Document:

Exhibit 10.12

 

LEASE BETWEEN

 

BOSTON HARBOR INDUSTRIAL DEVELOPMENT LLC

 

AND

 

AKOUOS, INC.

 

ARTICLE 1
  Reference Data

 

1.1                               Introduction: Each reference in this Lease to any of the following subjects shall be construed to incorporate the data stated for that subject in this Section 1.1.

 

	
Lease Date:
    	
 
    	
As of Dec. 28, 2018
    
	
 
    	
 
    	
 
    
	
Building:
    	
 
    	
The building located at 645 Summer Street, Boston, MA,   containing approximately 150,000 rentable square feet (the Building and such   parcel of land hereinafter being collectively referred to as the “Property”).
    
	
 
    	
 
    	
 
    
	
Industrial Park or the Pappas   Commerce Center:
    	
 
    	
That certain industrial park located in the City of Boston, MA,   in which the Property is located, containing approximately 760,784 rentable   square feet.
    
	
 
    	
 
    	
 
    
	
Premises:
    	
 
    	
That portion of the Building containing 37,500 rentable square   feet on the second (2nd) floor of the Building, as shown in the highlighted   area on the floor plan on Exhibit A attached hereto and made a   part hereof hereinafter referred to as the “Premises”.
    
	
 
    	
 
    	
 
    
	
Landlord:
    	
 
    	
Boston Harbor Industrial Development LLC, a Delaware limited   liability company
    
	
 
    	
 
    	
 
    
	
Original Notice
   Address of Landlord:
    	
 
    	
655 Summer Street
   Boston, MA 02210
   Attention: Timothy A. Pappas
    
    with a copy to:
 n/a
    
	
 
    	
 
    	
 
    
	
Tenant:
    	
 
    	
Akouos, Inc., a Delaware limited liability company
    
	
 
    	
 
    	
 
    
	
Original Notice
   Address of Tenant:
    	
 
    	
Attention:                              
    
    with a copy to:
    

 

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Term:
    	
 
    	
8 (eight) years from the Rent Commencement Date
    
	
 
    	
 
    	
 
    
	
Estimated Tenant Access Date:
    	
 
    	
May 18, 2019
    
	
 
    	
 
    	
 
    
	
Premises Delivery Schedule:
    	
 
    	
1. Landlord files a Tenant Alteration Application (the “TAA”)   with the Massachusetts Port Authority (“Massport”). Massport will take   approximately thirty (30) days to review and approve the TAA.

    2. Following Massport’s approval of the TAA, Landlord’s   contractor files a building permit application with the Massachusetts state   building inspector.

    3. Landlord’s contractor receives the building permit   approximately thirty (30) days after submitting the building permit   application with the Massachusetts state building inspector.

    2. Construction of Landlord’s Work (defined below) upon receipt   of building permit.

    3. Landlord’s receipt of certificate of occupancy approximately   30 days after substantial completion of Landlord’s Work.

    4. Tenant takes occupancy of Premises and Lease Term commences.
    
	
 
    	
 
    	
 
    
	
Commencement Date:
    	
 
    	
The later of (i) May 18, 2019, or (ii) the date   that Landlord delivers the Premises to Tenant with the Landlord’s Work   substantially completed with Landlord having obtained a permanent certificate   of occupancy for the Premises
    
	
 
    	
 
    	
 
    
	
Rent Commencement Date:
    	
 
    	
Three (3) months following the Commencement Date.
    

 

Annual Fixed Rent Rate:

 

	
Lease Year
    	
 
    	
Rentable 
   square feet
    	
 
    	
Fixed Rent per 
   square foot 
   (NNN)
    	
 
    	
Rent 
   Escalation
    	
 
    	
Annual Fixed 
   Rent Rate
    	
 
    
	
1
    	
 
    	
37,500
    	
 
    	
$
    	
62.00
    	
 
    	
n/a
    	
 
    	
$
    	
2,325,000.00
    	
 
    
	
2
    	
 
    	
37,500
    	
 
    	
$
    	
63.86
    	
 
    	
3.0
    	
%
    	
$
    	
2,394,750.00
    	
 
    
	
3
    	
 
    	
37,500
    	
 
    	
$
    	
65.78
    	
 
    	
3.0
    	
%
    	
$
    	
2,466,592.50
    	
 
    
	
4
    	
 
    	
37,500
    	
 
    	
$
    	
67.75
    	
 
    	
3.0
    	
%
    	
$
    	
2,540,590.28
    	
 
    
	
5
    	
 
    	
37,500
    	
 
    	
$
    	
69.78
    	
 
    	
3.0
    	
%
    	
$
    	
2,616,807.98
    	
 
    
	
6
    	
 
    	
37,500
    	
 
    	
$
    	
71.87
    	
 
    	
3.0
    	
%
    	
$
    	
2,695,312.22
    	
 
    
	
7
    	
 
    	
37,500
    	
 
    	
$
    	
74.03
    	
 
    	
3.0
    	
%
    	
$
    	
2,776,171.59
    	
 
    
	
8
    	
 
    	
37,500
    	
 
    	
$
    	
76.25
    	
 
    	
3.0
    	
%
    	
$
    	
2,859,456.74
    	
 
    

 

2

 

Monthly Fixed Rent Rate:

 

	
Lease Year
    	
 
    	
Rentable 
   square feet
    	
 
    	
Fixed Rent per 
   square foot 
   (NNN)
    	
 
    	
Rent 
   Escalation
    	
 
    	
Annual Fixed 
   Rent Rate
    	
 
    
	
1
    	
 
    	
37,500
    	
 
    	
$
    	
62.00
    	
 
    	
n/a
    	
 
    	
$
    	
193,750.00
    	
 
    
	
2
    	
 
    	
37,500
    	
 
    	
$
    	
63.86
    	
 
    	
3.0
    	
%
    	
$
    	
199,562.50
    	
 
    
	
3
    	
 
    	
37,500
    	
 
    	
$
    	
65.78
    	
 
    	
3.0
    	
%
    	
$
    	
205,549.38
    	
 
    
	
4
    	
 
    	
37,500
    	
 
    	
$
    	
67.75
    	
 
    	
3.0
    	
%
    	
$
    	
211,715.86
    	
 
    
	
5
    	
 
    	
37,500
    	
 
    	
$
    	
69.78
    	
 
    	
3.0
    	
%
    	
$
    	
218,067.33
    	
 
    
	
6
    	
 
    	
37,500
    	
 
    	
$
    	
71.87
    	
 
    	
3.0
    	
%
    	
$
    	
224,609.35
    	
 
    
	
7
    	
 
    	
37,500
    	
 
    	
$
    	
74.03
    	
 
    	
3.0
    	
%
    	
$
    	
231,347.63
    	
 
    
	
8
    	
 
    	
37,500
    	
 
    	
$
    	
76.25
    	
 
    	
3.0
    	
%
    	
$
    	
238,288.06
    	
 
    

 

	
Lease Year:
    	
 
    	
The term, “Lease Year l” as used in the rent tables herein shall   mean the 12 full calendar month period commencing on the Rent Commencement   Date. Each successive Lease Year shall mean the 12 full calendar month period   after the prior Lease Year.
    
	
 
    	
 
    	
 
    
	
Security Deposit:
    	
 
    	
Tenant shall provide a letter of credit equal to six   (6) months of average NNN Fixed Rent. After month thirty-nine (39) of   the Lease Term, subject to Tenant’s closing on additional financing of $50   million or more, provided Tenant has not entered into default prior to the   second Security Deposit reduction date, the Security Deposit shall be further   reduced to four ( 4) months of average NNN Fixed Rent for the remainder of   the Lease Term, or for as long as the Lease Term is extended, as applicable.
    
	
 
    	
 
    	
 
    
	
Tenant’s Percentage:
    	
 
    	
4.93% of the annual Operating Costs (as defined below) of the   Pappas Commerce Center based on a ratio of the rentable square foot (“RSF”)   of the Premises (37,500 RSF) to the total RSF of the Pappas Commerce Center   (760,784 RSF), as may be adjusted from time to time to reflect changes to the   Premises or the Pappas Commerce Center. Based on 
    

 

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current annual Operating Costs of the Pappas Commerce Center,   Tenant’s annual share is estimated to be $40,875, or $1.09/RSF for all   Operating Costs except for utilities to the Premises to the extent separately   metered; provided, however, such estimate does not supersede the specific   provisions set forth in this Lease, and Tenant shall remain liable for the   actual Operating Costs for Pappas Commerce Center incurred by Landlord.
    
	
 
    	
 
    	
 
    
	
Tenant’s Percentage of Real   Estate Taxes for Building:
    	
 
    	
25% of the annual real estate taxes of the Building based on a   ratio of the RSF of the Premises (37,500 RSF) to the total RSF of the   Building (150,000 RSF), as may be adjusted from time to time to reflect   changes to the Premises or the Pappas Commerce Center. Based on the current   annual real estate taxes for the Building, Tenant’s annual real estate tax   share is estimated to be $122,250, or $3.26/RSF; provided, however, such   estimate does not supersede the specific provisions set forth in this Lease,   and Tenant shall remain liable for the actual Real Estate Taxes incurred by   Landlord.
    
	
 
    	
 
    	
 
    
	
Tenant’s Percentage of   Insurance for Building:
    	
 
    	
25% of the annual insurance cost of the Building based on a   ratio of the RSF of the Premises (37,500 RSF) to the total RSF of the   Building (150,000 RSF), as may be adjusted from time to time to reflect   changes to the Premises or the Pappas Commerce Center. Based on the current   annual insurance cost for the Building, Tenant’s annual insurance share is   estimated to be $50,250, or $1.34/RSF; provided, however, such estimate does   not supersede the specific provisions set forth in this Lease, and Tenant   shall remain liable for the actual Insurance costs incurred by Landlord.
    
	
 
    	
 
    	
 
    
	
Tenant’s Percentage of Building   Operating Expenses:
    	
 
    	
25% of the annual Building Operating Expenses (as defined below)   based on a ratio of the RSF of the Premises (37,500 RSF) to the total RSF of   the Building (150,000 RSF), as may be adjusted from time to time to reflect   changes to the Premises or the Pappas Commerce Center. Based on the current   annual insurance cost for the Building, Tenant’s annual Building Operating   Expenses share is estimated to be $244,875, or $6.53/RSF; provided, however,   such estimate does not supersede the specific provisions set forth in this   Lease, and 
    

 

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Tenant shall remain liable for the actual Building Operating   Expenses incurred by Landlord. Notwithstanding the foregoing, in the event   capital repairs or replacements required by any laws not in existence and not   in effect as of the Commencement Date are made to the freight elevator,   Tenant shall be responsible for 100% of such costs.
    
	
 
    	
 
    	
 
    
	
Permitted Uses:
    	
 
    	
Research and development, laboratory, vivarium and offices.
    
	
 
    	
 
    	
 
    
	
Insurance Limits:
    	
 
    	
Comprehensive General Liability Insurance: For Tenant: Property   Damage Insurance: 
    
   For Landlord:
    	
 
    	
$2,000,000 100% of the full replacement value of the insured   property 100% of the full replacement value of the Building and Property
    

 

1.2                               Exhibits. The Exhibits listed below in this section are incorporated in this Lease by reference and are to be construed as a part of this Lease.

 

	
EXHIBIT A
    	
 
    	
Plan showing the   Premises
    
	
 
    	
 
    	
 
    
	
EXHIBIT A-1
    	
 
    	
Ground Floor Plan   Showing Loading Dock
    
	
 
    	
 
    	
 
    
	
EXHIBIT B
    	
 
    	
Tenant Landlord   Responsibility Matrix (‘‘Work Letter”)
    
	
 
    	
 
    	
 
    
	
EXHIBIT C
    	
 
    	
Maximum Allowable   Quantities of Hazardous Materials Summary
    

 

ARTICLE 2
  Premises

 

2.1                               Premises. Subject to Landlord’s completion of the Landlord’s Work in a good and workmanlike manner and in compliance with all laws applicable to the Landlord’s Work and the use or occupancy of the Premises including, without limitation, the so-called Americans with Disabilities Act and the rules and regulations promulgated thereunder, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, subject to and with the benefit of the terms, covenants, conditions and provisions of this Lease, the Premises in its “as is” condition in the Building, excluding exterior faces of exterior walls, the common pipes, ducts, conduit, wires, and appurtenant fixtures serving exclusively or in common other parts of the Building. Landlord shall deliver the Premises to Tenant with all base Building systems, including, but not limited to, HVAC, electrical, life safety and plumbing systems in good working condition as more particularly described in the Work Letter attached as Exhibit B hereto.

