	8.3.14.
	Within [***] after the Effective Date, [***] will take all actions necessary (including, without limitation, [***] to ensure [***], effective [***], which actions may include, without limitation, [***] and executing all documents necessary in connection therewith.

		
	8.3.15.
	CRISPR shall use Commercially Reasonable Efforts (A) to, within [***] of the Effective Date, [***] directly or indirectly [***] that [***], that have [***] and that [***] and other intellectual property rights or (B) shall otherwise work together [***]. To the extent [***] execute such documents as are necessary to [***] and (ii) CRISPR shall [***] and the [***] shall be [***]. 

		
	8.4.
	Vertex Covenants.  Vertex hereby covenants to CRISPR that, except as expressly permitted under this Agreement:

52

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	8.4.10.
	it will use Commercially Reasonable Efforts to obtain and maintain the requisite resources and expertise to perform its obligations hereunder; 

		
	8.4.11.
	Vertex will not engage, in any capacity in connection with this Agreement any Person who either has been debarred by the FDA, is the subject of a conviction described in Section 306 of the FD&C Act or is subject to any such similar sanction; and

		
	8.4.12.
	Vertex will inform CRISPR in writing promptly if it or any Person engaged by Vertex or any of its Affiliates who is performing services under this Agreement or any ancillary agreements is debarred or is the subject of a conviction described in Section 306 of the FD&C Act, or if any action, suit, claim, investigation or legal or administrative proceeding is pending or, [***], is threatened, relating to the debarment or conviction of CRISPR, any of its Affiliates or any such Person performing services hereunder or thereunder.

		
	8.5.
	Disclaimer.  Except as otherwise expressly set forth in this Agreement, neither Party nor its Affiliates makes any representation or extends any warranty of any kind, either express or implied, including any warranty of merchantability or fitness for a particular purpose.  Vertex and CRISPR understand that each Product is the subject of ongoing Research and Development and that neither Party can assure the safety, usefulness or commercial or technical viability of any Product.

ARTICLE 9.     
INDEMNIFICATION; INSURANCE
		
	9.1.
	Indemnification by Vertex.  Vertex will indemnify, defend and hold harmless CRISPR, each of its Affiliates, and each of its and its Affiliates’ employees, officers, directors and agents (each, an “CRISPR Indemnified Party”) from and against any and all liability, loss, damage, expense (including reasonable attorneys’ fees and expenses) and cost (collectively, a “Liability”) that the CRISPR Indemnified Party may be required to pay to one or more Third Parties to the extent resulting from or arising out of: 

		
	9.1.31.
	any claims of any nature arising out of the Research, Development, Manufacture, Commercialization or use of any Licensed Agent or Product by, on behalf of, or under the authority of, Vertex (other than by any CRISPR Indemnified Party), other than (a)  claims by Third Parties relating to misappropriation of trade secrets or other intellectual property rights arising out of the exercise of rights under the Licensed Know-How, or (b) claims for which CRISPR is required to indemnify Vertex pursuant to Section 10.2; or  

		
	9.1.32.
	the material breach by Vertex of any of its representations, warranties or covenants set forth in this Agreement, except to the extent caused by the negligence or intentional acts of CRISPR or any CRISPR Indemnified Party. 

		
	9.2.
	Indemnification by CRISPR.  Each CRISPR Entity will jointly and severally indemnify, defend and hold harmless Vertex, its Affiliates, Sublicensees, distributors and each of its and their respective employees, officers, directors and agents (each, a “Vertex Indemnified Party”) from and against any and all Liabilities that the Vertex Indemnified Party may be required to pay to one or more Third Parties to the extent resulting from or arising out of:

53

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	9.2.16.
	the material breach by CRISPR (or any CRISPR Entity(ies)) of any of its representations, warranties or covenants set forth in this Agreement, except to the extent caused by the negligence or intentional acts of Vertex or any Vertex Indemnified Party; or

		
	9.2.17.
	any claims of any nature arising out of the Research activities performed by CRISPR (or any CRISPR Entity(ies)) with respect to any Licensed Agent or Product prior to the Effective Date or during the Research Term, other than claims for which Vertex is required to indemnify CRISPR pursuant to Section 10.1.

		
	9.3.
	Procedure.  Each Party will notify the other Party in writing if it becomes aware of a claim for which indemnification may be sought hereunder.  In case any proceeding (including any governmental investigation) will be instituted involving any Party in respect of which indemnity may be sought pursuant to this ARTICLE 10, such Party (the “Indemnified Party”) will give prompt written notice of the indemnity claim to the other Party (the “Indemnifying Party”) and provide a copy to the Indemnifying Party of any complaint, summons or other written or verbal notice that the Indemnified Party receives in connection with any such claim.  An Indemnified Party’s failure to deliver written notice will relieve the Indemnifying Party of liability to the Indemnified Party under this ARTICLE 10 only to the extent such delay is prejudicial to the Indemnifying Party’s ability to defend such claim. Provided that the Indemnifying Party is not contesting the indemnity obligation, the Indemnified Party will permit the Indemnifying Party to control any litigation relating to such claim and the disposition of such claim by negotiated settlement or otherwise and any failure to contest prior to assuming control will be deemed to be an admission of the obligation to indemnify.  The Indemnifying Party will act reasonably and in good faith with respect to all matters relating to such claim and will not settle or otherwise resolve such claim without the Indemnified Party’s prior written consent which will not be withheld, delayed or conditioned unreasonably other than settlements only involving the payment of monetary awards for which the Indemnifying Party will be fully-responsible. The Indemnified Party will cooperate with the Indemnifying Party in such Party’s defense of any claim for which indemnity is sought under this Agreement, at the Indemnifying Party’s sole cost and expense.

		
	9.4.
	Insurance. Each Party will maintain, at its cost, reasonable insurance against liability and other risks associated with its activities contemplated by this Agreement and will furnish to the other Party evidence of such insurance upon request. Notwithstanding the foregoing, Vertex may self-insure to the extent that it self-insures for its other activities.

		
	9.5.
	Limitation of Consequential Damages.  Except for (a) claims of a Third Party that are subject to indemnification under this ARTICLE 10, (b) claims arising out of a Party’s willful misconduct, or (c) a Party’s breach of Section 2.13 or ARTICLE 12, neither Party nor any of its Affiliates will be liable to the other Party or its Affiliates for any incidental, consequential, special, punitive or other indirect damages or lost or imputed profits or royalties, lost data or cost of procurement of substitute goods or services, whether liability is asserted in contract, tort (including negligence and strict product liability), indemnity or contribution, and irrespective of whether that Party or any representative of that Party has been advised of, or otherwise might have anticipated the possibility of, any such loss or damage. 

54

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

ARTICLE 10.     
TERM; TERMINATION
		
	10.1.
	Agreement Term; Expiration.  This Agreement is effective as of the Effective Date and, unless earlier terminated pursuant to the other provisions of this ARTICLE 11, will continue in full force and effect until this Agreement expires as follows:

		
	10.1.18.
	on a country-by-country and Product-by-Product basis, on the date of expiration of all payment obligations under this Agreement with respect to such Product in such country;

		
	10.1.19.
	in its entirety upon the expiration of all payment obligations under this Agreement with respect to all Products in all countries pursuant to Section 11.1.1; and

		
	10.1.20.
	in its entirety upon expiration of all Options if Vertex has not exercised any Option as provided in Section 4.1.1.

		
	10.2.
	Termination of the Agreement.

		
	10.2.13.
	Vertex’s Termination for Convenience.  Vertex will be entitled to terminate this Agreement as a whole, or terminate this Agreement in part with respect to a particular Collaboration Program, for convenience by providing CRISPR 90 days’ written notice of such termination; provided, however, that if any termination under this Section 11.2.1 applies to a Product for which Vertex has received Marketing Approval, Vertex will provide CRISPR no less than 270 days’ notice of such termination.

		
	10.2.14.
	Termination Due to Failure to Obtain HSR Clearance. If the Parties make an HSR Filing with respect to a Collaboration Target under Section 4.1.2 and the HSR Clearance Date has not occurred on or prior to [***] after the effective date of the latest HSR Filing made by the Parties with respect to a Collaboration Target, this Agreement will terminate solely with respect to the applicable Collaboration Program at the election of either Party immediately upon notice to the other Party, if (a) the FTC or the DOJ has instituted (or threatened to institute) any action, suit or proceeding including seeking, threatening to seek or obtaining a preliminary injunction under the HSR Act against Vertex and CRISPR to enjoin or otherwise prohibit the transactions contemplated by this Agreement related to such proposed Collaboration Program, or (b) the Parties have not resolved any and all objections of the FTC and DOJ as contemplated by Section 4.1.2(b).  Notwithstanding the foregoing, this Section 11.2.2 will not apply if an HSR Filing is not required for Vertex to receive the Exclusive License with respect to a Collaboration Target.  If this Agreement is terminated pursuant to this Section 11.2.2 with respect to a particular Collaboration Target, such Collaboration Target will not count towards the Option Cap.  If, following termination of this Agreement with respect to a Collaboration Target under this Section 11.2.2, CRISPR or any of its Affiliates or sublicensees Commercializes a Product for the relevant Collaboration Target, [***] of (i) [***] and (ii) [***].  

55

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

[***].  The terms of Sections 1.117, 7.5.2, 7.5.5, 7.7, 7.8, 7.9 and 7.10 will apply with respect [***], mutatis mutandis.  
		
	10.2.15.
	Termination for Material Breach.

		
	(c)
	Vertex’s Right to Terminate.  If CRISPR (or any CRISPR Entity(ies)) is in material breach of this Agreement, then Vertex may deliver notice of such material breach to CRISPR.  If the breach is curable, CRISPR will have [***] from the receipt of such notice to cure such breach.  If either CRISPR fails to cure such breach within such [***] period or the breach is not subject to cure (a “CRISPR Breach Event”), Vertex may either (i) terminate this Agreement (A) if such breach relates solely relates to a particular Collaboration Program, with respect to the Collaboration Program affected by such breach (a “CRISPR Program Breach”) or (B) if such breach relates to multiple Collaboration Programs or this Agreement as a whole (a “CRISPR Agreement Breach”), in its entirety, by providing written notice to CRISPR or (ii) elect to exercise the alternate remedy provisions set forth in Section 11.3 (in lieu of termination). 

 
		
	(d)
	CRISPR’s Right to Terminate.  

		
	(i)
	If Vertex is in material breach of this Agreement, then CRISPR may deliver notice of such material breach to Vertex.  If the breach is curable, Vertex will have [***] following receipt of such notice to cure such breach (except to the extent such breach involves the failure to make a payment when due, which breach must be cured within [***] following receipt of such notice).  If Vertex fails to cure such breach within the [***] or [***] period, as applicable, or the breach is not subject to cure, CRISPR in its sole discretion may terminate this Agreement (i) if such breach relates solely relates to a particular Collaboration Program, with respect to the Collaboration Program affected by such breach or (ii) if such breach relates to multiple Collaboration Programs or this Agreement as a whole, in its entirety, by providing written notice to Vertex. 

		
	(ii)
	If Vertex (A) commences or actively and voluntarily participates in any action or proceeding (including any patent opposition or re-examination proceeding), or otherwise asserts any claim, challenging or denying the validity or enforceability of any claim of any Patent  that is licensed to Vertex under this Agreement or (B) actively and voluntarily assists any other Person in bringing or prosecuting any action or proceeding (including any patent opposition or re-examination proceeding) challenging or denying the validity or enforceability of any claim of any Patent that is licensed to Vertex under this Agreement (each of (A) and (B), a “Patent Challenge”), then, to the extent permitted by Applicable Law, CRISPR shall have the right, in its sole discretion, to give notice to Vertex that CRISPR may terminate the license(s) granted under such Patent to Vertex [***] following such notice, and, unless Vertex withdraws or causes to be withdrawn all such challenge(s) (or in the case of ex-parte proceedings, multi-party proceedings, or other Patent Challenges that Vertex does not have the power to unilaterally withdraw or cause to be withdrawn), Vertex 

56

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

ceases assisting any other party to such Patent Challenge and, to the extent Vertex is a party to such Patent Challenge, it withdraws from such Patent Challenge within such [***] period, CRISPR shall have the right to terminate this Agreement by providing written notice thereof to Vertex.  The foregoing right to terminate shall not apply with respect to any Patent Challenge where the Patent Challenge is made in defense of an assertion of the relevant Patent that is first brought by CRISPR against Vertex.  For the avoidance of doubt, any participation by Vertex or its employees in any claim, challenge or proceeding in response to a subpoena or as required under a pre-existing agreement between Vertex’s employee(s) or consultant(s) and their prior employer(s) shall not constitute active and voluntary participation or assistance and shall not give rise to CRISPR’s right to terminate any license hereunder. 
		
	10.2.16.
	Disputes Regarding Material Breach.  Notwithstanding the foregoing, if the Breaching Party in Section 11.2.3 disputes in good faith the existence, materiality, or failure to cure of any such breach that is not a payment breach, and provides notice to the Non-Breaching Party of such dispute within the relevant cure period, the Non-Breaching Party will not have the right to terminate this Agreement in accordance with Section 11.2.3, or the right to exercise the alternative remedy provisions of 11.3, as applicable, unless and until the relevant dispute has been resolved.  It is understood and acknowledged that during the pendency of such dispute, all the terms and conditions of this Agreement will remain in effect and the Parties will continue to perform all of their respective obligations hereunder.

		
	10.2.17.
	Termination for Insolvency.  If CRISPR (or any CRISPR Entity(ies)) makes an assignment for the benefit of creditors, appoints or suffers appointment of a receiver or trustee over all or substantially all of its property, files a petition under any bankruptcy or insolvency act or has any such petition filed against it that is not discharged within [***] of the filing thereof (each, an “Insolvency Event”), then Vertex may terminate this Agreement in its entirety effective immediately upon written notice to CRISPR.  If Vertex terminates this Agreement pursuant to this Section 11.2.5: 

		
	(a)
	All rights and licenses now or hereafter granted by CRISPR to Vertex under or pursuant to this Agreement, including, for the avoidance of doubt, any Exclusive Licenses are, for all purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined in the U.S. Bankruptcy Code.  Upon the occurrence of any Insolvency Event with respect to CRISPR (or any CRISPR Entity(ies)), CRISPR agrees that Vertex, as licensee of such rights under this Agreement, will retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code.  CRISPR will, during the term of this Agreement, create and maintain current copies or, if not amenable to copying, detailed descriptions or other appropriate embodiments, to the extent feasible, of all intellectual property licensed under this Agreement.  Each Party acknowledges and agrees that “embodiments” of intellectual property within the meaning of Section 365(n) include laboratory notebooks, cell lines, product samples and inventory, research studies and data, all Regulatory Approvals (and 

57

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

all applications for Regulatory Approval) and rights of reference therein, the Licensed Technology and all information related to the Licensed Technology.  If (x) a case under the U.S. Bankruptcy Code is commenced by or against CRISPR (or any CRISPR Entity(ies)), (y) this Agreement is rejected as provided in the U.S. Bankruptcy Code, and (z) Vertex elects to retain its rights hereunder as provided in Section 365(n) of the U.S. Bankruptcy Code, CRISPR (in any capacity, including debtor-in-possession) and its successors and assigns (including a trustee) will:

		
	(i)
	provide to Vertex all such intellectual property (including all embodiments thereof) held by CRISPR and such successors and assigns, or otherwise available to them, immediately upon Vertex’s written request.  Whenever CRISPR or any of its successors or assigns provides to Vertex any of the intellectual property licensed hereunder (or any embodiment thereof) pursuant to this Section 11.2.5(a)(i), Vertex will have the right to perform CRISPR’s obligations hereunder with respect to such intellectual property, but neither such provision nor such performance by Vertex will release CRISPR from liability resulting from rejection of the license or the failure to perform such obligations; and

		
	(ii)
	not interfere with Vertex’s rights under this Agreement, or any agreement supplemental hereto, to such intellectual property (including such embodiments), including any right to obtain such intellectual property (or such embodiments) from another entity, to the extent provided in Section 365(n) of the U.S. Bankruptcy Code.

		
	(b)
	All rights, powers and remedies of Vertex provided herein are in addition to and not in substitution for any and all other rights, powers and remedies now or hereafter existing at law or in equity (including the U.S. Bankruptcy Code) in the event of the commencement of a case under the U.S. Bankruptcy Code with respect to CRISPR.  The Parties agree that they intend the following rights to extend to the maximum extent permitted by Applicable Law, and to be enforceable under U.S. Bankruptcy Code Section 365(n):

		
	(i)
	the right of access to any intellectual property rights (including all embodiments thereof) of CRISPR, or any Third Party with whom CRISPR contracts to perform an obligation of CRISPR under this Agreement, and, in the case of any such Third Party, which is necessary for the Manufacture, use, sale, import or export of Licensed Agents; and

		
	(ii)
	the right to contract directly with any Third Party to complete the contracted work.

		
	10.3.
	Alternative Remedies to Termination. 

		
	10.3.9.
	Prior to Option Exercise.  If a CRISPR Breach Event occurs prior to Vertex exercising its Option with respect to a particular Collaboration Target, Vertex may elect the alternative remedy provisions of this Section 11.3.1 with respect to each Collaboration Target for which it has not yet exercised the Option and 

58

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

that is subject to such CRISPR Breach Event (in the case of a CRISPR Program Breach), or all such Collaboration Targets (in the case of a CRISPR Agreement Breach), by providing written notice of such election to CRISPR, in which case, this Agreement will continue in full force and effect with the following modifications with respect to each Collaboration Target for which Vertex elects to exercise its rights under this Section 11.3.1.  If Vertex exercises its rights under this Section 11.3.1, such exercise shall be Vertex’s sole remedy in connection with such CRISPR Breach Event; Vertex shall have no other rights hereunder or at law or in equity with respect to the relevant CRISPR Breach Event; and CRISPR shall have no obligation to cure such CRISPR Breach Event. 
		
	(a)
	if CRISPR has not completed the activities for which it is responsible under the applicable Research Plan, [***], in which case, [***], If [***] for such activities, CRISPR will [***] and Vertex will [***] as provided herein;

		
	(b)
	Vertex’s obligations under [***] will not apply with respect to the applicable Collaboration Target;

		
	(c)
	CRISPR will provide to Vertex [***] and [***] in [***] under the relevant [***] in an efficient and orderly manner; 

		
	(d)
	in the event that Vertex subsequently elects to obtain the Exclusive License with respect to any such Collaboration Target, such election shall be regarded as an Option pursuant to Section 4.1.1 (subject to the Option Cap), provided that [***].

		
	10.3.10.
	After Option Exercise.  If a CRISPR Breach Event occurs after Vertex exercises its Option with respect to a particular Collaboration Target, Vertex may elect the alternative remedy provisions of this Section 11.3.2 with respect to any Collaboration Target for which it has exercised the Option and that is subject to such CRISPR Breach Event (in the case of a CRISPR Program Breach), or all such Collaboration Targets (in the case of a CRISPR Agreement Breach), by providing written notice of such election to CRISPR, in which case, this Agreement will continue in full force and effect with the following modifications with respect to each Collaboration Target for which Vertex elects to exercise its rights under this Section 11.3.2, each at Vertex’s election.  If Vertex exercises its rights under this Section 11.3.2, such exercise shall be Vertex’s sole remedy in connection with such CRISPR Breach Event; Vertex shall have no other rights hereunder or at law or in equity with respect to the relevant CRISPR Breach Event; and CRISPR shall have no obligation to cure such CRISPR Breach Event.

		
	(a)
	CRISPR’s right to [***];

		
	(b)
	Vertex may [***] required or permitted [***] established pursuant to this Agreement in connection with the [***]; provided, however, Vertex will not have the right to: (i) [***] of this Agreement; (ii) [***] of the Parties, (iii) [***] under this Agreement; (iv) exercise its [***] would constitute a violation of an Applicable Law; (v) make a determination [***] under this Agreement or (vi) 

59

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

require [***], whether internal or external, including capital expenditures for which [***] as provided herein; and

		
	(c)
	to the extent CRISPR is then conducting Additional Research, Vertex may, but will not be obligated to, assume responsibility for such Additional Research, in which case, Vertex’s obligation to fund such activities as provided in Section 7.4 will terminate.  If Vertex does not elect to assume responsibility for such activities, CRISPR will continue to perform such activities and Vertex will continue to reimburse CRISPR for Research Costs arising out of such activities as provided herein. 

		
	10.3.11.
	[***].  If (a) CRISPR (or any CRISPR Entity(ies)) commits a breach or series of breaches of this Agreement, (b) Vertex incurs at least [***] in aggregate losses, damages and expenses as a result of such breach or breaches, (c) Vertex does not terminate this Agreement in its entirety or with respect to a Collaboration Target or Product due to such breach or breaches, and (d) Vertex has not exercised its rights under Section 11.3.1 or 11.3.2, as applicable, with respect to such breach or breaches, then, in addition to any other remedies Vertex may have under this Agreement, at law or in equity or otherwise, [***].  [***] Vertex will provide CRISPR with a written certificate, signed by Vertex’s Chief Financial Officer, certifying [***].  Notwithstanding the foregoing, if CRISPR notifies Vertex in writing that it disputes Vertex’s assertion that CRISPR (or any CRISPR Entity(ies)) is in breach of this Agreement [***], then (a) Vertex will initiate the dispute resolution process set forth in Section 11.3.4, and (b) pending the Parties’ agreement regarding the appropriate [***] or a determination by the mediator [***] in accordance with Section 11.3.4(b), Vertex will [***].  If the Parties cannot settle their dispute by mutual agreement, then, in accordance with Section 11.3.4(b), the mediator will determine (1) [***], (2) [***] and (3) if [***], in which case Vertex [***].  

		
	10.3.12.
	[***] Dispute Resolution.

		
	(a)
	Escalation. If Vertex has exercised its [***] rights under Section 11.3.3, and there is a dispute regarding whether CRISPR is in breach of this Agreement [***], either Party may make a written request that [***] be referred for resolution to Executive Officers of each Party (or their designees).  Within [***] after such request, the Executive Officers of each Party (or their designees) will meet in person at a mutually acceptable time and location or by means of telephone or video conference to negotiate a settlement of a [***].  Each Party may elect to have such Party's JRC representatives participate in such meeting, if desired, provided that it provides the other Party with reasonable advance notice of such intent so as to enable the other Party to have its JRC representatives also participate in such meeting, if desired.  In the event that the Executive Officers of each Party (or their designees) fail to resolve the [***] within such [***] the [***] will be referred to mediation under Section 11.3.4(b).

		
	(b)
	Mediation.  If a [***] cannot be resolved pursuant to Section 11.3.4(a), the Parties agree to try in good faith to resolve any such [***] by non-binding mediation administered by JAMS End Dispute in accordance with its 

60

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

commercial mediation rules.  The mediation will be conducted by a single mediator appointed by agreement of the Parties who will have previous financial experience in the pharmaceutical industry, or failing such agreement by JAMS End Dispute in accordance with its commercial mediation rules.  Unless otherwise mutually agreed upon by the Parties, the mediation proceedings will be conducted in Boston, Massachusetts.  The Parties agree that [***] the cost of the mediation, including filing and hearing fees, and the cost of the mediator(s).  Each Party will bear its own attorneys’ fees and associated costs and expenses. If the Parties are unable to resolve a [***] pursuant to such mediation, then at the completion of such mediation the mediator will decide the following issues, which decision will be binding on the Parties pending final resolution of the [***] by a court of competent jurisdiction:
		
	(i)
	Whether the [***] by Vertex pursuant to Section 11.3.3 exceeds the mediator’s objective good faith estimate of [***]; and

		
	(ii)
	What amount (if any) may Vertex [***] under Section 11.3.3, which [***].

		
	(c)
	Mediator Resolution. 

		
	(i)
	If the mediator determines that [***] by Vertex pursuant to Section 11.3.3 [***], the Parties will promptly cause [***] as provided for in Section 7.10.  The Parties will promptly cause [***].  

		
	(ii)
	If the mediator determines that Vertex may [***] under Section 11.3.3, Vertex may [***].  

		
	(iii)
	The decisions rendered by mediator with respect to [***] will be binding on the Parties pending resolution of the [***] by the agreement of the Parties or by a court of competent jurisdiction in accordance with this Agreement. 

		
	10.4.
	Consequences of Expiration or Termination of the Agreement. 

		
	10.4.3.
	In General.  If this Agreement expires or is terminated by a Party in accordance with this ARTICLE 11 at any time and for any reason, the following terms will apply to any Product in any country that is the subject of such expiration or termination:

		
	(c)
	The Parties will return (or destroy, as directed by the other Party) all data, files, records and other materials containing or comprising the other Party’s Confidential Information, except to the extent such Confidential Information is subject to a license or similar grant of rights that survives such termination or is necessary or useful to conduct activities for a surviving Collaboration Program or Product or country.  Notwithstanding the foregoing, the Parties will be permitted to retain one copy of such data, files, records, and other materials for archival and legal compliance purposes.

61

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	(d)
	Termination or expiration of this Agreement for any reason will be without prejudice to any rights or financial compensation that will have accrued to the benefit of a Party prior to such termination or expiration.  Such termination or expiration will not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement. 

		
	(e)
	The following provisions of this Agreement will survive any expiration or termination of this Agreement:  Article 1 (Definitions), Section 5.3 (License Grants to Vertex) (solely in the event of expiration, not termination) Section 5.4 (Licenses to Improvements), Section 5.6 (No Implied Licenses), Article 7 (Financial Provisions), solely to the extent of accrued obligation as contemplated by Section 11.4.1(b), Section 8.1.1 (Ownership; Assignment – CRISPR Technology and Vertex Technology), 8.1.2 (Ownership; Assignment – Agreement Technology), Sections 8.5-8.6 (with respect to proceedings to the extent relating to events occurring prior to the effective date of termination) 8.6.4 (Joinder), Article 10 (Indemnification; Insurance), Section 11.2.5 (Public Announcements; Publications), Section 11.4 (Consequences of Expiration or Termination of the Agreement), Sections 12.1, 12.2, 12.3, 12.4 and 12.6 (Confidentiality) and Article 13 (Miscellaneous).”

		
	10.4.4.
	Termination Before License Grant.  If this Agreement expires or is terminated, in whole or in part with respect to a Collaboration Target, by a Party in accordance with this ARTICLE 11 before Vertex has been granted an Exclusive License for a particular Collaboration Target, then, in addition to the terms set forth in Section 11.4.1, the following terms will apply to each Collaboration Target that is the subject of such expiration or termination:

		
	(a)
	Vertex’s Option under Section 4.1 will expire and CRISPR will be free to Research, Develop, Manufacture and Commercialize the applicable Licensed Agents or Products in the applicable counties on its own or with a Third Party;

 
		
	(b)
	except with respect to (i) any termination by Vertex under Section 11.2.3(a) or (ii) any expiration or termination with respect to a Collaboration Target that is associated with [***], effective upon such termination, Vertex hereby grants to CRISPR a non-exclusive, royalty-free, irrevocable, perpetual, worldwide license, which CRISPR may sublicense through multiple tiers, under all Vertex Program Technology Controlled by Vertex or its Affiliates (A) generated under the applicable Collaboration Program or (B) used in such terminated Collaboration Program to Develop, Manufacture and Commercialize Licensed Agents and Products directed to the relevant Collaboration Target; provided, that if the grant of such license to CRISPR with respect to any Know-How or Patent included in the Vertex Program Technology or CRISPR’s exercise of such license would [***] or would require compliance with any provision of any license between Vertex and a Third Party, Vertex will so notify CRISPR and such Know-How or Patent will only be included in the foregoing license if, following receipt of such notice, [***] and comply with any such provision; and

62

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	(c)
	except as explicitly set forth in Section 11.4.1, Vertex will have no further rights and CRISPR will have no further obligations with respect to each terminated Collaboration Target.

		
	10.4.5.
	Termination After License Grant.  If this Agreement is terminated, in whole or in part with respect to a Product or Collaboration Target, by a Party in accordance with this ARTICLE 11 (but not if this Agreement expires in accordance with its terms) after Vertex has been granted an Exclusive License for a particular Collaboration Target, then, in addition to the terms set forth in Section 11.4.1, the following terms will apply to any Product or Collaboration Target that is the subject of such termination:

		
	(c)
	except as set forth in Section 11.4.3(f), the applicable licenses granted by CRISPR to Vertex under this Agreement will terminate and Vertex and its Affiliates will cease all Research, Development, Manufacture and Commercialization activities with respect to the applicable Products; 

		
	(d)
	Vertex will assign back to the CRISPR Entity designated by CRISPR AG any Patents assigned to Vertex under Section 8.1.3 that relate to the applicable Collaboration Target to the extent that such Patents do not also relate to a Collaboration Target for which Vertex is maintaining the Exclusive License;

		
	(e)
	except with respect to (i) any termination by Vertex under Section 11.2.3(a) or (ii) any expiration or termination with respect to a Collaboration Target that is associated with [***], Vertex shall, as promptly as practicable, transfer to the CRISPR Entity designated by CRISPR AG or such CRISPR Entity’s designee possession and ownership of all Regulatory Approvals solely relating to the Development, Manufacture or Commercialization of any terminated Product or Collaboration Target within such terminated Collaboration Program;   

		
	(f)
	except as explicitly set forth in Section 11.4.1, Vertex will have no further rights and CRISPR will have no further obligations with respect to the terminated Products and Collaboration Target(s); 

		
	(g)
	except with respect to (i) any termination by Vertex under Section 11.2.3(a) or (ii) any termination with respect to a Collaboration Target that is associated with [***], and subject to Section 11.4.3(f), effective upon such termination, Vertex hereby grants to CRISPR a non-exclusive, royalty-free, irrevocable, perpetual, worldwide license, which CRISPR may sublicense through multiple tiers, under all Vertex Program Technology Controlled by Vertex or its Affiliates and (A) generated under the applicable Collaboration Program or (B) used in such terminated Collaboration Program to Develop, Manufacture and Commercialize Licensed Agents and Products directed to the relevant Collaboration Target; provided, that if the grant of such license to CRISPR with respect to any Know-How or Patent included in the Vertex Program Technology or CRISPR’s exercise of such license would [***] or would require compliance with any provision of any license between Vertex and a Third Party, Vertex will so notify CRISPR and such Know-How or Patent will only be included in the foregoing license 

63

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

if, following receipt of such notice, [***] and comply with any such provision; and
		
	(h)
	any permitted Sublicense of Vertex will, at the Sublicensee’s option, survive such termination; provided that the Sublicensee is not in material breach of any of its obligations under such Sublicense.  In order to effect this provision, at the request of the Sublicensee, CRISPR will enter into a direct license with the Sublicensee on substantially the same terms as this Agreement (taking into account the scope of the licensee granted under such Sublicense); provided that CRISPR will not be required to undertake obligations in addition to those required by this Agreement, and that CRISPR’s rights under such direct license will be consistent with its rights under this Agreement, taking into account the scope of the license granted under such direct license. Any such Sublicense would continue to include rights to any Patent assigned to CRISPR pursuant to Section 11.4.3(b) to the extent such rights were included in such Sublicense prior to termination and the license to CRISPR set forth in Section 11.4.3(e), if applicable, would not include rights to any Patent Controlled by Vertex to the extent such license would conflict with any rights granted to the relevant Sublicensee under such Patent.

ARTICLE 11.     
CONFIDENTIALITY
		
	11.1.
	Confidentiality.  Except to the extent expressly authorized by this Agreement or otherwise agreed in writing, the Parties agree that, during the Agreement Term and for [***] thereafter, each Party (the “Receiving Party”) receiving any Confidential Information of the other Party (the “Disclosing Party”) hereunder will: (a) keep the Disclosing Party’s Confidential Information confidential; (b) not publish, or allow to be published, and will not otherwise disclose, or permit the disclosure of, the Disclosing Party’s Confidential Information in any manner not expressly authorized pursuant to the terms of this Agreement; and (c) not use, or permit to be used, the Disclosing Party’s Confidential Information for any purpose other than as expressly authorized pursuant to the terms of this Agreement. Without limiting the generality of the foregoing, to the extent that Vertex provides to CRISPR (or any CRISPR Entity(ies)) any Confidential Information owned by any Third Party, CRISPR will handle such Confidential Information in accordance with the terms and conditions of this ARTICLE 12 applicable to a Receiving Party. 

		
	11.2.
	Authorized Disclosure.  Notwithstanding the foregoing provisions of Section 12.1, each Party may disclose Confidential Information belonging to the other Party to the extent such disclosure is reasonably necessary to:

		
	11.2.13.
	file or prosecute patent applications as contemplated by this Agreement; 

		
	11.2.14.
	prosecute or defend litigation;

		
	11.2.15.
	exercise its rights and perform its obligations hereunder; or

		
	11.2.16.
	comply with Applicable Law.

64

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

If a Party deems it reasonably necessary to disclose Confidential Information belonging to the other Party pursuant to this Section 12.2, the Disclosing Party will to the extent possible give reasonable advance written notice of such disclosure to the other Party and take reasonable measures to ensure confidential treatment of such information.  In addition to the foregoing, [***] may disclose [***] Confidential Information to Third Parties as reasonably required to facilitate the actual or potential Research, Development, Manufacture or Commercialization of [***] or Products; provided that such disclosure is covered by terms of confidentiality and non-use similar to those set forth herein. 
Notwithstanding anything to the contrary contained herein, in no event may [***] disclose [***] Confidential Information to any Third Party (including any of CRISPR’s investors, collaborators or licensees) engaged in the research, development, manufacture or commercialization of pharmaceutical products.    
		
	11.3.
	SEC Filings and Other Disclosures.  Either Party may disclose the terms of this Agreement (i) to the extent required to comply with Applicable Law, including the rules and regulations promulgated by the United States Securities and Exchange Commission or any equivalent governmental agency in any country in the Territory; provided, that such Party will reasonably consider the comments of the other Party regarding confidential treatment sought for such disclosure and (ii) to its advisors (including financial advisors, attorneys and accountants), actual or potential acquisition partners, financing sources or investors and underwriters on a need to know basis; provided that such disclosure is covered by terms of confidentiality similar to those set forth herein (which may include professional ethical obligations).  

		
	11.4.
	Residual Knowledge Exception.  Notwithstanding any provision of this Agreement to the contrary, Confidential Information will not include Residual Knowledge.  Any use made by the Receiving Party of Residual Knowledge is on an “as is, where is” basis, with all faults and all representations and warranties disclaimed and at its sole risk.

		
	11.5.
	Public Announcements; Publications.

		
	11.5.1.
	Coordination.  CRISPR and Vertex will, from time to time and at the request of the other Party, discuss the general information content relating to this Agreement that may be publicly disclosed; provided, however, that [***] will have no obligation to consult with [***] with respect to any scientific publication or public announcement concerning [***] Research, Development, Manufacture, Commercialization or use of any [***] or Product (except as otherwise expressly set forth in Section 12.5.3).

