Document:

krys-20201231ex1017_nort

- 1 - FIRST AMENDMENT TO LEASE AGREEMENT   THIS FIRST AMENDMENT TO LEASE AGREEMENT (“Amendment”) is entered into  this 17th day of January, 2020, by and between NORTHFIELD I, LLC, an Ohio limited liability  company (“Landlord”) and KRYSTAL BIOTECH, INC., a Delaware corporation (“Tenant”).  WITNESSETH:  WHEREAS, Landlord and Tenant entered into that certain Lease Agreement dated as of  December 26, 2019 (“Lease”) relating to approximately 100,000 rentable square feet in an  industrial building to be constructed on International Drive, Coraopolis, Findlay Township,  Allegheny County, Pennsylvania (“Building”);  WHEREAS, Landlord has obtained final land use approval from Findlay Township for the  development of the Building and committed financing from TriState Capital Bank (“Lender”) in  the amount of at least $6,529,328.00 for its completion of the Landlord’s Work; and  WHEREAS, Landlord and Tenant have agreed to amend and modify the Lease as set forth  herein;  NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other  good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,  the parties hereby agree as follows:  1. Amendment to Section 3.1.  The second paragraph of Section 3.1 of the Lease shall be deleted in its entirety and replaced with the following: “This Lease is subject to, and contingent upon, Landlord’s ability to close on financing in the amount of at least $6,529,328.00 (the “Financing Amount”) for its completion of the Landlord’s Work contemplated herein.  If Landlord is unable to close on financing equal to or greater than the Financing Amount with TriState Capital Bank (“Lender”) substantially on the terms set forth in that certain term sheet from Lender dated December 4, 2019, Landlord shall have the right to terminate this Lease upon written notice to Tenant, which notice must be given to Tenant via email to Jonathan P. Altman, Esq. at jpa@sgkpc.com no later than the earlier to occur of (x) the date upon which Landlord closes on financing with Lender for Landlord’s completion of the Landlord’s Work and (y) January 24, 2020.  Landlord shall use its best efforts to satisfy this financing contingency on or before January 24, 2020.  Landlord’s ability to close on such financing is contingent upon Landlord’s receipt of Tenant’s Cash Contribution (as such term is hereinafter defined) no later than 1:00 PM EST on January 23, 2020. Notwithstanding anything herein to the contrary, if Landlord terminates this Lease in accordance with the terms set forth in this paragraph, so long as Landlord was in receipt of Tenant’s Cash Contribution no later than 1:00 PM EST on January 23, 2020,  (i) Landlord shall, at Tenant’s election, provide Tenant with a signed copy of a commercially reasonable assignment of the Landlord Ground Lease, within three (3) days after any written notice of termination is delivered hereunder, (ii) Landlord shall, DocuSign Envelope ID: DC0B4504-FE9D-48D0-8105-9BE40CA5AA67 Exhibit 10.17 

 