 

2.2                               Appurtenant Rights. Tenant shall have, as appurtenant to the Premises, rights to use, and permit its invitees to use, in common with Landlord and other tenants and occupants of the

 

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Property, subject to reasonable rules and regulations from time to time made by Landlord of which Tenant is given notice: (a) the common lobbies, toilets and corridors of the Building and the pipes, ducts, conduits, wires and appurtenant fixtures serving the Premises as more particularly described in the Work Letter attached as Exhibit B hereto, (b) common walkways and driveways necessary for access to the Building, (c) the onsite café, Building showers and lockers, Building common mother’s room, secured, covered bicycle storage, rooftop paddle tennis club and shuffleboard courts as in existence as of the date hereof, all of which are hereinafter known as the “Common Areas”, Tenant shall have the right to lease from Landlord up to thirty-eight (38) parking spaces plus, on a monthly tenant-at-will basis, an additional 1⁄2 parking space per 1,000 rentable square feet in the Premises (the “Additional Parking”), for Tenant’s exclusive use that are located at the on­site parking facility (the ‘‘Tenant Parking”) at the monthly rent of $190.00/month per parking space, for the spaces in use, as such rate may be changed from time to time to reflect market parking fees (the “Parking Fee”). Tenant shall notify Landlord annually, within thirty (30) days prior to the commencement of each Lease Year, as to how many spaces of Tenant Parking Tenant has elected to use for such year. Tenant shall notify Landlord on or before the 10th day of each month how many Additional Parking spaces Tenant will lease for the following month. The Additional Parking shall be available to Tenant on first come, first served basis until the Building is fully leased. Tenant shall pay the Parking Fee to Landlord on the first day of each month in advance and such Parking Fee shall be deemed Additional Rent hereunder. Landlord reserves the right to relocate the Tenant Parking to a potential future adjacent parking structure owned by Landlord. Tenant shall have access to a shared loading dock in the Building. Tenant shall have exclusive use of a freight elevator. Tenant shall have access to and use of the Premises, the Common Areas and loading dock 24 hours per day, 7 days per week, 365 days per year.

 

To assist Landlord in preserving the common parking area, Landlord reserves the right to require Tenant to cause its employees to affix to their vehicles an identification sticker as furnished by Landlord as evidence that they are entitled to use said parking area. Further, Tenant shall furnish to Landlord, upon Landlord’s request at reasonable intervals, the license plate numbers of vehicles of employees of Tenant who are principally employed at the Premises.

 

Landlord reserves the right from time to time, upon not less than two (2) days prior notice, which may be oral, (except for emergency situations, where no prior notice shall be required, provided Landlord shall notify Tenant after such entry has occurred), without unreasonable interference with Tenant’s use of or access to the Premises: (a) to install above a dropped ceiling (when applicable), use, maintain, repair, replace and relocate for service to the Premises and/or other parts of the Building pipes, ducts, conduits, wires and appurtenant fixtures, wherever located in the Premises or Building, (b) to alter or relocate any other Common Areas, (c) to make any repairs and replacements to the Premises which Landlord may deem necessary, and (d) in connection with any excavation made upon adjacent land of landlord or others, to enter, and to license others to enter, upon the Premises to do such work as the person causing such excavation deems necessary to preserve the wall of the Building from injury or damage and to support the same. Tenant shall install and maintain, as Landlord may reasonably require, proper access panels in any

 

6

 

hung ceilings or walls as may be installed by Tenant in the Premises to afford access to any facilities above the ceiling or within or behind the walls.

 

As part of Landlord’s Work. Landlord shall install the base building PH neutralization system on the ground floor adjacent to the boiler room, which shall be adequate for Tenant’s needs. With respect to Tenant’s use of the base building PH neutralization system, on or before the Commencement Date, Landlord shall obtain any discharge permits required by the Massachusetts Water Resources Authority (“MWRA Permits”) and, to the extent required for Tenant’s use, Tenant shall obtain a wastewater treatment operator license from the Commonwealth of Massachusetts. Landlord and Tenant shall reasonably cooperate with each other to obtain such MWRA Permits and operator license. Tenant shall have the right to tie into the base building pH neutralization system, and the actual monitoring, repair and maintenance costs of the base building pH neutralization system shall be passed through to Tenant on a pro-rata basis. Landlord shall allocate fire control areas (as defined in the Uniform Building Code as adopted by the city or municipality(ies) in which the Building is located (the “UBC”)) within the Building for the storage of Hazardous Materials. Tenant shall be allocated one (1) control area, which shall consist of the Premises in its entirety.

 

2.3                               Right of First Offer. After the Building is fully leased, and so long as this Lease remains in full force and effect without any default by Tenant beyond the applicable grace period, Tenant shall have a one-time right of first offer, pursuant and subject to the following terms and conditions, to lease (i) the remainder of the second floor of the Building (currently leased to 908 Devices), (ii) 37,500 square feet of the first floor of the Building located below the Premises or (iii) at Tenant’s election, both such spaces (collectively, the “Available Space”); provided that, the Available Space shall be lab capable for a wet laboratory use similar to Tenant’s Permitted Use. In the event that Landlord desires to lease any Available Space other than to its then current tenant or occupant (if any) or any other party presently entitled pursuant to a written agreement to lease such Available Space, Landlord shall first make a written offer to lease such Available Space to Tenant, stating the Fixed Rent that Landlord will accept and all other material terms and conditions of the proposed lease. Tenant may lease such Available Space by accepting Landlord’s offer in writing within fifteen (15) business days after notice of such offer has been given by Landlord to Tenant or, if later, fifteen (15) business days after determination of the Fair Market Value rent (hereinafter referred to as the “Response Deadline”). If Tenant does not so accept such offer, Landlord shall be free to lease such Available Space to any third party on such terms and conditions as Landlord may elect, in which case Tenant shall have no further recourse with respect to such Available Space; provided that, if Landlord desires to enter into a lease for the Available Space that is at a rental rate which would be less than 95% of the net effective rent offered to Tenant, Landlord shall be required to re-offer the Available Space to Tenant in accordance with the provisions of this Section 2.3 at such lower net effective rent.

 

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ARTICLE 3
  Lease Term

 

3.1                               Term. TO HAVE AND TO HOLD for a term specified in Section 1.1 hereof as the “Term,” beginning on the Commencement Date.

 

3.2                               Early Occupancy. Landlord agrees to use reasonable efforts to have Landlord’s Work substantially completed by the Estimated Tenant Access Date, subject to delays beyond Landlord’s control or any delays caused by Tenant. Subject to the terms of this Section 3.2, Landlord shall in no way be liable to Tenant or any other party, and Tenant’ obligations shall not be reduced hereunder in the event such construction work is not substantially completed by the Estimated Tenant Access Date. The “Commencement Date” shall be the date on which Landlord delivers physical possession of the Premises to Tenant with the Landlord’s Work substantially complete. Landlord’s Work will be substantially complete when (a) all of Landlord’s Work is complete, except for punchlist items which do not interfere with the use of the Premises for the permitted use, and (b) the Premises may lawfully be occupied and used for the permitted use. Landlord will use all reasonable efforts to substantially complete Landlord’s Work and deliver the Premises to Tenant on or before May 18, 2019.

 

If Landlord does not substantially complete Landlord’s Work and deliver the Premises to Tenant by the date that is twenty-two (22) weeks plus sixty (60) days days after the issuance of a building permit (the “Abatement Date”), as such date may be extended for any Tenant Delay (as defined in Section 4.1 below), then for each day thereafter until such time as the Premises are delivered to Tenant with Landlord’s Work substantially complete, Tenant shall receive a rent credit equal to one day’s Fixed Rent. If Landlord, for any reason, does not substantially complete Landlord’s Work and deliver the Premises to Tenant by twenty-two (22) weeks plus one hundred fifty (150) days after the issuance of a building permit, as such date may be extended due to any Tenant Delay (defined below) or any delay caused by force majeure, then Tenant may, at any time thereafter but prior to the date on which Landlord’s Work is substantially complete, cancel this Lease by giving written notice of such cancellation to Landlord.

 

3.3                               Option to Renew. Provided that Tenant is in full occupancy and there exists no default by Tenant at the time of Tenant’s exercise of its option hereunder or on the commencement date of the Renewal Option Term, Tenant shall have the right and option to renew (the “Renewal Option”) this Lease for one (1) five (5) year renewal term (the “Renewal Option Term”). Tenant shall exercise the Renewal Option by giving written notice to Landlord of such election to extend the Lease Term at least twelve (12) months prior to the termination of the then-current term. Fixed Rent for the Renewal Option Term shall be the then-current Fair Market Value (“FMV”) for lease renewal transactions for comparable laboratory and office space located in the Seaport commercial markets surrounding the Building. Tenant shall have no further renewal options unless expressly granted by Landlord in writing. Landlord shall lease to Tenant the Premises for the Renewal Option Term in their then-current condition, and Landlord shall not provide to Tenant any allowances (e.g., moving allowance, construction allowance and the like) or other tenant inducements.

 

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The FMV for the Renewal Option Term shall be based, as applicable, on comparable laboratory and office space located in the Seaport commercial markets surrounding the Building, taking into account all relevant factors, including, without limitation, the size of the Premises, the condition of the Premises, the prevailing market conditions, and the other payments required of Tenant under the Lease. If after one hundred twenty (120) days of the valid exercise by Tenant of the Renewal Option, Landlord and Tenant have failed to reach an agreement as to the FMV of the Premises, such FMV shall be determined by the following appraisal process (the “Appraisal Process”):

 

Either Landlord or Tenant (the “Initiating Party”) shall initiate the proceedings for such determination by notice to the other, and by designating the name and address of an MAI appraiser willing to act in such determination. Within fifteen (15) days after receipt by the other party (the “Responding Party”) of such notice, the Responding Party shall, by notice to the Initiating Party, designate the name and address of another MAI appraiser willing to so act. If the Responding Party shall fail, neglect, or refuse within said fifteen (15) day period to designate another appraiser willing to so act, the appraiser designated by the Initiating Party shall alone conduct the appraisal. All appraisers designated above shall have not less than ten ( 10) years experience dealing with property similar to the Premises.

 

Such appraisers shall be instructed to deliver their written appraisals on or before thirty (30) days following the expiration of said fifteen (15)-day period. If within fifteen (15) days after the delivery of all such appraisals Landlord and Tenant do not agree in writing upon the FMV of the Premises, then within ten (10) days following the expiration of said fifteen (15)-day period Landlord and Tenant shall select an appraiser (the “Neutral Appraiser”) qualified in the same manner as Landlord’s and Tenant’s appraisers appointed above, and within thirty (30) days thereafter the Neutral Appraiser shall deliver to Landlord and Tenant its determination of the FMV of the Premises without knowledge of the determination by either Landlord’s or Tenant’s appraiser. The FMV shall be the determination by Landlord’s or Tenant’s appraiser which is closest to the determination of the Neutral Appraiser. Each of Landlord and Tenant shall bear the cost and expenses of its own appraiser and shall bear equally the costs and expenses of any Neutral Appraiser. If Landlord and Tenant do not timely agree upon or select a Neutral Appraiser, then Landlord shall so notify the president of the Greater Boston Real Estate Board, who then shall appoint the Neutral Appraiser (who shall be qualified in the same manner as Landlord’s and Tenant’s appraisers appointed above).

 

Notwithstanding the result of the Appraisal Process, in no event shall the Fixed Rent (exclusive of payments on account of real estate taxes, CAM charges, additional charges and other amounts provided in the Lease) for the Renewal Option Term be less than the Fixed Rent in effect for the year immediately preceding the commencement of the Renewal Option Term. Landlord and Tenant agree to execute and deliver a certificate confirming the exact amount of Fixed Rent payable for the Renewal Option Term, which certificate shall be attached to, and become a part of, this Lease, but the failure of either party to execute and deliver such confirmatory certificate shall not affect or impair the validity of such determination.