		
	11.5.2.
	Announcements. The Parties will jointly issue a press release, in the form attached hereto as Schedule M, regarding the signing of this Agreement on a date to be determined by Vertex within [***] following the Effective Date.  Except as set forth in the preceding sentence and as may be expressly permitted under Section 12.3, or as required to comply with Applicable Law (including the rules and regulations promulgated by the United States Securities and Exchange Commission or any equivalent governmental agency in any country in the Territory), neither Party will make any public announcement regarding this Agreement without the prior written approval of the other Party.  For the sake of clarity, nothing in this Agreement will prevent [***] from making any scientific publication or public announcement concerning [***] Research, Development, Manufacture or Commercialization activities with respect to any 

65

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

[***] or Product under this Agreement; provided, however, that, except as permitted under Section 12.2, [***] will not disclose any of [***] Confidential Information in any such publication or announcement without obtaining CRISPR’s prior written consent to do so.  
		
	11.5.3.
	Publications.  During the Agreement Term, each Party will submit to the other Party (the “Non-Disclosing Party”) for review and approval any proposed academic, scientific and medical publication or public presentation related to any Licensed Agent or Product or any activities conducted pursuant to any Research Plan. In each such instance, such review and approval will be conducted for the purposes of preserving the value of the Licensed Technology and the Vertex Technology, the rights granted to Vertex hereunder and determining whether any portion of the proposed publication or presentation containing the Non-Disclosing Party’s Confidential Information should be modified or deleted.  Written copies of such proposed publication or presentation required to be submitted hereunder will be submitted to the Non-Disclosing Party no later than [***] before submission for publication or presentation (or five Business Days in advance in the case of an abstract).  The Non-Disclosing Party will provide its comments with respect to such publications and presentations within [***] of its receipt of such written copy (or [***] in the case of an abstract).  The review period may be extended for an additional [***] if the Non-Disclosing Party reasonably requests such extension including for the preparation and filing of patent applications.  Notwithstanding anything to the contrary, the Non-Disclosing Party may require that the other Party redact the Non-Disclosing Party’s Confidential Information from any such proposed publication or presentation.  CRISPR and Vertex will each comply with standard academic practice regarding authorship of scientific publications and recognition of contribution of other parties in any publication.  Notwithstanding the foregoing, Vertex’s obligation to submit any publication to CRISPR for review and approval under this Section 12.5.3 will not apply to any publication made with respect to a Collaboration Program following Vertex’s exercise of the applicable Option that does not contain CRISPR’s Confidential Information or disclose any non-public information included in the Licensed Technology; provided, that where reasonably possible, Vertex will provide CRISPR with an advance copy of such publication if such publication is [***].

		
	11.6.
	Vertex Information Rights.  

		
	11.6.1.
	If Vertex determines in good faith that CRISPR (or any CRISPR Entity(ies)) is an entity that is subject to financial consolidation with Vertex for the purposes of its quarterly and annual financial statements (or otherwise requires such information in order to comply with GAAP), CRISPR will make available to Vertex:

		
	(d)
	as soon as practicable, but in any event within [***] after the end of each Calendar Quarter (i) an unaudited balance sheet as of the end of such Calendar Quarter, (ii) unaudited statements of income and cash flows for such Calendar Quarter, (iii) an unaudited statement of stockholders’ equity for such period, and (iv) a detailed trial balance as of the end of such Calendar Quarter, all 

66

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

prepared in accordance with GAAP (except that such financial statements may (x) be subject to year-end audit adjustments and (y) not contain all notes thereto that may be required in accordance with GAAP) and thereafter will promptly provide such other information as Vertex may reasonably request; 

		
	(e)
	as soon as practicable, but in any event within [***] after the end of each Calendar Year (i) an audited balance sheet as of the end of such Calendar Year, (ii) audited statements of income and cash flows for such Calendar Year, (iii) an audited statement of stockholders’ equity for such Calendar Year and (iv) a detailed trial balance as of the end of such Calendar Year, together with related footnotes all prepared in accordance with GAAP and audited and certified by a nationally recognized independent public accounting firm; and

		
	(f)
	on or prior to December 31 of each Calendar Year (other than the Calendar Year ending December 31, 2015),, such [***] as of [***] of such year as prepared by [***].

ARTICLE 12.     
MISCELLANEOUS
		
	12.1.
	Assignment.  Neither this Agreement nor any interest hereunder will be assignable by either Party without the prior written consent of the other Party, except as follows: (a) Vertex, and subject to Section 13.2, CRISPR, may, subject to the terms of this Agreement, assign its rights and obligations under this Agreement by way of sale of itself or the sale of the portion of such Party’s business to which this Agreement relates, through merger, sale of assets or sale of stock or ownership interest; provided that such sale is not primarily for the benefit of its creditors; and provided further that no CRISPR Entity may assign its rights and obligations hereunder unless all CRISPR Entities are assigning their rights and obligations hereunder to the same Third Party; and (b) either Party may assign its rights and obligations under this Agreement to any of its Affiliates; provided that such Party will remain liable for all of its rights and obligations under this Agreement.  An assigning Party will promptly notify the other Party of any assignment or transfer under the provisions of this Section 13.1.  This Agreement will be binding upon the successors and permitted assigns of the Parties and the name of a Party appearing herein will be deemed to include the names of such Party’s successors and permitted assigns to the extent necessary to carry out the intent of this Agreement.  Any assignment not in accordance with this Section 13.1 will be void.

		
	12.2.
	Change of Control of CRISPR.  

		
	12.2.6.
	Notification.  CRISPR will notify Vertex in writing promptly (and in any event within [***] Business Days) following the execution of a definitive agreement by any CRISPR Entity, its Affiliates or its equity holders that could reasonably be expected to result in a Change of Control of any CRISPR Entity.

		
	12.2.7.
	Effects of Change of Control of CRISPR.  If during the Agreement Term any CRISPR Entity undergoes a Change of Control to a Competitor, then upon the effective date of such Change of Control (a) Vertex’s obligation to provide CRISPR [***] will terminate and (b) Vertex will [***] with respect to the [***].  

67

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	12.3.
	Force Majeure.  Each Party will be excused from the performance of its obligations under this Agreement to the extent that such performance is prevented by Force Majeure and the nonperforming Party promptly provides notice of the prevention to the other Party.  Such excuse will be continued so long as the condition constituting force majeure continues and the nonperforming Party uses Commercially Reasonable Efforts to remove the condition.  

		
	12.4.
	Representation by Legal Counsel.  Each Party hereto represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting hereof.  In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption will exist or be implied against the Party that drafted such terms and provisions.

		
	12.5.
	Notices.  All notices which are required or permitted hereunder will be in writing and sufficient if delivered personally or sent by nationally-recognized overnight courier, addressed as follows:

If to Vertex: 
Vertex Pharmaceuticals Incorporated
Attn: Business Development
50 Northern Avenue 
Boston, Massachusetts 02110

with a copy to:
Vertex Pharmaceuticals Incorporated
Attn: Corporate Legal
50 Northern Avenue 
Boston, Massachusetts 02110

and:
Ropes & Gray LLP
Attn: Marc A. Rubenstein
Prudential Tower
800 Boylston Street
Boston, Massachusetts 02199-3600

If to CRISPR:    
CRISPR Therapeutics Ltd. 
Attn: Chief Legal Officer 
85 Tottenham Court Road 
London W1T 4TQ 
United Kingdom
with a copy to:
Goodwin Procter LLP
Attn: Christopher Denn
53 State Street

68

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

Boston, Massachusetts 02109

or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. In addition, each Party will deliver a courtesy copy to the other Party’s Alliance Manager concurrently with such notice. Any such notice will be deemed to have been given: (a) when delivered if personally delivered on a Business Day (or if delivered or sent on a non-business day, then on the next Business Day); or (b) on receipt if sent by overnight courier.  Any notices required or permitted under this Agreement that are delivered by Vertex to CRISPR AG pursuant to this Section 13.5 shall be deemed properly delivered hereunder to each of CRISPR UK, CRISPR AG, CRISPR Inc. and Tracr.  
		
	12.6.
	Amendment.  No amendment, modification or supplement of any provision of this Agreement will be valid or effective unless made in writing and signed by a duly authorized officer of each of Vertex Parent, Vertex UK and CRISPR AG, CRISPR Inc., CRISPR UK and Tracr.

		
	12.7.
	Waiver.  No provision of this Agreement will be waived by any act, omission or knowledge of a Party or its agents or employees except by an instrument in writing expressly waiving such provision and signed by a duly authorized officer of the waiving Party.  The waiver by either of Vertex or CRISPR of any breach of any provision hereof by the other Party will not be construed to be a waiver of any succeeding breach of such provision or a waiver of the provision itself.  Written waiver of any provision of this Agreement by of any one of the CRISPR Entities in accordance with this Section 13.7 shall be binding upon each of CRISPR UK, CRISPR AG, CRISPR Inc. and Tracr.  

		
	12.8.
	Severability.  If any clause or portion thereof in this Agreement is for any reason held to be invalid, illegal or unenforceable, the same will not affect any other portion of this Agreement, as it is the intent of the Parties that this Agreement will be construed in such fashion as to maintain its existence, validity and enforceability to the greatest extent possible.  In any such event, this Agreement will be construed as if such clause of portion thereof had never been contained in this Agreement, and there will be deemed substituted therefor such provision as will most nearly carry out the intent of the Parties as expressed in this Agreement to the fullest extent permitted by Applicable Law.

		
	12.9.
	Descriptive Headings.  The descriptive headings of this Agreement are for convenience only and will be of no force or effect in construing or interpreting any of the provisions of this Agreement.

		
	12.10.
	Export Control.  This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States of America or other countries that may be imposed upon or related to CRISPR or Vertex from time to time.  Each Party agrees that it will not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate Governmental Authority.

		
	12.11.
	Governing Law.  This Agreement, and all claims arising under or in connection therewith, will be governed by and interpreted in accordance with the substantive laws of The Commonwealth of Massachusetts, without regard to conflict of law principles thereof.  

69

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	12.12.
	Entire Agreement.  This Agreement constitutes and contains the complete, final and exclusive understanding and agreement of the Parties and cancels and supersedes any and all prior negotiations, correspondence, understandings and agreements, whether oral or written, between the Parties respecting the subject matter hereof and thereof, including that certain Confidentiality Agreement between Vertex Parent and CRISPR dated May 6, 2015, which is hereby superseded and replaced in its entirety as of the Effective Date, and any Confidential Information disclosed by the Parties under such agreement will be treated in accordance with the provisions of ARTICLE 12.

		
	12.13.
	Independent Contractors.  Both Parties are independent contractors under this Agreement.  Nothing herein contained will be deemed to create an employment, agency, joint venture or partnership relationship between the Parties hereto or any of their agents or employees, or any other legal arrangement that would impose liability upon one Party for the act or failure to act of the other Party.  Neither Party will have any express or implied power to enter into any contracts or commitments or to incur any liabilities in the name of, or on behalf of, the other Party, or to bind the other Party in any respect whatsoever.

		
	12.14.
	Interpretation.  Except where the context expressly requires otherwise, (a) the use of any gender herein will be deemed to encompass references to either or both genders, and the use of the singular will be deemed to include the plural (and vice versa), (b) the words “include,” “includes” and “including” will be deemed to be followed by the phrase “without limitation,” (c) the word “will” will be construed to have the same meaning and effect as the word “shall,” (d) any definition of or reference to any agreement, instrument or other document herein will be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (e) any reference herein to any Person will be construed to include the Person’s successors and assigns, (f) the words “herein,” “hereof” and “hereunder,” and words of similar import, will be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (g) all references herein to Sections, Schedules or Exhibits will be construed to refer to Sections, Schedules or Exhibits of this Agreement, and references to this Agreement include all Schedules and Exhibits hereto, (h) the word “notice” will mean notice in writing (whether or not specifically stated) and will include notices, consents, approvals and other written communications contemplated under this Agreement, (i) provisions that require that a Party, the Parties or any committee hereunder “agree,” “consent” or “approve” or the like will require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (j) references to any specific law, rule or regulation, or article, section or other division thereof, will be deemed to include the then-current amendments thereto or any replacement or successor law, rule or regulation thereof, (k) any definition of or reference to any agreement, instrument or other document herein will be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), and (l) the term “or” will be interpreted in the inclusive sense commonly associated with the term “and/or.”

		
	12.15.
	No Third Party Rights or Obligations.  No provision of this Agreement will be deemed or construed in any way to result in the creation of any rights or obligations in any Person not a Party to this Agreement.

70

Exhibit 10.6
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Triple asterisks denote omissions.

		
	12.16.
	Further Actions.  Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

		
	12.17.
	Counterparts.  This Agreement may be executed in two counterparts, each of which will be an original and both of which will constitute together the same document.  Counterparts may be signed and delivered by facsimile or digital transmission (.pdf), each of which will be binding when received by the applicable Party.

		
	12.18.
	CRISPR Entities.  Notwithstanding anything to the contrary in this Agreement:

		
	12.18.1.
	CRISPR UK, CRISPR AG, CRISPR Inc. and Tracr shall be jointly and severally liable to Vertex for all obligations of CRISPR under this Agreement;

		
	12.18.2.
	Breach or violation of any representation, warranty covenant or other obligation of CRISPR under this Agreement may result from, be caused by or arise from the act or omission of any one or more of the CRISPR Entities;

		
	12.18.3.
	Any particular right or interest of CRISPR under this Agreement shall only be exercisable once by the first CRISPR Entity to exercise such right or interest hereunder on behalf of CRISPR (i.e., Vertex shall not be liable to more than one CRISPR Entity with respect to any particular right or interest of CRISPR hereunder, including, without limitation, any payment obligations of Vertex hereunder); and

		
	12.18.4.
	Any consent or approval of CRISPR permitted or required under this Agreement by any one of CRISPR UK, CRISPR AG, CRISPR Inc. or Tracr shall be binding upon all of the CRISPR Entities.  

[SIGNATURE PAGE FOLLOWS]
* - * - * - *

71

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their representatives thereunto duly authorized as of the Effective Date.
	
		
	VERTEX PHARMACEUTICALS
INCORPORATED

	CRISPR THERAPEUTICS AG

	

By: /s/ Ian Smith
	

By: /s/ Rodger Novak

	Name:   Ian Smith
Title:    Chief Financial Officer
	Name:   Rodger Novak
Title:    CEO

	VERTEX PHARMACEUTICALS (EUROPE) LIMITED

	CRISPR THERAPEUTICS LIMITED

	By: /s/ Ian Smith
	By: /s/ Rodger Novak

	Name: Ian Smith
	Name:   Rodger Novak

	Title: Director
	Title:    CEO

	 
	

Schedule A
CRISPR Reserved Targets
Following are the CRISPR Reserved Targets:

		
	1.
	The following Targets: 

		
	a.
	[***]

		
	b.
	[***]

		
	c.
	[***]

		
	d.
	[***]

		
	e.
	[***]

		
	f.
	[***]

		
	g.
	[***]

		
	h.
	[***]

		
	i.
	[***]

		
	j.
	[***]

		
	2.
	All Targets that are, [***] (a) [***] or (b) [***] or (c) [***].

		
	3.
	All Targets that are, at the time Vertex has proposed to add such a Target to the Vertex Target List, [***].

		
	4.
	All Targets that are, at the time Vertex has proposed to add such a Target to the Vertex Target List, Targets that are [***]. 

All Targets that are, at the time Vertex has proposed to add such a Target to the Vertex Target List, Targets that are [***]. 
 

SCHEDULE A 

Schedule B
Initial Vertex Targets
		
	1)
	CFTR (cystic fibrosis transmembrane conductance regulator)

		
	2)
	[***]

		
	3)
	[***]

		
	4)
	[***]

		
	5)
	[***]

		
	6)
	[***]

		
	7)
	[***]

		
	8)
	[***]

		
	9)
	[***]

		
	10)
	[***]

		
	11)
	[***]

		
	12)
	[***]

		
	13)
	[***]

Initial Collaboration Targets

		
	1)
	CFTR (cystic fibrosis transmembrane conductance regulator)

		
	2)
	[***]

[***]

SCHEDULE B 

Schedule C
Option Exercise Data Package 
		
	•
	Option Exercise Data Package. All data for the Option Exercise Data Package is pre-specified by the Collaboration Program Working Group and is reviewed and endorsed by the JRC.

		
	•
	The responsibilities below would be specified on a program by program basis and endorsed by the JRC ahead of beginning any Research Plan.

		
	•
	Upon completion of the work, the data for each item is presented to the JRC and compared to the pre-specification.  The JRC endorses the interpretation that the data are or are not consistent with the pre-specification.

	
		
	Item
	Party Responsible for Generating Item/Data

	[***]
	CRISPR & Vertex

	[***]
	CRISPR

	[***]
	CRISPR

	[***]
	CRISPR and Vertex

	[***]
	Vertex and CRISPR

	[***]
	Vertex

	[***]
	Vertex

	[***]
	CRISPR

SCHEDULE C 

Schedule D
Initial Research Plan Components 
The following are key elements for the Research Plans.  A full Research Plan will be created by the Collaboration Program Working Group utilizing these elements in accordance with Section 2.2.  The provisions will be approved by the JRC in accordance with ARTICLE 3.
	
			
	Target Name
	Description
	 

	Work Plan Items
	Listing of all items required to complete the work plan.  This should include all of the items in Schedule C
	Listing of responsible parties for each of the work items.

	Key milestones
	Listing of key waypoints on the way to a transition agreement.
	Listing of key dates for each of the milestones.

	Budget
	Out of Pocket Spend – CRISPR 
FTE – CRISPR 
FTE – Vertex
	Listing of dollar amounts

	Key pieces of data and required values
	Listing of key pieces of data expected in the Option Exercise Data Package.  This is a critical element and will have to be carefully considered.  E.g. for a [***] etc. are other possible values.  These will be highly Target specific.
	Minimum acceptable values for each of these data.  These should be prospective and objective wherever possible.

	Key dependencies
	List key dependencies on various elements.
	 

	Assumptions
	List project assumptions.
	 

	Risks
	Listing of key risks, probabilities and impacts
	Describe mitigation/ contingency/ avoidance plan

SCHEDULE D 

Schedule E
Subcontractors

SCHEDULE E 

Schedule F
CRISPR Background Know-How 
(as of 26 October 2015)
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  A total of 1 page was omitted.  [***]

SCHEDULE F 

Schedule G
Terms of Joint Development & Commercialization Agreement 
ARTICLE 1.
DEFINITIONS.
		
	1.1.
	“Audited Party” has the meaning set forth in Section 7.6.

		
	1.2.
	“Auditing Party” has the meaning set forth in Section 7.6.

		
	1.3.
	“Baseball Arbitration” means “baseball” style arbitration in accordance with the arbitration procedure set forth on Schedule I of the Agreement.

		
	1.4.
	“Commercialization Budget” has the meaning set forth in Section 5.1.

		
	1.5.
	“Commercialization Costs” means the sum of the following costs and expenses incurred by the Parties or their respective Affiliates, in Commercializing the Shared Products (and related Manufacturing activities) in the Territory, in each case, to the extent incurred in accordance with the Commercialization Plan and Commercialization Budget: 

		
	(a)
	Expenses incurred in connection with the [***];  

		
	(b)
	Expenses incurred to conduct [***];

		
	(c)
	[***] representing the [***] as defined in the [***], in each case, to the extent directly attributable to [***];

		
	(d)
	Expenses identifiable to the [***], in each case, to the extent incurred specifically with respect [***];   

		
	(e)
	Expenses incurred in connection with the [***];

		
	(f)
	Expenses directly associated with [***], in each case, that are incurred with respect to a [***];

		
	(g)
	[***];

		
	(h)
	Expenses reasonably necessary and identifiable to the [***] with respect to: [***];

		
	(i) 
	[***]; and

		
	(j)
	any other Expenses approved by the JCC and included in the Commercialization Budget that are not otherwise included in any other Commercialization Cost category.

Commercialization Costs will exclude [***].
		
	1.6.
	“Commercialization Plan” has the meaning set forth in Section 5.1.

		
	1.7.
	“Development Budget” has the meaning set forth in Section 3.1.

		
	1.8.
	“Development Costs” means the sum of the following costs and expenses incurred by the Parties and their respective Affiliates in Developing the Shared Product (and related 

SCHEDULE G 

Manufacturing activities) in the Territory, in each case, to the extent incurred in accordance with the Global Development Plan and the Development Budget, including: 
		
	(a)
	Expenses incurred in [***];

		
	(b)
	[***];

		
	(c)
	[***] incurred in connection with [***];

		
	(d)
	Expenses associated with [***], to the extent incurred with respect to [***];

		
	(e)
	Expenses incurred in connection with [***], including the Parties’ [***]; 

		
	(f)
	Expenses associated with [***]; and

		
	(g)
	any other Expenses incurred for [***] and included in the [***]. 

Development Costs will exclude [***]. 
		
	1.9.
	“Expenses” means Out-of-Pocket Costs and FTE Costs. 

		
	1.10.
	“FTE Costs” means the product of (a) the number of FTEs (proportionately, on a per-FTE basis) used by a Party or its Affiliates in directly performing activities assigned to such Party under and in accordance with the Global Development Plan, Commercialization Plan or Medical Affairs Plan, as applicable, and (b) the FTE Rate.  

		
	1.11.
	“FTE” means one employee full-time for one year or more than one person working the equivalent of a full-time person, working directly on performing activities under the Global Development Plan, Medical Affairs Plan or Commercialization Plan, as applicable, where “full-time” is considered [***] hours for one Calendar Year. No additional payment will be made with respect to any individual who works more than [***] hours per Calendar Year and any individual who devotes less than [***] hours per Calendar Year will be treated as an FTE on a pro rata basis based upon the actual number of hours worked divided by [***]. 

		
	1.12.
	“Global Development Plan” has the meaning set forth in Section 3.1.

		
	1.13.
	“Global Branding Strategy” has the meaning set forth in Section 5.2.2.

		
	1.14.
	“JCC” has the meaning set forth in Section 2.1.

		
	1.15.
	“JDC” has the meaning set forth in Section 2.1.

		
	1.16.
	“JSC” has the meaning set forth in Section 2.1.

		
	1.17.
	“Lead Commercialization Party” has the meaning set forth in Section 5.1.

		
	1.18.
	“Licensed Vertex Know-How” means (a) [***], that (i) [***] and (ii) [***], (b) [***] and (c) [***].  

		
	1.19.
	“Licensed Vertex Background Patents” means (a) [***] that (i) [***] and (ii) [***], (b) [***] and (c) the [***].  

		
	1.20.
	“Manufacturing Costs” means the costs of Manufacturing Shared Product, which (a) to the extent such Shared Product is Manufactured by a Party or its Affiliates, [***] and (b) to the extent such Shared Product is Manufactured by a Third Party in an arms-length transaction, [***].

SCHEDULE G 

		
	1.21.
	“Manufacturing Working Group” has the meaning set forth in Section 6.1.

		
	1.22.
	“Medical Affairs Activities” means responding to external inquiries or complaints, the planning for and conduct of investigator sponsored Clinical Trials not included in the Global Development Plan, medical education, speaker programs, advisory boards, thought leader activities, educational grants and fellowships, local country government affairs, Phase 3b Clinical Trials, phase IV/post-Regulatory Approval Clinical Trials, generating health economics and outcomes research data from patient reported outcomes, prospective observational studies and retrospective observational studies, and economic models and reimbursement dossiers, deployment of MSLs, medical affairs clinical trial management, doctors in field (other than MSLs), scientific publications and medical communications.  

		
	1.23.
	“Medical Affairs Budget” has the meaning set forth in ARTICLE 4.

		
	1.24.
	“Medical Affairs Costs” means all Expenses incurred by the Parties in connection with the conduct of Medical Affairs Activities in accordance with the Medical Affairs Plan and the Medical Affairs Budget; 

		
	1.25.
	“Medical Affairs Plan” has the meaning set forth in ARTICLE 4.

		
	1.26.
	“MSL” means medical science liaisons.

		
	1.27.
	“Net Loss” means, for a given period, Net Sales (including deemed Net Sales under Section 8.6.5 of the Agreement) in the Territory less Program Expenses, where the result is a negative number.

		
	1.28.
	“Net Profit” means, for a given period, Net Sales (including deemed Net Sales under Section 8.6.5 of the Agreement) in the Territory less Program Expenses, where the result is a positive number.

		
	1.29.
	“Opt-Out Royalty” has the meaning set forth in Section 11.4.

		
	1.30.
	“Other Out-of-Pocket Costs” means: 

		
	(a)
	Expenses associated with [***] pursuant to the [***]; 

		
	(b)
	[***]; 

		
	(c)
	[***], in each case, that are [***]; and 

		
	(d)
	Expenses incurred in connection with the [***].

		
	1.31.
	“Patent Costs” means all Expenses reasonably allocated to the Shared Products for the prosecution, maintenance and enforcement of Patents that Cover the Shared Products.

		
	1.32.
	“Pharmacovigilance Agreement” has the meaning set forth in Section 8.1.

		
	1.33.
	“Program Expenses” means Development Costs, Commercialization Costs, Medical Affairs Costs, Patent Costs and Other Out-of-Pocket Costs.  

		
	1.34.
	“Project Leader” has the meaning set forth in Section 3.1.

		
	1.35.
	“Project Team” has the meaning set forth in Section 3.1.

		
	1.36.
	“Reconciliation Report” has the meaning set forth in Section 7.4.

SCHEDULE G 

		
	1.37.
	“Subcontract” has the meaning set forth in ARTICLE 9.

		
	1.38.
	“Subcontractor” has the meaning set forth in ARTICLE 9.

		
	1.39.
	“Summary Statement” has the meaning set forth in Section 7.3.

		
	1.40.
	“Trademark” means all trademarks, service marks, trade names, brand names, sub-brand names, trade dress rights, product configuration rights, certification marks, collective marks, logos, taglines, slogans, designs or business symbols and all words, names, symbols, colors, shapes, designations or any combination thereof that function as an identifier of source or origin or quality, whether or not registered, and all statutory and common law rights therein, and all registrations and applications therefor, together with all goodwill associated with, or symbolized by, any of the foregoing.

ARTICLE 2.
GOVERNANCE.
		
	2.1.
	Committees.  Within [***] after execution of the Joint Development & Commercialization Agreement, the Parties will establish a joint steering committee (the “JSC”) to provide high-level oversight and decision-making regarding the activities of the Parties under the Joint Development & Commercialization Agreement.  The JSC’s responsibilities will include (a) reviewing and overseeing the overall global Development, Manufacture and Commercialization of the Shared Products in the Field, (b)  overseeing the JDC, JCC and any other committees and working groups established with respect to the Shared Product and resolving matters on which the JDC, JCC or such committees and working groups are unable to reach consensus and (c) performing such other functions as may be established in the Joint Development & Commercialization Agreement.  The JSC will oversee a joint development committee (the “JDC”) and a joint commercialization committee (the “JCC”) and such other committees and working groups as the JSC may determine are appropriate from time to time.  

		
	2.2.
	Decision-Making.  The JSC, JDC, JCC and all other committees and working groups [***] with the goal being to maximize the chance of successfully developing and commercializing a [***] in a manner consistent with Applicable Laws and the Joint Development & Commercialization Agreement.  Disputes arising out of the JDC, JCC or any other committee or working group will be escalated to the JSC for resolution.  Disputes arising at the JSC will be referred to senior executives of each Party for resolution. whereupon the Parties’ senior executives will meet in person if requested by either such senior executive and attempt in good faith to resolve such dispute by negotiation and consultation for a [***] period following such referral.  If the senior executives do not resolve such dispute within such [***] period, such dispute shall be submitted to [***].   

ARTICLE 3.
DEVELOPMENT.
		
	3.1.
	Global Development Plan. The JDC will oversee the Development of Shared Products by the Parties in the Field in the Territory. Each Shared Product will be Developed in accordance with a global development plan (the “Global Development Plan”).  The Global Development Plan will include a plan for the Development of the Shared Product in the 

SCHEDULE G 

Territory through Regulatory Approval, including a regulatory strategy, high-level study design criteria, an allocation of responsibilities between the Parties, timelines and a budget for activities conducted under the Global Development Plan (the “Development Budget”).  The JDC will update the Global Development Plan [***] (or more frequently as needed) and submit it to the JSC for approval.  The Parties will establish a project team (the “Project Team”) to oversee and coordinate activities under the Global Development Plan.  The Project Team be formed with an experienced team leader (“Project Leader”), and the composition of the Project Team will be determined by the Project Leader based on available personnel from each Party across functions.  The Project Team will conduct its responsibilities under the Global Development Plan in good faith and with reasonable care and diligence.  The Project Team will provide the JDC with periodic updates regarding the progress of activities pursuant to the Global Development Plan.  
		
	3.2.
	Development Activities. 

		
	3.2.1.
	Regulatory Matters.  Regulatory activities will be jointly carried out by the Project Team under the guidance of the JDC.  All Regulatory Filings and Regulatory Approvals that relate to Shared Products shall be filed by and held in the name of [***] or its relevant Affiliates.  [***] shall use Commercially Reasonable Efforts, in consultation with [***] to seek to obtain and maintain Regulatory Approval for the Shared Product in the Field.  [***] will oversee, monitor and manage all regulatory interactions, communications and filings with, and submissions to, Regulatory Authorities with respect to the Shared Products.  [***], in consultation with [***], will control all regulatory activities with respect to the Shared Products, including determining the labeling strategy and the content of submissions; provided that [***] may review and comment on such strategies and submissions.  Vertex will prepare all regulatory submissions and provide [***] with advance drafts of any material documents or other material correspondence pertaining to the Shared Products, including any proposed labeling, that [***] plans to submit to any Regulatory Authority.  [***] may provide comments regarding such documents and other correspondence prior to their submission, which comments [***] will consider in good faith. [***] will provide [***] with copies of all material submissions it makes to, and all material correspondence it receives from, a Regulatory Authority pertaining to a Regulatory Approval of a Shared Product within [***] after receipt. [***] will provide [***] with reasonable advance notice of any meeting or teleconference with any Regulatory Authority with respect to the Shared Products.  Subject to Applicable Law, [***] will have the right to participate as an observer in all material meetings, conferences and discussions by [***] with Regulatory Authorities pertaining to Development of the Shared Products or Regulatory Approval of the Shared Products. 

		
	3.2.2.
	Clinical Trials.  The JDC will allocate responsibility between the Parties for the conduct of Clinical Trials and the various other Development activities addressed in the Global Development Plan.  [***] will have final decision-making authority with respect to the protocol for any Clinical Trial conducted under the Global Development Plan and the statistical analysis plan for any such Clinical Trial. 

SCHEDULE G 

The Party that has responsibility for conducting the Clinical Trial will have the responsibility for the packaging and labeling of clinical drug supplies, unless otherwise agreed by the Parties.
		
	3.2.3.
	Independent Activities.  The Joint Development & Commercialization Agreement will include a mechanism for each Party to propose additional Clinical Trials for inclusion in the Global Development Plan.  If the other Party does not agree to include such additional Clinical Trial in the Global Development Plan, the requesting Party may conduct such Clinical Trial at its sole expense (i.e. such expenses will not be included as Development Costs); provided that neither Party may conduct any Clinical Trial that [***].  The non-requesting Party will not have the right to use the data resulting from such Clinical Trial in a substantive manner as the basis for obtaining new or expanded Regulatory Approval for a Product in the Field or for commercial purposes for a Product in the Field unless and until such Party reimburses the requesting Party for [***] of the Development Costs.. 

		
	3.3
	Diligence.  Each Party will use Commercially Reasonable Efforts to execute and to perform, or cause to be performed, the activities assigned to it in the Global Development Plan, and to cooperate with the other Party in carrying out the Global Development Plan  in accordance with the timelines therein. Each Party and its Affiliates will conduct its Development activities in good scientific manner and in compliance with Applicable Law. Notwithstanding anything to the contrary contained herein, a Party or its Affiliates will not be obligated to undertake or continue any Development activities with respect to the Shared Products if such Party (or any of its Affiliates) reasonably determines that performance of such Development activity would violate Applicable Law or infringe or misappropriate a Third Party’s intellectual property.

ARTICLE 4.
MEDICAL AFFAIRS ACTIVITIES.
The Parties, acting through the JSC, will develop and agree upon a global medical affairs plan for the Shared Product that describes the Medical Affairs Activities to be conducted in the Territory, key tactics and strategies for implementing those activities, the relative responsibilities of the Parties and the associated budget for such activities (such plan, the “Medical Affairs Plan” and such budget, the “Medical Affairs Budget”).  CRISPR will lead and manage Medical Affairs Activities in the United States and Vertex will lead and manage Medical Affairs Activities outside of the United States, in each case, in accordance with the Medical Affairs Plan.  The number of MSLs to be deployed in each jurisdiction will be determined by the JSC at least [***] prior to potential launch.  
ARTICLE 5.
COMMERCIALIZATION.
		
	5.1.
	Commercialization Plan. The JCC will oversee the Commercialization of Shared Products by the Parties in the Field in the Territory. No later than [***] prior to the anticipated launch of the Shared Product in the first country in the Territory, the JCC will develop and submit to the JSC for approval, a Commercialization plan (the “Commercialization Plan”) that 

SCHEDULE G 

sets forth the Commercialization activities to be undertaken by the Parties with respect to the Commercialization of the Shared Product in the Territory.  The Commercialization Plan may include activities on a region-by-region or country-by-country basis, as determined by the JCC.  The JCC will update the Commercialization Plan on [***] (or more frequently as needed) and submit it to the JSC for approval. The Commercialization Plan will include (a) the Global Branding Strategy, (b) a marketing strategy, (c) a communications strategy that includes plans for public relations, conferences and exhibitions and other external meetings, internal meetings and communications, publications and symposia, internet activities and core brand package, (d) a high level operating plan for the implementation of such strategies on [***], including information related to Shared Product positioning, core messages to be communicated and pricing strategies, (e) a detailing strategy, (f) a pricing strategy, (g) all other material activities to be conducted in connection with the Commercialization of the Shared Product in the Field in the Territory and (h) a budget for activities conducted under the Commercialization Plan (the “Commercialization Budget”).  The Commercialization Plan will include a meaningful role for both Parties. In allocating responsibilities between the Parties, the JCC will take into consideration each Party’s expertise, capabilities, staffing and available resources to take on such activities, as well as the Parties’ intention to provide CRISPR an opportunity to build and expand its expertise, capabilities, staffing and available resources in connection with performing Commercialization activities allocated to it.  CRISPR shall be the Commercializing lead for Shared Products in the United States and Vertex shall be the Commercializing lead for Shared Products outside of the United States.  The Commercializing lead, with respect to the United States or outside of the United States, respectively, shall be referred to herein as the “Lead Commercialization Party” for such jurisdiction (as applicable, the “Lead Commercialization Party”  Unless otherwise specified in the Commercialization Plan, the Parties will jointly be responsible for conducting all Commercialization activities outside of the United States, such activities to be determined by the JSC.
		