 - 2 - at Tenant’s election and upon receipt of a commercially reasonable release and waiver  executed by Tenant therefor, assign (or cause the assignment) to Tenant all plans,  drawings and specifications related to Landlord’s Work, (iii) Landlord shall  immediately return the Security Deposit to Tenant, (iv) Landlord shall return Tenant’s  Cash Contribution to Tenant within ten (10) business days after the date of such  termination, (v) Landlord shall (and shall cause its affiliate, Al. Neyer, LLC to) release  Tenant from any and all liabilities and obligations otherwise contemplated by that  certain Letter of Indemnification dated October 3, 2019 between Al. Neyer, LLC and  Tenant, and (vi) Landlord shall pay to Tenant a break-up fee of $50,000.00 within ten  (10) business days after the date of such termination.  This paragraph shall survive the  termination of the Lease.”  2. Amendment to Section 3(a) of Exhibit B.  Section 3(a) of the Work Letter shall be deleted  in its entirety and replaced with the following:    “a. On or before the date Landlord closes on its construction loan with respect to  the Premises, and in any case upon no less than ten (10) days’ prior written notice from  Landlord to Tenant, Tenant shall deposit with Landlord the sum of Two Million Four  Hundred Thousand Dollars ($2,400,000.00) (“Tenant’s Cash Contribution”), which  amount shall be applied against the first $2,400,000.00 of hard costs associated with  Landlord’s Work.”    3. Amendment to Section 3(b) of Exhibit B.  Section 3(b) of the Work Letter shall be deleted  in its entirety and replaced with the following:    “b. Landlord shall provide Tenant, on a monthly basis until such time as the Tenant’s  Cash Contribution is depleted, a statement in the form presented below which shows the  progress of Landlord’s Work by division and the hard costs associated with the completed  portion of Landlord’s Work (each, a “Monthly Statement”).  Tenant shall have three (3)  business days in which to review and approve each Monthly Statement and such approval  shall not be unreasonably withheld or delayed.  In the event Tenant fails to provide  approval or disapproval of any Monthly Statement within the three-business day period  described above, said Monthly Statement shall be deemed approved by Tenant.  Upon  Tenant’s approval (or deemed approval in accordance with the previous sentence) of a  Monthly Statement, Landlord shall have the right to pay Contractor the amount shown on  the applicable Monthly Statement out of the Tenant’s Cash Contribution for such hard  costs associated with the completed portion of Landlord’s Work described in such  Monthly Statement.      DocuSign Envelope ID: DC0B4504-FE9D-48D0-8105-9BE40CA5AA67 

 

 - 3 - ”    4. No Amendment to Section 3(c) of Exhibit B.  Section 3(c) of the Work Letter shall remain  unchanged.    5. Full Force & Effect.  Landlord and Tenant represent to each other that as of the date hereof  (i) the Lease is in full force and effect, (ii)  there are no existing claims, defenses or offsets  which either party has against the other, and (iii) there exist no current or continuing  defaults under the Lease by Landlord or Tenant.    6. Authority to Execute.  Landlord and Tenant each represent and warrant to the other party  that the individual executing this Amendment on its behalf is duly authorized and has  legal capacity to execute and deliver this Amendment on behalf of such party. Each party  represents and warrants to the other that the execution and delivery of this Amendment  and the performance of such party’s obligations hereunder have been duly authorized and  that this Amendment is a valid and legal agreement binding on such party and enforceable  in accordance with its terms.    7. Defined Terms.  All capitalized terms used but not otherwise defined herein shall have  the meaning ascribed thereto in the Lease.    8. Entirety of Agreement. To the extent not previously modified or further modified by this  First Amendment to Lease, all provisions and terms of the Lease shall remain unchanged  and in full force and effect.      SIGNATURES ON FOLLOWING PAGE     Line Item Previous Work  Completed This Period Work Completed to Date General Conditions  $                              -    $                              -    $                              -    Sitework  $                              -    $                              -    $                              -    Concrete  $                              -    $                              -    $                              -    Steel (Design)  $                              -    $                              -    $                              -    Plumbing  $                              -    $                              -    $                              -    HVAC  $                              -    $                              -    $                              -    Electric  $                              -    $                              -    $                              -    Total  $                              -    $                              -    $                              -    Tenant's Cash Contribution  $                              -    $                              -    $                              -    $          2,400,000.00  Balance Remaining DocuSign Envelope ID: DC0B4504-FE9D-48D0-8105-9BE40CA5AA67 

 

 - 4 -   IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment to  Lease as of the day and year first above written.        LANDLORD:           NORTHFIELD I, LLC,          an Ohio limited liability company    By: Al. Neyer, LLC,   an Ohio limited liability company,   its Manager     By:        Name: Lesley S. Koth    Title: Sr. Vice President         TENANT:    KRYSTAL BIOTECH, INC.,  a Delaware corporation      By:               Krish S. Krishnan,          President and Chief Executive Officer    DocuSign Envelope ID: DC0B4504-FE9D-48D0-8105-9BE40CA5AA67krys-20201231ex1018_nort