 

9

 

ARTICLE 4
  Improvements

 

4.1                               Landlord’s Work. Landlord shall perform improvements (the “Landlord’s Work”) in the Premises in accordance with the attached Work Letter and all such improvements shall be in compliance with all applicable laws, codes and regulations. Landlord shall engage The Richmond Group as the general contractor for the performance of the tenant improvements in the Work Letter that are identified with an “X” in the column labeled “Tenant” (the ‘‘Tenant Items”). The items on the Work Letter that are identified with an “X” in the column labeled “Landlord” shall be performed by Landlord at Landlord’s sole cost and expense with contractors chosen at Landlord’s sole and absolute discretion. All costs for the Tenant Items in the Work Letter shall be paid solely with funds from the TI Allowance (defined below). Notwithstanding anything herein to the contrary, Landlord shall not be required to spend more than the TI Allowance (defined below) for the Tenant Items and any cost of the portions of Landlord’s Work that are Tenant Items which are in excess of the TI Allowance shall be paid by Tenant. For purposes of this Lease, “substantial completion” of Landlord’s Work shall be deemed to occur when the Premises are ready for Tenant’ occupancy except for minor items which do not cause material interference with Tenant’s use and occupancy of the Premises with Landlord having obtained a certificate of occupancy for the Premises. If substantial completion of Landlord’s Work is delayed by a Tenant Delay, then substantial completion shall be deemed to occur on the date on which the Landlord’s Work in the Premises would have been substantially completed but for the occurrence of any Tenant Delay. As used herein, a “Tenant Delay” shall mean each day of delay in the performance of the Landlord’s Work that occurs (a) because of Tenant’s failure to timely deliver or approve any required documentation such as any design or space plans (it being agreed that Tenant shall have a reasonable time to review and comment on any such design or space plan, which reasonable time shall be no less than five (5) business days), (b) because of any change by Tenant to any design or space plans after the same have been approved as final by Tenant in writing, or (c) because Tenant or its employees, agents, or contractors otherwise delay completion of the Landlord’s Work. On or before October 15 2018, Tenant’s architect shall deliver all plans, drawings, narratives and other materials required for submission of a TAA to Massport. For avoidance of doubt, Tenant’s failure to cause its architect to delivery such plans by such date shall be a Tenant Delay. In the event Tenant does not spend the entire TI Allowance, all remaining TI Allowance funds shall remain property of Landlord.

 

Tenant shall not be obligated to pay any charge for the use of the building services (including, but not limited to, parking, freight elevators, loading docks, air handling capacity, utilization of the building chases for ducting purposes, and electricity) during construction of Landlord’s Work or during Tenant’s move into the Premises. The loading dock which may be used by Tenant during the Term shall be identified on a ground floor plan to be attached hereto as Exhibit A-1.

 

Landlord shall provide for Tenant’s exclusive use a generator with an output not to exceed 250kW. Landlord shall contribute an amount not to exceed $50,000 towards the generator costs, which shall include but are not limited to the procurement and installation of the generator and transfer switch (collectively, the “Generator Installation Costs”), but shall

 

10

 

exclude any costs related to any dunnage installation to the Building necessary to install the generator (the “Generator Dunnage Costs”). The Generator Dunnage Costs shall be the sole responsibility of Landlord. All Generator Installation Costs in excess of Landlord’s $50,000 contribution, exclusive of the Generator Dunnage Costs, shall be borne by Tenant. In addition, Tenant shall have the right, subject to Article 6.2.4, to install HVAC equipment, antennas and satellite dishes on the roof or other part of the Building.

 

4.2                               Tenant Improvement Allowance. Landlord shall provide to Tenant a tenant improvement allowance in an amount not to exceed $175.00/RSF, or $6,562,500.00, to be applied towards the hard and soft costs associated with the Landlord’s Work (the “TI Allowance”). In addition, Landlord shall provide reimbursement to Tenant for space planning expenses in the amount of $3,750.00.

 

4.3                               TI Allowance Requisition Procedure. Following the commencement of the Landlord’s Work, on a monthly basis Landlord and Tenant’s construction representative (“Tenant’s Representative”) shall prepare a requisition for payment of costs associated with the performance of the Landlord’s Work (the “Requisition”). In the event Landlord disburses the entire TI Allowance to Tenant pursuant to the requisition procedure set forth in this Section 4.3, Tenant shall thereafter be responsible for all additional costs associated with the performance of the Landlord’s Work. Upon substantial completion of the Landlord’s Work and before Tenant occupies the Premises to conduct business therein, Tenant shall pay to Landlord an amount equal to the total construction costs of Landlord’s Work (as adjusted for any approved changes to the Landlord’s Work), less the amount of the TI Allowance. In the event of default of payment of such excess costs, Landlord (in addition to all other remedies) shall have the same rights as for a Tenant’s default under the Lease.

 

4.4                               Landlord Supervisory Fee. Tenant shall pay to Landlord a fee equal to two percent (2%) of the total TI Allowance, which shall be paid out of the TI Allowance.

 

ARTICLE 5
  Rent

 

5.1                               The Fixed Rent. Tenant covenants and agrees to pay rent to Landlord at the Original Notice Address of Landlord or at such other place or to such other person or entity as Landlord may by notice in writing to Tenant from time to time direct, at the Monthly Fixed Rent Rate in advance, on the first day of each calendar month included in the Term; and for any portion of a calendar month at the beginning or end of the Term, at that rate payable in advance for such portion. It is the intention of the parties hereto that the obligations of Tenant hereunder shall be separate and independent covenants and agreements, that the Monthly Fixed Rent Rate, the Additional Rent and all other sums payable by Tenant to Landlord shall continue to be payable in all events and that the obligations of Tenant hereunder shall continue unaffected, unless the requirement to pay or perform the same sha11 have been terminated or subject to abatement, deduction or setoff pursuant to an express provision of this Lease.

 

5.2                               Additional Rent. Tenant covenants and agrees to pay, as Additional Rent, (i) Personal Property Taxes, (ii) Tenant’s Percentage of Real Estate Taxes, Insurance and Operating

 

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Costs, and (iii) Utilities with respect to the Premises, as provided in this Section 5.2 as follows:

 

5.2.1                     Taxes. (a) Personal Property Taxes. Tenant shall pay all taxes charged, assessed or imposed upon the personal property of Tenant in or upon the Premises.

 

(b)           Real Property Taxes. Tenant shall pay during the Term hereof Tenant’s Percentage of Real Estate Taxes for the Building, as indicated above in Section 1.1, with respect to Real Estate Taxes incurred by Landlord in any tax year. Landlord and Tenant acknowledge and agree that Landlord receives one bill for Real Estate Taxes for the entire Industrial Park and that the Real Estate Taxes shown on such bill shall be allocated by Landlord among all of the buildings comprising the Industrial Park in good faith and in a fair and reasonable manner with respect to all parcels in the entire Industrial Park. Upon Landlord’s receipt of any tax bill, Landlord shall provide a copy to Tenant. The term “Real Estate Taxes” means the aggregate of all real estate taxes and any other governmental impositions which Landlord is required to pay based upon the value of or gross rents from the Property, general or special assessments, charges for sewer use or other governmental services, special district fees or taxes, and any other governmental fees and assessments imposed upon the Property, exclusive only of income and franchise taxes, whether or not such Real Estate Taxes exist or apply on the Commencement Date. Any assessments which can be paid in installments by Landlord shall be paid by Landlord in the maximum number of installments permitted by law and not included in Real Estate Taxes except in the year in which the assessment is actually paid. Notwithstanding anything to the contrary contained in this Lease, the following shall be excluded from Real Estate Taxes and shall be paid solely by Landlord: inheritance, estate, succession, transfer, gift, franchise, or capital stock tax, or any income taxes arising out of or related to ownership and operation of income-producing real estate, or any excise taxes imposed upon Landlord based upon gross or net rentals or other income received by it; any increase in taxes and assessments resulting from Landlord’s sale of, or other transfer of its interest in, the Building or the Industrial Park; and assessments, charges, taxes, rents, fees, rates, levies, excises, license fees, permit fees, inspection fees, or other authorization fees or charges to the extent allocable to or caused by the development or installation of on- or off-site improvements or utilities (including without limitation street and intersection improvements, roads, rights of way, lighting, and signalization) necessary for the development or construction of the Building, or any past, present or future system development reimbursement schedule or sinking fund related to any of the foregoing.

 

5.2.2                     Insurance.  Tenant shall pay during the Term hereof Tenant’s Percentage, as indicated above in Section 1.1, of all premiums for insurance carried by Landlord for the Building and the Property and Landlord’s business in the Property in any calendar year.

 

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5.2.3                     Operating Costs. Tenant shall pay during the Term hereof Tenant’s Percentage, as indicated above in Section 1.1, of all Operating Costs (as hereinafter defined) incurred by Landlord in any calendar year.

 

The term “Operating Costs” shall mean all costs or expenses incurred by Landlord in owning, operating, cleaning, managing, administering, maintaining, repairing, replacing, and improving the Property, including, without limitation, all costs of maintaining and repairing the Property (including snow removal, landscaping and grounds maintenance, parking lot operation and maintenance, security, operation and repair of heating and air-conditioning equipment, lighting and any other Building equipment or systems) and of all repairs and replacements (other than repairs or replacements for which Landlord has received reimbursement from contractors, other tenants of the Building or from others) necessary to keep the Property in good working order, repair, appearance and condition; all costs, including material and equipment costs, for cleaning and janitorial services to the Building (including window cleaning of the Building); all costs related to provision of heat (including oil, electric, steam and/or gas), air-conditioning, and water (including sewer charges) and other utilities to the Building; payments under all service contracts relating to the foregoing; all compensation, fringe benefits, payroll taxes and workmen’s compensation insurance premiums related thereto with respect to any employees of Landlord or its affiliates engaged in maintenance or management of the Property; attorneys’ fees and disbursements and auditing and other professional fees and expenses; all expenses including fees of attorneys, appraisers and other consultants, incurred in connection with any efforts to obtain abatements or reductions or to assure maintenance or to resist increase of Landlord’s taxes for any tax fiscal year wholly or partially included in the Term, whether or not successful and whether or not such efforts involve filing of actual abatement applications or initiation of formal proceedings; and a management fee not to exceed 3% of the NNN Fixed Rent.

 

There shall not be included in such Operating Costs brokerage fees (including rental fees) related to the leasing of space in the Building; interest and depreciation charges incurred on the Property; or expenditures made by Tenant with respect to cleaning, maintenance and upkeep of the Premises.

 

5.2.4                     Building Operating Expenses. Tenant shall pay during the Term hereof Tenant’s Percentage, as indicated above in Section 1.1, of all Building Operating Expenses (as hereinafter defined) incurred by Landlord in any calendar year on a fully net basis, with expenses that vary with occupancy calculated as if the Building were 95% occupied or, if higher, such higher rate of actual occupancy.

 

The term “Building Operating Expenses” shall mean all costs or expenses incurred by Landlord in owning, operating, cleaning, managing, administering, maintaining, repairing, replacing, and improving the Building, including, without limitation, all costs of ground lease rent, maintaining and repairing the Property (including snow removal, landscaping and grounds maintenance, parking lot operation and maintenance, security, operation and repair of heating and air-conditioning

 

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equipment, lighting and any other Building equipment or systems attributable to the Common Areas) and of all repairs and replacements (other than repairs or replacements for which Landlord has received full reimbursement from contractors, other tenants of the Building or from others) necessary to keep the Property in good working order, repair, appearance and condition; all costs, including material and equipment costs, for cleaning and janitorial services to the common portions of Building (including window cleaning of the Building); all costs related to provision of heat (including oil, electric, steam and/or gas), air-conditioning, and water (including sewer charges) and other utilities to the Building; payments under all service contracts relating to the foregoing; all compensation, fringe benefits, payroll taxes and workmen’s compensation insurance premiums related thereto with respect to any employee of Landlord or its affiliates engaged in maintenance or management of the Property; attorneys’ fees and disbursements and auditing and other professional fees and expenses; all expense including fees of attorneys, appraisers and other consultants, incurred in connection with any efforts to obtain abatements or reductions or to assure maintenance or to resist increase of Landlord’s taxes for any tax fiscal year wholly or partially included in the Term, whether or not successful and whether or not such efforts involve filing of actual abatement applications or initiation of formal proceedings; and a management fee equal to 3% of the Annual NNN Fixed Base Rent. Tenant ball have the right to audit, at Tenant’s sole cost and expense, Building Operating Expenses and Real Estate Taxes on an annual basis using a firm of Tenant’s designation. Landlord shall keep, in the Building manager’s office, complete books and records regarding Operating Costs and Real Estate Taxes (collectively, “Charges”). All record shall be retained for at least three (3) years. Tenant shall have the right to audit such records at any time upon reasonable written notice to Landlord. If such audit reveals that Tenant’s pro rata share of any Charges has been overstated by five percent (5%) or more, then Landlord shall immediately refund the overpayment and shall promptly upon demand reimburse Tenant for the costs of such audit up to $5,000.