	5.2.
	Commercialization Activities.  

		
	5.2.1.
	Training. The Parties will jointly prepare training programs and materials for employees and sales representatives with respect to the Shared Product, with the goal of ensuring compliance with all Applicable Laws and each Party’s compliance policies.  Each Party will be solely responsible for training its employees and sales representatives in accordance with such training program.  

		
	5.2.2.
	Global Branding Strategy.  The JCC will develop a global branding strategy for Shared Products in the Territory, including, with respect to each Shared Product, a life cycle plan, brand vision, positioning, key messaging, concept and imagery, Trademarks (including name and logos), brand public relations and supporting market research (the “Global Branding Strategy”) and submit such strategy to the JSC for approval. 

		
	5.2.3.
	Trademarks.  The JCC will select a product Trademark for each Shared Product throughout the world consistent with the Global Branding Strategy. Each Shared Product will be promoted and sold in the Territory under the applicable Trademarks. 

SCHEDULE G 

		
	5.2.4.
	Marketing.  The JCC will agree upon a marketing strategy for the Shared Product, including Shared Product positioning, messaging, appearance and launch sequencing, consistent with the Global Branding Strategy.  Marketing activities and responsibilities for each Party will be determined by the JCC.

		
	5.2.5.
	Managed Markets and Market Access.  The JCC will agree upon a strategy for the managed markets and market access for the Shared Product, including, without limitation, payer strategy and account management.  Such activities and responsibilities for each Party will be determined by the JCC.

		
	5.2.6.
	Pricing. The JCC will establish a global pricing strategy for the Shared Product (including list price, targeted net pricing, sales-weighted average discounts and rebates, the approach to pricing with different types of accounts and plans, types of discounts and rebates) in the Territory. The responsibility of each Party regarding the implementation of such global pricing strategy, including negotiating pricing and reimbursement with governments and private payers will be determined by the JCC.

		
	5.2.7.
	Field Sales.  The Parties will jointly promote the Shared Product (including performing sales calls) in the Territory in accordance with the Commercialization Plan.  CRISPR will lead and manage the promotion of the Shared Product in the United States.  Vertex will have the right provide [***] of the FTES with respect to the Shared Product in the United States.  Vertex will lead and manage promotion of the Shared Product outside of the United States and CRISPR will have the right to provide [***] of the FTES with respect to the Shared Product in the Major Market Countries (outside of United States).  CRISPR and Vertex will each ensure that its and its Affiliates’ sales representatives do not make any representation, statement, warranty or guaranty with respect to the Shared Product that is not consistent with the applicable current package insert of prescribing information or other documentation accompanying or describing a Shared Product, including mutually approved limited warranty and disclaimers, if any. CRISPR and Vertex will each ensure that its and its Affiliates’ sales representatives do not make any statements, claims or undertakings to any person with whom they discuss or promote the Shared Products that are not consistent with, or provide or use any labeling, literature or other materials other than those promotional materials currently approved for use by the JCC. 

		
	5.2.8.
	Distribution and Patient Services.  The Parties will jointly be responsible for distribution and patient services for the Shared Product in the Territory, including contracting with applicable service providers, such activities to be determined by the JCC [***] prior to launch of the Shared Product.

		
	5.2.9.
	Booking Sales; Distribution.  CRISPR will invoice, sell and book all sales of Shared Products in the United States and be responsible for warehousing and distributing such Shared Products in the United States.  Vertex will invoice, sell and book all sales of Shared Products outside of the United States and be responsible for warehousing and distributing such Shared Products outside of the United States.  

SCHEDULE G 

		
	5.3.
	Diligence.  Each Party will use Commercially Reasonable Efforts to execute and to perform, or cause to be performed, the activities assigned to it under the Commercialization Plan.  Each Party and its Affiliates will conduct its Commercialization activities in compliance with Applicable Law. Notwithstanding anything to the contrary contained herein, a Party or its Affiliates will not be obligated to undertake or continue any Commercialization activities with respect to the Shared Products if such Party (or any of its Affiliates) reasonably determines that performance of such Commercialization activity would violate Applicable Law or infringe or misappropriate a Third Party’s intellectual property.

ARTICLE 6.
MANUFACTURING.  
		
	6.1.
	Quality Agreement.  The Parties will meet to negotiate in good faith and agree on quality analysis and control criteria for the Manufacture of the Shared Product within [***] after the effective date of the Joint Development & Commercialization Agreement. The agreed upon criteria will be set forth in a quality agreement containing mutually agreed terms and conditions that are customary for agreements of this type.  

		
	6.2.
	Working Group.  The Parties will establish a manufacturing working group (the “Manufacturing Working Group”) to oversee matters relating to the Manufacture of the Shared Product.  The Manufacturing Working Group will report to the JDC for Development-related Manufacturing matters and will report to the JCC for Commercialization-related Manufacturing matters.  The Manufacturing Working Group’s responsibilities will include: (a) developing plans to transfer Manufacturing-related Know-How between the Parties as needed to facilitate the Manufacture of the Shared Product; (b) establishing standards applicable to each Party’s Manufacturing activities and reviewing each Party’s performance against such standards; conducting technical reviews, and (c) sharing planning and budgeting information with the JDC and JCC. 

		
	6.3.
	Responsibility.  The Parties will share responsibility for Manufacturing clinical supplies of Shared Product as determined by the Manufacturing Working Group.  Unless otherwise agreed by the Parties, Vertex will be responsible for Manufacturing commercial supplies of Shared Product. 

ARTICLE 7.
ALLOCATION OF NET PROFIT AND NET LOSS.
		
	7.1.
	Allocation.  Each Party will be entitled to 50% of the Net Profits or will bear 50% of the Net Loss, as applicable, during the term of the Joint Development & Commercialization Agreement.  If either Party elects to Opt-Out (as defined below), the other Party shall pay royalties in accordance with Section 11.4. 

		
	7.2.
	Calculation.  Net Profit or Net Loss will be calculated for each Calendar Quarter by determining the [***] and subtracting [***].

		
	7.3.
	Payment of Expenses; Summary Statements. Subject to reconciliation as provided in Section 7.4, the Party initially incurring Program Expenses will be responsible for and pay for all such Program Expenses so incurred. Each Party will maintain the books and records referred to in Section 7.6 and will accrue all Program Expenses and Net Sales) in accordance 

SCHEDULE G 

with the terms and conditions hereof and in accordance with GAAP. Within [***] after the end of each [***], each Party will submit to the other a non-binding, good faith estimate of the Program Expenses accrued and Net Sales during the just-ended [***].  Within [***] after the end of each [***], each Party will submit to the other a written report reflecting the accrual of Program Expenses and Net Sales during the just-ended [***], except that each Party’s submission for the last month of such [***] will be a good faith estimate and not actual amounts (each, a “Summary Statement”). Each Summary Statement (after the initial Summary Statement) will reflect an adjustment for the actual amount of the previous [***] as needed. Any reporting and reconciliation of variances between estimated and actual costs and expenses may be delayed by a [***] as reasonably necessary in light of a Party’s internal reporting procedures. The Parties’ respective Summary Statements will serve as the basis of the Reconciliation Reports prepared by the Parties pursuant to Section 7.4. Upon the request of either Party from time to time, the Parties’ respective finance departments, coordinated by the JDC, or JCC, as appropriate, will discuss any questions or issues arising from the Summary Statements, including the basis for the accrual of specific Program Expenses.
		
	7.4.
	Reconciliation. Vertex will prepare a reconciliation report, as soon as practicable after the receipt of  CRISPR’s Summary Statement, but in any event within [***] after the end of each [***], accompanied by reasonable supporting documents and calculations sufficient to support each Party’s financial reporting obligations, independent auditor requirements and obligations under the Sarbanes-Oxley Act, which reconciles the amounts accrued and reported in each Party’s Summary Statement during such [***] and the share of the Net Profits and Net Losses to be allocated to each of the Parties for such [***] in accordance with Section 7.1 (such report, the “Reconciliation Report”). Payment to reconcile Net Profit or Net Loss shall be made by the owing Party to the other Party within [***] after such Reconciliation Report is complete.  

		
	7.5.
	Cost Overruns. If a Party’s aggregate Development Costs, Medical Affairs Costs or Commercialization Costs in any Calendar Year are likely to exceed or exceed those set forth in the Development Budget, Medical Affairs Budget or Commercialization Budget, as applicable, for all of its activities under the Development Plan, Medical Affairs Plan or Commercialization Plan, as applicable, in such Calendar Year by up to [***] of the aggregate amount set forth in the Development Budget, Medical Affairs Budget or Commercialization Budget, as applicable, such Party will provide the other Party with an explanation for such excess costs and expenses, and such excess costs and expenses will be included in the Development Costs, Medical Affairs Cost or Commercialization Costs, as applicable, and shared by the Parties as provided herein. To the extent a Party’s aggregate Development Costs, Medical Affairs Costs or Commercialization Costs, as applicable, exceed those set forth in the Development Budget, Medical Affairs Budget or Commercialization Budget, as applicable, by more than [***], unless otherwise agreed by the Parties, such Expenses will not be shared by the Parties and the Party incurring such Expenses will be solely responsible for such Expenses.

		
	7.6.
	Books and Records.  Each Party will keep and maintain accurate and complete records regarding Program Expenses and Net Sales, during the [***] preceding Calendar Years. Upon [***] prior written notice from the other Party (the “Auditing Party”), the Party 

SCHEDULE G 

required to maintain such records (as applicable, the “Audited Party”) will permit an independent certified public accounting firm of internationally recognized standing, selected by the Auditing Party and reasonably acceptable to the Audited Party, to examine the relevant books and records of the Audited Party and its Affiliates, as may be reasonably necessary to verify the Summary Statements and Reconciliation Reports. An examination by the Auditing Party under this Section 7.6 will occur not more than [***] in any Calendar Year and will be limited to the pertinent books and records for any Calendar Year ending not more than [***] before the date of the request. The accounting firm will be provided access to such books and records at the Audited Party’s facility or facilities where such books and records are normally kept and such examination will be conducted during the Audited Party’s normal business hours. The Audited Party may require the accounting firm to sign a customary non-disclosure agreement before providing the accounting firm access to its facilities or records. Upon completion of the audit, the accounting firm will provide both the Auditing Party and the Audited Party a written report disclosing whether the applicable Summary Statements and Reconciliation Reports are correct or incorrect and the specific details concerning any discrepancies. No other information will be provided to the Auditing Party. If the report or information submitted by the Audited Party results in an underpayment or overpayment, the Party owing underpaid or overpaid amount will promptly pay such amount to the other Party, and, if, as a result of such inaccurate report or information, such amount is more than [***] of the amount that was owed the Audited Party will reimburse the Auditing Party for the reasonable expense incurred by the Auditing Party in connection with the audit.
ARTICLE 8.
ADVERSE EVENTS.
		
	8.1.
	Pharmacovigilance Agreement.  The Parties will meet to negotiate in good faith and agree on processes and procedures for sharing safety information within [***] after the effective date of the Joint Development & Commercialization Agreement. The agreed upon processes and procedures will be set forth in a pharmacovigilance agreement (the “Pharmacovigilance Agreement”) containing mutually agreed terms and conditions that are customary for agreements of this type.  The Pharmacovigilance Agreement will include provisions establishing a joint safety oversight working group to oversee the conduct of the Parties’ activities under the Pharmacovigilance Agreement and to coordinate the Parties’ interactions with respect to pharmacovigilance activities. 

		
	8.2.
	Global Safety Database.  The JCC will establish pharmacovigilance and safety strategy for the Shared Product.  Pursuant to such strategy, Vertex will establish the global safety database for such Shared Product.  Vertex will maintain a global database of safety information including, but not limited to, adverse events and pregnancy reports for such Shared Product, which will be used for regulatory reporting and responses to safety queries from Regulatory Authorities by both Parties. CRISPR will, and will cause its Affiliates to, transfer all adverse events information in its or their possession or control to the global safety database within a mutually agreed period of time that provides Vertex with sufficient time to enter all of the data and to obtain validation of the database. 

SCHEDULE G 

		
	8.3.
	Risk Management and Signal Detection Activities.  Vertex shall be primarily responsible for all signal detection and risk management activities for Shared Products.  These signal detection activities shall include, but are not limited to, proactive review and evaluation of all safety information from the Global Safety Database (including by way of example, Individual Case Safety Reports, aggregate safety information, literature reports, and non-clinical data).

ARTICLE 9. 
SUBCONTRACTING
Each Party may subcontract the performance of any activities undertaken by such Party in accordance with the Global Development Plan, Medical Affairs Plan or Commercialization Plan to one or more Third Parties (each such Third Party, a “Subcontractor”) pursuant to a written agreement (a “Subcontract”). Notwithstanding the foregoing, if either Party desires to subcontract any such activities, it will first discuss the matter with the other Party and reasonably consider using the other Party for such subcontracted activities, taking into account the capabilities of the other Party and potential impact on costs, as a potential alternative to subcontracting such activities to a Third Party. If, following such discussion a Party still desires to subcontract the performance of any such activity to one or more Third Parties, it may proceed to do so; provided, that prior to entering into any Subcontract which the subcontracting Party reasonably anticipates will entail payments to the Subcontractor in excess of [***] with respect to subcontracted activities under the Joint Development & Commercialization Agreement, the subcontracting Party will obtain the JSC’s approval, not to be unreasonably withheld, of use of the proposed Subcontractor to conduct the activities proposed to be subcontracted prior to execution of the applicable Subcontract. 

ARTICLE 10.  
LICENSES; IP
		
	10.1.
	License Grants.  Vertex will grant CRISPR a co-exclusive (with Vertex) license under Vertex’s and its Affiliates’ interest in the Licensed Vertex Know-How and Licensed Vertex Patents, with the right to Sublicense through multiple tiers (subject to Section 10.2), to Research, Develop, Manufacture, have Manufactured, use, keep, sell, offer for sale, import, export and Commercialize Shared Products in the Field in the Territory.  Additionally, the license rights granted by CRISPR to Vertex under Section 5.3.1 of the Agreement will be modified to be co-exclusive (with CRISPR) for Shared Products in the Territory.  

		
	10.2.
	Sublicensing.  Subject to the rights granted or retained by the Parties under the Joint Development & Collaboration Agreement, either Party may Sublicense (through multiple tiers) to its Affiliates or Third Parties any and all rights granted to it by the other Party or retained by such Party with respect to the Research, Development, Manufacture and Commercialization of the Shared Products; provided, that neither Party may grant any such Sublicense in a Major Market Country without the prior written consent of the other Party; and provided, further, that if either Party intends to Sublicense any such rights in any country, it will discuss the matter with the Other Party and in good faith consider using the Other Party to conduct any sublicensed activities.  If a Party grants any such Sublicense it will 

SCHEDULE G 

remain responsible for its obligations under the Joint Development & Commercialization Agreement and will be responsible for the performance of the relevant sublicensee. 
		
	10.3.
	[***].  If a Party believes, in its reasonable judgment, that it may be necessary to obtain rights under any [***] in order to Research, Develop, Manufacture or Commercialize a Shared Product in the Field, such Party will promptly notify the other Party and the Parties will discuss such matter in good faith.  Unless otherwise agreed, [***] will have the first right to enter into a license with the relevant Third Party to acquire rights to the [***].  If the Parties are unable to agree on whether any Know-How or Patents are [***], the Party that believes such rights are necessary may enter into a license with the relevant Third Party; provided, that [***] unless and until the other Party agrees, or as determined by arbitration or other dispute resolution mechanisms to [***].  

		
	10.4.
	Trademarks.  The Lead Commercialization Party will own and retain all rights to Trademarks for Shared Products in their respective jurisdiction, and all goodwill associated with or attached thereto arising out of the use thereof by the Parties, their Affiliates and Sublicensees will inure to the benefit of such Lead Commercialization Party.  Each non-Lead Commercialization Party, on behalf of itself and its Affiliates, will assign to the Lead Commercialization Party or its relevant Affiliate all right, title and interest in and to such Shared Product Trademarks and goodwill in the relevant jurisdiction.   The non-Lead Commercialization Party will not contest, oppose or challenge the Lead Commercialization Party’s ownership of such Shared Product Trademarks in the relevant jurisdiction.  The Lead Commercialization Party will own rights to any Internet domain names incorporating any Trademark for the Shared Product, or any variation or part of any such Trademark, as its URL address or any part of such address in the applicable jurisdiction. The Lead Commercialization Party will use Commercially Reasonable Efforts to register, maintain and enforce the Trademarks for the Shared Product in the relevant jurisdiction.

ARTICLE 11.
TERM; TERMINATION.
		
	11.1.
	Term.  The term of the Joint Development & Commercialization Agreement will commence on the execution of the Joint Development & Commercialization Agreement and continue in full force and effect until there is no longer a Global Development Plan or Commercialization Plan contemplating Development or Commercialization of a Shared Product in the Territory, unless earlier terminated as provided below. 

		
	11.2.
	Termination Generally.  The provisions of Sections 11.2.1, 11.2.3, 11.2.4 and 11.2.5 of the Agreement will apply to the Joint Development & Commercialization Agreement, mutatis mutandis.  

11.3.    Alternative Remedies.  The alternative remedy provisions of Section 11.3 of the
Agreement will not apply to Hemoglobinopathy Targets or [***] or to the Joint
Development & Commercialization Agreement.
		
	11.4.
	Opt-Out.  After [***] for a Shared Product directed to a particular Collaboration Target, either Party may opt out of the Joint Development & Commercialization Agreement for all Shared Products directed to such Collaboration Target upon [***] notice to the other Party (“Opt-Out”).  The other Party shall pay such opting out Party royalties (“Opt-Out 

SCHEDULE G 

Royalties”) in accordance with this Section 11.4 and the terms of Sections 7.5.2, 7.5.3, 7.5.4 and 7.5.5 of the Strategic Collaboration Option and License Agreement shall apply to such royalties, mutatis mutandis.   The applicable royalty rates shall be determined in accordance with the table set forth below based on the timing of the Opt-out Notice.  Upon the other Party’s receipt of such notice, all rights and obligations under the Joint Development & Commercialization Agreement with respect to Shared Products directed to such Collaboration Target shall terminate.  If the opting out Party is CRISPR, such Shared Product(s) shall be deemed Product(s) directed to a Collaboration Target other than a Hemoglobinopathy Target [***] under the Strategic Collaboration, Option and License Agreement, and the terms and conditions of such agreement shall apply with respect to all Products directed to the opted out Collaboration Target; provided, that in lieu of the royalty rates payable under Section 7.5.1 of such agreement Vertex shall pay royalties at the rates set forth in this Section 11.4. If the opting out Party is Vertex, the Parties shall negotiate in good faith a termination agreement for all Products directed to such opted out Collaboration Target, including, without limitation, reasonable diligence obligations and obligations of CRISPR for sharing of information regarding such Products with Vertex, which obligations will be substantially similar to the obligations imposed by Vertex under the Joint Development & Commercialization Agreement. For the avoidance of doubt, the allocation of Net Profits and Net Loss pursuant to Section 7.1 shall terminate upon the Opt-Out.

	
			
	Timing of Opt Out
	Net Sales (in Dollars) for such Shared Products in the Territory
	Opt-Out Royalty Rates as a Percentage (%) of Net Sales of such Shared Products

	[***]
	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

SCHEDULE G 

ARTICLE 12.
INDEMNITY
The Joint Development & Commercialization Agreement will include commercially reasonable indemnity provisions, which will include (but not be limited to) an obligation for each Party to indemnify the other Party from, against and in respect of any and all Liability incurred or suffered by the other Party to the extent resulting from: (a) any breach of, or inaccuracy in, any representation or warranty made by the indemnifying Party, or any breach or violation by the indemnifying Party of any covenant or agreement in the Joint Development & Commercialization Agreement; or (b) the negligence or intentional misconduct of, or violation of Applicable Law (including off-label promotion) by, the indemnifying Party, any of its Affiliates or Sublicensees, or any of their respective directors, officers, employees and agents, in performing its obligations or exercising its rights under the Joint Development & Commercialization Agreement.

SCHEDULE G 

Schedule H
CRISPR In-License Agreements 

Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  A total of 1 page was omitted. [***]

SCHEDULE H

Schedule I
Baseball Arbitration Procedures
Selection of Baseball Expert and Submission of Positions.  The Parties will select and agree upon a mutually acceptable independent Third Party expert who is neutral, disinterested and impartial, and has the experience specified in Schedule G for the applicable dispute (the “Baseball Expert”).  If the Parties are unable to mutually agree upon a Baseball Expert within [***] following the delivery of the request for Baseball Arbitration, then upon request by either Party, the Baseball Expert will be an arbitrator appointed by Judicial and Mediation Services (“JAMS”), which arbitrator need not have the above-described experience.  Once the Baseball Expert has been selected, each Party will within [***] following selection of the Baseball Expert provide the Baseball Expert and the other Party with a written report setting forth its position with respect to the substance of the dispute and may submit a revised or updated report and position to the Baseball Expert within [***] of receiving the other Party’s report.  If so requested by the Baseball Expert, each Party will make oral submissions to the Baseball Expert based on such Party’s written report, and each Party will have the right to be present during any such oral submissions.
JAMS Supervision.  In the event the Baseball Expert is a JAMS arbitrator selected by JAMS as provided in this Schedule I, the matter will be conducted as a binding arbitration in accordance with JAMS procedures, as modified by this Schedule I (including that the arbitrator will adopt as his or her decision the position of one Party or the other, as described below).  In such event, the arbitrator may retain a Third Party expert with the same experience specified in Schedule F for the Baseball Expert to assist in rendering such decision, and the expenses of any such expert will be shared by the Parties as costs of the arbitration as provided in this Schedule I.
Determination by the Baseball Expert.  The Baseball Expert will, no later than [***] after the last submission of the written reports and, if any, oral submissions, select one of the Party’s positions as his or her final decision, and will not have the authority to modify either Party’s position or render any substantive decision other than to so select the position of either Party as set forth in their respective written report (as initially submitted, or as revised in accordance with this Schedule I, as applicable).  The decision of the Baseball Expert will be the sole, exclusive and binding remedy between them regarding the dispute submitted to such Baseball Expert.
Location; Costs.  Unless otherwise mutually agreed upon by the Parties, the in-person portion (if any) of such proceedings will be conducted in Boston, Massachusetts. [***].
Timetable for Completion in [***].  The Parties will use, and will direct the Baseball Expert to use, commercially reasonable efforts to resolve a dispute within [***] after the selection of the Baseball Expert, or if resolution within [***] is not reasonably achievable, as determined by the Baseball Expert, then as soon thereafter as is reasonably practicable.

SCHEDULE I

Schedule J
Identified Third Party IP

	
			
	U.S. Patent No.
	U.S. Patent Application No.
	Filing Data

	[***]
	[***]
	[***]

	[***]
	[***]
	[***]

	[***]
	[***]
	[***]

	[***]
	[***]
	[***]

	[***]
	[***]
	[***]

	[***]
	[***]
	[***]

	[***]
	[***]
	[***]

	[***]
	[***]
	[***]

	[***]
	[***]
	[***]

	[***]
	[***]
	[***]

SCHEDULE J

Schedule K

Patent Costs

	
			
	 
	Prior to Option Exercise
	After Option Exercise

	CRISPR Platform Technology Patents
	[***]
	[***]

	CRISPR Background Patents
	[***]
	[***]

	CRISPR Program Patent
	[***]
	[***]

	[***] Patents
	[***]
	[***]

	[***] Patents
	[***]
	[***]

	[***] Joint Program Patents
	[***]
	[***]

	Other Joint Program Patent
	[***]
	[***]

	[***] Joint Program Patents
	[***]
	[***]

*Either Party may decline to pay its share of costs for Prosecuting and Maintaining any Other Joint Program Patents in a particular country or particular countries, in which case, the declining Party will, and will cause its Affiliates to, assign to the other Party (or, if such assignment is not possible, grant a fully-paid exclusive license in) all of their rights, titles and interests in and to such Other Joint Program Patents.

SCHEDULE K

Schedule L
CRISPR Disclosures
Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  A total of 6 pages were omitted.  [***]

Schedule M
Press Release 

SCHEDULE M

Vertex and CRISPR Therapeutics Establish Collaboration to Use CRISPR- Cas9 Gene Editing Technology to Discover and Develop New Treatments for Genetic Diseases

-Gene editing technology to be used to discover treatments to address the mutations and genes known to cause and contribute to cystic fibrosis-

-Vertex and CRISPR to utilize gene editing approach to discover treatments for genetic diseases, including sickle cell disease-

-Companies establish four-year research collaboration; CRISPR to receive $105 million up- front payment, of which $30 million is an equity investment, with potential for additional milestones and royalty payments-

BOSTON  AND  CAMBRIDGE,  MASS  –  October  XX,  2015  -   Vertex  Pharmaceuticals Incorporated (Nasdaq: VRTX) and CRISPR Therapeutics today announced that the two companies have entered into a strategic research collaboration focused on the use of CRISPR’s gene editing technology, known as CRISPR-Cas9, to discover and develop potential new treatments aimed at the underlying genetic causes of human disease.  The collaboration will evaluate the use of CRISPR-Cas9 across multiple diseases where targets have been validated through human genetics.  Vertex and CRISPR will focus their initial gene editing research on discovering treatments to address the mutations and genes known to cause and contribute to cystic fibrosis and sickle cell disease.  Vertex and CRISPR will also evaluate a specified number of other genetic targets as part of the collaboration.  Vertex will have exclusive rights to license up to six new CRISPR-Cas9-based treatments that emerge from the collaboration.  As part of the collaboration, Vertex made an up-front commitment of $105 million to CRISPR, including $75 million in cash and a $30 million equity investment.  CRISPR is also eligible to receive future development, regulatory and sales milestones and royalty payments on future sales.

“CRISPR-Cas9 is an important scientific and technological breakthrough that holds significant promise for the future discovery of potentially transformative treatments for many genetic diseases,”  said  David  Altshuler,  M.D.,  Ph.D.,  Vertex’s  Executive  Vice  President,  Global Research and Chief Scientific Officer.   “As a company founded on innovative science, we’re

SCHEDULE M

excited to begin this collaboration with CRISPR, as it puts us at the forefront of what we believe may  be  a  fundamental  change  in  the  future  treatment  of  disease  --  using  gene  editing technologies to address the underlying genetic causes of many diseases.”

“Vertex has a track record of developing innovative medicines for cystic fibrosis and other serious diseases, making them a great partner to accelerate the therapeutic promise of gene editing,” said Rodger Novak, M.D., Chief Executive Officer of CRISPR Therapeutics.  “For CRISPR, this collaboration validates the potential for gene editing in human therapeutics and provides important financial support for continued investment in our platform and proprietary pipeline of programs.”

About the Collaboration

Under the terms of the collaboration, Vertex and CRISPR will jointly use the CRISPR-Cas9 technology to discover and develop potential new treatments that correct defects in specific gene targets known to cause or contribute to particular diseases.  The initial focus of the collaboration will be on the use of CRISPR-Cas9 to potentially correct the mutations in the cystic fibrosis transmembrane conductance regulator (CFTR) gene known to result in the defective protein that causes CF and to edit other genes that contribute to the disease.  Additionally, the companies will seek to discover and develop gene-based treatments for hemoglobinopathies, including sickle cell disease.  Additional discovery efforts focused on a specified number of other genetic targets will also be conducted under the collaboration.  Discovery activities will be conducted primarily by CRISPR, and the related expenses will be fully funded by Vertex.  Vertex has the option to an exclusive license for up to six gene-based treatments that emerge from the four-year research collaboration.  Vertex will fund 100 percent of the development expenses of licensed treatments. For each of the up to six treatments in-licensed for development, Vertex will pay future development, regulatory and sales milestones of up to $420 million as well as royalty payments on future sales.

Vertex and CRISPR will collaborate on the research, development and commercialization of treatments for hemoglobinopathies that emerge from the collaboration.   Specifically for hemoglobinopathies,  including  treatments  for  sickle  cell  disease,  Vertex  and  CRISPR  will equally share all research and development costs and sales, with CRISPR Therapeutics leading commercialization efforts in the U.S.  For all other diseases, Vertex will lead all development and global commercialization activities.

Vertex will pay CRISPR $75 million in cash as part of its up-front commitment.  Vertex will also provide a $30 million investment in CRISPR, which is a private company.  The investment will

provide Vertex with an ownership stake in CRISPR.   The collaboration also provides Vertex with an observer seat on the CRISPR Board of Directors, which will be filled by Dr. Altshuler.

About Gene Editing with CRISPR-Cas9

“CRISPR” refers to Clustered Regularly Interspaced Short Palindromic Repeats that occur in the genome  of  certain  bacteria,  from  which  the  system  was  discovered.    Cas9  is  a  CRISPR- associated endonuclease (an enzyme) known to act as the “molecular scissors” that cut and edit, or correct, disease-associated DNA in a cell.  A guide RNA directs the Cas9 molecular scissors to the exact site of the disease-associated mutation.  Once the molecular scissors make a cut in the DNA, additional cellular mechanisms and exogenously added DNA will use the cell’s own machinery and other elements to specifically ‘repair’ the DNA.  This technology may offer the ability to directly modify or correct the underlying disease-associated changes in the human genome for the potential treatment of a large number of both rare and common diseases.

Emmanuelle Charpentier, Ph.D., one of  CRISPR Therapeutics’ scientific founders, co-invented the CRISPR-Cas9 technology and is the recipient of multiple prestigious awards in recognition of the potential contribution that the CRISPR-Cas9 technology may have on global health.  The other scientific co-founders of CRISPR are Craig Mello, Ph.D., Chad Cowan, Ph.D., Matthew Porteus, M.D., Ph.D., and Daniel Anderson, Ph.D.

About Vertex

Vertex is a global biotechnology company that aims to discover, develop and commercialize innovative medicines so people with serious diseases can lead better lives. In addition to our clinical development programs focused on cystic fibrosis, Vertex has more than a dozen ongoing research programs aimed at other serious and life-threatening diseases.

Founded in 1989 in Cambridge, Mass., Vertex today has research and development sites and commercial  offices  in the  United  States, Europe, Canada and  Australia.  For  five  years  in  a row, Science magazine has named Vertex one of its Top Employers in the life sciences. For
additional information and the latest updates from the company, please visit www.vrtx.com.

About CRISPR Therapeutics

The mission of CRISPR Therapeutics is to develop transformative gene-based medicines for patients with serious diseases. Our therapeutic approach aims to cure diseases at the molecular level using the breakthrough gene editing technology called CRISPR-Cas9. With our multi- disciplinary team of world-renowned academics, drug developers and clinicians, we are uniquely positioned to translate CRISPR-Cas9 technology into human therapeutics. We have licensed the foundational CRISPR-Cas9 patent estate for human therapeutic use from our scientific founder, Dr. Emmanuelle Charpentier. We are headquartered in Basel, Switzerland, our R&D operations are in Cambridge, Massachusetts and we have corporate offices in London, United Kingdom. www.crisprtx.com

Special Note Regarding Forward-looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including, without limitation, Dr. Altshuler’s statements in the second paragraph of the press release, Dr. Novak’s statements in the third paragraph of the press release and the information provided regarding the future development of treatments for genetic diseases using the CRISPR-Cas9 technology. While Vertex believes the forward-looking statements  contained  in  this  press  release  are  accurate,  these  forward-looking  statements represent the company's beliefs only as of the date of this press release and there are a number of factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements. Those risks and uncertainties include, among other things, that data may not support further development of the gene-based treatments subject to the collaboration due to safety, efficacy or other reasons, and other risks listed under Risk Factors in Vertex's annual report and quarterly reports filed with the Securities and Exchange Commission and available through the company's website at www.vrtx.com. Vertex disclaims any obligation to update the information contained in this press release as new information becomes available.

(VRTX-GEN)

Vertex Pharmaceuticals Incorporated

Investors:
Michael Partridge, 617-341-6108 or
Kelly Lewis, 617-961-7530 or
Eric Rojas, 617-961-7205

or

Media: mediainfo@vrtx.com

Zach Barber: 617-341-6992

CRISPR MEDIA CONTACTS:

MacDougall Biomedical Communications

Kari Watson in US – kwatson@macbiocom.com +1 (781) 235-3060

Anca Alexandru in Europe – aalexandru@macbiocom.com +49 (89) 2424-3494Exhibit

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 1

LEASE AGREEMENT
THIS LEASE AGREEMENT (this “Lease”) is made this 2nd day of December, 2015, between ARE-SD REGION NO. 23, LLC, a Delaware limited liability company (“Landlord”), and VERTEX PHARMACEUTICALS INCORPORATED, a Massachusetts corporation (“Tenant”).
		
	Building:
	That to be constructed Building to be known as 3215 Merryfield Row, San Diego, California. 

		
	Premises:
	The Building, containing approximately 170,523 rentable square feet, including the subterranean parking garage located in the Building, all as shown on Exhibit A.

		
	Project:
	The real property on which the Building in which the Premises are located, consisting of approximately 4.5 acres, together with all improvements thereon and appurtenances thereto as described on Exhibit B.

		
	Base Rent:
	Months 1* – 12:     $0 per rsf of the Premises per month

Months 13 – 60:    $4.50 per rsf of the Premises per month
Months 61 – 72:    $4.84 per rsf of the Premises per month
Months 73 – 84:    $4.98 per rsf of the Premises per month
Months 85 – 96:    $5.13 per rsf of the Premises per month
Months 97 – 108:    $5.29 per rsf of the Premises per month
Months 109 – 120:    $5.44 per rsf of the Premises per month
Months 121 – 132:    $5.61 per rsf of the Premises per month
Months 133 – 144:    $5.77 per rsf of the Premises per month
Months 145 – 156:    $5.95 per rsf of the Premises per month
Months 157 – 168:    $6.12 per rsf of the Premises per month
Months 169 – 180:    $6.30 per rsf of the Premises per month
Months 181 – 192:    $6.49 per rsf of the Premises per month
*Month 1 is the month in which the Rent Commencement Date occurs.
Rentable Area of Premises:  170,523 sq. ft.
Rentable Area of Building:  170,523 sq. ft.
Rentable Area of Project:  Approximately 230,523 sq. ft., subject to adjustment as provided for in Section 5 hereof.
Tenant’s Share of Operating Expenses of Building:  100%
Building’s Share of Operating Expenses of Project:  73.97%, subject to adjustment as provided for in Section 5 hereof.  
Security Deposit:  None
Target Commencement Date:  December 1, 2016
		
	Base Term:
	Beginning on the Commencement Date and ending 192 months from the first day of the first full month following the Rent Commencement Date.