1 SECOND AMENDMENT TO LEASE AGREEMENT   THIS SECOND AMENDMENT TO LEASE AGREEMENT (“Amendment”) is entered  into this   12th   day of August 2020, by and between NORTHFIELD I, LLC, an Ohio limited  liability company (“Landlord”), and KRYSTAL BIOTECH, INC., a Delaware corporation  (“Tenant”).  WITNESSETH:  WHEREAS, Landlord and Tenant entered into that certain Lease Agreement dated as of  December 26, 2019 and amended by that certain First Amendment to Lease dated as of January  17, 2020 (“Lease”) relating to approximately 100,000 rentable square feet in an industrial building  to be constructed on International Drive, Coraopolis, Findlay Township, Allegheny County,  Pennsylvania (“Building”);  WHEREAS, Landlord and Tenant have agreed to amend and modify the Lease as set forth  herein;  NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other  good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,  the parties hereby agree as follows:  1. Amendment to Section 1.4.  “Tenant’s Address” in Section 1.4 of the Lease is hereby deleted in its entirety and replaced with the following: “Tenant’s Address: Krystal Biotech, Inc.  2100 Wharton Street, Suite 701  Pittsburgh, PA 15203  Attn: Kathryn Romano  E-mail: kromano@krystalbio.com and  Krystal Biotech, Inc.  2100 Wharton Street, Suite 701  Pittsburgh, PA 15203  Attn: J. Christopher Naftzger  E-mail: cnaftzger@krystalbio.com With copy to: Jonathan P. Altman  Sherrard, German & Kelly, P.C.  535 Smithfield Street, Suite 300  Pittsburgh, PA 15222  E-mail: jpa@sgkpc.com” Exhibit 10.18 

 

 2      2. Amendments to Section 1.9. Section 1.9 of the Lease shall be deleted in its entirety and  replaced with the following:    “1.9   Lease Commencement Date; Completion of Landlord’s Work:        (a) The Lease Term shall commence upon the date that is forty (40)  days prior to the Substantial Completion Date, as such term is defined below (the  “Lease Commencement Date”).       (b) As used herein, the term “Initial Delivery Date” means the date  upon which Landlord has satisfied all of the Initial Delivery Conditions (as defined  on Exhibit B-4 attached hereto); provided, however, that in no event shall the Initial  Delivery Date occur prior to October 1, 2020. For the sake of clarity, if Landlord  satisfies all of the Initial Delivery Conditions (x) as of September 25, 2020, the  Initial Delivery Date shall be October 1, 2020, or (y) as of October 5, 2020, the  Initial Delivery Date shall be October 5, 2020.      (c) As used herein, the term “Substantial Completion Date” means  the date upon which Substantial Completion (as defined below) of Landlord’s Work  has occurred in accordance with the terms set forth in this Lease.  The Initial  Delivery Date (as defined below), the Substantial Completion Date and the Lease  Commencement Date will be officially established by execution of a written  statement in the form attached hereto as Exhibit C.     (d) Should Landlord fail to (1) cause the Initial Delivery Date to occur  by October 5, 2020 (the “Estimated Initial Delivery Date”) or (2) achieve  Substantial Completion (defined below) of Landlord’s Work by December 23, 2020  (the “Estimated Substantial Completion Date”), in either case for reasons other  than Force Majeure (defined in Section 28 below) or a Tenant Delay (defined  below), Tenant shall be entitled to the following abatement rights: (i) one day of  Rent for each calendar day of delay up to and including the sixtieth (60th) day of  such delay; (ii) two days of Rent for each calendar day of delay, from the sixty-first  (61st) day of such delay up to and including the one hundred twentieth (120th) day  of such delay; and (iii) three days of Rent for each calendar day of delay from the  one hundred twenty-first (121st) day of such delay and beyond, until the Initial  Delivery Date or the Substantial Completion Date (as applicable) occurs.     (e) “Substantial Completion” shall mean that Landlord has delivered  the Premises to Tenant with Landlord’s Work (as defined herein) substantially  completed in accordance with the work letter attached hereto and made a part hereof  as Exhibit B (“Work Letter”), except for Punch List Items (as defined in the Work  Letter) and otherwise (i) in compliance with all applicable federal, state and local  laws, statutes, ordinances, codes, orders rules, regulations and other requirements  