 

There shall not be included in such Building Operating Expenses brokerage fees (including rental fees) related to the leasing of space in the Building; interest and depreciation charges incurred on the Property; or expenditures made by Tenant with respect to cleaning, maintenance and upkeep of the Premises. Notwithstanding anything to the contrary set forth in this Lease, Operating Costs and Building Operating Expenses shall not include the following: bad debt expenses and interest, principal, points and fees on debts or amortization on any mortgage or other debt instrument encumbering the Building or the Property; costs which may be considered capital improvements, capital repairs, capital changes or any other capital costs as determined under generally accepted accounting principles except for capital improvements required by any laws not in existence and not in effect as of the Commencement Date, in which case such costs shall be capitalized and amortized over their useful life determined in accordance with generally accepted accounting principles; rentals for items which if purchased, rather than rented, would constitute a capital cost; costs incurred by Landlord to the extent that Landlord is reimbursed by insurance proceeds or is otherwise reimbursed; depreciation, amortization and interest payments, except on equipment, materials,

 

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tools, supplies and vendor-type equipment purchased by Landlord to enable Landlord to supply services Landlord might otherwise contract for with a third party where such depreciation, amortization and interest payments would otherwise have been .included in the charge for such third party’s services, all as determined in accordance with generally accepted accounting principles, consistently applied, and when depreciation or amortization is permitted or required, the item shall be amortized over its reasonably anticipated useful life; advertising and promotional expenditures, and costs of acquisition and maintenance of signs in or on the Building identifying the owner of the Building or other tenants; marketing costs, including leasing commissions, attorneys’ fees (in connection with the negotiation and preparation of letters, deal memos, letters of intent, leases, subleases and/or assignments), space planning costs, and other costs and expenses incurred in connection with lease, sublease and/or assignment negotiations and transactions with present or prospective tenants or other occupants of the Building; costs, including permit, license and inspection costs, incurred with respect to the installation of other tenants’ or other occupants’ improvements or included in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Building; expenses in connection with services or other benefits which are not offered to Tenant or for which Tenant is charged for directly; costs incurred by Landlord due to the violation by Landlord or any tenant of the terms and conditions of any lease of space in the Building; management fees paid or charged by Landlord in connection with the management of the Building to the extent such management fee is in excess of the management fee customarily paid or charged by landlords of comparable buildings in the vicinity of the Building; salaries and other benefits paid to the employees of Landlord to the extent customarily included in or covered by a management fee, provided that in no event shall Operating Costs or Building Operating Expenses include salaries and/or benefits attributable to personnel above the level of Building manager; rent for any office space occupied by Building management personnel to the extent the size or rental rate for of such office space exceeds the size or fair market rental value of office space occupied by management personnel of comparable buildings in the vicinity of the Building; amounts paid to Landlord or to subsidiaries or affiliates of Landlord for goods and/or services in the Building to the extent the same exceeds the costs of such goods and/or services rendered by unaffiliated third parties on a competitive basis; Landlord’s general corporate overhead and general and administrative expenses; any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord; services provided, taxes, attributable to, and costs incurred in connection with the operation of any retail, restaurant and garage operations for the Building, and any replacement garages or parking facilities and any shuttle services; costs incurred in connection with upgrading the Building to comply with las, rules, regulations and codes in effect prior to the Commencement Date; all assessments and premiums which are not specifically charged to Tenant because of what Tenant has done, which can be paid by Landlord in installments, shall be paid by Landlord in the maximum number of installments permitted by law and not included as Operating Costs or Building Operating Expenses except in the year in which the assessment or premium

 

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installment is actually paid; costs arising from the negligence or willful .misconduct of Landlord or other tenants or occupants of the Building or their respective agents, employees, licensees, vendors, contractors or providers of materials or services; costs arising from Landlord’s charitable or political contributions; costs arising from latent defects or repair thereof; costs for sculpture, paintings or other objects of art; costs associated with the operation of the business of the entity which constitutes Landlord as the same are distinguished from the costs of operation of the Building, including accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of Tenant may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s interest in the Building, costs incurred in connection with any disputes between Landlord and its employees, between Landlord and Building management, or between Landlord and other tenants or occupants; any other costs or expenses which would not normally be treated as operating costs by landlords of comparable buildings in the vicinity of the Building.

 

5.2.5                     Utilities. Tenant acknowledges that Rent does not include the cost of supplying utilities to the Premises and agrees to pay all charges for heat, electricity and other utilities (whether they are used for furnishing heat or other purposes) that are furnished to the Premises and presently separately metered, except for water and sewer; provided, however, that Tenant shall be responsible for all wastewater inspection charges pertaining to Tenant’s use of the Building’s wastewater discharge system. Landlord agrees to provide (and shall include such provision in its Operating Costs) all other utility service and to furnish reasonably hot and cold water and reasonable heat and air conditioning (except to the extent that the same are furnished through separately metered utilities) to the Premises, the hallways, stairways, and lavatories during normal business hours on regular business days of the heating and air conditioning seasons of each year, all subject to interruption due to any accident, to the making of repairs, alterations, or improvements, to labor difficulties, to trouble in obtaining electricity, service, or supplies from the sources from which they are usually obtained for the Building, or to any other cause beyond the Landlord’s control. HVAC shall be separately metered and available at all times of the day and night for Tenant’s use. Landlord’s failure to furnish, or any interruption or termination of, services due to the application of laws, the failure of any equipment, the performance of repairs, improvements or alterations, or the occurrence of any event or cause beyond the reasonable control of Landlord (a “Service Failure”) shall not render Landlord liable to Tenant, constitute a constructive eviction of Tenant, give rise to an abatement of Rent, nor relieve Tenant from the obligation to fulfill any covenant or agreement. However, if the Premises, or a material portion of the Premises, is made untenantable for a period in excess of three (3) consecutive business days as a result of the Service Failure, then Tenant, as its sole remedy, shall be entitled to receive an abatement of Rent payable hereunder during the period beginning on the fourth (4th) consecutive business day of the Service Failure and ending on the day the service has been restored and if the Service Failure continues for a period in excess of ninety (90) consecutive business days, Tenant may terminate this Lease upon written notice to Landlord at any time thereafter before Landlord cures such Service Failure. If the

 

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entire Premises has not been rendered untenantable by the Service Failure, the amount of the abatement that Tenant is entitled to receive shall be prorated based upon the percentage of the Premises rendered untenantable and not used by Tenant. In no event, however, shall Landlord be liable to Tenant for any loss or damage, including the theft of Tenant’s property, arising out of or in connection with the failure of any security services, personnel or equipment. For the avoidance of doubt, except for the express remedies set forth in this paragraph under no circumstances will Landlord be liable to Tenant for any damages, costs, expenses, lost profits, or consequential damages as a result of a Service Failure irrespective of the cause.

 

Landlord shall have no obligation to provide utilities or equipment other than the utilities and equipment within the Premises as of the Commencement Date of this Lease. In the event Tenant requires additional utilities or equipment, the installation and maintenance thereof shall be subject to the prior written consent of the Landlord and shall be Tenant’s sole cost and responsibility, including, without limitation, compliance with all applicable legal requirements. Except as otherwise provided in Article 5, it is understood and agreed that Tenant shall make its own arrangements for the installation or provision of all such utilities and that Landlord shall be under no obligation to furnish any utilities to the Premises and shall not be liable for any interruption or failure in the supply of any such utilities to the Premises.

 

5.3                               Late Payment of Rent. If any installment of Rent is not paid within ten (10) days after written notice that such installment is past due, Tenant shall pay Landlord a late fee payment equal to five percent (5%) of the overdue payment. All unpaid late fees shall compound on a monthly basis. As used herein, the term “rent” or “Rent” shall mean Monthly Fixed Rent Rate, Additional Rent and other sums and charges due from Tenant under the terms of this Lease.

 

5.4                               Security Deposit. Upon the execution of this Lease, Tenant shall deposit with Landlord the letter of credit Security Deposit. Said deposit shall be held by Landlord as security for the faithful performance by Tenant of all the terms of this Lease by said Tenant to be observed and performed.

 

If the Rent payable hereunder shall be overdue and unpaid or should Landlord make payments on behalf of Tenant, or Tenant shall fail to perform any of its covenants, agreements and obligations set forth in this Lease, then Landlord may, at it option and without prejudice to any other remedy which Landlord may have on account thereof after the expiration of all applicable notice and cure periods, appropriate and apply said Security Deposit or so much thereof as may be necessary to compensate Landlord toward the payment of Rent or other sums or loss or damage sustained by Landlord due to such breach on the part of Tenant; and Tenant shall forthwith within ten (10) days upon demand restore said Security Deposit to the original sum deposited. Should Tenant not be in default as of the end of the Term, the Security Deposit shall be returned in full to Tenant at the end of the Term and surrender of the Premises to Landlord in the condition required hereunder.

 

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In the event of bankruptcy or other creditor-debtor proceedings against Tenant, all securities shall be deemed to be applied first to the payment of rent and other charges due Landlord for all periods prior to the filing of such proceedings.

 

ARTICLE 6
  Tenant’s Additional Covenants

 

6.1                               Affirmative Covenants. Tenant covenants at all times during the Term and for such further time (prior or subsequent thereto) as Tenant occupies the Premi.es or any part thereof:

 

6.1.1                     Perform Obligations. To perform promptly all of the obligations of Tenant set forth in this Lease; and to pay when due the Fixed Rent and Additional Rent and all charges, rates and other sums which by the terms of this Lease are to be paid by Tenant.

 

6.1.2                     Use. To use the Premises only for the Permitted Uses, and from time to time to procure all licenses and permits necessary therefor, at Tenant’s sole expense. With respect to any licenses or permits for which Tenant may apply, pursuant to this subsection 6.1.2 or any other provision hereof, Tenant shall furnish Landlord copies of applications therefor on or before their submission to the governmental authority. Tenant shall be solely responsible for maintaining compliance with all such permits or approvals and shall hold Landlord harmless for any violations thereof by Tenant.

 

The vivarium will be permitted to be operated in the portion of the Premises shown on plans approved by Landlord in accordance with [Exhibit A], and shall be used for biopharmaceutical research, development, handling and testing of [rodents and other small mammals] (“Permitted Animals”). If Tenant proposes to use any animals other than the Permitted Animals in its operations, it shall first obtain the prior written consent of Landlord. Animal testing, solely of Permitted Animals, shall be permitted subject to the following: (i) all testing shall be conducted in strict compliance with all applicable governmental rules and regulations and with good scientific and medical practice; (ii) all dead animals, any part thereof or any waste products related thereto, shall be disposed of, at Tenant’ sole cost and expense, in strict compliance with all applicable governmental rules and regulations and with good scientific and medical practice; (iii) no odors, noises or any similar nuisance shall be permitted to emanate from or permeate outside the vivarium; and (iv) Tenant’s use of the vivarium shall not interfere with the peaceable and quiet use and enjoyment by other tenants or occupants of the Premises. Tenant shall procure and deliver to Landlord copies of all necessary permits and approvals necessary for the use and operation of the vivarium before allowing any actual Permitted Animals into the Premises and shall maintain such permits and approvals during the Lease Term. Tenant shall not use, or suffer or permit the use or occupancy of, or suffer or permit anything to be done in or anything to be brought into or kept in or about the Premises or any part thereof (including, without limitation, any materials, appliances or equipment used in the construction or other preparation of the Premises and furniture and carpeting): (i) which would violate any of the covenants, agreements, terms, provisions and conditions of this Lease or any other legal

 

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requirements; (ii) for any unlawful purposes or in any unlawful manner; (iii) which, in the reasonable judgment of Landlord shall in any way (a) impair, interfere with or otherwise materially diminish the quality of any of the Building services or the proper and economic heating, cleaning, ventilating, air conditioning or other servicing of the Building or Premises, or with the use or occupancy of any of the other areas of the Building, or occasion injury or damage to any occupants of the Premises or other tenants or occupants of the Building; or (iv) which is inconsistent with the maintenance of the Premises.