		
	Permitted Use:
	Research and development laboratory, related office and other related uses consistent with the character of the Project and otherwise in compliance with the provisions of Section 7 hereof.

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 2

Address for Rent Payment:    Landlord’s Notice Address:
c/o Alexandria Real Estate Equities, Inc.    385 E. Colorado Boulevard, Suite 299
Dept LA 23447    Pasadena, CA 91101
Pasadena, CA 91185-3447    Attention: Corporate Secretary
Tenant’s Notice Address    Tenant’s Notice Address
Prior to Rent Commencement Date:    After the Rent Commencement Date:
50 Northern Avenue        50 Northern Avenue
Boston, MA 02210        Boston, MA 02210
Attention:  Lease Administrator        Attention:  Lease Administrator
With a copy to Tenant’s attorney below with respect to notices of Default (and, as a courtesy only, Landlord shall endeavor to deliver notices relating to the Right of First Refusal and the Extension Right to Tenant’s attorney but Landlord’s failure to deliver such notices to Tenant’s attorney shall in no event constitute a default by Landlord or a failure by Landlord to deliver the applicable notice to Tenant):
Bowditch & Dewey LLP
175 Crossing Boulevard
Framingham, MA 01702
Attention:  Paul C. Bauer
The following Exhibits and Addenda are attached hereto and incorporated herein by this reference:
		
	[X]  EXHIBIT A - PREMISES DESCRIPTION
	[X]  EXHIBIT B - DESCRIPTION OF PROJECT

		
	[X]  EXHIBIT C - WORK LETTER
	[X]  EXHIBIT D - COMMENCEMENT DATE

		
	[X]  EXHIBIT E - RULES AND REGULATIONS
	[X]  EXHIBIT F - TENANT’S PERSONAL PROPERTY

		
	[X]  EXHIBIT G - EV PARKING STATIONS
	[X]        EXHIBIT H - SITE PLAN

		
	[X]  EXHIBIT I - VERTEX AREA 
	[X]  EXHIBIT J - INTENTIONALLY OMITTED

		
	[X]  EXHIBIT K - SIGNAGE
	[X]  EXHIBIT L - MAINTENANCE OBLIGATIONS

1.Lease of Premises.  Upon and subject to all of the terms and conditions hereof, Landlord hereby leases the Premises to Tenant and Tenant hereby leases the Premises from Landlord.  The portions of the Project which are for the non-exclusive use of tenants of the Project are collectively referred to herein as the “Common Areas.”  The Common Areas shall include, but not be limited to, all common driveways, sidewalks, parking areas, walkways and benches located at the Project.  Landlord reserves the right to modify Common Areas, provided that such modifications do not materially reduce the Common Area or materially adversely affect Tenant’s use of the Premises for the Permitted Use.  From and after the Rent Commencement Date through the expiration of the Term, Tenant shall have access to the Building and the Premises 24 hours a day, 7 days a week, except in the case of emergencies, as the result of Legal Requirements, the performance by Landlord of any installation, maintenance or repairs, or any other temporary interruptions, and otherwise subject to the terms of this Lease.  The site plan attached as Exhibit H reflects the site plan currently planned by Landlord for the Project which site plan remains subject to change by Landlord, provided that material changes to the Building shall be subject to Tenant’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed.  In addition, Tenant shall have the exclusive right to use the areas outside the Building shown as Vertex areas on Exhibit I attached hereto (including, without limitation, the central plant, loading dock area, emergency generator yard, storage sheds, cooling tower, chiller room and trash enclosure and the courtyard/meadow area located on the east side of the Building facing the canyons) (collectively, “Exclusive Use Areas”).
2.    Delivery; Acceptance of Premises; Commencement Date.  Landlord shall use reasonable efforts to deliver the Premises to Tenant on or before the Target Commencement Date (as such date may be extended to the extent of Tenant Delays and/or Force Majeure (as hereinafter defined) delays (provided that in no event may Force Majeure delays exceed 9 months) on a day-for-day basis) with the 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 3

Cold Shell in Tenant Improvement Work Readiness Condition (“Delivery” or “Deliver”) so that Tenant may commence construction of the Tenant’s Work in the Building.  The date on which Landlord Delivers the Premises to Tenant shall constitute the “Landlord Delivery Date”.  If Landlord fails to timely Deliver the Premises, Landlord shall not be liable to Tenant for any loss or damage resulting therefrom, except as provided in the immediately following sentence, and this Lease shall not be void or voidable except as provided herein.  If the Landlord Delivery Date does not occur (i) within 60 days after the Target Commencement Date (as such date may be extended to the extent of Tenant Delays and Force Majeure delays (provided that in no event may Force Majeure delays exceed 9 months) on a day-for day basis) (as extended, the “Adjusted Target Commencement Date”) the Abatement Period (as defined in Section 3 below) shall be extended by one additional day for each day after the Adjusted Target Commencement Date that Landlord fails to Deliver the Premises to Tenant, and (ii) within 120 days after the Adjusted Target Commencement Date, the Abatement Period shall thereafter be extended by two days for each day after the date that is 120 days after the Adjusted Target Commencement Date that Landlord fails to Deliver the Premises.  As used herein, the terms “Landlord’s Work,” “Cold Shell,” “Tenant’s Work,” “Tenant Delay” and “Tenant Improvement Work Readiness Condition” shall have the meanings set forth for such terms in the Work Letter.
The “Commencement Date” shall be the earlier of (i) the Landlord Delivery Date, and (ii) the date Landlord could have Delivered the Premises but for Tenant Delays.  The “Rent Commencement Date” shall be the date that is 10 months after the Commencement Date.  If substantial completion of the Tenant’s Work is delayed due to Landlord Delays (as defined in the Work Letter) or Force Majeure (provided that in no event may Force Majeure delays exceed 4.5 months) beyond the scheduled Rent Commencement Date as calculated in the immediately preceding sentence, the Rent Commencement Date shall be extended to the extent of such Landlord Delays and/or Force Majeure (provided that in no event may Force Majeure delays exceed 4.5 months) on a day-for-day basis. Upon request of either party, Landlord and Tenant shall execute and deliver a written acknowledgment of the Commencement Date, the Rent Commencement Date and the expiration date of the Term when such are established in the form of the “Acknowledgement of Commencement Date” attached to this Lease as Exhibit D; provided, however, the failure of either party to execute and deliver such acknowledgment shall not affect either party’s rights hereunder.  The “Term” of this Lease shall be the Base Term, as defined above on the first page of this Lease and any Extension Terms which Tenant may elect pursuant to Section 40 hereof.
Tenant acknowledges and agrees that (i) Landlord’s obligation to develop the Building as contemplated in this Lease is subject to Landlord entering into a lease termination agreement with The Scripps Research Institute, an existing tenant in a building located at the Project as of the date of this Lease, for an early termination of its lease at the Project on terms and conditions acceptable to Landlord in its sole and absolute discretion (the “Lease Termination Agreement”), and (ii)  the effectiveness of this Lease shall be subject to Landlord entering into the Lease Termination Agreement on or before March 25, 2016 (which March 25, 2016 date shall not be extended due to Force Majeure) (the “Condition Precedent”).  If the Condition Precedent is not satisfied by the date set forth above, this Lease shall automatically terminate in its entirety and none of the provisions of this Lease shall have any force or effect.  If this Lease terminates pursuant to the immediately preceding sentence, neither Landlord nor Tenant shall have any further rights, duties or obligations under this Lease.
Tenant acknowledges and agrees that (i) Landlord does not currently have the required governmental entitlements necessary for the development of the Building or the Project as contemplated in this Lease (collectively, the “Approvals”), (ii) Landlord shall have no obligation to commence the construction of the Building prior to obtaining such Approvals (and the expiration of any challenge periods), (iii) Landlord’s obligation to develop the Building as contemplated in this Lease is subject to Landlord’s ability to obtain, on terms and conditions acceptable to Landlord in its reasonable discretion, all of the Approvals, and (iv) Landlord shall have the sole right to determine all matters related to the Approvals.  Landlord shall use good faith reasonable efforts to obtain the Approvals, provided such Approvals are on terms acceptable to Landlord, in its reasonable discretion.  If, notwithstanding Landlord’s good faith reasonable efforts, Landlord is unable to obtain a building permit for Landlord’s Work from the City of San Diego (the “Building Permit”) on or 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 4

before April 1, 2017, and Tenant has not otherwise elected to terminate this Lease pursuant to this Section 2, this Lease may be terminated by Landlord or Tenant by written notice to the other and, if so terminated, neither Landlord nor Tenant shall have any further rights, duties or obligations under this Lease, except with respect to provisions which expressly survive the termination of this Lease. Notwithstanding the foregoing, if Landlord obtains the Building Permit prior to the exercise by Landlord or Tenant of the foregoing termination right, then such termination right shall expire and be of no further force or effect. Tenant agrees that, upon reasonable advance written request from Landlord, to make a senior level executive of Tenant (Vice President or higher) available to attend meetings with Landlord and the City of San Diego, to support Landlord in its efforts to obtain on an expedited basis the necessary governmental approvals (including, without limitation, the Approvals) to construct the Building as contemplated in this Lease.  
If Landlord does not complete the demolition of the 3215 Merryfield building existing as of the date of this Lease by December 1, 2016 (as such date may be extended to the extent of Tenant Delays and Force Majeure delays (provided that in no event may Force Majeure delays exceed 6 months) on a day-for day basis) (as extended, the “Target Demolition Completion Date”) and so long as Tenant delivers, on or before the date that is 30 days prior to the Target Demolition Completion Date, written notice to Landlord of its intention to terminate this Lease for Landlord’s failure to complete such demolition (an “Intention Notice”) on or before the Target Demolition Completion Date, this Lease may be terminated by Tenant by written notice to Landlord, and if so terminated by Tenant, neither Landlord nor Tenant shall have any further rights, duties or obligations under this Lease, except with respect to provisions which expressly survive termination of this Lease. If Tenant does not (1) timely deliver an Intention Notice, and (2) elect to terminate this Lease by delivery of written notice pursuant to the immediately preceding sentence within 10 business days of the Target Demolition Completion Date, such right to terminate this Lease shall be waived and this Lease shall remain in full force and effect. If the Landlord Delivery Date does not occur by May 1, 2017 (as such date may be extended to the extent of Tenant Delays and Force Majeure delays (provided that in no event may Force Majeure delays exceed 6 months) (as extended, the “Outside Landlord Delivery Date”), this Lease may be terminated by Tenant by written notice to Landlord, and if so terminated by Tenant, neither Landlord nor Tenant shall have any further rights, duties or obligations under this Lease, except with respect to provisions which expressly survive termination of this Lease.  If Tenant does not elect to terminate this Lease pursuant to the immediately preceding sentence within 10 business days following the Outside Landlord Delivery Date, such right to terminate this Lease shall be waived and this Lease, and any applicable extension of the Abatement Period, shall remain in full force and effect.  Notwithstanding anything to the contrary contained in this Lease and for the avoidance of any doubt, the termination rights set forth in this Section 2 shall terminate on the Commencement Date; provided, however that such termination of Tenant’s termination rights shall in no event affect or be deemed a forfeiture of any extension of the Abatement Period to which Tenant may be entitled pursuant to this Section 2.
Except as set forth in the Work Letter:  (i) Tenant shall accept the Premises in their condition as of the Commencement Date, subject to all applicable Legal Requirements (as defined in Section 7 hereof); and (ii) Landlord shall otherwise have no obligation for any defects in the Premises.  Tenant shall have the right to access the Project and the Premises prior to the Landlord Delivery Date for design purposes and Tenant shall have 24 hour per day, 7 day per week access to the Building on and after the Landlord Delivery Date for construction of the Tenant’s Work in accordance with the terms of the Work Letter; provided, however, that all such access is coordinated with Landlord, and Tenant complies with this Lease and all other reasonable restrictions and conditions Landlord may impose during such periods of access.  Any access to the Premises by Tenant before the Commencement Date shall be subject to all of the terms and conditions of this Lease, excluding the obligation to pay Base Rent and Operating Expenses.
Except as otherwise expressly provided for in this Lease, Tenant agrees and acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the suitability of the Premises or the Project for the conduct of Tenant’s business, and Tenant waives any implied warranty that the Premises or the Project are suitable for the Permitted Use.

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 5

3.    Rent.
(a)    Base Rent.  Tenant shall pay to Landlord in advance, without demand, abatement, deduction or set-off, monthly installments of Base Rent on or before the first day of each calendar month during the Term hereof after the Rent Commencement Date, in lawful money of the United States of America, at the office of Landlord for payment of Rent set forth above, or to such other person or at such other place as Landlord may from time to time designate in writing.  Payments of Base Rent for any fractional calendar month shall be prorated.  The obligation of Tenant to pay Base Rent and other sums to Landlord and the obligations of Landlord under this Lease are independent obligations.  Tenant shall have no right at any time to abate, reduce, or set-off any Rent (as defined in Section 5) due hereunder except for any abatement as may be expressly provided in this Lease. 
Notwithstanding anything to the contrary contained in this Lease, so long as no Default has occurred under this Lease, for the period commencing on the Rent Commencement Date through the last day of the 12th month after the Rent Commencement Date (the “Abatement Period”), as such Abatement Period may be extended pursuant to the first paragraph of Section 2, Tenant shall not be required to pay Base Rent for the Premises.
(b)    Additional Rent.  In addition to Base Rent, Tenant agrees to pay to Landlord as additional rent (“Additional Rent”):  (i) commencing on the Rent Commencement Date, Tenant’s Share of “Operating Expenses” (as defined in Section 5), and (ii) any and all other amounts Tenant assumes or agrees to pay under the provisions of this Lease, including, without limitation, any and all other sums that may become due by reason of any default of Tenant or failure to comply with the agreements, terms, covenants and conditions of this Lease to be performed by Tenant, after any applicable notice and cure period.
4.    Base Rent Adjustments.  Base Rent shall be increased during the Base Term pursuant to the schedule set forth on Page 1 of this Lease.
5.    Operating Expense Payments.  Commencing on the Rent Commencement Date, Tenant shall be responsible for Tenant’s Share of Operating Expenses during the Term.  Landlord shall deliver to Tenant a written estimate of Operating Expenses for each calendar year during the Term (the “Annual Estimate”), which may be reasonably revised by Landlord from time to time during such calendar year.  Commencing on the Rent Commencement Date and continuing thereafter on the first day of each month during the Term, Tenant shall pay Landlord an amount equal to 1/12th of Tenant’s Share of the Annual Estimate.  Payments for any fractional calendar month shall be prorated.
The term “Operating Expenses” means all costs and expenses of any kind or description whatsoever incurred or accrued each calendar year by Landlord with respect to the Building (including the Building’s Share of Operating Expenses for the Project) (including, without duplication, Taxes (as defined in Section 9), capital repairs, replacements and improvements amortized on a straight line basis over the useful life of such capital items as reasonably determined taking into consideration all relevant factors (e.g., the 24 hour operation of the Building Systems, where applicable), and the costs of Landlord’s third party property manager (not to exceed 2.0% of Base Rent) or, if there is no third party property manager, administration rent in the amount of 2.0% of Base Rent (provided that during the Abatement Period, Tenant shall nonetheless be required to pay administration rent each month equal to the amount of administration rent that Tenant would have been required to pay in the absence of there being an Abatement Period).  “Operating Expenses for the Project” means all costs and expenses of any kind or description incurred or accrued each calendar year by Landlord with respect to the Project which are not specific to the Building or any other building located in the Project.  Operating Expenses and Operating Expenses for the Project shall not include:
(a)    the original construction costs of the Project including, but not limited to Landlord’s Work, and renovation prior to the date of this Lease and costs of correcting defects in such original construction or renovation;

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 6

(b)    capital expenditures for expansion of the Project;
(c)    interest, principal payments of Mortgage (as defined in Section 27) debts of Landlord, financing costs and amortization of funds borrowed by Landlord, whether secured or unsecured, and all payments of base rent (but not taxes or operating expenses) directly associated with the Project under any ground lease or other underlying lease of all or any portion of the Project;
(d)    depreciation of the Project (except for capital improvements, the cost of which are  includable in Operating Expenses);
(e)    advertising, promotional, legal and space planning expenses and leasing commissions and other costs and expenses incurred in procuring and leasing space to tenants for the Project, including any leasing office maintained in the Project, free rent, moving expenses and construction allowances for tenants;
(f)    legal and other expenses incurred in the negotiation or enforcement of leases;
(g)    completing, fixturing, improving, renovating, painting, redecorating or other work, which Landlord pays for or performs for other tenants within their premises, and costs of correcting defects in such work;
(h)    costs for which Landlord is entitled to be reimbursed by other tenants of the Project or Taxes to be paid directly by Tenant or other tenants of the Project, whether or not actually paid;
(i)    salaries, wages, benefits and other compensation paid to officers and employees of Landlord who (x) do not have day to day responsibility for the operating, managing or servicing of the Building or the Project or (y) are above the level of senior vice president, provided that the expense of any personnel not dedicated exclusively to the Building or the Project shall be equitably prorated to reflect time spent on operating, managing or otherwise servicing the Building or the Project vis-a-vis time spent on matters unrelated to operating, managing or otherwise servicing the Building or the Project;
(j)    general organizational, administrative and overhead costs relating to maintaining Landlord’s existence, either as a corporation, partnership, or other entity, including general corporate, legal and accounting expenses;
(k)    costs (including attorneys’ fees, accountant fees, and costs of settlement, judgments and payments in lieu thereof) incurred in connection with negotiations or disputes with tenants, other occupants, or prospective tenants, and costs and expenses, including legal fees, incurred in connection with negotiations or disputes with employees, consultants, management agents, leasing agents, purchasers or mortgagees of the Project;
(l)    costs incurred by Landlord due to the violation by Landlord, its employees, agents or contractors or any tenant of the terms and conditions of any lease of space in the Project or any Legal Requirement (as defined in Section 7);
(m)    penalties, fines or interest incurred as a result of Landlord’s inability or failure to make payment of its obligations in a timely manner (other than as a result of any late payments by Tenant to Landlord) including, but not limited to, Taxes and/or to file any tax or informational returns when due, or from Landlord’s failure to make any payment of Taxes required to be made by Landlord hereunder before delinquency;
(n)    overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for goods and/or services in or to the Project to the extent the same exceeds the costs of such goods and/or services rendered by unaffiliated third parties on a competitive basis;

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 7

(o)    costs of Landlord’s charitable or political contributions, or of fine art maintained at the Project;
(p)    costs in connection with services (including electricity), items or other benefits of a type which are not standard for the Project and which are not available to Tenant without specific charges therefor, but which are provided to another tenant or occupant of the Project, whether or not such other tenant or occupant is specifically charged therefor by Landlord;
(q)    all transaction costs incurred in the actual or contemplated sale or refinancing of the Project or an interest in the Project;
(r)    net income taxes of Landlord or the owner of any interest in the Project, franchise, capital stock, gift, estate or inheritance taxes or any federal, state or local documentary taxes imposed against the Project or any portion thereof or interest therein; 
(s)    costs actually reimbursed to Landlord under any warranty carried by Landlord for the Project, which warranties Landlord shall, as part of Operating Expenses, use commercially reasonable efforts to enforce, provided, that if Tenant pays for such a cost as part of Operating Expenses and Landlord actually receives reimbursement for such cost under its warranty in a subsequent year, Tenant shall receive a credit against Operating Expenses in the year in which such reimbursement is received by Landlord in an amount equal to its pro rata share of the amount of the reimbursement for such cost received by Landlord under its warranty, not to exceed the amount actually paid by Tenant; 
(t)    any expenses otherwise includable within Operating Expenses to the extent actually reimbursed by insurance (or would have been reimbursed by insurance required to be carried by Landlord pursuant to Section 17), which policies Landlord shall, as part of Operating Expenses, use commercially reasonable efforts to enforce, provided, that if Tenant pays for such expense as part of Operating Expenses and Landlord actually receives reimbursement for such expense from Landlord’s insurance in a subsequent year, Tenant shall receive a credit against Operating Expenses in the year in which such reimbursement is received by Landlord in an amount equal to its pro rata share of the amount of the reimbursement for such expense received by Landlord from its insurance, not to exceed the amount actually paid by Tenant;
(u)    costs occasioned by condemnation;
(v)    costs and expenses resulting from the adjudicated gross negligence or willful misconduct of Landlord;
(w)    the cost of any “tap fees” or the one-time lump sum sewer or water connection fees for the Building payable in connection with the initial construction of the Building;
(x)    any costs incurred to remove, study, test or remediate Hazardous Materials in or about the Building or the Project (provided, however, that the foregoing is in no event intended to limit Tenant’s obligations under Section 28 or Section 30 of this Lease);
(y)    except for the Amenities Fee (as defined in Section 40(a)), the costs, whether operating, maintenance, capital or otherwise, relating to The Alexandria and/or the Amenities, as such terms are defined in Section 41 (not including the cost of any ancillary services or items payable by Tenant in connection with its use of The Alexandria and/or the Amenities).  For the avoidance of any doubt, Tenant shall be obligated to pay for all services and items payable by Tenant pursuant to Section 41, the Standard Use Agreements and any other agreements executed by Tenant in connection with the use of the Amenities;
(z)    reserves for repairs, maintenance and replacements; 
(aa)    rentals of equipment ordinarily considered to be of a capital nature (such as elevators and HVAC systems) except if such equipment is reasonably and customarily leased either temporarily or 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 8

permanently in the operation of Class A office and laboratory buildings in the Torrey Pines area of San Diego; provided, however, that in no event shall any specific piece of equipment that is part of the original construction of the Building be leased as part of such original construction of the Building and passed through as part of Operating Expenses (but, for the avoidance of any doubt any replacement of such equipment may be leased by Landlord and the cost thereof, to the extent such leasing costs do not exceed the capital costs of comparable purchased equipment amortized as set forth herein, passed through as part of Operating Expenses unless such cost is expressly required to be excluded as provided for in this clause (aa));
(bb)    property management fees other than as specifically permitted above; 
(cc)    salaries, wages or other compensation paid to employees of any third party property management organization being paid a fee by Landlord for its services where such services are covered by a management fee; 
(dd)    costs of insurance deductibles in excess of deductibles that Tenant can demonstrate are “commercially reasonable deductible” amounts reasonably consistent with the amounts carried by owners of comparable projects in the Torrey Pines area of San Diego; provided, however, that deductibles in excess of $100,000 shall be amortized on a straight-line basis with interest at 8% per annum over the greater of ten (10) years or the then remaining Base Term of this Lease (exclusive of any extension of the Base Term, provided that if the greater period is 10 years and thereafter Tenant extends the Base Term of this Lease, then amortization shall continue during the Term, as extended, to the extent necessary to achieve a 10 year amortization from the date such payments commenced), and, for each year (or partial year) during such amortization period (including any extension of the Base Term), Operating Expenses shall include the amortized portion of such deductible allocable to such year (or partial year);
(ee)    to the extent that Tenant does not lease space in the Spectrum 3 Building, costs incurred with respect to Common Areas located within and serving only tenants of the Spectrum 3 Building; 
(ff)    the cost of environmental testing conducted by Landlord pursuant to Section 30(d) which Landlord is prohibited from passing through to Tenant pursuant to Section 30(d); 
(gg)    the original construction costs of the Spectrum 3 Building and costs of correcting defects in such original construction of the Spectrum 3 Building;
(hh)    the costs of improvements, maintenance, repairs or replacements to be made to the Spectrum 3 Building or any portion thereof; and 
(ii)    any expenses otherwise includable within Operating Expenses to the extent actually reimbursed by persons other than tenants of the Project under leases for space in the Project.
Notwithstanding anything to the contrary contained herein, commencing on the Rent Commencement Date, all costs and expenses of any kind incurred by Landlord or Tenant (including, without limitation, for operations, maintenance, repairs and/or replacements) with  respect to the Exclusive Use Areas shall be fully allocable to the Building and Tenant shall be responsible for 100% of all such costs and expenses (except to the extent such costs are excluded from Operating Expenses pursuant to this Section 5). Tenant shall not be responsible for maintenance costs and expenses incurred by Landlord or any other tenant of the Project with respect to areas of the Project which may be designated by Landlord as exclusive use areas serving only the Spectrum 3 Building or areas of the Project that are materially inaccessible to Tenant, except to the extent caused by Tenant or any Tenant Party.
Within 90 days after the end of each calendar year (or such longer period as may be reasonably required not to exceed 180 days after the end of the calendar year), Landlord shall furnish to Tenant a statement (an “Annual Statement”) showing in reasonable detail:  (a) the total and Tenant’s Share of actual Operating Expenses for the previous calendar year, and (b) the total of Tenant’s payments in respect of 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 9

Operating Expenses for such year.  If Tenant’s Share of actual Operating Expenses for such year exceeds Tenant’s payments of Operating Expenses for such year, the excess shall be due and payable by Tenant as Rent within 30 days after delivery of such Annual Statement to Tenant.  If Tenant’s payments of Operating Expenses for such year exceed Tenant’s Share of actual Operating Expenses for such year Landlord shall pay the excess to Tenant within 30 days after delivery of such Annual Statement, except that after the expiration, or earlier termination of the Term or if Tenant is delinquent in its obligation to pay Rent, Landlord shall pay the excess to Tenant after deducting all other amounts due Landlord.  Landlord’s and Tenant’s obligations to pay any overpayments or deficiencies due pursuant to this paragraph shall survive the expiration or earlier termination of this Lease.  Following November 30th of each calendar year, Tenant shall not be responsible for the payment of items of Operating Expenses not reflected in the Annual Statement delivered by Landlord for the prior calendar year, except for Taxes for which Tenant is responsible under this Lease and/or any costs for which Landlord is billed after November 30th of the calendar year in which the Annual Statement is delivered.
The Annual Statement shall be final and binding upon Tenant unless Tenant, within 180 days after Tenant’s receipt thereof (or, with respect to any item for which Tenant is responsible under such Annual Statement for which Tenant is billed following Landlord’s delivery of such Annual Statement to Tenant, within 180 days after Tenant’s receipt of such bill), shall contest any item therein by giving written notice to Landlord, specifying each item contested and the reason therefor.  If, during such applicable 180 day period, Tenant reasonably and in good faith questions or contests the accuracy of Landlord’s statement of Tenant’s Share of Operating Expenses, Landlord will provide Tenant (or a representative designated by Tenant by written notice to Landlord) with access to Landlord’s books and records relating to the operation of the Project and such information reasonably necessary to evaluate the Operating Expenses (the “Expense Information”).  If after Tenant’s review of such Expense Information, Landlord and Tenant cannot agree upon the amount of Tenant’s Share of Operating Expenses, then Tenant shall have the right to have an independent regionally or nationally recognized real estate company that provides operating expense auditing services selected by Tenant and approved by Landlord (which approval shall not be unreasonably withheld or delayed), working pursuant to a fee arrangement other than a contingent fee (at Tenant’s sole cost and expense, except as otherwise expressly provided in this paragraph), audit and/or review the Expense Information for the year in question (the “Independent Review”).  The results of any such Independent Review shall be binding on Landlord and Tenant.  If the Independent Review shows that the payments actually made by Tenant with respect to Operating Expenses for the calendar year in question exceeded Tenant’s Share of Operating Expenses for such calendar year, Landlord shall at Landlord’s option either (i) credit the excess amount to the next succeeding installments of estimated Operating Expenses or (ii) pay the excess to Tenant within 30 days after delivery of such statement, except that after the expiration or earlier termination of this Lease or if Tenant is delinquent in its obligation to pay Rent, Landlord shall pay the excess to Tenant after deducting all other amounts due Landlord.  If the Independent Review shows that Tenant’s payments with respect to Operating Expenses for such calendar year were less than Tenant’s Share of Operating Expenses for the calendar year, Tenant shall pay the deficiency to Landlord within 30 days after delivery of such statement.  If the Independent Review shows that Tenant has overpaid with respect to Operating Expenses by more than 4% then Landlord shall reimburse Tenant for all costs incurred by Tenant for the Independent Review.  Operating Expenses for the calendar years in which Tenant’s obligation to share therein begins and ends shall be prorated.  
Landlord and Tenant agree that the rentable square footage of the Premises and the Building set forth on page 1 of this Lease shall be the rentable square footage of the Premises and the Building during the Term of this Lease and shall not be subject to re-measurement unless expressly agreed to in writing by the parties (e.g., in connection with a Change Order (as defined in the Work Letter)).  
Upon the substantial completion of the Spectrum 3 Building, Landlord shall determine the rentable square footage of the Spectrum 3 Building in accordance with either (i) ANSI/BOMA Z65.3-2009 for the Gross Areas of Building, if the Spectrum 3 Building will be a single tenant building, or (ii) the BOMA 2010 Standard Methods of Measurement for multi-tenant buildings, if the Spectrum 3 Building will be leased to multiple tenants.  Once the rentable square footage of the Spectrum 3 Building has been determined pursuant 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 10

to the immediately preceding sentence, Landlord shall notify Tenant in writing of the rentable square footage of the Spectrum 3 Building.  If the Rentable Area of Project (based on the rentable square footage of the Spectrum 3 Building plus the Rentable Area of the Building) deviates from the amount reflected in the definition of “Rentable Area of Project” on page 1 of this Lease, then this Lease shall be amended so as to (i) reflect the Rentable Area of Project (based on the rentable square footage of the Spectrum 3 Building plus the Rentable Area of the Building) and (ii) appropriately adjust the amount set forth in the definition of “Building’s Share of Operating Expenses of Project” which was calculated based on the Rentable Area of Project set forth on page 1 of this Lease.
“Tenant’s Share” shall be the percentage set forth on the first page of this Lease as Tenant’s Share as reasonably adjusted by Landlord for changes in the physical size of the Premises or the Project occurring thereafter.  For the avoidance of any doubt, Tenant shall pay as part of Operating Expenses the Building’s Share of Operating Expenses of Project for those Operating Expenses which are not specific to the Building or the Spectrum 3 Building.  Base Rent, Tenant’s Share of Operating Expenses and all other amounts payable by Tenant to Landlord hereunder are collectively referred to herein as “Rent.”
6.    Intentionally Omitted.  
7.    Use.  The Premises shall be used solely for the Permitted Use set forth in the basic lease provisions on page 1 of this Lease, and in compliance with all laws, orders, judgments, ordinances, regulations, codes, directives, permits, licenses, covenants and restrictions now or hereafter applicable to the Premises, and to the use and occupancy thereof, including, without limitation, the Americans With Disabilities Act, 42 U.S.C. § 12101, et seq. (together with the regulations promulgated pursuant thereto, “ADA”) (collectively, “Legal Requirements” and each, a “Legal Requirement”).  Tenant shall, upon 5 days’ written notice from Landlord, discontinue any use of the Premises which is declared by any Governmental Authority (as defined in Section 9) having jurisdiction to be a violation of a Legal Requirement.  Tenant will not use or permit the Premises to be used for any purpose or in any manner that would void Tenant’s or Landlord’s insurance or cause the disallowance of any sprinkler credits.  Tenant shall reimburse Landlord promptly upon demand for any additional premium charged for any such insurance policy by reason of Tenant’s failure to comply with the provisions of this Section or otherwise caused by Tenant’s use and/or occupancy of the Premises (other than for general office and non-hazardous laboratory purposes).  Tenant will use the Premises in compliance with this Lease and will not commit or permit waste, overload the floor or structure of the Premises, subject the Premises to use that would damage the Premises (other than ordinary wear and tear) or unreasonably obstruct or unreasonably interfere with the rights of Landlord or other tenants or occupants of the Project, including conducting or giving notice of any auction, liquidation, or going out of business sale on the Premises, or use or allow the Premises to be used for any unlawful purpose.  Tenant shall cause any equipment or machinery to be installed in the Premises so as to reasonably prevent sounds or vibrations from the Premises from extending into Common Areas located outside the Building, or other improved space in the Project.  Tenant shall not place any machinery or equipment which would overload the floor in or upon the Premises.
Landlord shall be responsible, at Landlord’s cost and not as part of Operating Expenses, for the compliance of the Common Areas of the Project (located outside the Building) and Landlord’s Work with Legal Requirements as of Shell Substantial Completion (as defined in the Work Letter).  If, following the Shell Substantial Completion, the Common Areas of the Project and/or Landlord’s Work are determined not to be in compliance with Legal Requirements as of the Shell Substantial Completion, Landlord shall, within a reasonable period following such determination, perform, at Landlord’s sole cost and expense and not as part of Operating Expenses, the alterations or improvements to the Common Areas of the Project or Landlord’s Work, as applicable, required to cause the Common Areas of the Project and Landlord’s Work to be in compliance with Legal Requirements as of Shell Substantial Completion.  Following the Commencement Date, Landlord shall, as an Operating Expense (to the extent such Legal Requirement is generally applicable to similar buildings in the area in which the Project is located) and at Tenant’s expense (to the extent such Legal Requirement is triggered by reason of Tenant’s, as compared to other tenants of the Project, specific use of the Premises or Tenant’s Alterations) make any alterations or modifications to the Common Areas or 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 11