 

 3    of governmental agencies having authority over the Property (collectively,  “Applicable Law(s)”) and (ii) in a condition that is suitable for a certificate of  occupancy to be issued, subject only to the completion of Tenant’s Work.    (f) “Tenant Delay” means any actual delay that Landlord encounters in  the performance of the Landlord’s Work, to the extent that such delay is caused by  any act or omission by Tenant or its employees, agents, licensees, contractors or  any other party acting on behalf of Tenant which substantially interferes with the  performance of Landlord’s Work such that Landlord is delayed in the performance  of Landlord’s Work as a direct result of such act or omission by Tenant or its  employees, agents, licensees, contractors or any other party action on behalf of  Tenant.  In order for Landlord to claim an event of Tenant Delay, Landlord must  provide written notice to Tenant within ten (10) days of the date on which Landlord  actually learns of the act or omission and the resulting delay, which notice specifies  Landlord’s reasonable determination of the cause of the delay and (if known and  completed) the duration of the delay.  In the event a Tenant Delay causes a delay in  the Lease Commencement Date, Tenant shall commence payment of Rent on the  date which would be the Lease Commencement Date if not for Tenant Delay.”    3. Amendment to Section 1.12.  Section 1.12 of the Lease is hereby deleted in its entirety  and replaced with the following:    “1.12  Base Rent Commencement Date: The Base Rent shall commence on the Lease  Commencement Date; provided, however, that should Tenant exercise its Purchase  Option per the terms of Section 25(a), then Base Rent will not be due except in the  case that closing on the Purchase Option is not timely completed in accordance with  the terms set forth in Article 25 of this Lease.  If closing on the Purchase Option is not  timely completed in accordance with the terms set forth in Article 25 of this Lease,  then all accrued Base Rent beginning from the Lease Commencement Date shall  become immediately due and payable.”    4. Amendment to Section 1.13.  Section 1.13 of the Lease is hereby deleted in its entirety  and replaced with the following:    “1.13  Additional Rent: Additional Rent for the first year of the Lease Term is estimated  to be Two and 24/100 Dollars ($2.24) per rentable square foot per annum, payable in twelve  (12) equal monthly installments as set forth in Section 4.2 of this Lease, and shall  commence on the Lease Commencement Date; provided, however, that should Tenant  exercise its Purchase Option per the terms of Section 25(a), then Additional Rent will  not be due except in the case that closing on the Purchase Option is not timely  completed in accordance with the terms set forth in Article 25 of this Lease.  If closing  on the Purchase Option is not timely completed in accordance with the terms set forth  in Article 25 of this Lease, then all accrued Additional Rent beginning from the Lease  Commencement Date shall become immediately due and payable.”  

 