 

All Hazardous Substances, laboratory chemicals, laboratory animals and other laboratory materials must be brought into the Premises via the freight elevator.

 

6.1.3                     Repair and Maintenance. To maintain the Premises in neat order and in good condition and repair and to perform all necessary repairs to the interior of the Premises and to promptly notify Landlord of any required repairs to the freight elevator and any plumbing, heating, electrical, life safety and ventilating and air-conditioning systems exclusively serving the Premises such as are necessary to keep them in good working order, appearance and condition, as the case may require, reasonable wear and tear thereof and damage by fire or by casualty only excepted; to keep all glass in windows and doors of the Premises (except glass in the exterior walls of the Building) whole and in good condition with glass of the same quality as that damaged or broken; and to make as and when needed as a result of misuse by, or neglect or improper conduct of Tenant or Tenant’s servants, contractors, employees, agents, invitees or licensees (collectively, “Tenant Parties”), all repairs necessary, which repairs and replacements shall be in quality and class equal to the original work. Tenant shall pay Landlord, as Additional Rent, the cost of any repairs to the freight elevator and any plumbing, heating, electrical, life safety and ventilating and air-conditioning systems exclusively serving the Premises. Invoices for said repairs shall be due within thirty (30) days after Landlord submits an invoice for such repairs to Tenant. Landlord, upon default of Tenant hereunder and upon prior notice to Tenant, may elect, at the expense of Tenant, to perform all such cleaning and maintenance and to make any such repairs or to repair any damage or injury to the Building or the Premises caused by moving personal property of Tenant in or out of the Building, or by installation or removal of furniture or other property, or by misuse by, or neglect, or improper conduct of, Tenant or Tenant’s servants, employees, agents, contractors, customers, patrons, invitees, or licensees. Except as stated above, other required repairs shall be performed by the Landlord subject to reimbursement by Tenant through Tenant’s Percentage of Building Operating Expenses, provided however that any repairs necessitated as a result of gross negligence or willful misconduct of Tenant or Tenant Parties shall be performed at Tenant’s sole cost and expense. Tenant shall be responsible, at Tenant’s sole cost and expense, for all janitorial services required within the Premises. Notwithstanding any provision of this Lease to the contrary, (i) capital repairs or replacements to the freight elevator shall be made by Landlord at its sole cost and expense without reimbursement by Tenant except for capital repairs or replacements required by any laws not in existence and not in effect as of the Commencement Date which shall be included in Building Operating

 

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Expenses pursuant to Section 5.2.4 (in which case Tenant shall be responsible for 100% of such costs pursuant to Section 1.1) and (ii) costs of repairs and maintenance to the freight elevator that are not capital repairs or replacements shall be directly billed to Tenant.

 

6.1.4       Compliance with Law. So long as the Premises are delivered to Tenant in compliance with all applicable laws including, without limitation, all ordinances and all orders or regulations of any public authority, to make all repairs, alterations, additions or replacements to the Premises required by any law or ordinance or any order or regulation of any public authority; to keep the Premises equipped with all safety appliances so required; and to comply with the orders and regulations of all governmental authorities with respect to zoning, building, fire, health and other codes, regulations, ordinances or laws applicable to the Premises; provided that, Landlord shall, as part of the Landlord’s Work, install all sprinklers and fire safety systems required by any such law or ordinance or any order or regulation of any public authority. Notwithstanding the foregoing or any other provision of this Lease, however, Tenant shall not be responsible for compliance with any such laws, regulations, or the like requiring (a) structural repairs or modifications; or (b) repairs or modifications to the utility or building service equipment; or (c) installation of new building service equipment, such as fire detection or suppression equipment, unless such repairs, modifications, or installations shall be due to the gross negligence or willful misconduct of Tenant or any agent, employee, or contractor of Tenant or are due to Tenant’s specific manner of use of the Premises (as opposed to the Permitted Uses, generally).

 

6.1.5       Indemnification. Pursuant to the terms of Article 10, below, to save Landlord harmless, and to exonerate and indemnify Landlord from and against any and all claims, liabilities or penalties asserted by or on behalf of any person, firm, corporation or public authority on account of injury, death, damage or loss to person or property in or upon the Premises arising out of the use or occupancy of the Premises by Tenant or by any person claiming by, through or under Tenant (including, without limitation, all patrons, employees and customers of Tenant), or arising out of any delivery to or service supplied to the Premises, or on account of or based upon anything whatsoever done on the Premises, except if the same was caused by the gross negligence or willful misconduct of Landlord, its agents, servants or employees. In respect of all of the foregoing, Tenant shall indemnify Landlord from and against all reasonable costs, expenses (including reasonable attorneys’ fees), and liabilities incurred in or in conjunction with any such claim, action or proceeding brought thereon; and, in case of any action or proceeding brought against Landlord by reason of any such claim, Tenant, upon notice from Landlord and at Tenant’s expense, shall resist or defend such action or proceeding and employ counsel therefor reasonably satisfactory to Landlord.

 

6.1.6       Landlord’s Right to Enter. To permit Landlord and its agents, upon reasonable prior notice which may be oral, (except for emergency situations, where no prior notice shall be required, provided Landlord shall notify Tenant after such entry has occurred), to enter into and examine the Premises at reasonable times and to show

 

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the Premises, and to make repairs to the Premises, and, during the last six (6) months prior to the expiration of this Lease, to keep affixed in suitable places notices of availability of the Premises.

 

6.1.7       Personal Property at Tenant’s Risk. To place and keep all of the furnishings, fixtures, equipment, effects and property of every kind, nature and description of Tenant and of all persons claiming by, through or under Tenant which, during the continuance of this Lease or any occupancy of the Premises by Tenant or anyone claiming under Tenant, may be on the Premises, at the sole risk and hazard of Tenant, except to the extent any damage thereto is caused by the gross negligence or willful misconduct of Landlord.

 

6.1.8       Payments of Landlord’s Cost of Enforcement. To pay on demand Landlord’s reasonable expenses, including reasonable attorney’s fees, incurred in enforcing any obligation of Tenant under this Lease as provided in Section 8.4.

 

6.1.9       Yield Up. At the expiration of the Term or earlier termination of this Lease, to surrender all keys to the Premises; to remove all of its trade fixtures and personal property in the Premises; to remove such installations, improvements and alterations made by Tenant in the Premises as Landlord may have requested at the time such installments, improvements and alterations were installed and all Tenant’s signs wherever located; to repair all damage caused by such removal and to yield up the Premises (including all installations and improvements made by Tenant except for trade fixtures and such of said installations or improvements as Landlord shall request Tenant to remove at the time of installation), broom-clean and in the same good order and repair in which Tenant is obliged to keep and maintain the Premises by the provisions of this Lease. In no event shall Tenant have any responsibility for any repairs or maintenance made necessary, in whole or in part, by the negligence or willful misconduct of Landlord, fire, casualty, eminent domain, or ordinary wear and tear, or by alterations, improvements, restoration, repairs, replacements, or renovations that are the responsibility of Landlord or are not expressly required of Tenant herein. Any property not so removed shall be deemed abandoned and may be removed and disposed of by Landlord in such manner as Landlord shall determine and Tenant shall pay Landlord the entire cost and expense incurred by Landlord in effecting such removal and disposition and in making any incidental repairs and replacements to the Premises and for use and occupancy of the Premises during the period after the expiration of the Term and prior to its performance of its obligations under this subsection 6.1.9 at the rate set forth in Section 11.8. Tenant shall further indemnify Landlord against all loss, cost and damage resulting from Tenant’s failure and delay in surrendering the Premises as above provided.

 

6.1.10     Estoppel Certificate. Upon not less than fifteen (15) days’ prior written request by Landlord, to execute, acknowledge and deliver to Landlord a statement in writing certifying that this Lease is unmodified and in full force and effect and that Tenant has no defenses, offsets or counterclaims against its obligations to pay the Fixed Rent and Additional Rent and any other charges and to perform its other covenants

 

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under this Lease (or, if there have been any modifications, that the Lease is in full force and effect as modified and stating the modifications and, if there are any defenses, offsets or counterclaims, setting them forth in reasonable detail), and the dates to which the Fixed Rent and Additional Rent and other charges have been paid and such other certifications as Landlord may reasonably require. Any such statement delivered pursuant to this subsection 6.1.10 may be relied upon by Landlord, any prospective purchaser or mortgagee of the Premises, or any prospective assignee of such mortgage. Tenant shall also deliver to Landlord such financial information as may be reasonably required by Landlord to be provided to any mortgagee or prospective purchaser of the Premises.

 

6.1.11              Landlord’s Expenses Re Consents. To reimburse Landlord promptly on demand for all reasonable legal expenses incurred by Landlord in connection with all requests by Tenant for consent or approval hereunder.

 

6.2                               Negative Covenants. Tenant covenants at all times during the Term and such further time (prior or subsequent thereto) as Tenant occupies the Premises or any part thereof:

 

6.2.1                     Assignment and Subletting. Except as otherwise set forth herein, not to assign, transfer, mortgage or pledge this Lease or to sublease (which term shall be deemed to include the granting of concessions and licenses and the like) all or any part of the Premises or suffer or permit this Lease or the leasehold estate hereby created or any other rights arising under this Lease to be assigned, transferred or encumbered, in whole or in part, whether voluntarily, involuntarily or by operation of law, or permit the occupancy of the Premises by anyone other than Tenant without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. The Landlord shall respond to Tenant’s written request within ten (10) business days after receipt by Landlord of all information and materials reasonably required by Landlord. In the event Tenant desires to assign this Lease or sublet any portion or all of the Premises, Tenant shall notify Landlord in writing of Tenant’s intent to so assign this Lease or sublet the Premises and the proposed effective date of such subletting or assignment, and shall request in such notification that Landlord consent thereto. Landlord’s consent shall not be unreasonably withheld, conditioned or delayed to an assignment or to a subletting, provided that the assignee or subtenant shall use the Premises only for the Permitted Uses, the proposed assignee or subtenant has sufficient financial resources to discharge its obligations under the Lease assignment or sublease agreement and the proposed transfer agreement, and the proposed assignment or sublease shall not, in Landlord’s reasonable judgment, cause harm to the Property or harm to the reputation of the Building or the Property. Tenant shall, as Additional Rent, reimburse Landlord promptly for Landlord’s reasonable legal expenses incurred in connection with any request by Tenant for such consent. If Landlord consents thereto, no such subletting or assignment shall in any way impair or release the Tenant from the continuing primary liability of Tenant hereunder, and no consent to any subletting or assignment in a particular instance shall be deemed to be a waiver of the obligation to obtain the Landlord’s written approval in case of any other subletting or assignment.

 

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Notwithstanding anything to the contrary provided for herein, subject to approval by Massport and provided that no event of Tenant default hereunder then exists beyond any applicable grace or cure period, Tenant shall have the right (A) to sublease up to 12,000 rentable square feet of the Premises for the first three (3) years of the Term, without Landlord’s approval and (B) to sublease or assign the Premises under this Lease, without Landlord’s approval, to any parent or affiliate, or in the event of any corporate merger, consolidation, or sale of assets or stock, but after Tenant provides thirty (30) days prior written notice thereof to Landlord, PROVIDED that: (i) any successor to Tenant pursuant hereto has a net worth computed in accordance with generally accepted accounting principles at least equal to the greater of (x) the net worth of Tenant immediately prior to such merger, consolidation, or transfer, or (y) the net worth of Tenant on the date of the Lease; (ii) proof satisfactory to Landlord of such net worth shall have been delivered to Landlord at least ten (10) days prior to the effective date of any such transaction; and (iii) the any assignee agrees directly with Landlord to be bound by all the obligations of the Tenant hereunder, including, without limitation, the obligation to pay rent and other amounts provided for under this Lease.