the exterior of the Building that are required by Legal Requirements.  Except as provided in the 2 immediately preceding sentences, Tenant, at its sole expense, shall make any alterations or modifications to the interior or the exterior of the Premises or the Project that are required by Legal Requirements (including, without limitation, compliance of the Premises with the ADA) related to Tenant’s use or occupancy of the Premises.  Notwithstanding any other provision herein to the contrary, Tenant shall be responsible for any and all demands, claims, liabilities, losses, costs, expenses, actions, causes of action, damages or judgments, and all reasonable expenses incurred in investigating or resisting the same (including, without limitation, reasonable attorneys’ fees, charges and disbursements and costs of suit) (collectively, “Claims”) arising out of or in connection with Legal Requirements related to Tenant’s particular use or occupancy of the Premises or Tenant’s Alterations.  For purposes of Section 1938 of the California Civil Code, as of the date of this Lease, the Project has not been inspected by a certified access specialist.
8.    Holding Over.  If, with Landlord’s express written consent, Tenant retains possession of the Premises after the termination of the Term, (i) unless otherwise agreed in such written consent, such possession shall be subject to immediate termination by Landlord at any time, (ii) all of the other terms and provisions of this Lease (including, without limitation, the adjustment of Base Rent pursuant to Section 4 hereof) shall remain in full force and effect (excluding any expansion or renewal option or other similar right or option) during such holdover period, (iii) Tenant shall continue to pay Base Rent in the amount payable upon the date of the expiration or earlier termination of this Lease or such other amount as Landlord may indicate, in Landlord’s sole and absolute discretion, in such written consent, and (iv) all other payments shall continue under the terms of this Lease.  If Tenant remains in possession of the Premises after the expiration or earlier termination of the Term without the express written consent of Landlord, (A) Tenant shall become a tenant at sufferance upon the terms of this Lease except that the monthly Base Rent shall be equal to 150% of Base Rent in effect during the last 30 days of the Term, and (B) Tenant shall be responsible for all damages suffered by Landlord resulting from or occasioned by Tenant’s holding over, including consequential damages.  Notwithstanding the foregoing, if Tenant notifies Landlord in writing no less than 90 days prior to the expiration or earlier termination of the Term of Tenant’s intention to hold over, then (w) Tenant shall become a tenant at sufferance upon the terms of this Lease except that the monthly Base Rent shall (1) for the first 30 days of the holdover period, be equal to 125% of Base Rent in effect during the last 30 days of the Term, and (2) thereafter, commencing on the 31st day of such holdover period, be equal to 150% of Base Rent in effect during the last 30 days of the Term, (x)  for the first 30 days of such holdover period, Tenant shall not be responsible for any damages suffered by Landlord resulting from or occasioned by Tenant’s holding over,  (y) for the period commencing on the 31st day through the 90th day of such holdover period, Tenant shall only be responsible for any direct damages suffered by Landlord resulting from or occasioned by Tenant’s holding over, and (z) following the 90th day of such holdover period, Tenant shall be responsible for all damages suffered by Landlord resulting from or occasioned by Tenant’s holding over, including consequential damages. No holding over by Tenant, whether with or without consent of Landlord, shall operate to extend this Lease except as otherwise expressly provided, and this Section 8 shall not be construed as consent for Tenant to retain possession of the Premises.  Acceptance by Landlord of Rent after the expiration of the Term or earlier termination of this Lease shall not result in a renewal or reinstatement of this Lease.
9.    Taxes.  Landlord shall pay, as part of Operating Expenses, all taxes, levies, fees, assessments and governmental charges of any kind, existing as of the Commencement Date or thereafter enacted (collectively referred to as “Taxes”), imposed by any federal, state, regional, municipal, local or other governmental authority or agency, including, without limitation, quasi-public agencies (collectively, “Governmental Authority”) during the Term, including, without limitation, all Taxes:  (i) imposed on or measured by or based, in whole or in part, on rent payable to (or gross receipts received by) Landlord under this Lease and/or from the rental by Landlord of the Project or any portion thereof, or (ii) based on the square footage, assessed value or other measure or evaluation of any kind of the Premises or the Project, or (iii) assessed or imposed by or on the operation or maintenance of any portion of the Premises or the Project, including parking, or (iv) assessed or imposed by, or at the direction of, or resulting from Legal Requirements, or interpretations thereof, promulgated by any Governmental Authority, or (v) imposed as a license or other fee, charge, tax, or assessment on Landlord’s business or occupation of leasing space in the Project.  Landlord 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 12

may, at Landlord’s sole discretion or as otherwise reasonably agreed upon by Landlord and Tenant, contest by appropriate legal proceedings the amount, validity, or application of any Taxes or liens securing Taxes.  Any written request received by Landlord from Tenant requesting that Landlord contest Taxes shall be considered by Landlord in good faith and Landlord’s approval of such request shall not be unreasonably withheld, conditioned or delayed.  If Landlord agrees to contest Taxes pursuant to a request from Tenant, the reasonable costs and expenses in connection with such contest of Taxes shall be borne by Tenant.  Notwithstanding anything to the contrary herein, Landlord shall only charge Tenant for assessments as if those assessments were paid by Landlord over the longest possible term which Landlord is permitted to pay for the applicable assessments without additional charge other than interest, if any, provided under the terms of the underlying assessments.  If Landlord secures an abatement or refund of Taxes for the Project for a period during the Term, Tenant shall receive Tenant’s Share of such abatement or refund (i.e., the net amount after paying all reasonable costs and expenses of security the abatement or refund, including reasonably attorneys’ fees) as a credit to be applied by Landlord against Operating Expenses next coming due (or, if no further Operating Expenses are due from Tenant under this Lease and Tenant is not in Default under this Lease, by a cash payment to Tenant). Taxes shall not include any net income taxes, or any capital, stock, succession, transfer, franchise, gift, estate or inheritance taxes imposed on Landlord except to the extent such taxes are in substitution for any Taxes payable hereunder, nor shall Taxes include any late payments, penalties or fines (except to the extent such late penalties, penalties or fines are incurred as a result of Tenant’s timely failure to pay Tenant’s Share of Taxes as required under this Lease).  Taxes shall also not include any items to the extent otherwise included in Operating Expenses, costs incurred by Landlord with respect to the original development and construction of the Building, Taxes accruing with respect to the Building (and the development of the Building) prior to the Rent Commencement Date, costs incurred with respect to the original development and construction of Spectrum 3 Building, reserves for future taxes, or any development fee (whether payable on a one-time or annual basis) imposed on Landlord specifically as a condition for the issuance of the development permit for the Building (e.g., fees for transit, housing, schools, open space, child care, arts programs, traffic mitigations measures, environmental impact reports and traffic studies; provided, however, that Tenant shall be required to comply with any traffic demand management plans applicable to the Project and the costs thereof shall be included as part of Operating Expenses).  If any such Tax is levied or assessed directly against Tenant, then Tenant shall be responsible for and shall pay the same at such times and in such manner as the taxing authority shall require.  Tenant shall pay, prior to delinquency, any and all Taxes levied or assessed against any personal property or trade fixtures placed by Tenant in the Premises, whether levied or assessed against Landlord or Tenant.  If any Taxes on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s property, or if the assessed valuation of the Project is increased by a value attributable to improvements in or alterations to the Premises, whether owned by Landlord or Tenant and whether or not affixed to the real property so as to become a part thereof, higher than the base valuation on which Landlord from time-to-time allocates Taxes to all tenants in the Project, Landlord shall have the right, but not the obligation, to pay such Taxes.  Landlord’s determination of any excess assessed valuation shall be binding and conclusive, absent manifest error.  The amount of any such payment by Landlord shall constitute Additional Rent due from Tenant to Landlord within 30 days following demand.
10.    Parking.  Subject to all matters of record, Force Majeure, a Taking (as defined in Section 19 below) and the exercise by Landlord of its rights hereunder, Tenant shall have the right, at no additional cost to Tenant during the Base Term, to use 400 parking spaces at the Project, subject to Landlord’s reasonable rules and regulations.  Tenant shall have the exclusive right to use all of the parking spaces located in the subterranean parking garage under the Building, which shall be applied against the total number of parking spaces made available for Tenant’s use pursuant to the immediately preceding sentence.  Tenant shall have the right to install, subject to compliance with Legal Requirements, a roll down door at the main entrance of the subterranean parking garage to control access to the subterranean parking garage via the use of Building access cards.  The balance of the parking spaces available for Tenant’s use shall be located in the portions of surface parking lot located on and serving the Project designated for non-reserved parking in common with other tenants of the Project.  Tenant will use reasonable efforts to cause the parking spaces located in the subterranean parking garage to be fully occupied before using parking spaces in the surface parking lot located on and serving the Project.  Landlord shall in no event grant rights to other tenants 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 13

of the Project to use more parking spaces in the surface parking lot than, together with the spaces allocated to Tenant pursuant to this Section 10, are available for use by tenants of the Project in the surface parking lot.  Notwithstanding anything to the contrary contained herein, Landlord has the right, during periods of lower demand for parking by Tenant (e.g., after regular business hours) and following written notice to Tenant, to use the surface parking lots serving the Project on a temporary and occasional basis for invitees of The Alexandria. The terms of Exhibit G attached hereto shall apply with respect to any installation by Tenant of electric vehicle car charging stations at the Project.  The plan attached as Exhibit A reflects the subterranean parking at the Building currently contemplated by Landlord.  Landlord shall not reduce the number of parking spaces in the subterranean parking garage shown on such plan unless required to do so in connection with the Approvals and only after obtaining Tenant’s written consent thereto, which consent shall not be unreasonably withheld, conditioned or delayed.  Tenant shall not reduce the number of parking spaces in the subterranean parking garage as shown on the plan without Landlord’s written consent thereto, which consent shall not be unreasonably withheld, conditioned or delayed.
11.    Utilities, Services.  To the extent that Tenant may do so, Tenant shall contract directly with utility providers for all water, electricity, gas (if applicable), sewer and other utilities, and refuse and trash collection (“Utilities”) required by Tenant for the Premises following the Rent Commencement Date and continuing during the Term.  Landlord shall cooperate with Tenant, at no cost to Landlord, in making such arrangement with the Utility providers.  If billed directly to Tenant, Tenant shall pay directly to such Utility providers prior to delinquency for all such Utilities furnished to Tenant or the Project during the Term and shall pay for all maintenance charges for Utilities, and any storm sewer charges or other similar charges for Utilities imposed by any Governmental Authority or Utility provider, and any taxes, penalties, surcharges or similar charges thereon. To the extent that any Utilities, maintenance charges for Utilities, any storm sewer charges or other similar charges for Utilities imposed by any Governmental Authority or Utility provider, or any taxes, penalties, surcharges or similar charges are paid for by Landlord, Tenant shall reimburse Landlord for such costs as Operating Expenses.  Except as otherwise expressly provided in this Lease, no interruption or failure of Utilities, from any cause whatsoever other than Landlord’s gross negligence or willful misconduct, shall result in eviction or constructive eviction of Tenant, termination of this Lease or the abatement of Rent.  Tenant shall be responsible for obtaining and paying for its own janitorial services for the Premises.
Notwithstanding anything to the contrary set forth herein, if (i) a stoppage of an Essential Service (as defined below) to the Premises shall occur and such stoppage is due solely to the gross negligence or willful misconduct of Landlord and not due in any part to any act or omission on the part of Tenant or any Tenant Party or any matter beyond Landlord’s reasonable control (any such stoppage of an Essential Service being hereinafter referred to as a “Service Interruption”), and (ii) such Service Interruption continues for more than 5 consecutive business days after Landlord shall have received written notice thereof from Tenant, and (iii) as a result of such Service Interruption, the conduct of Tenant’s normal operations in the Premises are materially and adversely affected, then there shall be an abatement of one day’s Base Rent and Operating Expenses for each day during which such Service Interruption continues after such 5 business day period; provided, however, that if any part of the Premises is reasonably useable for Tenant’s normal business operations or if Tenant conducts all or any part of its operations in any portion of the Premises notwithstanding such Service Interruption, then the amount of each daily abatement of Base Rent and Operating Expenses shall only be proportionate to the nature and extent of the interruption of Tenant’s normal operations or ability to use the Premises.  Except for the self-help rights provided for in Section 31 below, the rights granted to Tenant under this paragraph shall be Tenant’s sole and exclusive remedy resulting from a Service Interruption, and Landlord shall not otherwise be liable for any loss or damage suffered or sustained by Tenant resulting from any failure or cessation of services.  For purposes hereof, the term “Essential Services” shall mean the following services:  gas, water, sewer and electricity, but in each case only to the extent that Landlord has an obligation to provide same to Tenant under this Lease.  
12.    Alterations and Tenant’s Property.  The Tenant’s Work shall be governed by the Work Letter and not this Section 12.  Any alterations, additions, or improvements made to the Premises by or on behalf of Tenant, including additional locks or bolts of any kind or nature upon any doors or windows in the Premises, but excluding the installation, removal or realignment of furniture systems (other than removal of 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 14

furniture systems owned or paid for by Landlord) not involving any modifications to the structure or connections (other than by ordinary plugs or jacks) to Building Systems (as defined in Section 13) (“Alterations”) shall be subject to Landlord’s prior written consent, which may be given or withheld in Landlord’s sole discretion if any such Alteration materially, adversely affects the structure or Building Systems and shall not be otherwise unreasonably withheld, conditioned or delayed.  Notwithstanding the foregoing, Tenant may construct non-structural Alterations in the Premises without advance notice to Landlord if the cost of such work does not exceed $250,000 per project (“No Notice Alterations”).  Upon written request from Landlord not more than once each calendar year, Tenant shall provide “as built” plans for any No Notice Alterations constructed by Tenant in the Premises. Notwithstanding the foregoing, Tenant shall be required to request Landlord’s prior written approval with respect to any Alteration that would constitute a No Notice Alteration if such No Notice Alteration would materially diminish the value of any existing leasehold improvements (e.g., converting any laboratory space to office space).  If Landlord approves any Alterations, Landlord may impose such conditions on Tenant in connection with the commencement, performance and completion of such Alterations as Landlord may deem appropriate in Landlord’s reasonable discretion.  Any request for approval shall be in writing, delivered not less than 15 days in advance of any proposed construction, and accompanied by plans, specifications, bid proposals, work contracts and such other information concerning the nature and cost of the alterations as may be reasonably requested by Landlord, including the identities and mailing addresses of all persons performing work or supplying materials.  Landlord’s right to review plans and specifications and to monitor construction shall be solely for its own benefit, and Landlord shall have no duty to ensure that such plans and specifications or construction comply with applicable Legal Requirements.  Tenant shall cause, at its sole cost and expense, all Alterations to comply with insurance requirements and with Legal Requirements and shall implement at its sole cost and expense any alteration or modification required by Legal Requirements as a result of any Alterations.  Tenant shall pay to Landlord, as Additional Rent, on demand an amount equal to the out-of-pocket cost incurred by Landlord in connection with any Alteration to cover Landlord’s overhead and expenses for plan review, coordination, scheduling and supervision.  Before Tenant begins any Alteration, Landlord may post on and about the Premises notices of non-responsibility pursuant to applicable law.  Tenant shall reimburse Landlord for, and indemnify and hold Landlord harmless from, any expense incurred by Landlord by reason of faulty work or inadequate cleanup done by Tenant or its contractors.  
Tenant shall cause the completion of all Alterations work free and clear of liens, and shall provide (and cause each contractor or subcontractor to provide) certificates of insurance for workers’ compensation and other coverage in amounts and from an insurance company reasonably satisfactory to Landlord protecting Landlord against liability for personal injury or property damage during construction.  Upon completion of any Alterations, Tenant shall deliver to Landlord:  (i) sworn statements setting forth the names of all contractors and subcontractors who did the work and final lien waivers from all such contractors and subcontractors; and (ii) “as built” plans for any such Alteration.
Except for Removable Installations (as hereinafter defined), all Installations (as hereinafter defined) shall be and shall remain the property of Landlord during the Term and following the expiration or earlier termination of the Term, shall not be removed by Tenant at any time during the Term, and shall remain upon and be surrendered with the Premises as a part thereof.  Notwithstanding the foregoing, if Tenant requests in writing at the time Tenant requests approval of any Installation that Landlord determine whether or not Landlord will require removal of an Installation at the expiration or earlier termination of the Term, Landlord shall, within 10 business days after such request, notify Tenant of its determination.  If Landlord by such determination requires that Tenant remove such Installation upon the expiration or earlier termination of the Term, Tenant shall do so in accordance with the immediately succeeding sentence.  Upon the expiration or earlier termination of the Term, Tenant shall remove (i) all wires, cables or similar equipment which Tenant has installed in the Premises or in the risers or plenums of the Building other than those installed as part of the Tenant’s Work, (ii) any Installations for which Landlord has given Tenant timely notice of removal in accordance with the immediately preceding sentence, and (iii) all of Tenant’s Property (as hereinafter defined), and Tenant shall restore and repair any damage caused by or occasioned as a result of such removal, including, without limitation, capping off all such connections behind the walls of the Premises and repairing any holes.  During any restoration period beyond the expiration or earlier termination of the Term, Tenant 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 15

shall pay Rent to Landlord as provided herein as if said space were otherwise occupied by Tenant.  If Landlord is requested by Tenant or any lender, lessor or other person or entity claiming an interest in any of Tenant’s Property to waive any lien Landlord may have against any of Tenant’s Property, and Landlord consents to such waiver, then Landlord shall be entitled to be paid as administrative rent a fee of $1,000 per occurrence for its time and effort in preparing and negotiating such a waiver of lien.  
For purposes of this Lease, (x) “Removable Installations” means any items listed on Exhibit F attached hereto and any items agreed by Landlord in writing to be included on Exhibit F in the future, (y) “Tenant’s Property” means Removable Installations and, other than Installations, any trade fixtures, personal property or equipment of Tenant that may be removed provided that after such removal and repair of any damage caused by such removal there is no remaining material damage to the Premises and such removal and repair does not adversely affect the operation of any Building Systems or the operations of any laboratory spaces within the Premises, and (z) ”Installations” means all installed or affixed property of any kind paid for with the TI Fund, all Alterations, all fixtures, and all partitions, hardware, built-in machinery, built-in casework and cabinets and other similar additions, equipment, property and improvements built into the Premises so as to become an integral part of the Premises, including, without limitation, fume hoods which penetrate the roof or plenum area, installed cage washers, built-in cold rooms, built-in warm rooms, walk-in cold rooms, walk-in warm rooms, deionized water systems, HVAC, chillers, built-in plumbing, electrical and mechanical equipment and systems, and any installed power generator and transfer switch.
13.    Landlord’s Repairs.  Landlord, as an Operating Expense, shall maintain all of the structural (including the roof and exterior walls), exterior, parking (including the subterranean garage) and other Common Areas of the Project, including HVAC, plumbing, fire sprinklers, elevators and all other building systems serving the Premises and other portions of the Project (“Building Systems”), in good repair, reasonable wear and tear and uninsured losses and damages caused by Tenant, or by any of Tenant’s assignees, sublessees, licensees, agents, servants, employees, invitees and contractors (or any of Tenant’s assignees, sublessees and/or licensees respective agents, servants, employees, invitees and contractors) (each, a “Tenant Party” and collectively, “Tenant Parties”) excluded.  Losses and damages caused by Tenant or any Tenant Party shall be repaired by Landlord, to the extent not covered by insurance, at Tenant’s sole cost and expense.  Landlord reserves the right to stop Building Systems services when reasonably necessary (i) by reason of accident or emergency, or (ii) after delivery of written notice to Tenant and reasonable efforts to coordinate with Tenant to minimize disruption to Tenant’s operations, for planned repairs, alterations or improvements, which are, in the judgment of Landlord, desirable or necessary to be made, until said repairs, alterations or improvements shall have been completed.  Landlord shall have no responsibility or liability for failure to supply Building Systems services during any such period of interruption; provided, however, that Landlord shall, except in case of emergency, provide Tenant 5 days advance notice of any planned stoppage of Building Systems services for routine maintenance, repairs, alterations or improvements.  Tenant shall promptly give Landlord written notice of any repair required by Landlord pursuant to this Section of which Tenant is aware, after which Landlord shall make a commercially reasonable effort to effect such repair.  Landlord shall not be liable for any failure to make any repairs or to perform any maintenance unless such failure shall persist for an unreasonable time after Tenant’s written notice of the need for such repairs or maintenance.  Tenant waives its rights under any state or local law to terminate this Lease or, except for the self-help rights provided for in Section 31 below, to make such repairs at Landlord’s expense and agrees that the parties’ respective rights with respect to such matters shall be solely as set forth herein.  Repairs required as the result of fire, earthquake, flood, vandalism, war, or similar cause of damage or destruction shall be controlled by Section 18.
Tenant shall have the self-help rights provided for in Section 31.
Notwithstanding anything to the contrary contained in this Lease, as of the Rent Commencement Date, the maintenance and repair obligations for the Building shall be allocated between Landlord and Tenant as set forth on Exhibit L attached hereto.  The maintenance obligations allocated to Tenant pursuant to Exhibit L (the “Tenant Maintenance Obligations”) shall be performed by Tenant at Tenant’s sole cost and expense.  The Tenant Maintenance Obligations shall include the procurement and maintenance of contracts, 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 16

in form and substance reasonably satisfactory to Landlord, with copies to Landlord upon Landlord’s written request, for and with contractors reasonably acceptable to Landlord specializing and experienced in the respective Tenant Maintenance Obligations. If Landlord does not object to a contract provided by Tenant to Landlord for approval within 5 business days after Landlord’s receipt of such contract from Tenant, such contract shall be deemed approved.  Notwithstanding anything to the contrary contained herein, the scope of work of any such contracts entered into by Tenant pursuant to this paragraph shall, at a minimum, comply with manufacturer’s recommended maintenance procedures for the optimal performance of the applicable equipment.  Landlord shall, notwithstanding anything to the contrary contained in this Lease, have no obligation to perform any Tenant Maintenance Obligations. The Tenant Maintenance Obligations shall not include the right or obligation on the part of Tenant to make any structural and/or capital repairs or improvements to the Project, and Landlord shall, during any period that Tenant is responsible for the Tenant Maintenance Obligations, continue to be responsible, as part of Operating Expenses, for capital repairs and replacements required to be made to the Project.  If Tenant fails to maintain any portion of the Building for which Tenant is responsible as part of the Tenant Maintenance Obligations in a manner reasonably acceptable to Landlord within the requirements of this Lease, Landlord shall have the right, but not the obligation, to provide Tenant with written notice thereof and to assume the Tenant Maintenance Obligations if Tenant does not cure Tenant’s failure within 30 days after receipt of such notice.  
14.    Tenant’s Repairs.  Subject to Section 13 hereof, Tenant, at its expense, shall repair, replace and maintain in good condition all portions of the Premises, including, without limitation, entries, doors, ceilings, interior windows, interior walls, and the interior side of demising walls.  Such repair and replacement may include capital expenditures and repairs whose benefit may extend beyond the Term.  Should Tenant fail to make any such repair or replacement or fail to maintain the Premises, Landlord shall give Tenant notice of such failure.  If Tenant fails to commence cure of such failure within 30 days of Landlord’s notice, and thereafter diligently prosecute such cure to completion, Landlord may perform such work and shall be reimbursed by Tenant within 30 days after demand therefor; provided, however, that if such failure by Tenant creates or could create an emergency, Landlord may immediately commence cure of such failure and shall thereafter be entitled to recover the costs of such cure from Tenant.  Subject to Sections 17 and 18, Tenant shall bear the full uninsured cost of any repair or replacement to any part of the Project that results from damage caused by Tenant or any Tenant Party and any repair that benefits only the Premises.
15.    Mechanic’s Liens.  Tenant shall discharge, by bond or otherwise, any mechanic’s lien filed against the Premises or against the Project for work claimed to have been done for, or materials claimed to have been furnished to, Tenant within 15 business days after the filing thereof, at Tenant’s sole cost and shall otherwise keep the Premises and the Project free from any liens arising out of work performed, materials furnished or obligations incurred by Tenant.  Should Tenant fail to discharge any lien described herein, Landlord shall have the right, but not the obligation, to pay such claim or post a bond or otherwise provide security to eliminate the lien as a claim against title to the Project and the cost thereof shall be immediately due from Tenant as Additional Rent.  If Tenant shall lease or finance the acquisition of office equipment, furnishings, or other personal property of a removable nature utilized by Tenant in the operation of Tenant’s business, Tenant warrants that any Uniform Commercial Code Financing Statement filed as a matter of public record by any lessor or creditor of Tenant will upon its face or by exhibit thereto indicate that such Financing Statement is applicable only to removable personal property of Tenant located within the Premises.  In no event shall the address of the Project be furnished on the statement without qualifying language as to applicability of the lien only to removable personal property, located in an identified suite held by Tenant.  
16.    Indemnification.  Tenant hereby indemnifies and agrees to defend, save and hold Landlord harmless from and against any and all Claims for injury or death to persons or damage to property occurring within or about the Premises, arising directly or indirectly out of use or occupancy of the Premises or a breach or default by Tenant in the performance of any of its obligations hereunder, except to the extent caused by the willful misconduct or negligence of Landlord.  Landlord shall not be liable to Tenant for, and Tenant assumes all risk of damage to, personal property (including, without limitation, loss of records kept within the Premises).  Tenant further waives any and all Claims for injury to Tenant’s business or loss of income relating to any such damage or destruction of personal property (including, without limitation, any loss of 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 17

records).  Landlord shall not be liable for any damages arising from any act, omission or neglect of any tenant in the Project or of any other third party.
Subject to all of the other provisions of this Lease including, without limitation, the waivers provided for in Section 17, Landlord hereby indemnifies and agrees to defend, save and hold Tenant harmless from and against any and all third party Claims for injury or death to persons or damage to property occurring at the Project (outside of the Premises) to the extent caused by the willful misconduct or negligence of Landlord.
Notwithstanding any contrary provision of this Lease, neither party shall be liable to the other party for any consequential damages arising under this Lease; provided that this sentence shall not apply to Landlord’s damages (x) as expressly provided for in Section 8, and/or (y) in connection with Tenant’s obligations as more fully set forth in Section 30.  In no event shall the foregoing limit the damages to which Landlord is entitled under Section 21(c)(ii)(A)-(D).
17.    Insurance.  Landlord shall maintain all risk property and, if applicable, sprinkler damage insurance covering the full replacement cost of the Project.  Landlord shall further procure and maintain (i) commercial general liability insurance with a single loss limit of not less than $2,000,000 for bodily injury and property damage with respect to the Project, and (ii) earthquake coverage (provided that such earthquake coverage may, at Landlord’s option, be included in a blanket policy and may be sublimited).  Landlord may, but is not obligated to, maintain such other insurance and additional coverages as it may deem reasonably necessary, including, but not limited to, flood, environmental hazard, loss or failure of building equipment, errors and omissions, rental loss during the period of repair or rebuilding, workers’ compensation insurance and fidelity bonds for employees employed to perform services and insurance for any improvements installed by Tenant or which are in addition to the standard improvements customarily furnished by Landlord without regard to whether or not such are made a part of the Project.  All such insurance shall be included as part of the Operating Expenses.  The Project may be included in a blanket policy (in which case the cost of such insurance allocable to the Project will be reasonably determined by Landlord based upon the insurer’s cost calculations).  At least 60% of the all risk capacity insurers under such blanket policy shall have a rating of not less than policyholder rating of A- and financial category rating of at least Class IX in “Best’s Insurance Guide”. Tenant shall also reimburse Landlord for any increased premiums or additional insurance which Landlord reasonably deems necessary as a result of the particular use of the Premises by Tenant or any Tenant Parties.  
Tenant, at its sole cost and expense, shall maintain during the Term:  all risk property insurance with business interruption and extra expense coverage, covering the full replacement cost of all property and improvements installed or placed in the Premises by Tenant at Tenant’s expense; workers’ compensation insurance with no less than the minimum limits required by law; employer’s liability insurance with such limits as required by law; and commercial general liability insurance, with a minimum limit of not less than $5,000,000 per occurrence for bodily injury and property damage with respect to the Premises.  The commercial general liability insurance policy shall name Alexandria Real Estate Equities, Inc., and Landlord, its officers, directors, employees, managers, agents, invitees and contractors (each a “Landlord Party” and collectively, “Landlord Parties”), as additional insureds; insure on an occurrence and not a claims-made basis; be issued by insurance companies which have a rating of not less than policyholder rating of A- and financial category rating of at least Class IX in “Best’s Insurance Guide”; shall not be cancelable for nonpayment of premium unless 10 days prior written notice shall have been given to Landlord from the insurer; not contain a hostile fire exclusion; contain a contractual liability endorsement; and provide primary coverage to Landlord (any policy issued to Landlord providing duplicate or similar coverage shall be deemed excess over Tenant’s policies). Certificates of insurance showing the limits of coverage required hereunder and showing Landlord as an additional insured shall be delivered to Landlord by Tenant prior to (i) the earlier to occur of  (x) the Commencement Date, or (y) the date that Tenant accesses the Premises under this Lease, and (ii) each renewal of said insurance.  Tenant’s policy may be a “blanket policy” with an aggregate per location endorsement which specifically provides that the amount of insurance shall not be prejudiced by other losses covered by the policy.  Tenant shall, at least 5 days prior to the expiration of such policies, furnish Landlord with renewal certificates.

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 18

In each instance where insurance is to name Landlord as an additional insured, Tenant shall upon written request of Landlord also designate and furnish certificates so evidencing Landlord as additional insured to:  (i) any lender of Landlord holding a security interest in the Project or any portion thereof, (ii) the landlord under any lease wherein Landlord is tenant of the real property on which the Project is located, if the interest of Landlord is or shall become that of a tenant under a ground or other underlying lease rather than that of a fee owner, and/or (iii) any management company retained by Landlord to manage the Project.
Notwithstanding anything in this Section 17 to the contrary, for so long as Tenant can provide Landlord with reasonably acceptable evidence that Tenant is maintaining an equity market cap of not less than $15,000,000,000, Tenant may self-insure for the insurance required by Tenant to be maintained pursuant to this Section 17.  With respect to Tenant’s self-insurance, Landlord and Tenant agree as follows: (a) that Tenant’s self-insurance shall be treated as actual insurance and that such self-insurance shall be the primary coverage for every risk for which Tenant is liable or responsible hereunder; (b) the waiver of subrogation provisions set forth in this Lease shall apply to Tenant’s self-insurance as though Tenant were maintaining the insurance required under this Lease, (c) Tenant shall bear the entire cost of the defense of any claim for which it is responsible under the terms of this Lease including, without limitation, the defense of Landlord, and (d) Tenant shall use its own funds to pay any claim or indemnity or replace any property or otherwise provide the funding which would have been available from insurance proceeds but for Tenant’s election to self-insure.  If Tenant elects to self-insure, Landlord shall be considered to be covered by the same insurance terms, including, but not limited to, insuring grants, exclusions, conditions and limits, by which it would have been covered had insurance covering such risk been in effect.  Notwithstanding anything to the contrary contained in this Lease, Tenant hereby releases Landlord from any liability for loss or damage caused by Landlord and/or any Landlord Party against which Tenant has elected to self-insure but which Tenant would otherwise be required to insure against under this Lease and in no event shall Landlord be liable for any loss or damage which Landlord would not otherwise be responsible but for Tenant’s election to self insure.  The right to self-insure shall only apply to Vertex Pharmaceuticals Incorporated.
The property insurance obtained by Landlord and Tenant shall include a waiver of subrogation by the insurers and all rights based upon an assignment from its insured, against Landlord or Tenant, and their respective officers, directors, employees, managers, agents, invitees and contractors (“Related Parties”), in connection with any loss or damage thereby insured against.  Neither party nor its respective Related Parties shall be liable to the other for loss or damage caused by any risk insured against under property insurance required to be maintained hereunder, and each party waives any claims against the other party, and its respective Related Parties, for such loss or damage.  The failure of a party to insure its property shall not void this waiver.  Landlord and its respective Related Parties shall not be liable for, and Tenant hereby waives all claims against such parties for, business interruption and losses occasioned thereby sustained by Tenant or any person claiming through Tenant resulting from any accident or occurrence in or upon the Premises or the Project from any cause whatsoever.  If the foregoing waivers shall contravene any law with respect to exculpatory agreements, the liability of Landlord or Tenant shall be deemed not released but shall be secondary to the other’s insurer.
Landlord may require insurance policy limits described in this Section 17 to be raised to conform with requirements of Landlord’s lender and/or insurance consultants; provided, however, that the increased amount of coverage is consistent with coverage amounts then being required by institutional owners of Class A buildings in the Torrey Pines area of San Diego other than Landlord and affiliates of Landlord.
18.    Restoration.  If, at any time during the Term, the Premises are damaged or destroyed by a fire or other casualty, Landlord shall notify Tenant within 60 days after discovery of such damage as to the amount of time Landlord reasonably estimates it will take to restore the Premises, as applicable (the “Restoration Period”).  If the Restoration Period is estimated to exceed 12 months (the “Maximum Restoration Period”), or if Landlord reasonably determines such casualty to be an uninsured casualty, Landlord may, in such notice, elect to terminate this Lease as of the date that is 75 days after the date of discovery of such damage or destruction; provided, however, that notwithstanding Landlord’s election to restore, Tenant may elect to terminate this Lease by written notice to Landlord delivered within 15 business 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 19

days of receipt of a notice from Landlord estimating a Restoration Period for the Premises longer than the Maximum Restoration Period.  Unless either Landlord or Tenant so elects to terminate this Lease, Landlord shall, subject to receipt of sufficient insurance proceeds other than any shortfall resulting from Landlord’s failure to maintain the insurance required to be maintained by Landlord pursuant to Section 17 (with any deductible to be treated as an Operating Expense subject to and in accordance with Section 5), use good faith efforts to promptly restore the Premises (excluding the improvements installed by Tenant or by Landlord and paid for by Tenant), subject to delays arising from the collection of insurance proceeds, from Force Majeure events or as needed to obtain any license, clearance or other authorization of any kind required to enter into and restore the Premises issued by any Governmental Authority having jurisdiction over the use, storage, handling, treatment, generation, release, disposal, removal or remediation of Hazardous Materials (as defined in Section 30) in, on or about the Premises (collectively referred to herein as “Hazardous Materials Clearances”); provided, however, that if repair or restoration of the Premises is not substantially complete as of the end of the Maximum Restoration Period or, if longer, the Restoration Period, Landlord may, in its sole and absolute discretion, by written notice to Tenant delivered within 15 business days of the expiration of the Maximum Restoration Period or, if longer, the Restoration Period elect not to proceed with such repair and restoration, or Tenant may by written notice to Landlord delivered within 15 business days of the expiration of the Maximum Restoration Period or, if longer, the Restoration Period, elect to terminate this Lease, in which event Landlord shall be relieved of its obligation to make such repairs or restoration and this Lease shall terminate as of the date that is 75 days after the later of:  (i) discovery of such damage or destruction, or (ii) the date all required Hazardous Materials Clearances are obtained.
Tenant, at its expense, shall promptly perform, subject to delays arising from the collection of insurance proceeds, from Force Majeure (as defined in Section 34) events or to obtain Hazardous Material Clearances, all repairs or restoration not required to be done by Landlord and shall promptly re-enter the Premises and commence doing business in accordance with this Lease.  Notwithstanding the foregoing, either Landlord or Tenant may terminate this Lease upon written notice to the other if the Premises are damaged during the last year of the Term and Landlord reasonably estimates that it will take more than 2 months to repair such damage; provided, however, that such notice is delivered within 10 business days after the date that Landlord provides Tenant with written notice of the estimated Restoration Period.  Notwithstanding anything to the contrary contained herein, Landlord shall also have the right to terminate this Lease if Landlord maintains the insurance required to be maintained by Landlord under this Lease, but insurance proceeds are not available for such restoration.  Rent shall be equitably and proportionately abated from the date of discovery of the damage or destruction until occupancy of the Premises is legally permitted, in the proportion to which the area of the Premises, if any, which is not usable by Tenant bears to the total area of the Premises; provided, however, that if Tenant fails to obtain any Hazardous Materials Clearances required in order for Landlord to access the Premises (or any portion thereof) or for Landlord to perform repair or reconstruction activities within 60 days after the date of discovery of the damage or destruction, then Tenant shall not be entitled to any abatement following such initial 60 day period and shall be required to pay Rent for the Premises during any period following such initial 60 day period that Landlord’s access to the Premises (or any portion thereof) or Landlord’s repair or reconstruction activities are delayed in any way solely as a result of Tenant’s failure to obtain any Hazardous Materials Clearances.  Such abatement shall be the sole remedy of Tenant, and except as provided in this Section 18, Tenant waives any right to terminate the Lease by reason of damage or casualty loss.
The provisions of this Lease, including this Section 18, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, or any other portion of the Project, and any statute or regulation which is now or may hereafter be in effect shall have no application to this Lease or any damage or destruction to all or any part of the Premises or any other portion of the Project, the parties hereto expressly agreeing that this Section 18 sets forth their entire understanding and agreement with respect to such matters.
19.    Condemnation.  If the whole or any material part of the Premises or the Project is taken for any public or quasi-public use under governmental law, ordinance, or regulation, or by right of eminent domain, or by private purchase in lieu thereof (a “Taking” or “Taken”), and the Taking would in Landlord’s 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 20