 4      5. Amendment to Section 7(b).  Section 7(b) of the Lease shall be deleted in its entirety and  replaced with the following:    “(b)   Landlord hereby warrants the Landlord’s Work as follows (collectively,  “Landlord’s Construction Warranties”): (i) For a period of one (1) year beginning  on the Substantial Completion Date, Landlord, at its sole cost and expense, shall  warrant the Landlord’s Work has been constructed in a good and workmanlike  manner, in compliance with the plans and specifications attached hereto and made  a part hereof as Exhibit B-1 (“Plans and Specifications”), and in accordance with  the Schedule attached hereto and made a part hereof as Exhibit B-2 (“Schedule”)  and the same will be free of all defects; and (ii) For a period of eighteen (18) months  beginning on the Substantial Completion Date, Landlord, at its sole cost and  expense, shall warrant the paved areas of the Property from any defects in  construction.  Notwithstanding anything to the contrary contained herein,  Landlord’s Construction Warranties will not include any maintenance which is the  responsibility of the Tenant as set forth in Section 8.2 below.”    6. Amendment to Section 8.2.  The final sentence of Section 8.2 shall be deleted in its  entirety and replaced with the following:    “Landlord represents that, as of the Substantial Completion Date, the mechanical  systems of the Premises installed by Landlord as part of Landlord’s Work shall be  in good working condition and otherwise meet the standards set forth in the Work  Letter.”    7. Amendment to Section 25(a).  The first sentence of Section 25(a) is hereby deleted in its  entirety and replaced with the following:    “So long as a Tenant Default does not then exist, Tenant (or an affiliate of Tenant)  shall have the option (“Purchase Option”) to purchase the Building and the  Improvements and take a corresponding assignment of Landlord’s rights under the  Landlord Ground Lease (“Option Property”) for $9,392,359.01, which Purchase  Option may be exercised by Tenant at any time prior to the date that is ten (10) days  after the Initial Delivery Date (the “Outside Exercise Date”) by delivering written  notice of Tenant’s exercise of the Purchase Option (“Purchase Notice”) to  Landlord.”    8. Amendment to Exhibit B – Work Letter, Section 1.  Section 1 of Exhibit B – Work Letter  shall be deleted in its entirety and replaced with the following:    “1.  CONSTRUCTION OF THE BUILDING.   Landlord, by and through Al.  Neyer, LLC, an Ohio limited liability company (“Contractor”), shall promptly  

 

 5    construct the Building in an effort to achieve Substantial Completion on or before the  Estimated Substantial Completion Date.”    9. Amendment to Exhibit B – Work Letter, Section 6.  Section 6 of Exhibit B – Work Letter  shall be deleted in its entirety and replaced with the following:    “6.  DRAWINGS AND AUTOCAD FILES.   Landlord shall provide Tenant with  electronic files of all architectural, construction and subcontractor drawings of the  leased Premises within Sixty (60) days following the Substantial Completion Date.   These files may be used solely in connection with the Building and the Premises.  Landlord shall provide Tenant with a complete set of the Plans and Specifications  and as-built drawings (including space planning, architectural, mechanical,  engineering, electrical and plumbing) with respect to the Premises within thirty (30)  day of the Substantial Completion Date.”    10. Amendment to Exhibit C – Commencement Date Memorandum.   Exhibit C shall be  replaced in its entirety with Exhibit C (revised) attached hereto and made a part hereof.    11. Full Force & Effect.  Landlord and Tenant represent to each other that as of the date hereof  (i) the Lease is in full force and effect, (ii)  there are no existing claims, defenses or offsets  which either party has against the other, and (iii) there exist no current or continuing  defaults under the Lease by Landlord or Tenant.    12. Authority to Execute.  Landlord and Tenant each represent and warrant to the other party  that the individual executing this Amendment on its behalf is duly authorized and has  legal capacity to execute and deliver this Amendment on behalf of such party. Each party  represents and warrants to the other that the execution and delivery of this Amendment  and the performance of such party’s obligations hereunder have been duly authorized and  that this Amendment is a valid and legal agreement binding on such party and enforceable  in accordance with its terms.    13. Defined Terms.  All capitalized terms used but not otherwise defined herein shall have  the meaning ascribed thereto in the Lease.    14. Entirety of Agreement. To the extent not modified by this Amendment, all provisions and  terms of the Lease shall remain unchanged and in full force and effect.      SIGNATURES ON FOLLOWING PAGE     

 