 

If for any assignment or sublease consented to by Landlord hereunder Tenant receives rent or other consideration, either initially or over the term of the assignment or sublease, in excess of the rent called for hereunder, or in case of sublease of part, in excess of such rent fairly allocable to the part, after appropriate adjustments to assure that all other payments called for hereunder are appropriately taken into account and after deduction for reasonable expenses of Tenant in connection with the assignment or sublease, to pay to Landlord as Additional Rent fifty (50%) percent of the excess of each such payment of rent or other consideration received by Tenant promptly after its receipt.

 

6.2.2       Nuisance. Not to injure, deface or otherwise harm the Premises; nor commit any nuisance; nor permit in the Premises any vending machine (except such as is used for the sale of merchandise to employees of Tenant) or inflammable fluids or chemicals (except such as are customarily used in compliance with all applicable laws in connection with the Permitted Uses or standard office, warehouse and/or light manufacturing equipment uses); nor permit any cooking to such extent as requires special exhaust venting; nor permit the emission of any objectionable noise or odor; nor make, allow or suffer any waste; nor make any use of the Premises which is improper, offensive or contrary to any law or ordinance or which will invalidate any of Landlord’s insurance; nor conduct any auction, fire, “going out of business” or bankruptcy sales.

 

6.2.3       Hazardous Wastes and Materials. Tenant shall not, without the prior written consent of Landlord, keep, store, or use any hazardous agents, substances or materials designated as, or containing components now or hereafter designated as, hazardous, dangerous, toxic, radioactive or harmful by reason of its impact or potential impact on humans, animals and/or the environment, and/or subject to regulation under any federal, state or local law, regulation or ordinance (“Hazardous Substances”) in, on, under or about the Premises or Building except

 

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for ordinary cleaning and office supplies used and stored in accordance with applicable law and best industry practices. Further, Tenant shall: (i) not permit any such Hazardous Substances to escape, be released, or be disposed of in, or about the Premises, Building, or Property, (ii) promptly, timely and completely comply with all federal, state or local governmental requirements concerning such Hazardous Substances, including without limitation, use, sale, transportation, generation, treatment, disposal, licensing, permitting, reporting and record keeping, and (iii) simultaneously with the execution of this Lease and within fifteen (15) business days of Landlord’s written request, provide evidence reasonably satisfactory to Landlord of Tenant’s compliance with all applicable federal, state or local laws, regulations or ordinances, including copies of all licenses and permits that Tenant has been required to obtain for the handling of any Hazardous Substances. Without limitation, Hazardous Substances shall include those described in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §9601 et seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §6901 et seq., the Massachusetts Hazardous Waste Management Act, as amended, M.G.L. Chapter 21C, the Massachusetts Oil and Hazardous Material Release Prevention Act, as amended, M.G.L. Chapter 21E, 10 CFR Part 20 Standards for Protection Against Radiation and 42 CFR Part 73 Select Agent Rule, the regulations adopted under these acts, and all applicable present and future statutes, regulations ordinances, rules, codes, judgments, orders or other similar enactments of any Governmental Authority regulating or relating to health, safety, or environmental conditions on, under or about the Premises.

 

Prior to the commencement of this Lease, Tenant shall deliver to Landlord, a list identifying each type of Hazardous Substance that shall be brought upon, kept, used, stored, handled, treated, generated on, or released or disposed of from, the Premises and setting forth and any all governmental approvals or permits required in connection with the presence, use, storage, handling, treatment, generation, release, or disposal of such Hazardous Substances on or from the Premises (“Hazardous Substance List”). Tenant shall deliver to Landlord, an updated Hazardous Substance List at least once a year, and shall also notify Landlord if any new Hazardous Substance is brought onto, kept used, stored, handled, treated, generated on, or released or disposed of in, on or under the Premises. Tenant shall not allow any Hazardous Substance into the Premises in excess of the amount shown on the Maximum Allowable Quantities of Hazardous Materials Summary, attached hereto and incorporated herein as Exhibit C.

 

In no event shall Tenant generate, produce, bring upon, use, store or treat any infectious biological micro-organisms or any other Hazardous Substances in the Premises with a risk category above the level of Biosafety Level 2 as established and described by the Department of Health and Human Services Publication Biosafety in Microbiological and Biomedical Laboratories (Fifth Edition) (the “BMBL”), as it may be further revised (or such nationally recognized new or replacement standards as may be reasonably selected by Landlord).

 

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Landlord shall have the right to conduct annual tests of the Premise to determine whether any contamination of the Premises has occurred as a result of Tenant’s use. The cost of each such annual test shall not exceed $10,000. Tenant shall be required to pay the actual cost of such annual test of the Premises, without markup; provided however, that if Tenant conducts its own tests of the Premises using third party contractors that have been approved by Landlord, Landlord shall accept such tests in lieu of the annual tests. Landlord shall have the right at any time to test the premises for contamination at its own cost. If any governmental agency shall ever require testing to ascertain whether or not there bas been any release of Hazardous Substances (x) in the Building and/or on the Property and (y) that has been caused by Tenant or any party acting by, through or under Tenant (including, without limitation, any employee, agent, contractor or invitee of Tenant), then the reasonable costs thereof shall be reimbursed by Tenant to Landlord upon demand as additional rent. Additionally, Tenant shall reimburse Landlord for the reasonable cost of an annual environmental compliance audit as required by Massport.

 

Immediately upon a release or threat of release of Hazardous Substances by Tenant, Tenant shall notify Landlord, and Tenant shall make available to Landlord any reasonably requested information relating to the types and amounts of all Hazardous Substances being generated, produced, brought upon, used, stored or treated on the Premises and upon Landlord’s written request, copies of any federal, state or municipal filings or compliance reports made by Tenant with respect to such Hazardous Substances, all of which Landlord shall have the right to audit and review subject to such reasonable terms and conditions imposed by Tenant for the protection of Tenant’s business interests, including confidentiality. Tenant agrees to pay the reasonable cost of any environmental inspection or assessment required by any governmental agencies, mortgagees of the Property, or by any insurance carrier, to the extent that such inspection or assessment pertains to any release, threat of release, contamination, claim of contamination, loss or damage in the Premises arising out of Tenant’s use and occupancy (together, “Environmental Incidents”). Tenant shall be fully and completely liable (either with or without negligence) to Landlord for any and all cleanup costs and expenses and any and all other charges, expenses, fees, fines, penalties (both civil and criminal) and costs imposed with respect to Tenant’s use, disposal, transportation, generation and/or sale of, or Tenant’s causing or permitting the escape, disposal or release, of any Hazardous Substances. In all events, Tenant shall indemnify Landlord as provided in Section 6.1.5 of this Lease from any release of Hazardous Substances on the Premises or in the Building arising out of Tenant’s use or occupancy of the Premises.

 

Tenant acknowledges that areas of the Building may be used for non-laboratory uses and with respect to any Hazardous Substances kept, stored or used with Landlord’s consent, Tenant shall operate its business and conduct all laboratory operations and the storage, use treatment, and disposal of Hazardous Substances at the Premises in accordance with the best industry practices and in accordance with the terms of this Lease. In all events Tenant shall comply with all applicable provisions of the standards of the U.S. Department of Health and Human Services

 

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as further described in the USDHHS publication Biosafety in Microbiological and Biomedical Laboratories (4th Edition, May 1999) as it may be further revised, or such nationally recognized new or replacement standards as may be reasonably agreeable to Tenant and Landlord after receipt of written notice thereof. Any Hazardous Substances permitted to be stored on the Premises pursuant to this Lease shall be stored in areas of the Premises exclusively designated by Tenant for such purpose. Tenant further acknowledges the complex nature of maintaining the Premises for bioscience research, laboratory, and/or vivarium uses and shall perform all work and take all steps appropriate and necessary to safeguard safety, health and welfare of itself, other tenants and occupants of the Premises in accordance with the terms of this Lease.

 

Prior to the Expiration Date, Tenant shall clean and otherwise decommission to the extent reasonably necessary all interior surfaces (including floors, walls, ceilings, and counters), piping, supply lines, waste lines and plumbing in or serving the Premises, and all exhaust or other ductwork in or serving the Premises, in each case that has carried, released or otherwise been exposed to any Hazardous Substances, and shall otherwise clean the Premises so as to permit the report hereinafter called for by this Section 6.2.3 to be issued. At least five (5) business days prior to the Expiration Date, Tenant, at Tenant’s expense, shall obtain for Landlord a report addressed to Landlord (and, at Tenant’s election, Tenant) by a reputable licensed environmental engineer or industrial hygienist that is designated by Tenant and acceptable to Landlord in Landlord’s reasonable discretion, which report shall be based on the environmental engineer’s inspection of the Premises and shall state, to the Landlord’s reasonable satisfaction, that (a) the Hazardous Substances described in the first sentence of this paragraph, to the extent existing prior to such decommissioning, have been removed in accordance with applicable laws and best industry practice including, without limitation, the standards of the American National Standards Institute (“ANSI”) including ANSI standard BSR/AIHA Z9.11 “Laboratory Decommissioning”; (b) all Hazardous Substance described in the first sentence of this paragraph, if any, have been removed in accordance with applicable laws and best industry practice including, without limitation, the standards of ANSI, including ANSI standard Z9.11-2008 “Laboratory Decommissioning”, from the interior surfaces of the Premises (including floors walls, ceilings, and counters), piping, supply lines, waste lines and plumbing, and all such exhaust or other ductwork in the Premises, may be reused by Landlord in compliance with applicable laws without incurring special costs on account of such Hazardous Substance or undertaking special procedures for demolition, disposal, investigation, assessment, cleaning or removal of such Hazardous Substances and without giving notice to governmental agencies in connection with such Hazardous Substances; and (c) the Premises may be reoccupied for office or laboratory use, demolished or renovated without incurring special costs on account of such Hazardous substances or undertaking special procedure for disposal, investigation, assessment, cleaning or removal of Hazardous Substances described in the first sentence of this paragraph and without giving notice to governmental agencies in connection with Hazardous Substances. Further, for purposes of clauses (b) and (c), “special costs ‘ or “special procedures” shall mean costs or procedures, as the case

 

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may be, that would not be incurred but for the nature of the Hazardous Substances as Hazardous Substances instead of non-Hazardous Substances. The report shall also include reasonable detail concerning the clean-up measures taken, the clean-up locations, the tests run and the analytic results.

 

If Tenant fails to perform its obligations under this Section 6.2.3, without limiting any other right or remedy, Landlord may, on five (5) business days’ prior written notice to Tenant perform such obligations at Tenant’s expense, and Tenant shall within ten (10) days of demand reimburse Landlord for all reasonable out-of-pocket costs and expenses incurred by Landlord in connection with such work.

 

Tenant shall give written notice to Landlord within twenty (20) days prior to the Commencement Date and thereafter once annually within twenty (20) days of each anniversary of the Commencement Date of any materials on OSHA’s right to know list or which are subject to regulation by any other federal, state, municipal or other governmental authority and which Tenant intends to have present at the Premises and with such notice shall provide Landlord with all information required by such law, regulation or authority. Tenant shall provide such further information confirming such materials and/or their use, storage or disposal, within thirty (30) days of Landlord’s reasonable request, but not more than one (1) time every twelve (12) months, except in connection with a sale, refinancing or any release or threat of release of Hazardous Substances. Tenant shall not use or permit the Premises to be used for any purpose or in any manner that would void Tenant’s or Landlord’s Insurance, increase insurance risk, or cause the disallowance of any sprinkler or other credits. Landlord shall notify Tenant of such increase in insurance policies and Tenant shall pay same as additional rent by reason of Tenant’s failure to comply with the provisions of this Section or otherwise caused by Tenant’s use and/or occupancy of the Premises.

 

Tenant’s indemnity obligations under this Section 6.2.3 shall survive the expiration or earlier termination of this Lease.