reasonable judgment, materially interfere with or impair Landlord’s ownership or operation of the Project or would in the reasonable judgment of Landlord and Tenant either prevent or materially interfere with Tenant’s use of the Premises (as resolved, if the parties are unable to agree, by arbitration by a single arbitrator with the qualifications and experience appropriate to resolve the matter and appointed pursuant to and acting in accordance with the rules of the American Arbitration Association), then upon written notice by Landlord or Tenant to the other this Lease shall terminate and Rent shall be apportioned as of said date.  If part of the Premises shall be Taken, and this Lease is not terminated as provided above, Landlord shall promptly restore the Premises and the Project as nearly as is commercially reasonable under the circumstances to their condition prior to such partial Taking and the rentable square footage of the Building, the rentable square footage of the Premises, Tenant’s Share of Operating Expenses and the Rent payable hereunder during the unexpired Term shall be reduced to such extent as may be fair and reasonable under the circumstances.  Upon any such Taking, Landlord shall be entitled to receive the entire price or award from any such Taking without any payment to Tenant, and Tenant hereby assigns to Landlord Tenant’s interest, if any, in such award.  Tenant shall have the right, to the extent that same shall not diminish Landlord’s award, to make a separate claim against the condemning authority (but not Landlord) for such compensation as may be separately awarded or recoverable by Tenant for moving expenses and damage to Tenant’s trade fixtures, if a separate award for such items is made to Tenant.  Tenant hereby waives any and all rights it might otherwise have pursuant to any provision of state law to terminate this Lease upon a partial Taking of the Premises or the Project.
20.    Events of Default.  Each of the following events shall be a default (“Default”) by Tenant under this Lease:
(a)    Payment Defaults.  Tenant shall fail to pay any installment of Rent or any other payment hereunder when due; provided, however, that Landlord will give Tenant written notice and an opportunity to cure any failure to pay Rent within 5 days of any such notice not more than twice in any 12 month period and Tenant agrees that such notice shall be in lieu of and not in addition to, or shall be deemed to be, any notice required by law.
(b)    Insurance.  Any insurance required to be maintained by Tenant pursuant to this Lease shall be canceled or terminated or shall expire or shall be reduced or materially changed, or Landlord shall receive a notice of nonrenewal of any such insurance and Tenant shall fail to obtain replacement insurance before the expiration of the current coverage.
(c)    Abandonment.  Tenant shall abandon the Premises.  Tenant shall not be deemed to have abandoned the Premises if (i) Tenant provides Landlord with advance notice prior to vacating and, at the time of or during a reasonable time after vacating the Premises, Tenant completes Tenant’s obligations with respect to the Surrender Plan in compliance with Section 28, (ii) Tenant has made reasonable arrangements reasonably acceptable to Landlord for the security of the Premises for the balance of the Term, and (iii) Tenant continues during the balance of the Term to satisfy all of its obligations under the Lease as they come due.
(d)    Improper Transfer.  Tenant shall assign, sublease or otherwise transfer all or any portion of Tenant’s interest in this Lease or the Premises except as expressly permitted herein, or Tenant’s interest in this Lease shall be attached, executed upon, or otherwise judicially seized and such action is not released within 90 days of the action.
(e)    Liens.  Tenant shall fail to discharge or otherwise obtain the release of any lien placed upon the Premises in violation of this Lease within 15 business days after any such lien is filed against the Premises.
(f)    Insolvency Events.  Tenant or any guarantor or surety of Tenant’s obligations hereunder shall:  (A) make a general assignment for the benefit of creditors; (B) commence any case, proceeding or other action seeking to have an order for relief entered on its behalf as a debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 21

it or its debts or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or of any substantial part of its property (collectively a “Proceeding for Relief”); (C) become the subject of any Proceeding for Relief which is not dismissed within 90 days of its filing or entry; or (D) be dissolved or otherwise fail to maintain its legal existence (if Tenant, guarantor or surety is a corporation, partnership or other entity).
(g)    Estoppel Certificate or Subordination Agreement.  Tenant fails to execute any document required from Tenant under Sections 23 or 27 within 10 days after a second notice requesting such document.
(h)    Other Defaults.  Tenant shall fail to comply with any provision of this Lease other than those specifically referred to in this Section 20, and, except as otherwise expressly provided herein, such failure shall continue for a period of 30 days after written notice thereof from Landlord to Tenant.
Any notice given under Section 20(h) hereof shall:  (i) specify the alleged default, (ii) demand that Tenant cure such default, (iii) be in lieu of, and not in addition to, or shall be deemed to be, any notice required under any provision of applicable law, and (iv) not be deemed a forfeiture or a termination of this Lease unless Landlord elects otherwise in such notice; provided that if the nature of Tenant’s default pursuant to Section 20(h) is such that it cannot be cured by the payment of money and reasonably requires more than 30 days to cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said 30 day period and thereafter diligently prosecutes the same to completion; provided, however, that such cure shall be completed no later than 90 days from the date of Landlord’s notice.
21.    Landlord’s Remedies.
(a)    Payment By Landlord; Interest.  Upon a Default by Tenant hereunder, Landlord may, without waiving or releasing any obligation of Tenant hereunder, make such payment or perform such act.  All sums so paid or incurred by Landlord, together with interest thereon, from the date such sums were paid or incurred, at the annual rate equal to 12% per annum or the highest rate permitted by law (the “Default Rate”), whichever is less, shall be payable to Landlord on demand as Additional Rent.  Nothing herein shall be construed to create or impose a duty on Landlord to mitigate any damages resulting from Tenant’s Default hereunder.
(b)    Late Payment Rent.  Late payment by Tenant to Landlord of Rent and other sums due will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult and impracticable to ascertain.  Such costs include, but are not limited to, processing and accounting charges and late charges which may be imposed on Landlord under any Mortgage covering the Premises.  Therefore, if any installment of Rent due from Tenant is not received by Landlord within 5 days after the date such payment is due, Tenant shall pay to Landlord an additional sum equal to 6% of the overdue Rent as a late charge.  Notwithstanding the foregoing, before assessing a late charge the first time in any calendar year, Landlord shall provide Tenant written notice of the delinquency and will waive the right if Tenant pays such delinquency within 5 days thereafter.  The parties agree that this late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant.  In addition to the late charge, Rent not paid when due shall bear interest at the Default Rate from the 5th day after the date due until paid.
(c)    Remedies.  Upon the occurrence of a Default, Landlord, at its option, without further notice or demand to Tenant, shall have in addition to all other rights and remedies provided in this Lease, at law or in equity, the option to pursue any one or more of the following remedies, each and all of which shall be cumulative and nonexclusive, without any notice or demand whatsoever.
(i)    Terminate this Lease, or at Landlord’s option, Tenant’s right to possession only, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the Premises and expel or remove Tenant 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 22

and any other person who may be occupying the Premises or any part thereof, without being liable for prosecution or any claim or damages therefor;
(ii)    Upon any termination of this Lease, whether pursuant to the foregoing Section 21(c)(i) or otherwise, due to a Default by Tenant, Landlord may recover from Tenant the following:
(A)    The worth at the time of award of any unpaid rent which has been earned at the time of such termination; plus
(B)    The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus
(C)    The worth at the time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; and
(D)    Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, specifically including, but not limited to, brokerage commissions and advertising expenses incurred, expenses of remodeling the Premises or any portion thereof for a new tenant, whether for the same or a different use, and any special concessions made to obtain a new tenant.
The term “rent” as used in this Section 21 shall be deemed to be and to mean all sums of every nature required to be paid by Tenant pursuant to the terms of this Lease, whether to Landlord or to others.  As used in Sections 21(c)(ii)(A) and (B), above, the “worth at the time of award” shall be computed by allowing interest at the Default Rate.  As used in Section 21(c)(ii)(C) above, the “worth at the time of award” shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus 1%.
(iii)    Landlord may continue this Lease in effect after Tenant’s Default and recover rent as it becomes due (Landlord and Tenant hereby agreeing that Tenant has the right to sublet or assign hereunder, subject only to reasonable limitations).  Accordingly, if Landlord does not elect to terminate this Lease following a Default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies hereunder, including the right to recover all Rent as it becomes due.
(iv)    If Landlord elects to terminate this Lease following a Default by Tenant, Landlord shall have the right, subject to the terms of any agreements of subordination or nondisturbance entered into by Landlord, to terminate any and all subleases, licenses, concessions or other consensual arrangements for possession entered into by Tenant and affecting the Premises or may, in Landlord’s sole discretion, succeed to Tenant’s interest in such subleases, licenses, concessions or arrangements.  Upon Landlord’s election to succeed to Tenant’s interest in any such subleases, licenses, concessions or arrangements, Tenant shall, as of the date of notice by Landlord of such election, have no further right to or interest in the rent or other consideration receivable thereunder.
(v)    Independent of the exercise of any other remedy of Landlord hereunder or under applicable law, Landlord may conduct an environmental test of the Premises as generally described in Section 30(d) hereof, at Tenant’s expense.
(d)    Effect of Exercise.  Exercise by Landlord of any remedies hereunder or otherwise available shall not be deemed to be an acceptance of surrender of the Premises and/or a termination of this Lease by Landlord, it being understood that such surrender and/or termination can be effected only by the express 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 23

written agreement of Landlord and Tenant.  Any law, usage, or custom to the contrary notwithstanding, Landlord shall have the right at all times to enforce the provisions of this Lease in strict accordance with the terms hereof; and the failure of Landlord at any time to enforce its rights under this Lease strictly in accordance with same shall not be construed as having created a custom in any way or manner contrary to the specific terms, provisions, and covenants of this Lease or as having modified the same and shall not be deemed a waiver of Landlord’s right to enforce one or more of its rights in connection with any subsequent default.  A receipt by Landlord of Rent or other payment with knowledge of the breach of any covenant hereof shall not be deemed a waiver of such breach, and no waiver by Landlord of any provision of this Lease shall be deemed to have been made unless expressed in writing and signed by Landlord.  To the greatest extent permitted by law, Tenant waives the service of notice of Landlord’s intention to re-enter, re-take or otherwise obtain possession of the Premises as provided in any statute, or to institute legal proceedings to that end, and also waives all right of redemption in case Tenant shall be dispossessed by a judgment or by warrant of any court or judge.  Any reletting of the Premises or any portion thereof shall be on such terms and conditions as Landlord in its sole discretion may determine.  Landlord shall not be liable for, nor shall Tenant’s obligations hereunder be diminished because of, Landlord’s failure to relet the Premises or collect rent due in respect of such reletting or otherwise to mitigate any damages arising by reason of Tenant’s Default.  Landlord shall, however, use commercially reasonable efforts to mitigate the damages arising by reason of the termination of this Lease as a result of a Default by Tenant; provided, however, that in no event shall mitigation require Landlord to consider, among other things, (i) any tenant which does not satisfy Landlord’s then current underwriting criteria, in the exercise of Landlord’s sole and absolute discretion, for comparable size premises, (ii) subdividing the Premises unless Landlord elects in its sole and absolute discretion to do so, (iii) any change in use of the Premises or any alterations which would lessen the value of the leasehold improvements, (iv) granting any tenant improvement allowances, free rent or other lease concessions, or (v) accepting any tenant if Landlord would have the right to reject such tenant if such tenant were a proposed assignee or sublessee of Tenant including, without limitation, considering the factors described in Section 22(b).
22.    Assignment and Subletting.
(a)    General Prohibition.  Without Landlord’s prior written consent subject to and on the conditions described in this Section 22, Tenant shall not, directly or indirectly, voluntarily or by operation of law, assign this Lease or sublease the Premises or any part thereof or mortgage, pledge, or hypothecate its leasehold interest or grant any concession or license within the Premises, and any attempt to do any of the foregoing shall be void and of no effect.  If Tenant is a corporation, partnership or limited liability company, the shares or other ownership interests thereof which are not actively traded upon a stock exchange or in the over-the-counter market, a transfer or series of transfers whereby 50% or more of the issued and outstanding shares or other ownership interests of such corporation, partnership or limited liability company are, or voting control is, transferred (but excepting transfers upon deaths of individual owners) from a person or persons or entity or entities which were owners thereof at time of execution of this Lease to persons or entities who were not owners of shares or other ownership interests of the corporation, partnership or limited liability company at time of execution of this Lease, shall be deemed an assignment of this Lease requiring the consent of Landlord as provided in this Section 22.  
(b)    Permitted Transfers.  If Tenant desires to assign, sublease, hypothecate or otherwise transfer this Lease or sublet the Premises other than pursuant to a Permitted Assignment (as defined below), then at least 15 days, but not more than 60 days, before the date Tenant desires the assignment or sublease to be effective (the “Assignment Date”), Tenant shall give Landlord a notice (the “Assignment Notice”) containing such information about the proposed assignee or sublessee, including the proposed use of the Premises and any Hazardous Materials proposed to be used, stored handled, treated, generated in or released or disposed of from the Premises, the Assignment Date, any relationship between Tenant and the proposed assignee or sublessee, and all material terms and conditions of the proposed assignment or sublease, including a copy of any proposed assignment or sublease in its final form, and such other information as Landlord may deem reasonably necessary or appropriate to its consideration whether to grant its consent. Landlord shall, by giving written notice to Tenant within 15 days after receipt of the Assignment Notice, either:  

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 24

(i) grant such consent (provided that Landlord shall further be entitled to a copy of the final signed form of sublease prior to the effective date of any such subletting to confirm that it conforms to the draft previously provided by Tenant), (ii) refuse such consent, in its reasonable discretion; or (iii) as to an assignment of the entire Lease for the remainder of the Term, terminate this Lease as of the Assignment Date (an “Assignment Termination”). Among other reasons, it shall be reasonable for Landlord to withhold its consent in any of these instances:  (1) the proposed assignee or subtenant is a governmental agency; (2) in Landlord’s reasonable judgment, the use of the Premises by the proposed assignee or subtenant would entail any alterations that would materially lessen the value of the leasehold improvements in the Premises, or would require materially increased services by Landlord; (3) the use of the Premises by the proposed assignee or subtenant would not be consistent with the uses in general of laboratory tenants in Class A buildings in the Torrey Pines area of San Diego; (4) in Landlord’s reasonable judgment, the proposed assignee or subtenant lacks the creditworthiness to support the financial obligations it will incur under the proposed assignment or sublease; (5) in Landlord’s reasonable judgment, the character, reputation, or business of the proposed assignee or subtenant is materially detrimental to the Project; (6) Landlord has received from any prior landlord to the proposed assignee or subtenant a materially negative report concerning such prior landlord’s experience with the proposed assignee or subtenant; (7) Landlord has experienced previous defaults by or is in litigation with the proposed assignee or subtenant; (8) the use of the Premises by the proposed assignee or subtenant will violate any applicable Legal Requirement; or (9) until all of the rentable square footage of the Spectrum 3 Building has been leased at least once, the proposed assignee or subtenant is an entity with whom Landlord is then actively negotiating to lease space in the Project.  If Landlord delivers notice of its election to exercise an Assignment Termination, Tenant shall have the right to withdraw such Assignment Notice by written notice to Landlord of such election within 5 business days after Landlord’s notice electing to exercise the Assignment Termination.  If Tenant withdraws such Assignment Notice, this Lease shall continue in full force and effect.  If Tenant does not withdraw such Assignment Notice, this Lease, and the term and estate herein granted, shall terminate as of the Assignment Date.  No failure of Landlord to exercise any such option to terminate this Lease, or to deliver a timely notice in response to the Assignment Notice, shall be deemed to be Landlord’s consent to the proposed assignment, sublease or other transfer.  Tenant shall pay to Landlord a fee equal to One Thousand Five Hundred Dollars ($1,500) in connection with its consideration of any Assignment Notice and/or its preparation or review of any consent documents.  Notwithstanding the foregoing, Landlord’s consent to an assignment of this Lease or a subletting of any portion of the Premises to any entity controlling, controlled by or under common control with Tenant (a “Control Permitted Assignment”) shall not be required, provided that Landlord shall have the right to approve the form of any such sublease or assignment.  In addition, Tenant shall have the right to assign this Lease, upon 30 days prior written notice to Landlord but without obtaining Landlord’s prior written consent, to a corporation or other entity which is a successor-in-interest to Tenant, by way of merger, consolidation or corporate reorganization, or by the purchase of all or substantially all of the assets or the ownership interests of Tenant provided that (i) such merger or consolidation, or such acquisition or assumption, as the case may be, is for a good business purpose and not principally for the purpose of transferring the Lease, and (ii) the net worth (the excess of total “assets” over total “liabilities” using the definitions of “assets” and “liabilities” promulgated under generally accepted accounting principles (“GAAP”)) of the assignee is not less than the greater of the net worth (as determined above and as evidenced by a certification from the Chief Financial Officer of such assignee) of Tenant as of (A) the Commencement Date, or (B) as of the date of the assignment, and (iii) such assignee shall agree in writing to assume all of the terms, covenants and conditions of this Lease (a “Corporate Permitted Assignment”).  Control Permitted Assignments and Corporate Permitted Assignments are hereinafter referred to as “Permitted Assignments.”
(c)    Additional Conditions.  As a condition to any such assignment or subletting, whether or not Landlord’s consent is required, Landlord may require:
(i)    that any assignee or subtenant agree, in writing at the time of such assignment or subletting, that if Landlord gives such party notice that Tenant is in default under this Lease, such party shall thereafter make all payments otherwise due Tenant directly to Landlord, which payments will be received by Landlord without any liability except to credit such payment against those due under the Lease, and any such third party shall agree to attorn to Landlord or its successors and 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 25

assigns should this Lease be terminated for any reason; provided, however, in no event shall Landlord or its successors or assigns be obligated to accept such attornment; and
(ii)    A list of Hazardous Materials, certified by the proposed assignee or sublessee to be true and correct, which the proposed assignee or sublessee intends to use, store, handle, treat, generate in or release or dispose of from the Premises, together with copies of all documents relating to such use, storage, handling, treatment, generation, release or disposal of Hazardous Materials by the proposed assignee or subtenant in the Premises or on the Project, prior to the proposed assignment or subletting, including, without limitation:  permits; approvals and reports; storage and management plans; plans relating to the installation of any storage tanks to be installed at the Project (provided, said installation of tanks shall only be permitted after Landlord has given its written consent to do so, which consent shall not be unreasonably withheld, conditioned or delayed); and all closure plans or any other documents required by any and all federal, state and local Governmental Authorities for any storage tanks installed in, on or under the Project for the closure of any such tanks.  Neither Tenant nor any such proposed assignee or subtenant is required, however, to provide Landlord with any portion(s) of such documents containing information of a proprietary nature which, in and of themselves, do not contain a reference to any Hazardous Materials or hazardous activities.
(d)    No Release of Tenant, Sharing of Excess Rents.  Notwithstanding any assignment or subletting, Tenant and any guarantor or surety of Tenant’s obligations under this Lease shall at all times remain fully and primarily responsible and liable for the payment of Rent and for compliance with all of Tenant’s other obligations under this Lease.  Except in connection with any Permitted Assignment, if the Rent due and payable by a sublessee or assignee (or a combination of the rental payable under such sublease or assignment plus any bonus or other consideration therefor or incident thereto in any form) exceeds the sum of the rental payable under this Lease, in the case of a sublease as allocated to the space subject to the sublease, (excluding however, any Rent payable under this Section) plus the actual and reasonable brokerage fees, legal costs, lease concessions and any design or construction fees directly related to and required pursuant to the terms of any such sublease (with all such amounts amortized over the term of the sublease or, in the case of an assignment, the then-remaining term of the Lease) (“Excess Rent”), then Tenant shall be bound and obligated to pay Landlord as Additional Rent hereunder 50% of such Excess Rent within 10 days following receipt thereof by Tenant.  If Tenant shall sublet the Premises or any part thereof, Tenant hereby immediately and irrevocably assigns to Landlord, as security for Tenant’s obligations under this Lease, all rent from any such subletting, and Landlord as assignee for Tenant, or a receiver for Tenant appointed on Landlord’s application, may collect such rent and apply it toward Tenant’s obligations under this Lease; except that, until the occurrence of a Default, Tenant shall have the right to collect such rent.
(e)    No Waiver.  The consent by Landlord to an assignment or subletting shall not relieve Tenant or any assignees of this Lease or any sublessees of the Premises from obtaining the consent of Landlord to any further assignment or subletting nor shall it release Tenant or any assignee or sublessee of Tenant from full and primary liability under the Lease.  The acceptance of Rent hereunder, or the acceptance of performance of any other term, covenant, or condition thereof, from any other person or entity shall not be deemed to be a waiver of any of the provisions of this Lease or a consent to any subletting, assignment or other transfer of the Premises.
(f)    Intentionally Omitted.  
23.    Estoppel Certificate.  Tenant shall, within 10 business days of written notice from Landlord, execute, acknowledge and deliver a statement in writing in any form reasonably requested by a proposed lender or purchaser, (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease as so modified is in full force and effect) and the dates to which the rental and other charges are paid in advance, if any, (ii) acknowledging that there are not any uncured defaults on the part of Landlord hereunder, or specifying such defaults if any are claimed, and (iii) setting forth such further information with respect to the status of this Lease or the Premises as may 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 26

be reasonably requested by a prospective bona fide third party purchaser or encumbrancer.  Any such statement may be relied upon by any prospective purchaser or encumbrancer of all or any portion of the real property of which the Premises are a part.  Tenant’s failure to deliver such statement within 10 days after Landlord’s delivery to Tenant of a second written request therefor, shall be conclusive upon Tenant that the Lease is in full force and effect and without modification except as may be represented by Landlord in any certificate prepared by Landlord and delivered to Tenant for execution. 
Landlord shall, within 10 business days of written notice from Tenant, execute an estoppel certificate (which may include good faith and factually correct comments by Landlord) to Tenant’s bona fide third party lender, an assignee pursuant to a Permitted Assignment, or an approved subtenant or assignee:  (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease as so modified is in full force and effect) and the dates to which the rental and other charges are paid in advanced, if any, (ii) acknowledging that there are not, to Landlord’s actual knowledge, Defaults on the part of Tenant hereunder, or specifying such Defaults if any are claimed and (iii) setting forth such further information with respect to the status of this Lease or the Premises as may be reasonably requested thereon.
24.    Quiet Enjoyment.  So long as Tenant is not in Default under this Lease, Tenant shall, subject to the terms of this Lease, at all times during the Term, have peaceful and quiet enjoyment of the Premises against any person claiming by, through or under Landlord.
25.    Prorations.  All prorations required or permitted to be made hereunder shall be made on the basis of a 360 day year and 30 day months.
26.    Rules and Regulations.  Tenant shall, at all times during the Term, comply with the rules and regulations attached hereto, and with reasonable, non-discriminatory, new written rules and regulations from time to time established by Landlord covering the use of the Premises or the Project.  Any new rules and regulations imposed by Landlord pursuant to this Section 26 shall not (i) materially adversely affect Tenant’s parking, access to or use of the Premises for the Permitted Use, (ii) materially increase Tenant’s financial obligations to Landlord under this Lease in a manner not otherwise contemplated by the other provisions of this Lease, and/or (iii) materially adversely affect Tenant’s rights or obligations under this Lease.  The current rules and regulations are attached hereto as Exhibit E.  If there is any conflict between said rules and regulations (including any later promulgated rules and regulations) and other provisions of this Lease, the terms and provisions of this Lease shall control.  Landlord shall not have any liability or obligation for the breach of any rules or regulations by other tenants in the Project and Landlord shall not enforce such rules and regulations in a discriminatory manner among tenants in the Project.
27.    Subordination.  This Lease and Tenant’s interest and rights hereunder are hereby made and shall be subject and subordinate at all times to the lien of any Mortgage now existing or hereafter created on or against the Project or the Premises, and all amendments, restatements, renewals, modifications, consolidations, refinancing, assignments and extensions thereof, without the necessity of any further instrument or act on the part of Tenant; provided, however that so long as there is no Default hereunder, Tenant’s rights set forth in this Lease including its rights to use, occupy and possess the Premises shall not be disturbed by the Holder of any such Mortgage.  Tenant agrees, at the election of the Holder of any such Mortgage, to attorn to any such Holder.  Tenant agrees upon demand to execute, acknowledge and deliver such instruments, confirming such subordination, and such instruments of attornment as shall be requested by any such Holder, provided any such instruments contain appropriate non-disturbance provisions assuring Tenant’s quiet enjoyment of the Premises as set forth in Section 24 hereof.  Notwithstanding the foregoing, any such Holder may at any time subordinate its Mortgage to this Lease, without Tenant’s consent, by notice in writing to Tenant, and thereupon this Lease shall be deemed prior to such Mortgage without regard to their respective dates of execution, delivery or recording and in that event such Holder shall have the same rights with respect to this Lease as though this Lease had been executed prior to the execution, delivery and recording of such Mortgage and had been assigned to such Holder.  The term “Mortgage” whenever used in this Lease shall be deemed to include deeds of trust, security assignments and any other 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 27

encumbrances, and any reference to the “Holder” of a Mortgage shall be deemed to include the beneficiary under a deed of trust.  As of the date of this Lease, there is no existing Mortgage encumbering  the Project.
28.    Surrender.  Upon the expiration of the Term or earlier termination of Tenant’s right of possession, Tenant shall surrender the Premises to Landlord in the same condition as received, subject to any Alterations or Installations permitted by Landlord to remain in the Premises, free of Hazardous Materials brought upon, kept, used, stored, handled, treated, generated in, or released or disposed of from, the Premises by any person other than a Landlord Party during the Term or any holding over (collectively, “Tenant HazMat Operations”) and released of all Hazardous Materials Clearances, if any, broom clean, ordinary wear and tear and casualty loss and condemnation covered by Sections 18 and 19 excepted.  At least 3 months prior to the surrender of the Premises, Tenant shall deliver to Landlord a narrative description of the actions proposed (or required by any Governmental Authority) to be taken by Tenant in order to surrender the Premises (including any Installations permitted by Landlord to remain in the Premises) at the expiration or earlier termination of the Term, free from any residual impact from the Tenant HazMat Operations and otherwise released for unrestricted use and occupancy (the “Surrender Plan”).  Such Surrender Plan shall be accompanied by a current listing of (i) all Hazardous Materials licenses and permits held by or on behalf of any Tenant Party with respect to the Premises, and (ii) all Hazardous Materials used, stored, handled, treated, generated, released or disposed of from the Premises, and shall be subject to the review and reasonable approval of Landlord’s environmental consultant.  In connection with the review and approval of the Surrender Plan, upon the request of Landlord, Tenant shall deliver to Landlord or its consultant such additional non-proprietary information concerning Tenant HazMat Operations as Landlord shall reasonably request.  On or before such surrender, Tenant shall deliver to Landlord evidence that the approved Surrender Plan shall have been satisfactorily completed and Landlord shall have the right, subject to reimbursement at Tenant’s expense as set forth below, to cause Landlord’s environmental consultant to inspect the Premises and perform such additional procedures as may be deemed reasonably necessary to confirm that the Premises are, as of the effective date of such surrender or early termination of the Lease, free from any residual impact from Tenant HazMat Operations.  Tenant shall reimburse Landlord, as Additional Rent, for the reasonable, actual out-of pocket expense incurred by Landlord for Landlord’s environmental consultant to review and approve the Surrender Plan and to visit the Premises and verify satisfactory completion of the same, which cost shall not exceed $5,000.  Landlord shall have the unrestricted right to deliver such Surrender Plan and any report by Landlord’s environmental consultant with respect to the surrender of the Premises to third parties. 
If Tenant shall fail to prepare or submit a Surrender Plan approved by Landlord, or if Tenant shall fail to complete the approved Surrender Plan, or if such Surrender Plan, whether or not approved by Landlord, shall fail to adequately address any residual effect of Tenant HazMat Operations in, on or about the Premises, Landlord shall have the right to take such actions as Landlord may deem reasonable or appropriate to assure that the Premises and the Project are surrendered free from any residual impact from Tenant HazMat Operations, the reasonable cost of which actions shall be reimbursed by Tenant as Additional Rent, without regard to the limitation set forth in the first paragraph of this Section 28.
Tenant shall immediately return to Landlord all keys and/or access cards to parking, the Project, restrooms or all or any portion of the Premises furnished to or otherwise procured by Tenant.  If any such access card or key is lost, Tenant shall pay to Landlord, at Landlord’s election, either the cost of replacing such lost access card or key or the cost of reprogramming the access security system in which such access card was used or changing the lock or locks opened by such lost key.  Any Tenant’s Property, Alterations and property not so removed by Tenant as permitted or required herein shall be deemed abandoned and may be stored, removed, and disposed of by Landlord at Tenant’s expense, and Tenant waives all claims against Landlord for any damages resulting from Landlord’s retention and/or disposition of such property.  All obligations of Tenant hereunder not fully performed as of the termination of the Term, including the obligations of Tenant under Section 30 hereof, shall survive the expiration or earlier termination of the Term, including, without limitation, indemnity obligations, payment obligations with respect to Rent and obligations concerning the condition and repair of the Premises.