 6    IN WITNESS WHEREOF, Landlord and Tenant have executed this Second Amendment  to Lease Agreement as of the day and year first above written.        LANDLORD:           NORTHFIELD I, LLC,          an Ohio limited liability company    By: Al. Neyer, LLC,   an Ohio limited liability company,   its Manager     By:        Name: Robert D. Fessler    Title: Executive Vice President         TENANT:    KRYSTAL BIOTECH, INC.,  a Delaware corporation      By:        Name: Kathryn Romano            Title: _______________________________  

 

{S1500685.1} C-1    EXHIBIT C (revised)    Commencement Date Memorandum      THIS COMMENCEMENT DATE MEMORANDUM is entered into on  _______________, 202__ between NORTHFIELD I, LLC, an Ohio limited liability company  (“Landlord”) and KRYSTAL BIOTECH, INC., a Delaware corporation (“Tenant”).     On December ___, 2019 Landlord and Tenant entered into a lease (as amended, the  "Lease") covering certain Premises described in the Lease.     In accordance with Sections 3.1 and 3.4 of the Lease, as amended, Landlord and Tenant  are executing, acknowledging and delivering this Agreement for the purposes of specifying (a) the  Initial Delivery Date, (b) the Substantial Completion Date, (c) the dates of the commencement and  termination of the Lease Term[ and][,] (d) the final rentable square footage of the Building[, (e)  an updated Base Rent table, and (f) an updated Purchase Price for the Option Property,  relative to Tenant’s Purchase Option].  Any terms capitalized herein, but no defined herein shall  have the meanings ascribed to them in the Lease.    1. The Lease Term commenced on __________, 202__ (“Lease Commencement Date”), and  shall terminate on ____________________.    2. The Initial Delivery Date occurred on _________________, 202__ (“Initial Delivery  Date”).    3. The approximate number of square feet of the Building is ________ rentable square feet.    4. Except as otherwise expressly provided in Section 1.12 of the Lease, Tenant's Base Rent  obligation under the Lease shall commence on the Lease Commencement Date.     5. [The Base Rent table set forth in Section 1.11 of the Lease is hereby amended and  restated as follows:]    TIME PERIOD  (Months)  ANNUAL BASE RENT MONTHLY BASE RENT  1 – 12  $     [________]  $     [________]  13 – 24 $     [________] $     [________]  25 – 36 $     [________] $     [________]  37 – 48 $     [________] $     [________]  49 – 60 $     [________] $     [________]  61 – 72 $     [________] $     [________]  73 – 84 $     [________] $     [________]  85 – 96 $     [________] $     [________]  

 

{S1500685.1} C-2    97 – 108 $     [________] $     [________]  109 – 120 $     [________] $     [________]  121 – 132 $     [________] $     [________]  133 – 144 $     [________] $     [________]  145 – 156 $     [________] $     [________]  157 – 168 $     [________] $     [________]  169 – 180 $     [________] $     [________]    6. [The Purchase Price set forth in Section 25(a) of the Lease is hereby amended and  restated to be $[______].]    7. Except as otherwise expressly provided in Section 1.13 of the Lease, payment of Additional  Rent shall commence on the Lease Commencement Date.      8. Tenant has accepted the Premises (subject in all respects to Landlord’s obligation to  address any and all Punch List Items in accordance with the terms set forth in the Lease)  as of the Substantial Completion Date.    9. The execution of this memorandum shall not constitute the exercise by Tenant of any  option it may have to extend the Lease Term.    10. The Lease (as amended) is in full force and effect and is hereby ratified and confirmed.      [SIGNATURE PAGE FOLLOWS]  

 

    C-3    {S1500685.1}     IN WITNESS WHEREOF, Landlord and Tenant have executed two (2) originals hereof  on the above date.    LANDLORD:           NORTHFIELD I, LLC,          an Ohio limited liability company    By: Al. Neyer, LLC   an Ohio limited liability company,   its Manager     By:        Name:       Title:       Date:              TENANT:    KRYSTAL BIOTECH, INC.,  a Delaware corporation    By:        Name:       Title:               Date:

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