 

6.2.4       Installation, Alterations or Addition. Not to make any installations, alterations or additions in, to or on the Premises other than those shown on the attached Work Letter nor to permit the making of any boles in the walls, partitions, ceilings or floors without on each occasion obtaining the prior written consent of Landlord (which consent shall not be unreasonably withheld) as well as the approval by Massport under its TAA process, and then only pursuant to plans and specifications approved by Landlord in advance in each instance; and Tenant shall pay promptly when due the entire cost of any work undertaken by Tenant so that the Premises shall at all times be free of liens for labor and materials. In any event, Tenant shall within ten (10) business days after the same is filed, discharge any mechanics’ liens or other encumbrances that may arise out of such work. Tenant shall procure all necessary licenses and permits at Tenant’s sole expense before undertaking such work. All such work shall be done in a good and workmanlike manner employing materials of good quality and so as to conform with all applicable zoning, building, fire, health and other codes, regulations, ordinances and laws. Tenant shall save

 

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Landlord harmless and indemnified from all injury, loss, claims or damage to any person or property occasioned by or growing out of such work, except to the extent caused by the gross negligence or willful misconduct of Landlord. Tenant shall reimburse Landlord for any reasonable expenses incurred by Landlord in the review and approval of Tenant’s plans and specifications for the construction of improvements to the Premises performed during the Lease Term.

 

6.2.5       Abandonment. Not to abandon or vacate the Premises during the Term.

 

6.2.6       Signs. Not to paint or place any signs or place any curtains, blinds, shades, awnings, aerials, or the like, visible from outside the Premises without Landlord’s prior written approval. Landlord sha1l provide, at its sole cost and expense, Tenant signage in the lobby directory and in the Building’s second floor elevator lobby. Landlord shall work with Tenant to evaluate the potential of exterior signage for Tenant at the Property.

 

ARTICLE 7
  Casualty or Taking

 

7.1          Termination. In the event that the Premises or the Building, or any material part thereof or the access thereto, shall be taken by any public authority or for any public use, or shall be destroyed or damaged by fire or casualty, or by the action of any public authority, then this Lease may be terminated at the election of either party. Such election, which may be made notwithstanding the fact that Landlord’s entire interest may have been divested, shall be made by the giving of notice to the other party within thirty (30) days after the date of the taking or casua1ty.

 

7.2          Restoration. If the parties do not elect to so terminate (or if no termination right arises under Section 7.1), this Lease shall continue in force and a just proportion of the rent reserved, according to the nature and extent of the damages sustained by the Premises (or the access thereto), shall be abated until the Premises, or what may remain thereof, shall be put by Landlord in proper condition for use, which Landlord covenants to do with reasonable diligence to the extent permitted by the net proceeds of insurance recovered or damages awarded for such taking, destruction or damage and subject to zoning and building laws or ordinances then in existence. “Net proceeds of insurance recovered or damages awarded” refers to the gross amount of such insurance or damages less the reasonable expenses of Landlord incurred in connection with the collection of the same, including without limitation, fees and expenses for legal and appraisal services.

 

7.3          Award. Irrespective of the form in which recovery may be had by law, all rights to damages or compensation for a taking shall belong to Landlord in all cases (not including any awards specifically made to Tenant for its relocation costs and personal property, which shall belong to Tenant, provided Landlord’s award is not reduced or otherwise adversely affected thereby).

 

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ARTICLE 8
  Defaults

 

8.1          Events of Default. (a) If Tenant shall default in the performance of any of its obligations to pay the Fixed Rent or Additional Rent hereunder and if such default shall continue for five business (5) days after written notice from Landlord designating such default, or (b) if Tenant shall default in the performance of any of its other obligations under the Lease and such default is not cured within thirty (30) days after written notice from Landlord to Tenant specifying any such default or defaults, provided that if such default cannot reasonably be cured within such 30-day period, Tenant shall have additional commercially reasonable period to cure such default so long as Tenant has commenced diligently to correct the default within such 30-day period and diligently pursue such cure to completion, or (c) if any assignment shall be made by Tenant or any guarantor of Tenant for the benefit of creditors, or (d) if Tenant’s leasehold interest shall be taken on execution, or (e) if a lien or other involuntary encumbrance is filed against Tenant’s leasehold interest or Tenant’s other property, including said leasehold interest. and is not discharged within ten (10) business days thereafter, or (f) if a petition is filed by Tenant or any guarantor of Tenant for liquidation, or for reorganization or an arrangement under any provision of any bankruptcy law or code as then in force and effect, or (g) if an involuntary petition under any of the provisions of any bankruptcy law or code is filed against Tenant or any guarantor of Tenant and such involuntary petition is not dismissed within thirty (30) days thereafter, then, and in any of such cases, Landlord and the agents and servants of Landlord lawfully may, in addition to and not in derogation of any other remedies set forth in this Lease or any applicable laws, immediately or at any time thereafter upon written demand or notice and with or without process of law (forcibly, if necessary) enter into and upon the Premises or any part thereof or mail a notice of termination addressed to Tenant, and repossess the same and expel Tenant and those claiming through or under Tenant and remove its and their effects (forcibly, if necessary) without being deemed guilty of any manner of trespass and without prejudice to any remedies which might otherwise be used for arrears of rent or prior breach of covenants, and upon such written notice as aforesaid this Lease shall terminate, Tenant hereby waiving all statutory rights to the Premises (including without limitation rights of redemption, if any, to the extent such rights may be lawfully waived).

 

8.2          Remedies. In the event that this Lease is terminated under any of the provisions contained in Section 8.1 or shall be otherwise terminated for breach of any obligation of Tenant, Tenant shall pay to Landlord within thirty (30) days of such termination, as compensation, the discounted value (calculated using a discount factor equal to the then prime rate of the Bank of America plus 2%) of the excess of the total rent reserved for the residue of the Term over the rental value of the Premises for said residue of the Term. In calculating the rent reserved there shall be included, in addition to the Fixed Rent and Additional Rent, the value of all other considerations agreed to be paid or performed by Tenant for said Term as set forth in this Lease. In the event Landlord elects, in its sole and absolute discretion, not to terminate the Lease but terminate Tenant’s right to possession of the Premises, Tenant shall pay punctually to Landlord as additional and cumulative obligations, all rent when due under the Lease and perform all obligations which Tenant covenants in this Lease to pay and to perform in the same manner and to the same extent and at the same time as provided in the Lease. In calculating the amounts to be paid by

 

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Tenant pursuant to the next preceding sentence Tenant shall be credited with the net proceeds of any rent obtained by Landlord by reletting the Premises, after deducting all Landlord’s expense in connection with such reletting, including, without limitation, all repossession costs, brokerage commissions, fees for legal services, it being agreed by Tenant that Landlord may (i) relet the Premises or any part or parts thereof, for a term or terms which may at Landlord’s option be equal to or less than or exceed the period which would otherwise have constituted the balance of the Term and may grant such concessions and free rent as Landlord in its sole judgment considers advisable or necessary to relet the same and (ii) make such alterations, repairs and decorations in the Premises as Landlord in its sole judgment considers advisable or necessary to relet the same, and no action of Landlord in accordance with the foregoing or failure to relet or to collect rent under reletting shall operate or be construed to release or reduce Tenant’s liability as aforesaid. In the event of any termination of this Lease for a Tenant default, Landlord shall make reasonable efforts to mitigate its damages. Notwithstanding any provision of this Lease to the contrary, in no event shall Landlord or Tenant be liable for any consequential, indirect or special damages under or in connection with this Lease.

 

Nothing contained in this Lease shall, however, limit or prejudice the right of Landlord to prove for and obtain in proceedings for bankruptcy or insolvency by reason of the termination of this Lease, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

 

8.3                               Remedies Cumulative. Any and all rights and remedies which Landlord may have under this Lease, and at law and equity, shall be cumulative and shall not be deemed inconsistent with each other, and any two or more of all such rights and remedies may be exercised at the same time insofar as permitted by law.

 

8.4                               Landlord’s Right to Cure Defaults. Landlord may, but shall not be obligated to, cure, at any time after the expiration of all applicable notice and cure periods hereunder, without notice, any default by Tenant under this Lease; and whenever Landlord so elects, all costs and expenses incurred by Landlord, including reasonable attorneys’ fees, in curing a default shall be paid, as Additional Rent, by Tenant to Landlord on demand, together with interest thereon at the maximum rate permitted by law (but not to exceed 12% per annum) from the date of payment by Landlord to the date of payment by Tenant.

 

8.5                               Effect of Waivers of Default. Any consent or permission by Landlord to any act or omission which otherwise would be a breach of any covenant or condition herein, shall not in any way be held or construed (unless expressly so declared) to operate as waiver of such default or to impair the continuing obligation of any covenant or condition herein, or otherwise, except as to the specific instance, operate to permit similar acts or omissions.

 

8.6                               No Waiver, etc. The failure of Landlord to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of this Lease shall not be deemed a waiver of such violation nor prevent a subsequent act, which would have originally constituted a violation, from having all the force and effect of an original violation. The

 

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receipt by Landlord of rent with knowledge of the breach of any covenant of this Lease shall not be deemed to have been a waiver of such breach by Landlord. No consent or waiver, express or implied, by Landlord to or of any breach of any agreement or duty shall be construed as a waiver or consent to or of any other breach of the same or any other agreement or duty.

 

8.7                               No Accord and Satisfaction. No acceptance by Landlord of a lesser sum than the Fixed Rent, Additional Rent or any other charge then due shall be deemed to be other than on account of the earliest installment of such rent or charge due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent or other charge be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such installment or pursue any other remedy in this Lease provided.

 

8.8                               Landlord’s Default. Landlord shall not be deemed to be in default in the performance of any of its obligations hereunder unless it shall fail to perform such obligations and such failure shall continue for a period of thirty (30) days or such additional time as is reasonably required to correct any such default after written notice has been given by Tenant to Landlord specifying the nature of Landlord’s alleged default. Landlord shall not be liable in any event for special, punitive, incidental or consequential damage to Tenant by reason of Landlord’s default, whether or not notice is given. Tenant shall have no right to terminate this Lease or offset or counterclaim against any rent due hereunder on account of a Landlord’s default, except in the event of eviction or as expressly set forth herein.

 

ARTICLE 9
  Rights of Mortgage Holders

 

9.1                               Rights of Mortgage Holders. The word “mortgage” as used herein includes mortgages, deeds of trust, ground leases, superior leases, or other similar instruments evidencing other voluntary liens or encumbrances, and modifications, consolidations, extensions, renewals, replacements and substitutes thereof. The word “holder” shall mean a mortgagee, and any subsequent holder or holders of a mortgage. Until the holder of a mortgage shall enter and take possession of the Property for the purpose of foreclosure, such holder shall have only such rights of Landlord as are necessary to preserve the integrity of this Lease as security. Upon entry and taking possession of the Property for the purpose of foreclosure, such holder shall have all the rights of Landlord. No such holder of a mortgage shall be liable either as mortgagee or as assignee, to perform, or be liable in damages for failure to perform, any of the obligations of Landlord unless and until such holder shall enter and take possession of the Property for the purpose of foreclosure. Upon entry for the purpose of foreclosure, such holder shall be liable to perform all of the obligations of Landlord, subject to and with the benefit of the provisions of Section 11.4, provided that a discontinuance of any foreclosure proceeding shall be deemed a conveyance under said provisions to the owner of the equity of the Property.

 

The covenants and agreements contained in this Lease with respect to the rights, powers and benefits of a holder of a mortgage (particularly, without limitation thereby, the covenants and agreements contained in this Section 9.1) constitute a continuing offer to

 

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any person, corporation or other entity, which by accepting a mortgage subject to this Lease, assumes the obligations herein set forth with respect to such holder; such holder is hereby constituted a party of this Lease as an obligee hereunder to the same extent as though its name were written hereon as such; and such holder shall be entitled to enforce such provisions in its own name. Tenant agrees within ten (10) days after receipt of request of Landlord to execute and deliver from time to time any agreement which may be necessary to implement the provisions of this Section 9.1.

 

Landlord shall use reasonable efforts to procure, on or about the date of this Lease and at Tenant’s sole cost and expense, from the holder of all mortgages affecting the Premises, Building or Property from time to time, a subordination and non-disturbance agreement acceptable to Tenant.