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 28

29.    Waiver of Jury Trial.  TO THE EXTENT PERMITTED BY LAW, TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.
30.    Environmental Requirements.
(a)    Prohibition/Compliance/Indemnity.  Tenant shall not cause or permit any Hazardous Materials (as hereinafter defined) to be brought upon, kept, used, stored, handled, treated, generated  in or about, or released or disposed of from, the Premises or the Project by Tenant or any Tenant Party in violation of applicable Environmental Requirements (as hereinafter defined).  Subject to the provisions of the last sentence of this Section 30(a), if Tenant breaches the obligation stated in the preceding sentence, or if the presence of Hazardous Materials in the Premises during the Term or any holding over results in contamination of the Premises, the Project or any adjacent property or if contamination of the Premises, the Project or any adjacent property by Hazardous Materials brought into, kept, used, stored, handled, treated, generated in, or released or disposed of from, the Premises by anyone other than Landlord and Landlord’s employees, agents and contractors otherwise occurs during the Term or any holding over, Tenant hereby indemnifies and shall defend and hold Landlord, its officers, directors, employees, agents and contractors harmless from any and all actions (including, without limitation, remedial or enforcement actions of any kind, administrative or judicial proceedings, and orders or judgments arising out of or resulting therefrom), costs, claims, damages (including, without limitation, punitive damages and damages based upon diminution in value of the Premises or the Project, or the loss of, or restriction on, use of the Premises or any portion of the Project), expenses (including, without limitation, attorneys’, consultants’ and experts’ fees, court costs and amounts paid in settlement of any claims or actions), fines, forfeitures or other civil, administrative or criminal penalties, injunctive or other relief (whether or not based upon personal injury, property damage, or contamination of, or adverse effects upon, the environment, water tables or natural resources), liabilities or losses (collectively, “Environmental Claims”) which arise during or after the Term as a result of such contamination.  This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, treatment, remedial, removal, or restoration work required by any federal, state or local Governmental Authority because of Hazardous Materials present in the air, soil or ground water above, on, or under the Premises.  Without limiting the foregoing, if the presence of any Hazardous Materials on the Premises, the Building, the Project or any adjacent property caused or permitted by Tenant or any Tenant Party results in any contamination of the Premises, the Building, the Project or any adjacent property, Tenant shall promptly take all actions at its sole expense and in accordance with applicable Environmental Requirements as are necessary to return the Premises, the Building, the Project or any adjacent property to the condition existing prior to the time of such contamination, provided that Landlord’s approval of such action shall first be obtained, which approval shall not unreasonably be withheld so long as such actions would not potentially have any material adverse long-term or short-term effect on the Premises, the Building or the Project.  Tenant acknowledges having received a copy of Landlord’s Phase I environmental site assessment report with respect to the Project.  Notwithstanding anything to the contrary contained in Section 28 or this Section 30, Tenant shall not be responsible for, and the indemnification and hold harmless obligation set forth in this paragraph shall not apply to (i) contamination in the Premises which Tenant can reasonably establish existed in the Premises immediately prior to the Commencement Date, (ii) the presence of any Hazardous Materials in the Premises which Tenant can reasonably establish migrated from outside of the Premises into the Premises, or (iii) contamination caused by Landlord or any Landlord’s employees, agents and contractors, unless in any case, the presence of such Hazardous Materials (x) is the result of a breach by Tenant of any of its obligations under this Lease, or (y) was caused, contributed to or exacerbated by Tenant or any Tenant Party.  
(b)    Business.  Landlord acknowledges that it is not the intent of this Section 30 to prohibit Tenant from using the Premises for the Permitted Use.  Tenant may operate its business according to prudent industry practices so long as the use or presence of Hazardous Materials is strictly and properly monitored 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 29

according to all then applicable Environmental Requirements.  As a material inducement to Landlord to allow Tenant to use Hazardous Materials in connection with its business, Tenant agrees to deliver to Landlord prior to the Commencement Date a list identifying each type of Hazardous Materials to be brought upon, kept, used, stored, handled, treated, generated on, or released or disposed of from, the Premises and setting forth any and all governmental approvals or permits required in connection with the presence, use, storage, handling, treatment, generation, release or disposal of such Hazardous Materials on or from the Premises (“Hazardous Materials List”).  Tenant shall maintain a current and up to date Hazardous Materials List at the Premises and with applicable Governmental Authorities. Tenant shall deliver to Landlord an updated Hazardous Materials List at any time that Tenant is required to deliver a Hazardous Materials List to any Governmental Authority (e.g., the fire department) in connection with its use or occupancy of the Premises.  Tenant shall deliver to Landlord true and correct copies of the following documents (the “Haz Mat Documents”) relating to the use, storage, handling, treatment, generation, release or disposal of Hazardous Materials prior to the Commencement Date, or if unavailable at that time, concurrent with the receipt from or submission to a Governmental Authority:  permits; approvals; reports and correspondence; storage and management plans, notice of violations of any Legal Requirements; plans relating to the installation of any storage tanks to be installed at the Project (provided, said installation of tanks shall only be permitted after Landlord has given Tenant its written consent to do so, which consent may not be unreasonably withheld, conditioned or delayed); all closure plans or any other documents required by any and all federal, state and local Governmental Authorities for any storage tanks installed in, on or under the Project for the closure of any such tanks; and a Surrender Plan (to the extent surrender in accordance with Section 28 cannot be accomplished in 3 months).  Tenant is not required, however, to provide Landlord with any portion(s) of the Haz Mat Documents containing information of a proprietary nature which, in and of themselves, do not contain a reference to any Hazardous Materials or hazardous activities.  It is not the intent of this Section to provide Landlord with information which could be detrimental to Tenant’s business should such information become possessed by Tenant’s competitors.
(c)    Intentionally Omitted.  
(d)    Testing.  Landlord shall have the right to conduct annual tests of the Premises to determine whether any contamination of the Premises or the Project has occurred as a result of Tenant’s use.  Tenant shall be required to pay the cost of such annual test of the Premises if there is violation of this Section 30; provided, however, that if Tenant conducts its own tests of the Premises using third party contractors and test procedures acceptable to Landlord which tests are certified to Landlord, Landlord shall accept such tests in lieu of the annual tests to be paid for by Tenant, if applicable.  In addition to the annual tests Landlord may conduct pursuant to this Section 30(d), Landlord may conduct additional tests at the expiration or earlier termination of the Term to determine if contamination has occurred as a result of Tenant’s use of the Premises.  In connection with such testing, upon the request of Landlord, Tenant shall deliver to Landlord or its consultant such non-proprietary information concerning the use of Hazardous Materials in or about the Premises by Tenant or any Tenant Party.  If contamination has occurred (not including Hazardous Materials residue that would typically be removed upon the decommissioning of the Premises) for which Tenant is liable under this Section 30, Tenant shall pay the costs to conduct such tests.  If no such contamination is found, Landlord shall pay the costs of such tests (which shall not constitute an Operating Expense).  Landlord shall provide Tenant with a copy of all third party, non-confidential reports and tests of the Premises made by or on behalf of Landlord during the Term without representation or warranty and subject to a confidentiality agreement.  Tenant shall, at its sole cost and expense, promptly and satisfactorily remediate any contamination for which Tenant is liable under this Section 30 identified by such testing in accordance with all Environmental Requirements.  Landlord’s receipt of or satisfaction with any environmental assessment in no way waives any rights which Landlord may have against Tenant.
(e)    Control Areas.  Tenant shall be entitled to use 100% of the Hazardous Materials inventory within any control area or zone located within the Building, as designated by the applicable building code, for chemical use or storage.  If Tenant does not lease all of the Spectrum 3 Building (as defined below), Tenant shall be allowed to utilize up to its pro rata share of the Hazardous Materials inventory within any control area or zone (located within Tenant’s premises in the Spectrum 3 Building), as designated by the 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 30

applicable building code, for chemical use or storage.  As used in the preceding sentence, Tenant’s pro rata share of any control areas or zones located within Tenant’s premises in the Spectrum 3 Building  shall be determined based on the rentable square footage that Tenant leases within the applicable control area or zone.  For purposes of example only, if a control area or zone contains 10,000 rentable square feet and 2,000 rentable square feet of a tenant’s premises are located within such control area or zone (while such premises as a whole contains 5,000 rentable square feet), the applicable tenant’s pro rata share of such control area would be 20%.  
(f)    Underground Tanks.  In no event shall Tenant have the right to install or use any underground storage tanks storing Hazardous Materials at the Project.  The term “underground storage tank” as used in this Lease shall not include above-ground storage tanks located in the subterranean parking garage and/or the mechanical/service yard.
(g)    Tenant’s Obligations.  Each party’s obligations under this Section 30 shall survive the expiration or earlier termination of the Lease.  During any period of time after the expiration or earlier termination of this Lease required by Tenant or Landlord to complete the removal from the Premises of any Hazardous Materials for which Tenant is responsible under this Lease (including, without limitation, the release and termination of any licenses or permits restricting the use of the Premises and the completion of the approved Surrender Plan), Tenant shall continue to pay the full Rent in accordance with this Lease for any portion of the Premises not relet by Landlord in Landlord’s sole discretion, which Rent shall be prorated daily.
(h)    Definitions.  As used herein, the term “Environmental Requirements” means all applicable present and future statutes, regulations, ordinances, rules, codes, judgments, orders or other similar enactments of any Governmental Authority regulating or relating to environmental conditions on, under, or about the Premises or the Project, or the environment, including without limitation, the following:  the Comprehensive Environmental Response, Compensation and Liability Act; the Resource Conservation and Recovery Act; and all state and local counterparts thereto, and any regulations or policies promulgated or issued thereunder.  As used herein, the term “Hazardous Materials” means and includes any substance, material, waste, pollutant, or contaminant listed or defined as hazardous or toxic, or regulated by reason of its impact or potential impact on humans, animals and/or the environment under any Environmental Requirements, asbestos and petroleum, including crude oil or any fraction thereof, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas).  As defined in Environmental Requirements, Tenant is and shall be deemed to be the “operator” of Tenant’s “facility” and the “owner” of all Hazardous Materials brought on the Premises by Tenant or any Tenant Party, and the wastes, by-products, or residues generated, resulting, or produced therefrom.
31.    Tenant’s Remedies/Limitation of Liability.  
(a)    Generally.  Landlord shall not be in default hereunder unless Landlord fails to perform any of its obligations hereunder within 30 days after written notice from Tenant specifying such failure (unless such performance will, due to the nature of the obligation, require a period of time in excess of 30 days, then after such period of time as is reasonably necessary).  Upon any default by Landlord, Tenant shall give notice by registered or certified mail to any Holder of a Mortgage covering the Premises and to any landlord of any lease of property in or on which the Premises are located and Tenant shall offer such Holder and/or landlord a reasonable opportunity to cure the default, including time to obtain possession of the Project by power of sale or a judicial action if such should prove necessary to effect a cure; provided Landlord shall have furnished to Tenant in writing the names and addresses of all such persons who are to receive such notices.  All obligations of Landlord hereunder shall be construed as covenants, not conditions; and, except as may be otherwise expressly provided in this Lease, Tenant may not terminate this Lease for breach of Landlord’s obligations hereunder.
All obligations of Landlord under this Lease will be binding upon Landlord only during the period of its ownership of the Premises and not thereafter.  The term “Landlord” in this Lease shall mean only the 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 31

owner for the time being of the Premises.  Upon the transfer by such owner of its interest in the Premises, such owner shall thereupon be released and discharged from all obligations of Landlord thereafter accruing, but such obligations shall be binding during the Term upon each new owner for the duration of such owner’s ownership.
(b)    Tenant’s Self-Help Remedy.  If Landlord is in default of any of its obligations to maintain and repair the Premises (other than as a result of a casualty, which shall be governed solely by the provisions of Section 18 of this Lease) (collectively referred to in this Section 31(b) as “repairs”), then notwithstanding anything to the contrary contained in this Lease, Tenant may, provided that it does not materially adversely affect any Building Systems affecting other tenants of the Project or materially adversely affect the Building structure, perform such repairs subject to the following terms and conditions:
(i)    Tenant shall deliver written notice to Landlord and any Holder whose name and address has previously been furnished to Tenant in writing (the “Self-Help Notice”) of Tenant’s intention to perform such repairs, which Self-Help Notice shall state in bold-faced all capital letters:  “FAILURE TO PERFORM SUCH WORK IN TEN (10) DAYS SHALL RESULT IN TENANT’S EXERCISE OF SELF-HELP”.  If neither Landlord nor lender commences to cure Landlord’s failure to perform such repairs within 10 days after receipt of the Self-Help Notice, then Tenant may take such action as is reasonably necessary to perform such repairs; 
(ii)    All repairs performed by Tenant or its agents pursuant to this Section 31(b) must be performed in a good and workmanlike manner in compliance with applicable Legal Requirements and, to the extent possible, using contractors then under contract to perform maintenance at the Project whose names have been provided to Tenant by Landlord or whose names are otherwise reasonably known to Tenant, and shall not void any warranties or guaranties on the Premises or the Project;
(iii)    In the event Landlord’s failure relates to repairs that are bona fide emergency repairs (i.e., necessary to prevent or remediate a material and imminent threat to the health or safety of persons or necessary to prevent a material adverse affect on Tenant’s business operations), then notwithstanding the provisions of Section 31(b)(i) above, the Self-Help Notice shall be in the form and shall be given in such amount of time as is reasonable in the circumstances, and if Landlord or lender fails to respond within a time as is reasonable in the circumstances, Tenant may cause such emergency repairs to be made pursuant to the requirements set forth herein; and
(iv)    Landlord shall reimburse Tenant for Tenant’s reasonable out-of-pocket third party costs of the performance of the repairs that are incurred under the terms of this Section 31(b) (the “Reimbursement Amount”) within 30 days after Tenant’s submission to Landlord of Tenant’s bill therefor, which bill shall be accompanied by receipted, itemized invoices (with reasonable supporting documentation) and conditional lien releases from all contractors, subcontractors, materialmen and suppliers that performed the work or provided the material or services reflected in the bill), provided, however, in no event shall such emergency repairs exceed what is required to end the pending emergency (it being understood and agreed by Landlord that in the case of an emergency, depending upon the circumstances, overtime and/or premium time labor charges may be reasonable).  Tenant shall provide unconditional lien waivers to Landlord in connection with all such bills paid within 10 days after Landlord’s payment of Tenant’s bill.  In the event Landlord fails to pay all or any portion of the Reimbursement Amount due Tenant under this Section 31(b) within 30 days after receipt of Tenant’s bill therefore, together with the invoices therefor, supporting documentation and the conditional lien releases required by this Section 31(b)(iv), along with written notice to Landlord stating in bold-faced, all capital letters that:  “FAILURE TO REIMBURSE WITHIN THIRTY (30) DAYS SHALL RESULT IN TENANT’S EXERCISE OF OFFSET RIGHTS”, Tenant may offset such delinquent amount against up to 20% of the monthly Base Rent due from Tenant until Tenant has been reimbursed in full, provided that Tenant shall provide Landlord with unconditional lien waivers in connection with the work relating to such amounts within 10 days of the date on which the amount 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 32

has been fully paid or so offset, or as soon thereafter as reasonably practicable.  Notwithstanding the foregoing, if Landlord delivers to Tenant a good faith written objection notice within 10 business days after receipt of Tenant’s notice of intent to offset, setting forth with reasonable particularity Landlord’s reasons for its claim that Landlord is not required to pay Tenant all or any specified portion of the Reimbursement Amount, then Tenant shall not be entitled to offset the disputed portion of the Reimbursement Amount.  If Landlord and Tenant are not able to reach agreement with respect to the disputed matters within 10 business days after Tenant’s receipt of such notice from Landlord, the parties shall submit such dispute to arbitration conducted by the American Arbitration Association in San Diego in accordance with the “Expedited Procedures” of its Commercial Arbitration Rules.  Unless the parties otherwise agree, the arbitrator must be a retired judge of the Superior Court of the State of California. All costs associated with arbitration shall be awarded to the prevailing party as determined by the arbitrator.  Nothing contained in this Section 31(b) is intended to preclude or limit Landlord from passing through as part of Operating Expenses any Reimbursement Amount to the extent Landlord is otherwise not precluded under Section 5 from passing through such cost as part of Operating Expenses.
Notwithstanding anything to the contrary contained herein, the self-help remedies provided for in this Section 31 shall in no event apply to Landlord’s Work and Tenant shall have no right to perform any portion of or complete the construction of Landlord’s Work.
32.    Inspection and Access.  Landlord and its agents, representatives, and contractors may enter the Premises at any reasonable time to inspect the Premises and to make such repairs as may be required or permitted pursuant to this Lease.  Landlord and Landlord’s representatives may enter the Premises during business hours on not less than 2 business days advance written notice (except in the case of emergencies in which case Landlord shall provide such notice as is reasonable under the circumstances and such entry may be at any time) for the purpose of effecting any such repairs, inspecting the Premises, showing the Premises to prospective purchasers and, during the last year of the Term, to prospective tenants.  Landlord shall use reasonable efforts to coordinate with Tenant to schedule any such entry and activity in order to minimize interruption of Tenant’s operations at the Premises.  Landlord may erect a suitable sign on the Building stating the Premises within the Building are available to let during the last year of the Term or that the Project is available for sale. Landlord shall not erect any signs on the Building in connection with the availability of space available to let in the Spectrum 3 Building. Landlord may grant easements, make public dedications, designate Common Areas and create restrictions on or about the Project outside the Building, provided that no such easement, dedication, designation or restriction materially adversely affects Tenant’s use or occupancy of the Premises for the Permitted Use or materially adversely affects Tenant’s rights with respect to the Exclusive Use Areas (other than on a temporary basis).  At Landlord’s request, Tenant shall execute such instruments as may be necessary for such easements, dedications or restrictions.  Tenant shall at all times, except in the case of emergencies, have the right to escort Landlord or its agents, representatives, contractors or guests while the same are in the Premises, provided such escort does not materially and adversely affect Landlord’s access rights hereunder. During Landlord’s access of the Premises, Landlord shall use reasonable efforts to comply with Tenant’s reasonable security requirements; provided, however, that Tenant has notified Landlord of such security requirements prior to Landlord’s entry into the Premises.  Landlord shall use reasonable efforts to comply with Tenant’s written protocol with respect to entering restricted portions of the Premises; provided, however, that a copy of the same has previously been provided to Landlord.  Tenant shall have the right to designate (on plans provided by Tenant to Landlord, which may be reasonably updated by Tenant from time to time upon notice to Landlord) certain areas of the Premises as limited access areas required to protect the health of persons or security of confidential and proprietary information, which limited access areas shall not be entered into by Landlord or Landlord’s representatives without a Tenant representative, except in the case of an emergency or as otherwise reasonably necessary.
Subject to the terms of this Section 32, Landlord may from time to time during the Term, during regular business hours and/or otherwise at times mutually acceptable to Landlord and Tenant, conduct third 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 33

party tours of certain portions of the Premises reasonably agreed upon in advance by Landlord and Tenant (“Tours”) which Tours may be held with not less than 1 business day’s advance notice.  
33.    Security.  Landlord shall develop jointly with Tenant, subject to Tenant’s approval, which approval shall not be unreasonably withheld, conditioned or delayed, a commercially reasonable security plan (the “Security Plan”) for the exterior perimeter and Common Areas of the Project. Landlord shall provide (or cause to be provided) security to the Project in accordance with the Security Plan, the cost of which shall constitute an Operating Expense. Notwithstanding anything to the contrary contained in Section 5, prior to the commencement of construction of the Spectrum 3 Building by Landlord, Tenant shall, as part of Operating Expenses, be responsible for all costs and expenses incurred by Landlord with respect to the provision of security to the Project.  Notwithstanding the fact that Landlord provides (or causes to be provided) security services at the Project at any time during the Term, Landlord shall not be deemed to owe Tenant, or any person claiming by, through or under Tenant, any special duty or standard of care as a result of Landlord’s provision of such security services and in no event shall Landlord be responsible for the efficacy of such security measures. Tenant acknowledges and agrees that security devices and services, if any, while intended to deter crime may not in given instances prevent theft or other criminal acts and that Landlord is not providing any security services with respect to the Premises.  Tenant agrees that Landlord shall not be liable to Tenant for, and Tenant waives any claim against Landlord with respect to, any loss by theft or any other damage suffered or incurred by Tenant in connection with any unauthorized entry into the Premises or any other breach of security with respect to the Premises.  Tenant shall be solely responsible for the personal safety of Tenant’s officers, employees, agents, contractors, guests and invitees while any such person is in, on or about the Premises and/or the Project.  Tenant shall at Tenant’s cost obtain insurance coverage to the extent Tenant desires protection against such criminal acts.
Subject to the terms of this Lease, including, without limitation, Tenant’s compliance with Section 12, Tenant, at Tenant’s sole cost and expense, shall have the right to install and maintain a security and card access system including cameras inside and outside the Premises (including, as may be coordinated with Landlord as provided below, the Common Areas) (“Tenant’s Security System”), subject to the following conditions:  (i) Tenant’s plans and specifications for the proposed location of Tenant’s Security System and Tenant’s protocol for the operation of Tenant’s Security System shall be subject to Landlord’s prior written approval, which approval will not be unreasonably withheld; provided, however, that Tenant shall coordinate the installation and operation of Tenant’s Security System with Landlord to assure that Tenant’s Security System may be compatible with the Building’s systems and equipment and Tenant does not violate the reasonable privacy rights of any other occupants of the Project; (ii) Landlord shall be provided with keys, codes and/or access cards, as applicable, and means of immediate access to fully exercise all of its entry rights under the Lease with respect to the Premises; and (iii) Tenant shall be solely responsible, at Tenant’s sole cost and expense, for the monitoring, operation and removal of Tenant’s Security System.  Upon the expiration or earlier termination of this Lease, Tenant shall remove Tenant’s Security System. All costs and expenses associated with the removal of Tenant’s Security System and the repair of any damage to the Premises and the Building resulting from the installation and/or removal of same shall be borne solely by Tenant.  Notwithstanding anything to the contrary contained herein, Landlord shall not be directly or indirectly liable to Tenant, any Tenant Parties or any other person and Tenant hereby waives any and all claims against and releases Landlord from any and all claims arising as a consequence of or related to Tenant’s Security System, or the failure thereof.
34.    Force Majeure.  Except for the payment of Rent or as otherwise specifically excluded or limited in this Lease, neither Landlord nor Tenant shall be held responsible or liable for delays in the performance of its obligations hereunder when caused by, related to, or arising out of acts of God, catastrophic weather, national, regional, or local disasters, calamities, or catastrophes, material delay in issuance or revocation of permits beyond the time periods customarily required by the City for such issuance or revocation, as applicable, enemy or hostile governmental action, terrorism, insurrection, riots, civil disturbance or commotion, fire or other casualty (“Force Majeure”).  In the event that either party is delayed from performing any obligation hereunder as a result of Force Majeure, such party shall promptly give notice to the other 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 34

party of the delay in question, specifying in such notice the nature of the delay and such party’s good faith estimate of the length of the delay in question.
35.    Brokers.  Landlord and Tenant each represents and warrants that it has not dealt with any broker, agent or other person (collectively, “Broker”) in connection with this transaction and that no Broker brought about this transaction, other than DTZ.  Landlord and Tenant each hereby agree to indemnify and hold the other harmless from and against any claims by any Broker, other than the broker, if any named in this Section 35, claiming a commission or other form of compensation by virtue of having dealt with Tenant or Landlord, as applicable, with regard to this leasing transaction. Landlord shall be responsible for all commissions due to DTZ arising out of the execution of this Lease in accordance with the terms of a separate written agreement between DTZ and Landlord.
36.    Limitation on Landlord’s Liability.  NOTWITHSTANDING ANYTHING SET FORTH HEREIN OR IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE CONTRARY:  (A) LANDLORD SHALL NOT BE LIABLE TO TENANT OR ANY OTHER PERSON FOR (AND TENANT AND EACH SUCH OTHER PERSON ASSUME ALL RISK OF) LOSS, DAMAGE OR INJURY, WHETHER ACTUAL OR CONSEQUENTIAL TO:  TENANT’S PERSONAL PROPERTY OF EVERY KIND AND DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE FIXTURES, EQUIPMENT, INVENTORY, SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS, PRODUCT, SPECIMENS, SAMPLES, AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER RECORDS OF EVERY KIND AND DESCRIPTION KEPT AT THE PREMISES AND ANY AND ALL INCOME DERIVED OR DERIVABLE THEREFROM; (B) THERE SHALL BE NO PERSONAL RECOURSE TO LANDLORD FOR ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR ARISING IN ANY WAY UNDER THIS LEASE OR ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT WITH RESPECT TO THE SUBJECT MATTER HEREOF AND ANY LIABILITY OF LANDLORD HEREUNDER SHALL BE STRICTLY LIMITED SOLELY TO LANDLORD’S INTEREST IN THE PROJECT OR ANY PROCEEDS FROM SALE OR CONDEMNATION THEREOF AND ANY INSURANCE PROCEEDS PAYABLE IN RESPECT OF LANDLORD’S INTEREST IN THE PROJECT OR IN CONNECTION WITH ANY SUCH LOSS; AND (C) IN NO EVENT SHALL ANY PERSONAL LIABILITY BE ASSERTED AGAINST LANDLORD IN CONNECTION WITH THIS LEASE NOR SHALL ANY RECOURSE BE HAD TO ANY OTHER PROPERTY OR ASSETS OF LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS.  UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE FOR INJURY TO TENANT’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.
37.    Severability.  If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws, then and in that event, it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby.  It is also the intention of the parties to this Lease that in lieu of each clause or provision of this Lease that is illegal, invalid or unenforceable, there be added, as a part of this Lease, a clause or provision as similar in effect to such illegal, invalid or unenforceable clause or provision as shall be legal, valid and enforceable.
38.    Signs; Exterior Appearance.  Tenant shall not, without the prior written consent of Landlord, which may be granted or withheld in Landlord’s sole discretion:  (i) attach any awnings, exterior lights, decorations, balloons, flags, pennants, banners, painting or other projection to any outside wall of the Building, (ii) use any curtains, blinds, shades or screens other than Landlord’s standard window coverings, (iii) coat or otherwise sunscreen the interior or exterior of any windows, (iv) attach any items to the windows with tape or any other adhesive substance, or (v) place any items of any type which can be viewed from the exterior of the Premises in violation of applicable Legal Requirements.  Tenant shall not place any furniture or other items in the window line on the street facing side of the Building that is not professional in appearance.  
Tenant shall have the exclusive right to display, at Tenant’s cost and expense, one or more signs bearing Tenant’s name and/or logo at the top of the Building (collectively, the “Building Signs”) in a location selected by Tenant and reasonably acceptable to Landlord if not shown on Exhibit K attached hereto.  Subject 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 35

to applicable Legal Requirements, the parties anticipate the Building Signs will total 100 square feet. Notwithstanding the foregoing, Tenant acknowledges and agrees that the Building Signs including, without limitation, the size, color and type, shall be subject to Landlord’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed, shall be consistent with Landlord’s signage program at the Project and shall be subject to any and all other required approvals and applicable Legal Requirements.  Tenant shall be responsible, at Tenant’s sole cost and expense, for the maintenance of the Building Signs, for the removal of the Building Signs at the expiration or earlier termination of this Lease and for the repair of all damage resulting from such removal.  The Building Signs shall be personal to Vertex Pharmaceuticals Incorporated, except that such right may be assigned in connection with any Permitted Assignment.
Tenant shall, at Tenant’s sole cost and expense, have the non-exclusive right to install a sign bearing Tenant’s name on the Monument Sign serving the Project (the “Monument Sign”), as reflected on Exhibit K attached hereto.  Tenant acknowledges and agrees that Tenant’s signage on the Monument Sign including, without limitation, the location, size, color and type shall be subject to Landlord’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed, shall be subject to and consistent with Landlord’s signage program at the Project and shall be subject to any and all other required approvals and applicable Legal Requirements.  Tenant shall be responsible, at Tenant’s sole cost and expense, for the maintenance of Tenant’s signage on the Monument Sign, for the removal of Tenant’s signage from the Monument Sign at the expiration or earlier termination of this Lease and for the repair of all damage resulting from such removal.  The Monument Sign shall be personal to Vertex Pharmaceuticals Incorporated, except that such right may be assigned in connection with any Permitted Assignment.  Tenant has elected option A reflected on Exhibit K with respect to the Monument Sign.
39.    Right to Expand.
(a)    Expansion in the Project.  Subject to Landlord’s obtaining all required Approvals (subject to the third paragraph of Section 2 above), Landlord shall, within 24 months after the Rent Commencement Date, construct a second building at the Project containing approximately 40,000-60,000 rentable square feet of rentable space (the “Spectrum 3 Building”).  Landlord shall, in the exercise of its sole and absolute discretion, make the decisions as to all matters regarding the Spectrum 3 Building including, without limitation, the size thereof.  Tenant acknowledges that, if Landlord so elects in its sole and absolute discretion, all or a portion of the Spectrum 3 Building may consist of small suites (e.g., a science hotel).  So long as Tenant is then leasing not less than 75% of the Premises, then, subject to the terms of this Section 39, the first time that Landlord intends to accept a written proposal (the “Pending Deal”) to lease all or a portion of the ROFR Space (as hereinafter defined) to a third party, Landlord shall deliver to Tenant written notice (the “Pending Deal Notice”) of the existence and the material terms of such Pending Deal.  For purposes of this Section 39(a), “ROFR Space” shall mean any space in the Spectrum 3 Building.  Tenant shall be entitled to exercise its right under this Section 39(a) only with respect to the entire ROFR Space described in such Pending Deal Notice (the “Identified Space”).  Within 10 business days after Tenant’s receipt of the Pending Deal Notice, Tenant shall deliver to Landlord written notice (the “Space Acceptance Notice”) if Tenant elects to lease the Identified Space.  Tenant’s right to receive the Pending Deal Notice and election to lease or not lease the Identified Space pursuant to this Section 39(a) is hereinafter referred to as the “Right of Refusal.”  If Tenant elects to lease the Identified Space by delivering the Space Acceptance Notice within the required 10 business day period, Tenant shall be deemed to agree to lease the Identified Space on the same general terms and conditions as this Lease except that the terms of the Lease shall be modified to reflect the terms of the Pending Deal Notice for the rental of the Identified Space, provided, however, that (i) if the term of the lease with respect to the Identified Space would pursuant to the Pending Deal expire prior to the term of the Lease with respect to the then-existing Premises, then the term of the Lease with respect to the Identified Space shall be modified to be co-terminous with the Term of this Lease with respect to the then-existing Premises, and (ii) if the term of the lease with respect to the Identified Space is modified to be co-terminous with the term of the then-existing Premises pursuant to sub-section (i), then the economic terms set forth in the Pending Deal Notice shall be equitably adjusted to account for such extension of the term with respect to the Identified Space, provided that such adjustment of the economic terms shall be no less favorable to Landlord  on an annual basis than the economic terms set forth in the Pending Deal (and with market rate 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 36

annual increases in base rent for the Identified Space for that portion of the lease term for the Identified Space beyond the term provided for in the Pending Deal), as reasonably determined by Landlord and Tenant.  If the term of the lease with respect to the Identified Space would pursuant to the Pending Deal expire after the term of this Lease with respect to the then-existing Premises, then the term of the lease with respect to the Identified Space shall be as provided in the Pending Deal (and, for the avoidance of any doubt, no adjustment shall be made to the term of this Lease for the then-existing Premises).  Notwithstanding anything to the contrary contained herein, in no event shall the Work Letter or the TI Allowance (as defined in the Work Letter) apply to the Identified Space, as the terms and conditions of the Pending Deal Notice (as may be equitably adjusted by Landlord), including any tenant improvement allowance provided for in the Pending Deal Notice, shall apply.  If Tenant fails to deliver a Space Acceptance Notice to Landlord within the required 10 business day period, Tenant shall be deemed to have waived its rights under this Section 39(a) to lease the Identified Space identified in the applicable Pending Deal Notice, and Landlord shall have the right to lease such Identified Space to the third party subject to the Pending Deal (or an affiliate of such third party) (“Pending Deal Party”).  Tenant’s Right of First Refusal with respect to such Identified Space shall be restored if Landlord fails to enter into an agreement to lease the Identified Space to the Pending Deal Party within 6 months after Landlord’s deliver of the Pending Deal Notice to Tenant.  Tenant’s Right of First Refusal shall exist with respect to each portion of the Spectrum 3 Building until such portion of the Spectrum 3 Building has been subject to a Pending Deal.  For the avoidance of any doubt, Tenant shall in no event be entitled to a second Pending Deal Notice with respect to any space in the Spectrum 3 Building once Landlord has entered into a lease with a Pending Deal Party with respect to such space in the Spectrum 3 Building.
If Tenant leases a portion of the Spectrum 3 Building and a portion of the Spectrum 3 Building is leased to a third party, the following Lease provisions shall also apply to Tenant’s leasing of the Identified  Space (and in the event of any conflict between the provisions of this paragraph and the other provisions of the this Lease with respect to the leasing of the Identified Space, the provisions of this paragraph shall govern): (i) Tenant shall not, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, use the Identified Space in any manner which will require ventilation, air exchange, heating, gas, steam, electricity or water beyond the existing capacity of the Spectrum 3 Building as proportionately allocated to the Identified Space based upon Tenant’s share of the Spectrum 3 Building as usually furnished for the Permitted Use, (ii) Tenant’s Alterations affecting the structure of the Spectrum 3 Building or the Building Systems serving the Spectrum 3 Building shall require Landlord’s consent which consent may be given or withheld in Landlord’s sole discretion, (iii) Landlord may equitably increase, in Landlord’s reasonable discretion, Tenant’s share of Operating Expenses for any item of expense or cost reimbursable by Tenant that relates to a repair, replacement, or service that benefits only the Identified Space or only a portion of the Spectrum 3 Building that includes the Identified Space or that varies with occupancy or use.  Also, so long as Tenant leases any portion of the Spectrum 3 Building, Section 5(hh) shall be deleted in its entirety.
(b)    Amended Lease.  If: (i) Tenant fails to timely deliver a Space Acceptance Notice, or (ii) after the expiration of a period of 20 days from the date Landlord delivers to Tenant a lease amendment or lease agreement for the Identified Space no lease amendment or lease agreement for the Identified Space acceptable to both parties each in their reasonable discretion has been executed and delivered by Tenant to Landlord, Tenant shall be deemed to have waived its right to lease the Identified Space subject to the applicable Pending Deal, subject to terms of Section 39(a).
(c)    Exceptions.  Notwithstanding the above, the Right of First Refusal shall, at Landlord’s option, not be in effect and may not be exercised by Tenant:
(i)    during any period of time that Tenant is in Default under any provision of the Lease; or
(ii)    if Tenant has been in Default under any provision of the Lease 3 or more times, whether or not the Defaults are cured, during the 12 month period prior to the date on which Tenant seeks to exercise the Right of First Refusal.

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 37

(d)    Termination.  The Right of First Refusal shall, at Landlord’s option, terminate and be of no further force or effect even after Tenant’s due and timely exercise of the Right of First Refusal, if, after such exercise, but prior to the commencement date of the lease of such Right of First Refusal, (i) Tenant fails to timely cure any default by Tenant under the Lease; or (ii) Tenant has Defaulted 3 or more times during the period from the date of the exercise of the Right of First Refusal to the date of the commencement of the lease of the Identified Space, whether or not such Defaults are cured.
(e)    Subordinate.  Tenant hereby acknowledges and agrees that, notwithstanding anything to the contrary contained in this Lease, Tenant’s Right of First Refusal shall be subject and subordinate to any expansion rights granted in the Spectrum 3 Building to any Pending Deal Party with whom Landlord enters into a lease for space in the Spectrum 3 Building.
(f)    Rights Personal.  The Right of First Refusal is personal to Vertex Pharmaceuticals Incorporated and is not assignable without Landlord’s consent, which may be granted or withheld in Landlord’s sole discretion separate and apart from any consent by Landlord to an assignment of Tenant’s interest in the Lease, except that it may be assigned in connection with any Permitted Assignment of this Lease.
(g)    No Extensions.  The period of time within which the Right of First Refusal may be exercised shall not be extended or enlarged by reason of Tenant’s inability to exercise the Right of First Refusal.
40.    Right to Extend Term.  Tenant shall have the right to extend the Term of the Lease upon the following terms and conditions:
(a)    Extension Rights.  Tenant shall have 2 consecutive rights (each, an “Extension Right”) to extend the term of this Lease for 5 years each (each, an “Extension Term”) on the same terms and conditions as this Lease (other than with respect to Base Rent and the Work Letter) by giving Landlord written notice of its election to exercise each Extension Right at least 12 months prior to the expiration of the Base Term of the Lease or the expiration of the prior Extension Term.
     Upon the commencement of any Extension Term, Base Rent shall be payable at the Market Rate (as defined below).  As used herein, “Market Rate” shall mean the rate (including, if applicable, periodic (but no more frequently than annual) increases) that comparable landlords of comparable buildings have accepted in current transactions from non-equity (i.e., not being offered equity in the buildings) and nonaffiliated tenants of similar financial strength for space of comparable size, quality (including all Tenant’s Work, Alterations and other improvements) and floor height in Class A laboratory/office buildings in the Torrey Pines area of San Diego for a comparable term, with the determination of the Market Rate to take into account all relevant factors, including tenant inducements, views, signage rights, covered parking, available amenities other than the Amenities, age of the Building, age of mechanical systems serving the Premises, leasing commissions, allowances or concessions, if any.  In addition, there may be a market rent for the parking rights provided hereunder if tenants of comparable buildings in the Torrey Pines area of San Diego are then customarily paying fees for parking rights granted under their leases and provided further that in the event that there is a market rent for parking rights, Base Rent shall exclude any consideration as to parking rights.  Also, on the first day of each month during each Extension Term, Tenant shall also be required to pay an amenities fee in connection with the Amenities (the “Amenities Fee”).  The Amenities Fee payable on the commencement date of the first year of the Extension Term shall be an amount calculated as follows:  $0.18 per rentable square foot of the Premises per month escalated on each date that Base Rent is adjusted pursuant to the schedule set forth on page 1 of this Lease and on the commencement date of the Extension Term by multiplying the amount payable immediately before such adjustment date and commencement date, as applicable, by 2.9% (for example, on the first day of the 61st month of the Base Term, the $0.18 per rentable square foot of the Premises per month would be escalated by 2.9% to $0.18522 per rentable square foot of the Premises per month and on the first day of the 73rd month of the Base Term, the $0.18522 per rentable square foot of the Premises per month would be escalated to $0.19 per rentable square foot of the Premises per month, and so on).  The Amenities Fee shall continue to increase through the first Extension Term by 2.9% on each annual anniversary of the commencement date of the first Extension Term and, if 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 38

Tenant elects to exercise its second Extension Term, the Amenities Fee shall increase on the commencement date of the second Extension Term and on each annual anniversary of the commencement date of the second Extension Term by 2.9%.
If, on or before the date which is 270 days prior to the expiration of the Base Term of this Lease or the expiration of the prior Extension Term (as applicable), Tenant has not agreed with Landlord’s determination of the Market Rate and the rent escalations during the applicable Extension Term after negotiating in good faith, Tenant shall be deemed to have elected arbitration as described in Section 40(b).  If Tenant has elected to exercise an Extension Right by delivering notice to Landlord as required in this Section 40(a), Tenant and, except as otherwise provided in Section 40(d) and Section 40(f) below, Landlord, shall have no right thereafter to rescind or elect not to extend the term of the Lease for such Extension Term.  
(b)    Arbitration.  
(iii)    Within 10 days of Tenant’s notice to Landlord of its election (or deemed election) to arbitrate Market Rate and escalations, each party shall deliver to the other a proposal containing the Market Rate and escalations that the submitting party believes to be correct (“Extension Proposal”).  If either party fails to timely submit an Extension Proposal, the other party may send a notice to such party indicating the failure and stating that if an Extension Proposal is not sent within 10 days after such second notice, the party’s submitted proposal shall determine the Base Rent and escalations for the Extension Term.  If either party fails to timely submit an Extension Proposal following such second notice, the party’s submitted proposal shall determine the Base Rent and escalations for the Extension Term.  If both parties submit Extension Proposals, then Landlord and Tenant shall meet within 7 days after delivery of the last Extension Proposal and make a good faith attempt to mutually appoint a single Arbitrator (and defined below) to determine the Market Rate and escalations.  If Landlord and Tenant are unable to agree upon a single Arbitrator, then each shall, by written notice delivered to the other within 10 days after the meeting, select an Arbitrator.  If either party fails to timely give notice of its selection for an Arbitrator, the other party’s submitted proposal shall determine the Base Rent for the Extension Term.  The 2 Arbitrators so appointed shall, within 5 business days after their appointment, appoint a third Arbitrator.  If the 2 Arbitrators so selected cannot agree on the selection of the third Arbitrator within the time above specified, then either party, on behalf of both parties, may request such appointment of such third Arbitrator by application to any state court of general jurisdiction in the jurisdiction in which the Premises are located (or, if the state court does not agree to make such appointment, such appointment of such third Arbitrator shall be made by the President of the Greater San Diego Association of Realtors (or, if such President has previously worked for either party, the most immediate past President of the San Diego Association of Realtors not having such a conflict)), upon 10 days prior written notice to the other party of such intent.
(iv)    The decision of the Arbitrator(s) shall be made within 30 days after the appointment of a single Arbitrator or the third Arbitrator, as applicable.  The decision of the single Arbitrator shall be final and binding upon the parties.  The average of the two closest Arbitrators in a three Arbitrator panel shall be final and binding upon the parties.  Each party shall pay the fees and expenses of the Arbitrator appointed by or on behalf of such party and the fees and expenses of the third Arbitrator shall be borne equally by both parties.  If the Market Rate and escalations are not determined by the first day of the Extension Term, then Tenant shall pay Landlord Base Rent in an amount equal to the Base Rent in effect immediately prior to the Extension Term and increased by the Rent Adjustment Percentage until such determination is made.  After the determination of the Market Rate and escalations, the parties shall make any necessary adjustments to such payments made by Tenant.  Landlord and Tenant shall then execute an amendment recognizing the Market Rate and escalations for the Extension Term.
(v)    An “Arbitrator” shall be any person appointed by or on behalf of either party or appointed pursuant to the provisions hereof and:  (i) shall be (A) a member of the American Institute 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 39

of Real Estate Appraisers with not less than 10 years of experience in the appraisal of improved office and high tech industrial real estate in the greater San Diego metropolitan area, or (B) a licensed commercial real estate broker with not less than 15 years’ experience representing landlords and/or tenants in the leasing of high tech or life sciences space in the greater San Diego metropolitan area, (ii) devoting substantially all of their time to professional appraisal or brokerage work, as applicable, at the time of appointment and (iii) be in all respects impartial and disinterested.
(c)    Rights Personal.  Extension Rights are personal to Vertex Pharmaceuticals Incorporated and are not assignable without Landlord’s consent, which may be granted or withheld in Landlord’s sole discretion separate and apart from any consent by Landlord to an assignment of Tenant’s interest in the Lease, except that they may be assigned in connection with any Permitted Assignment of this Lease.
(d)    Exceptions.  Notwithstanding anything set forth above to the contrary, Extension Rights shall, at Landlord’s option, not be in effect and Tenant may not exercise any of the Extension Rights:
(i)    during any period of time that Tenant is in Default under any provision of this Lease; or
(ii)    if Tenant has been in Default under any provision of this Lease 3 or more times, whether or not the Defaults are cured, during the 12 month period immediately prior to the date that Tenant intends to exercise an Extension Right, whether or not the Defaults are cured.
(e)    No Extensions.  The period of time within which any Extension Rights may be exercised shall not be extended or enlarged by reason of Tenant’s inability to exercise the Extension Rights.
(f)    Termination.  The Extension Rights shall, at Landlord’s option, terminate and be of no further force or effect even after Tenant’s due and timely exercise of an Extension Right, if, after such exercise, but prior to the commencement date of an Extension Term, (i) Tenant fails to timely cure any default by Tenant under this Lease; or (ii) Tenant has Defaulted 3 or more times during the period from the date of the exercise of an Extension Right to the date of the commencement of the Extension Term, whether or not such Defaults are cured.
41.    The Alexandria at Torrey Pines.
(a)    Generally.  ARE-SD Region No. 17, LLC, a Delaware limited liability company (“ATP Landlord”) has constructed certain amenities at the property owned by ATP Landlord located at 10996 Torreyana Road, San Diego, California (“The Alexandria”), which include, without limitation, shared conference facilities (“Shared Conference Facilities”), a fitness center and restaurant (collectively, the “Amenities”) for non-exclusive use by (a) Tenant, (b) other tenants of the Project, (c) Landlord, (d) the tenants of ATP Landlord, (e) ATP Landlord, (e) other affiliates of Landlord, ATP Landlord and Alexandria Real Estate Equities, Inc. (“ARE”), (f) the tenants of such other affiliates of Landlord, ATP Landlord and ARE, and (g) any other parties permitted by ATP Landlord (collectively, “Users”).  Landlord, ATP Landlord, ARE, and all affiliates of Landlord, ATP Landlord and ARE may be referred to collectively herein as the “ARE Parties.”  Notwithstanding anything to the contrary contained herein, Tenant acknowledges and agrees that ATP Landlord shall have the right, at the sole discretion of ATP Landlord, to discontinue the availability of The Alexandria at any time; provided, however, in no event shall ATP Landlord discontinue Tenant’s rights to use the Amenities while continuing the rights of other tenants of the Project or the rights of tenants of affiliates of Landlord, ATP Landlord and ARE (or their respective successors or assigns) to use the Amenities. ATP Landlord shall have the sole right to determine all matters related to the Amenities including, without limitation, relating to the reconfiguration, relocation, modification or removal of any of the Amenities at The Alexandria and/or to revise, expand or discontinue any of the services (if any) provided in connection with the Amenities.  Tenant acknowledges and agrees that Landlord has not made any representations or warranties regarding the continued availability of any of the Amenities and that Tenant is not entering into this Lease with an expectation that the Amenities shall continue to be available to Tenant throughout the Term.

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 40

(b)    License.  Commencing on the mutual execution and delivery of this Lease by the parties, and so long as (i) The Alexandria and the Project continue to be owned by affiliates of ARE, (ii) The Alexandria continues to be operated as an amenities center, and (iii) ATP Landlord continues to make the Amenities available for use by Tenant, Tenant shall have the non-exclusive right to the use of the available Amenities in common with other Users pursuant to the terms of this Section 41. A total of 388 passes to the fitness center shall be issued to Tenant for its employees (but, following the Rent Commencement Date, the persons using such passes must be employed at the Premises).  Neither Tenant nor its employees shall have any right to access and/or use the Amenities unless Tenant and its employees have entered into license and use agreements (including indemnification and waiver agreements required by ATP Landlord) with respect to such Amenities which are in form and content reasonably acceptable to Landlord and/or ATP Landlord (the “Standard Use Agreements”).  If, during the Base Term, the Amenities in their entirety become materially unavailable for use by Tenant (for any reason other than a Default by Tenant under this Lease or the default by Tenant of any Standard Use Agreements or other agreement(s) relating to the use of the Amenities by Tenant) for a period in excess of 15 consecutive days, then, commencing on the date that the Amenities in their entirety become materially unavailable for use by Tenant and continuing for the period that the Amenities in their entirety remain materially unavailable for use by Tenant, the Base Rent due under this Lease shall be reduced by an amount equal to $0.18 per rentable square foot of the Premises per month escalated on each date that Base Rent is adjusted pursuant to the schedule set forth on page 1 of this by multiplying the amount payable immediately before such adjustment date by 2.9% (for example, on the first day of the 61st month of the Base Term, the $0.18 per rentable square foot of the Premises per month would be escalated by 2.9% to $0.18522 per rentable square foot of the Premises per month and on the first day of the 73rd month of the Base Term, the $0.18522 per rentable square foot of the Premises per month to $0.19 per rentable square foot of the Premises, and so on).
(c)    Shared Conference Facilities.  Use by Tenant of the Shared Conference Facilities and restaurant at The Alexandria shall be in common with other Users with scheduling procedures reasonably determined by ATP Landlord.  ATP Landlord reserves the right to exercise its reasonable discretion in the event of conflicting scheduling requests among Users.  Tenant hereby acknowledges that (i) Biocom/San Diego, a California non-profit corporation (“Biocom”) has the right to reserve the Shared Conference Facilities and any reservable dining area(s) included as part of the Amenities at The Alexandria for up to 50% of the time that such Shared Conference Facilities and reservable dining area(s) are available for use by Users each calendar month, and (ii) Illumina, Inc., a Delaware corporation, has the exclusive use of the main conference room within the Shared Conference Facilities for up to 4 days per calendar month.
Any vendors engaged by Tenant in connection with Tenant’s use of the Shared Conference Facilities shall be professional vendors holding any required licenses.  ATP Landlord shall have the right to reasonably approve any vendors utilized by Tenant in connection with Tenant’s use of the Shared Conference Facilities.  Prior to any entry by any such vendor onto The Alexandria, Tenant shall deliver to Landlord a copy of the contract between Tenant and such vendor and certificates of insurance from such vendor evidencing industry standard commercial general liability, automotive liability, and workers’ compensation insurance.  Tenant shall cause all such vendors utilized by Tenant to provide a certificate of insurance naming Landlord, ARE, and ATP Landlord as additional insureds under the vendor’s liability policies.  Notwithstanding the foregoing, Tenant shall be required to use the food service operator used by ATP Landlord at The Alexandria for any food service or catered events held by Tenant in the Shared Conference Facilities.
Tenant shall, at Tenant’s sole cost and expense, (i) be responsible for the set-up of the Shared Conference Facilities in connection with Tenant’s use (including, without limitation ensuring that Tenant has a sufficient number of chairs and tables and the appropriate equipment), and (ii) surrender the Shared Conference Facilities after each time that Tenant uses the Shared Conference Facilities free of Tenant’s personal property, in substantially the same set up and same condition as received, subject to casualty, and free of any debris and trash.  If Tenant fails to restore and surrender the Shared Conference Facilities as required by sub-section (ii) of the immediately preceding sentence, such failure shall constitute a “Shared Facilities Failure.”  Each time that Landlord or ATP Landlord reasonably determines that Tenant has committed a Shared Facilities Failure, Tenant shall be required to pay Landlord a penalty within 5 days after 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 41

notice from Landlord of such Shared Facilities Failure.  The penalty payable by Tenant in connection with the first Shared Facilities Failure shall be $200.  The penalty payable shall increase by $50 for each subsequent Shared Facilities Failure (for the avoidance of doubt, the penalty shall be $250 for the second Shared Facilities Failure, shall be $300 for the third Shared Facilities Failure, etc.).  In addition to the foregoing, Tenant shall be responsible for reimbursing ATP Landlord or Landlord, as applicable, for all costs expended by ATP Landlord or Landlord, as applicable, in repairing any damage to the Shared Conference Facilities, the Amenities, or The Alexandria caused by Tenant or any Tenant Related Party.  The provisions of this Section 41(c) shall survive the expiration or earlier termination of this Lease.
(d)    Rules and Regulations.  Tenant shall be solely responsible for paying for any and all ancillary services (e.g., audio visual equipment) provided to Tenant, all food services operators  and any other third party vendors providing services to Tenant at The Alexandria.  Tenant shall use the Amenities (including, without limitation, the Shared Conference Facilities) in compliance with all applicable Legal Requirements and any reasonable rules and regulations imposed by ATP Landlord or Landlord from time to time (which rules shall not be enforced in a discriminatory manner) and in a manner that will not interfere with the rights of other Users.  The use of Amenities other than the Shared Conference Facilities by employees of Tenant shall be in accordance with the terms and conditions of the License Agreements.  Neither ATP Landlord nor Landlord (nor, if applicable, any other affiliate of Landlord) shall have any liability or obligation for the breach of any rules or regulations by other Users with respect to the Amenities.  Tenant shall not make any alterations, additions, or improvements of any kind to the Shared Conference Facilities, the Amenities or The Alexandria.
Tenant acknowledges and agrees that ATP Landlord shall have the right at any time and from time to time to reconfigure, relocate, modify or remove any of the Amenities at The Alexandria and/or to revise, expand or discontinue any of the services (if any) provided in connection with the Amenities.
(e)    Waiver of Liability and Indemnification.  Tenant warrants that it will use reasonable care to prevent damage to property and injury to persons while on The Alexandria.  To the extent permitted by applicable law, Tenant waives any claims it or any Tenant Parties may have against any ARE Parties relating to, arising out of or in connection with the Amenities and any entry by Tenant and/or any Tenant Parties onto The Alexandria, except to the extent caused by the willful misconduct or gross negligence of any ARE Party, and Tenant releases and exculpates all ARE Parties from any liability relating to, arising out of or in connection with the Amenities and any entry by Tenant and/or any Tenant Parties onto The Alexandria.  Tenant hereby agrees to indemnify, defend, and hold harmless the ARE Parties from any claim of damage to property or injury to person relating to, arising out of or in connection with (i) the use of the Amenities by Tenant or any Tenant Parties, and (ii) any entry by Tenant and/or any Tenant Parties onto The Alexandria, except to the extent caused by the willful misconduct or negligence of any ARE Party.  The provisions of this Section 41 shall survive the expiration or earlier termination of this Lease.
(f)    Insurance.  As of the mutual execution and delivery of this Lease by the parties, Tenant shall cause ATP Landlord to be named as an additional insured under the commercial general liability policy of insurance that Tenant is required to maintain pursuant to Section 17 of this Lease.
42.    Roof Equipment.  As long as Tenant is not in Default under this Lease, Tenant shall have the right at its sole cost and expense, subject to compliance with all Legal Requirements (including, without limitation, any height limitations imposed by the City of San Diego with Tenant acknowledging and agreeing that the planned height of the Building may result in Tenant not having any rights under this Section 42), to install, maintain, and remove on the top of the roof of the Building one or more satellite dishes, communication antennae and other equipment for the transmission or reception of communication of signals, mechanical equipment, heat exchangers or other similar equipment (all of which having a diameter and height reasonably acceptable to Landlord) as Tenant may from time to time desire (collectively, “Roof Equipment”) on the following terms and conditions:

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 42

(a)    Requirements.  Tenant shall submit to Landlord (i) the plans and specifications for the installation of the Roof Equipment, (ii) copies of all required governmental and quasi-governmental permits, licenses, and authorizations that Tenant will and must obtain at its own expense, with the cooperation of Landlord, if necessary for the installation and operation of the Roof Equipment, and (iii) an insurance policy or certificate of insurance evidencing insurance coverage as required by this Lease and any other insurance as reasonably required by Landlord for the installation and operation of the Roof Equipment.  Landlord shall not unreasonably withhold or delay its approval for the installation and operation of the Roof Equipment; provided, however, that Landlord may reasonably withhold its approval if the installation or operation of the Roof Equipment (A) may damage the structural integrity of the Building, (B) may void, terminate, or invalidate any applicable roof warranty, (C) may reduce the leasable space in the Building, or (D) is not properly screened from the viewing public to Landlord’s reasonable satisfaction.  
(b)    No Damage to Roof.  If installation of the Roof Equipment requires Tenant to make any roof cuts or perform any other roofing work, such cuts shall only be made to the roof area of the Building located directly above the Premises and only in the manner designated in writing by Landlord; and any such installation work (including any roof cuts or other roofing work) shall be performed by Tenant, at Tenant’s sole cost and expense by a roofing contractor designated by Landlord or otherwise reasonably approved by Landlord.  If Tenant or its agents shall otherwise cause any damage to the roof during the installation, operation, and removal of the Roof Equipment such damage shall be repaired promptly at Tenant’s expense and the roof shall be restored in the same condition it was in before the damage, ordinary wear and tear excepted.  Landlord shall not charge Tenant Additional Rent for the installation and use of the Roof Equipment.  If, however, Landlord’s insurance premium or Tax assessment increases as a result of the Roof Equipment, Tenant shall pay such increase as Additional Rent within thirty (30) days after receipt of a reasonably detailed invoice from Landlord.  Tenant shall not be entitled to any abatement or reduction in the amount of Rent payable under this Lease if for any reason Tenant is unable to use the Roof Equipment.  In no event whatsoever shall the installation, operation, maintenance, or removal of the Roof Equipment by Tenant or its agents void, terminate, or invalidate any applicable roof warranty.
(c)    Protection.  The installation, operation, and removal of the Roof Equipment shall be at Tenant’s sole risk.  Tenant shall indemnify, defend, and hold Landlord harmless from and against any and all claims, costs, damages, liabilities and expenses (including, but not limited to, attorneys’ fees) of every kind and description that may arise out of or be connected in any way with Tenant’s installation, operation, or removal of the Roof Equipment.
(d)    Removal.  At the expiration or earlier termination of this Lease or the discontinuance of the use of the Roof Equipment by Tenant, Tenant shall, at its sole cost and expense, remove the Roof Equipment from the Building.  Tenant shall leave the portion of the roof where the Roof Equipment was located in good order and repair, reasonable wear and tear excepted.  If Tenant does not so remove the Roof Equipment, Tenant hereby authorizes Landlord to remove and dispose of the Roof Equipment and charge Tenant as Additional Rent for all costs and expenses incurred by Landlord in such removal and disposal.  Tenant agrees that Landlord shall not be liable for any Roof Equipment or related property disposed of or removed by Landlord.
(e)    No Interference.  The Roof Equipment shall not interfere with the proper functioning of any telecommunications equipment or devices that have been installed prior to the installation of the Roof Equipment.
(f)    Relocation.  Landlord shall have the right, at its expense (but not as an Operating Expense) and after 60 days prior notice to Tenant, to relocate the Roof Equipment to another site on the roof of the Building as long as such site reasonably meets Tenant’s sight line and interference requirements and does not unreasonably interfere with Tenant’s use and operation of the Roof Equipment.
(g)    Access.  Landlord grants to Tenant the right of ingress and egress on a 24 hour 7 day per week basis to install, operate, and maintain the Roof Equipment.  Before receiving access to the roof of the 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 43

Building, Tenant shall give Landlord at least 24 hours’ advance written or oral notice, except (i) in emergency situations, in which case reasonable advance oral notice shall be given by Tenant and (ii) access for standard, periodic maintenance, in which case a one-time notice to Landlord of the nature of the maintenance and the general frequency of the access shall be adequate.  Landlord shall supply Tenant with the name, telephone, and pager numbers of the contact individual(s) responsible for providing access during emergencies.
(h)    Appearance.  If permissible by Legal Requirements and reasonably practicable, the Roof Equipment shall be painted the same color as the exterior structural painted elements of the Building.
(i)    Intentionally Omitted.  
(j)    No Assurance of Roof Equipment.  Notwithstanding anything to the contrary contained herein, Tenant acknowledges and agrees that (i) Landlord shall have no obligation to alter any plans Landlord may have, now or in the future, for the height of the Building so that Tenant may exercise or use any of its rights under this Section 42 and (ii) Landlord may use the full height allocated to the Project so that Tenant will not have the right to exercise or use any of its rights under this Section 42 in which case Tenant shall have no further rights under this Section 42.  Notwithstanding the foregoing, Tenant shall have the right to pursue, so long as Landlord’s development, use or operation of the Building is not materially adversely affected and the Building structure and Building Systems are not materially adversely affected, at Tenant’s sole cost and expense, approvals and/or permits required from the applicable Governmental Entities for the installation and maintenance by Tenant of Roof Equipment which would exceed any height requirements imposed by applicable Governmental Entities, and if Tenant obtains such approvals and/or permits, Tenant shall have the right to install and maintain such Roof Equipment which would exceed such height requirements subject to the terms of this Section 42.  Landlord shall reasonably cooperate, at no cost to Landlord, in Tenant’s efforts to obtain approvals and/or permits
43.    Emergency Generator.  Subject to Tenant complying with all of the provisions of this Lease including, without limitation, Section 12 hereof, and all applicable Legal Requirements and Landlord’s rules and regulations, Tenant shall have the right, at Tenant’s sole cost and expense, to install an emergency generator and related tanks and equipment (collectively, “Emergency Generator”) in a location at the Project reasonably acceptable to both Landlord and Tenant (“Generator Area”).  All such improvements to the Generator Area shall be of a design and type and with screening acceptable to Landlord, in Landlord’s reasonable discretion.  Landlord shall have the right, in its sole and absolute discretion, to require Tenant to remove any such Emergency Generator installed by Tenant and restore the Generator Area to its original use and condition, free of any debris and trash and free of any Hazardous Materials, upon the expiration or earlier termination of the Term.  Landlord shall have no obligation to make any repairs or improvements to the Emergency Generator or the Generator Area and Tenant shall maintain the same, at Tenant’s sole cost and expense, in good repair and condition during the Term as though the same were part of the Premises.  
44.    LEED Certification.  Tenant agrees to reasonably cooperate with Landlord and to use commercially reasonable efforts to comply with measures reasonably implemented by Landlord with respect to the Building and/or the Project in connection with Landlord’s efforts, if any, to obtain a Leadership in Energy and Environmental Design (LEED) certificate for Landlord’s Work.  Tenant shall have the right, at its sole discretion and at Tenant’s sole cost and expense, to pursue LEED certification for the Tenant’s Work.
45.    Learning Lab.  
(a)    General.  Tenant may operate a portion of the Premises in a location selected by Tenant and reasonably acceptable to Landlord but not to exceed 1,500 rentable square feet (the “Learning Lab”), as a center for science education providing programs and services for children from and around the San Diego area.  Tenant shall be responsible, at Tenant’s sole cost and expense for any and all furniture, fixtures and equipment desired by Tenant with respect to the Learning Lab. Tenant shall also be responsible during the Term, at Tenant’s sole cost and expense, for all aspects of the staffing and operation of the Learning Lab in compliance with all applicable Legal Requirements and in a Class A manner and for providing all materials 

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 44

required in connection with such  operation of the Learning Lab.  The Rentable Area of Premises set forth on page 1 of this Lease includes all of the rentable area of the Premises, including any space that may be included in the Learning Lab.  Tenant shall not be required to pay Base Rent with respect to the Learning Lab but shall, commencing on the Rent Commencement Date, pay Operating Expenses with respect to the Learning Lab throughout the Term subject to and in accordance with the terms of Section 5 of this Lease (meaning that the rentable square footage of the Learning Lab (not to exceed 1,500 rsf) shall be deducted from the Rentable Area of Premises as defined on page 1 of this Lease for the purpose of determining Base Rent, but Tenant’s Share of Operating Expenses of Building shall not be reduced); provided, however, that if at any time during the Term Tenant ceases operating the Learning Lab as a center for science education as provided in this paragraph or otherwise commences using the Learning Lab in connection with its business operations, Tenant shall be required to pay Base Rent with respect to the Learning Lab at the same rate per rentable square foot as Tenant is then paying with respect to the balance of the Premises.  At any time during the Term, Tenant shall have the right to elect by written notice to Landlord to terminate the agreement with Landlord regarding the Learning Lab set forth in this Section 45, in which event (i) Tenant shall immediately commence paying Base Rent with respect to the Learning Lab at the same rate per rentable square foot as Tenant is then paying with respect to the balance of the Premises, (ii) this Section 45 shall terminate and have no further force or effect, and (iii) Tenant shall continue to have the right as a Permitted Use hereunder, in Tenant’s sole discretion, to use all or any portion of the Premises as a center for science education providing programs and services for children from and around the San Diego area, but without the obligations of Sections 45(b) and (c).
(b)    Signage.  Landlord and Tenant shall develop a mutually acceptable logo that represents the involvement of both Landlord (or, if designated by Landlord, an affiliate of Landlord) and Tenant with the Learning Lab, which logo shall, during any period that Tenant operates the Learning Lab as an educational facility pursuant to Section 45(a) above, be included on signage at the entry of the Learning Lab and at other locations within the Learning Lab reasonably acceptable to Landlord and Tenant.  Tenant shall not use the logo other than as expressly provided in this Section 45(b) and, if requested to do so by Landlord, Tenant shall promptly remove any reference to Landlord (or Landlord’s affiliate, if applicable) from the logo.
(c)    Calendar of Events.  Tenant shall provide Landlord with reasonable advance notice of all events being held at the Learning Lab while the Learning Lab operates as an educational facility pursuant to Section 45(a) above so that Landlord may, if it so elects and without any obligation to do so, attend any such events.
46.    Miscellaneous.
(a)    Notices.  All notices or other communications between the parties shall be in writing and shall be deemed duly given upon delivery or refusal to accept delivery by the addressee thereof if delivered in person, or upon actual receipt if delivered by reputable overnight guaranty courier, addressed and sent to the parties at their addresses set forth above.  Landlord and Tenant may from time to time by written notice to the other designate another address for receipt of future notices.
(b)    Joint and Several Liability.  If and when included within the term “Tenant,” as used in this instrument, there is more than one person or entity, each shall be jointly and severally liable for the obligations of Tenant.
(c)    Financial Information. Tenant shall furnish Landlord  with true and complete copies of (i) Tenant’s most recent audited annual financial statements within 180 days of the end of each of Tenant’s fiscal years during the Term, and (ii) Tenant’s most recent unaudited quarterly financial statements within 90 days of the end of each of Tenant’s first three fiscal quarters of each of Tenant’s fiscal years during the Term. So long as Tenant or Tenant’s parent entity (to the extent that the Tenant’s financial statements are consolidated with those of its parent entity and separate financial statements are not maintained with respect to Tenant) is a “public company” and its financial information is publicly available, then the foregoing delivery requirements of this Section 44(c) shall not apply.

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 45

(d)    Recordation.  Neither this Lease nor a memorandum of lease shall be filed by or on behalf of Tenant in any public record.  Notwithstanding the foregoing, upon Tenant’s request and at Tenant’s sole cost and expense, Landlord shall execute and properly notarize a memorandum of lease prepared by Tenant which memorandum shall contain only the following information and any other additional information that may be required by applicable law: (i) the names of the parties to this Lease, (ii) description of the Premises and the Project, and (iii) the Term.  Tenant shall file such memorandum of lease, at Tenant’s sole cost.  If Tenant fails, after written request from Landlord, to record a termination of the memorandum on the expiration or earlier termination of this Lease, Tenant shall be responsible for any damages suffered by Landlord (from any cause including, without limitation, resulting from any indemnities or certifications which may be made by Landlord in favor of third parties).  The provisions of this Section 46(d) shall survive the expiration or earlier termination of this Lease.  
(e)    Interpretation.  The normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Lease or any exhibits or amendments hereto.  Words of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires.  The captions inserted in this Lease are for convenience only and in no way define, limit or otherwise describe the scope or intent of this Lease, or any provision hereof, or in any way affect the interpretation of this Lease.
(f)    Not Binding Until Executed.  The submission by Landlord to Tenant of this Lease shall have no binding force or effect, shall not constitute an option for the leasing of the Premises, nor confer any right or impose any obligations upon either party until execution of this Lease by both parties.
(g)    Limitations on Interest.  It is expressly the intent of Landlord and Tenant at all times to comply with applicable law governing the maximum rate or amount of any interest payable on or in connection with this Lease.  If applicable law is ever judicially interpreted so as to render usurious any interest called for under this Lease, or contracted for, charged, taken, reserved, or received with respect to this Lease, then it is Landlord’s and Tenant’s express intent that all excess amounts theretofore collected by Landlord be credited on the applicable obligation (or, if the obligation has been or would thereby be paid in full, refunded to Tenant), and the provisions of this Lease immediately shall be deemed reformed and the amounts thereafter collectible hereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder.
(h)    Choice of Law.  Construction and interpretation of this Lease shall be governed by the internal laws of the state in which the Premises are located, excluding any principles of conflicts of laws.
(i)    Time.  Time is of the essence as to the performance of Tenant’s obligations under this Lease.
(j)    OFAC.  Tenant and Landlord are currently (a) in compliance with and shall at all times during the Term of this Lease remain in compliance with the regulations of the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury and any statute, executive order, or regulation relating thereto (collectively, the “OFAC Rules”), (b) not listed on, and shall not during the term of this Lease be listed on, the Specially Designated Nationals and Blocked Persons List, Foreign Sanctions Evaders List, or the Sectoral Sanctions Identification List, which are all maintained by OFAC and/or on any other similar list maintained by OFAC or other governmental authority pursuant to any authorizing statute, executive order, or regulation, and (c) not a person or entity with whom a U.S. person is prohibited from conducting business under the OFAC Rules.
(k)    Incorporation by Reference.  All exhibits and addenda attached hereto are hereby incorporated into this Lease and made a part hereof.  If there is any conflict between such exhibits or addenda and the terms of this Lease, such exhibits or addenda shall control.

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 46

(l)    Entire Agreement.  This Lease, including the exhibits attached hereto, constitutes the entire agreement between Landlord and Tenant pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, letters of intent, negotiations and discussions, whether oral or written, of the parties, and there are no warranties, representations or other agreements, express or implied, made to either party by the other party in connection with the subject matter hereof except as specifically set forth herein.
(m)    No Accord and Satisfaction.  No payment by Tenant or receipt by Landlord of a lesser amount than the monthly installment of Base Rent or any Additional Rent will be other than on account of the earliest stipulated Base Rent and Additional Rent, nor will any endorsement or statement on any check or letter accompanying a check for payment of any Base Rent or Additional Rent be an accord and satisfaction.  Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or to pursue any other remedy provided in this Lease.
(n)    Hazardous Activities.  Notwithstanding any other provision of this Lease, Landlord, for itself and its employees, agents and contractors, reserves the right to refuse to perform any repairs or services in any portion of the Premises which, pursuant to Tenant’s routine safety guidelines, practices or custom or prudent industry practices, require any form of protective clothing or equipment other than safety glasses.  In any such case, Tenant shall contract with parties who are acceptable to Landlord, in Landlord’s reasonable discretion, for all such repairs and services, and Landlord shall, to the extent required, equitably adjust Tenant’s Share of Operating Expenses in respect of such repairs or services to reflect that Landlord is not providing such repairs or services to Tenant.  
(o)    Redevelopment of Project.  Tenant acknowledges that Landlord, in its sole discretion, may, subject to the terms of the fourth sentence of Section 1 and the limitations set forth in this Section 46(o), from time to time expand, renovate and/or reconfigure the Project as the same may exist from time to time and, in connection therewith or in addition thereto, as the case may be, from time to time without limitation:  (a) change the shape, size, location, number and/or extent of any improvements, buildings, structures, lobbies, hallways, entrances, exits, parking and/or parking areas relative to any portion of the Project; (b) modify, eliminate and/or add any buildings, improvements, and parking structure(s) either above or below grade, to the Project, the Common Areas and/or any other portion of the Project and/or make any other changes thereto affecting the same; and (c) make any other changes, additions and/or deletions in any way affecting the Project and/or any portion thereof as Landlord may elect from time to time, including without limitation, additions to and/or deletions from the land comprising the Project, the Common Areas and/or any other portion of the Project; provided, however, in no event may Landlord make any changes to the Building (including the subterranean parking garage) or, subject to the terms of the immediately following paragraph, reduce the parking spaces available to Tenant and in no event shall Tenant’s use of the Exclusive Use Areas including, but not limited to, the courtyard/meadow area located on the east side of the Building facing the canyons be materially or adversely affected. Landlord shall consult with Tenant if Landlord plans to make any changes to the Project pursuant to this Section 46(o) that would materially adversely affect the entrance to the Building. Notwithstanding anything to the contrary contained in this Lease, Tenant shall have no right to seek damages (including abatement of Rent) or to cancel or terminate this Lease because of any proposed changes, expansion, renovation or reconfiguration of the Project nor shall Tenant have the right to restrict, inhibit or prohibit any such changes, expansion, renovation or reconfiguration; provided, however, Landlord shall not change the size, dimensions, location or Tenant’s Permitted Use of the Premises (including the subterranean parking garage).
If, at any time during the Term, Landlord elects to expand, renovate and/or reconfigure the Project pursuant to the immediately preceding paragraph, Landlord shall have the right, exercisable upon 30 days prior written notice to Tenant to relocate all or any portion of Tenant’s parking spaces hereunder on a temporary basis during such expansion, renovation and/or reconfiguration to one or more locations designated by Landlord in the Torrey Pines area of San Diego within a one-mile radius of the Premises.  Landlord shall, at Landlord’s sole cost and expense (and not as an Operating Expense), provide a shuttle service between such locations and the Project.  

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 47

[ Signatures on next page ]

    
Exhibit 10.10

3215 Merryfield/Vertex - Page 48

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and year first above written.
TENANT:
VERTEX PHARMACEUTICALS INCORPORATED,
a Massachusetts corporation

/s/ Ian Smith

By: Ian Smith
Its: Chief Financial Officer

LANDLORD:
ARE-SD REGION NO. 23, LLC, 
a Delaware limited liability company

By:    ALEXANDRIA REAL ESTATE EQUITIES, L.P.,
		
	 

	a Delaware limited partnership, 

managing member

By:    ARE-QRS CORP., 
a Maryland corporation, 
general partner

/s/ Gary Dean

By: Gary Dean
Its: SVP RE Legal Affairs 

Acknowledging and agreeing to be
bound with respect to the applicable 
obligations set forth in Section 41 of this
Lease with respect to the Amenities only:

ARE-SD REGION NO. 17, LLC,
a Delaware limited liability company 
 
By:     ALEXANDRIA REAL ESTATE EQUITIES, L.P., 
    a Delaware limited partnership,  
    managing member
By:    ARE-QRS CORP.,  
        a Maryland corporation,  
        general partner
/s/ Gary Dean
By: Bary Dean
Its: SVP RE Legal Affairs

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00254-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00254-of-00352.parquet"}]]