 

9.2                               Lease Superior or Subordinate to Mortgages. It is agreed that the rights and interest of Tenant under this Lease shall be (i) automatically subject or subordinate to any present or future mortgage or mortgages and to any and all advances to be made thereunder, and to the interest of the holder thereof in the Premises or the Industrial Park or (ii) prior to any present or future mortgage or mortgages, if Landlord shall elect, by notice to Tenant, to give the rights and interest of Tenant under this Lease priority to such mortgage; in the event of either of such cases, the rights and interest of Tenant under this Lease should be deemed to be subordinate to, or have priority over, as the case may be, said mortgage or mortgages, irrespective of the time of execution or time of recording of any such mortgage or mortgages (provided that, in the case of subordination of this Lease to any mortgages, the holder thereof agrees not to disturb the possession of Tenant so long as Tenant is not in default hereunder beyond all applicable notice and cure periods). Tenant shall, within ten (10) days after request of Landlord, execute, acknowledge and deliver any and all commercially reasonable instruments deemed by Landlord necessary or desirable to give effect to or notice of such subordination or priority. Any mortgage to which this Lease shall be subordinated may contain such terms, provisions and conditions as the holder deems usual or customary.

 

ARTICLE 10
  Indemnity and Public Liability Insurance

 

10.1        Mutual Indemnity.

 

10.1.1              Subject to the provisions of Section 10.7, Tenant shall indemnify and save harmless Landlord from and against all claims of whatever nature arising from any negligence or willful misconduct of Tenant, or Tenant Parties, or arising from any accident, injury or damage whatsoever caused to any person, or to the property of any person, occurring in or about the Premises after the date that possession of the Premises is first delivered to Tenant and until the end of the Term of this Lease and thereafter, so long as Tenant is in occupancy of any part of the Premises, in or about the Premises or arising from any accident, injury or damage occurring inside or outside the Premises but within the Property or on the Industrial Park, where such accident, injury or damage results, or is claimed to have resulted, from the negligence or willful misconduct on the part of Tenant or Tenant Parties.

 

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10.1.2              Landlord agrees to indemnify and save harmless Tenant from and against all claims of whatever nature arising from gross negligence or willful misconduct of Landlord, or Landlord’s contractors, agents, servants or employees.

 

10.1.3              Each indemnity and hold harmless agreement contained in this Section shall include indemnity against all costs, expenses and liabilities incurred in or in connection with any such claim or proceeding brought thereon, and the defense thereof with counsel approved by the party entitled to such indemnity which approval shall not be unreasonably withheld. The indemnity provisions set forth in this Section and elsewhere in this Lease shall survive expiration or earlier termination of the Lease.

 

10.2                        Public Liability Insurance. Tenant agrees to maintain in full force from the date upon which Tenant first enters the Premises for any reason, throughout the Term of this Lease, and thereafter, so long as Tenant is in occupancy of any part of the Premises, a policy of general liability and property damage insurance under which Landlord (and such other persons as are in privity of estate with Landlord as may be set out in notice from time to time), and Massport are named as additional insureds, and under which the insurer agrees to indemnify and hold Landlord, Massport and those in privity of estate with Landlord, harmless from and against all cost, expense and/or liability arising out of or based upon any and all claims, accidents, injuries, and damages set forth in Section l0.1.1 of this Article, in the form of coverage consistent to what is prudent for responsible tenants in the greater Boston area in the same business as Tenant. Each such policy shall be non-cancelable and non-amendable with respect to Landlord, Massport and Landlord’s said designees of which Tenant has written notice without thirty (30) days prior notice to Landlord, and shall be in at least in the amounts set forth in Section 1.1, or in such higher limits as Landlord shall from time to time reasonably request if, during the Term of this Lease, such higher limits are carried customarily in the Greater Boston Area with respect to similar properties. Tenant agrees that, as a condition to first entering the Premises, Landlord shall be furnished with a duplicate original or certificate of the insurance required to be maintained by Tenant under this Section. Said insurance may be maintained by Tenant under a so-called blanket policy covering the Premises as well as other premises of the Tenant, provided such insurance has a landlord protective liability endorsement attached thereto. Neither the issuance of any insurance policy required hereunder, nor the minimum limits specified herein with respect to Tenant’s insurance coverage, shall be deemed to limit or restrict in any way Tenant’s liability arising under or out of this Lease, including, without limitation, Tenant’s liabilities and obligations under Section 6.23.

 

10.3                        Property Insurance. Landlord shall procure and maintain, and shall pay the cost thereof (subject to reimbursement from Tenant as set forth in Article 5), with respect to the Building a policy or policies of All Risk of Physical Loss insurance required by the holder of any fee or leasehold mortgage covering all of any portion of the Property, in an amount equal to 100% of the full replacement value of the Property at the time of loss and commercial general liability insurance in the amounts deemed appropriate by Landlord.

 

10.4                        Tenant’s Risk. Except to the extent said damage is caused by or results from gross negligence or willful misconduct of Landlord or Landlord’s agents, servants or employees, Landlord shall have no responsibility or liability for any loss of or damage to fixtures or

 

33

 

other personal property of Tenant. Except to the extent specifically provided in Section 10.1.2, in no event shall Landlord’s obligation to make repairs as provided in this Lease be construed as an agreement to indemnify Tenant against any loss or damage sustained by the Tenant resulting from the non-performance, or negligent performance, of Landlord’s repair obligations under this Lease.

 

10.5                        Injury Caused by Third Parties. To the maximum extent permitted by law, Tenant agrees that Landlord shall not be responsible or liable to Tenant, or to those claiming by, through or under Tenant, for any loss or damage that may be occasioned by or through the acts or omissions of persons occupying adjoining premises or any part of the premises adjacent to or connecting with the Premises or any part of the Property, or otherwise, or for any loss or damage resulting to Tenant or those claiming by, through or under Tenant, or its or their property, from the breaking, bursting, stopping or leaking of electric cables or wires, and water, gas, sewer or steam pipes unless said damage or loss results or is claimed to have resulted from the gross negligence and willful misconduct of Landlord, its agent, servants or employees.

 

10.6                        Tenant’s Failure. If Tenant fails to obtain and/or maintain any insurance required by the terms of the Lease to be obtained by Tenant, Tenant shall be liable for all losses and costs resulting from said failure. Nothing herein shall be a waiver of any of Landlord’s rights and remedies under any other Article of this Lease or at law or equity.

 

10.7                        Waiver of Subrogation. Landlord and Tenant mutually agree that any property damage insurance earned by either shall provide for the waiver by the insurance carrier of any right of subrogation against the other, and they further mutually agree that, with respect to any damage to property, the loss from which is covered by the insurance then being carrier by them, respectively, the one carrying such insurance and suffering such loss releases the other of and from any and all claims with respect to such loss to the extent of the limits of insurance carried with respect thereto, plus the amount of any commercially reasonable deductible.

 

10.8                        Insurance Certificates. Tenant shall furnish to Landlord on the Commencement Date, and thereafter within thirty (30) days prior to the expiration of each such policy, certificates of insurance required by the terms of this Lease to be obtained and maintained by Tenant. Each certificate shall evidence the thirty (30) days non-cancellability and non-amendability of such policies, as required by this Article. Landlord, Landlord’s successors and assigns, and any nominee or Landlord in privity of estate with Landlord or otherwise holding any interest in the Premises of whom Tenant has prior written notice, including, without limitation, any ground lessor and the holder of any fee or leasehold mortgage, shall be named as loss payees and/or additional insureds (as applicable) under each policy of insurance required by the terms of this Lease to be obtained and maintained by Tenant pursuant to the Article.

 

34

 

ARTICLE 11
  Miscellaneous Provisions

 

11.1                        Notices from One Party to Another. All notices required or permitted hereunder shall be in writing and addressed, if to the Tenant, at the Original Notice Address of Tenant or such other address as Tenant shall have last designated by notice in writing to Landlord and, if to Landlord, at the Original Notice Address of Landlord or such other address as Landlord shall have last designated by notice in writing to Tenant. Any notice shall be deemed duly given when mailed to such address postage prepaid, by registered or certified mail, return receipt requested, by nationally recognized overnight delivery courier (e.g., FedEx) or when delivered to such address by hand.

 

11.2                        Quiet Environment. Landlord agrees that upon Tenant’s paying the rent and performing and observing the agreements, conditions and other provisions on its part to be performed and observed, Tenant shall and may peaceably and quietly have, hold and enjoy the Premises during the Term hereof without hindrance from Landlord or anyone claiming under Landlord, subject, however, to the terms of this Lease.

 

11.3                        Lease not to be Recorded. Tenant agrees that it will not record this Lease. Both parties shall, upon the request of either, execute and deliver and record a notice or short form of this Lease in such form, if any, as may be permitted by applicable statute. Landlord hereby acknowledges and agrees that in the event Tenant files for an initial public offering, a copy of this Lease will be required to become a public document.

 

11.4                        Limitation of Parties’ Liability. The term “Landlord” as used in this Lease, so far as covenants or obligations to be performed by Landlord are concerned, shall be limited to mean and include only the owner or owners at the time in question of the Property or the holder of the Landlord’s interest under this Lease, and in the event of any transfer or transfers of title to said Property or the Landlord’s leasehold interest, the Landlord (and in case of any subsequent transfers or conveyances, the then grantor) shall be concurrently freed and relieved from and after the date of such transfer or conveyance, without any further instrument or agreement of all liability as respects the performance of any covenants or obligations on the part of the Landlord contained in this Lease thereafter to be performed, it being intended hereby that the covenants and obligations contained in this Lease on the part of Landlord, shall, subject as aforesaid, be binding on the Landlord, its successors and assigns, only during and in respect of their respective successive periods of ownership of said leasehold interest or fee, as the case may be. Tenant, its successors and assigns, shall not assert nor seek to enforce any claim for breach of this Lease against any of Landlord’s assets other than Landlord’s interest in the Building and Property, and Tenant agrees to look solely to such interest for the satisfaction of any liability or claim against Landlord under this Lease, it being specifically agreed that in no event whatsoever shall Landlord (which term shall include, without limitation, any general or limited partner, trustees, beneficiaries, officers, directors, or stockholders of Landlord) ever be personally liable for any such liability. The foregoing provision shall not limit Tenant’s right to seek injunctive relief in a dispute with Landlord.

 

35

 

11.5                        Acts of God. Except with respect to Tenant’s obligation to pay rent, in any case where either party hereto is required to do any act, delays caused by or resulting from Acts of God, war, civil commotion, fire, flood or other casualty, labor difficulties, shortages of labor, materials or equipment, government regulations, unusually severe weather, or other causes beyond such party’s reasonable control shall not be counted in determining the time during which work shall be completed, whether such time be designated by a fixed date, a fixed time or a “reasonable time,” and such time shall be deemed to be extended by the period of such delay.

 

11.6                        Brokerage. Tenant and Landlord warrant and represent that they have dealt with no broker in connection with the consummation of this Lease, other than Carolyn Wheatley of CBRE/New England (the “Tenant’s Broker”), and Meredith Christieansen of CBRE/New England (the “Landlord’s Broker”), and in the event of any brokerage claims, other than by the Tenant’s Broker or the Landlord’s Broker, against either party predicated upon prior dealings with the warranting party, the warranting party agrees to defend the same and indemnify and hold the other party harmless against any such claim. By separate agreement, Landlord shall pay the commissions for this transaction to Landlord’s Broker and Tenant’s Broker.

 

11.7                        Applicable Law and Construction. This Lease shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts and, if any provisions of this Lease shall to any extent be invalid, the remainder of this Lease shall not be affected thereby. There are no oral or written agreements between Landlord and Tenant affecting this Lease. This Lease may be amended, and the provisions hereof may be waived or modified, only by instruments in writing executed by Landlord and Tenant. The titles of the several Articles and Sections contained herein are for convenience only and shall not be considered in construing this Lease. Unless repugnant to the context and subject to the provisions of Section 6.2.1, the words “Landlord” and “Tenant” appearing in this Lease shall be construed to mean those named above and their respective heirs, executors, administrators, successors and assigns, and those claiming through or under them respectively. If there be more than one tenant, the obligations imposed by this Lease upon Tenant shall be joint and several.

 

11.8                        Holding Over. Any holding over by Tenant after the expiration of the Term of the lease, with or without the written consent of the Landlord, shall be treated as a daily tenancy at sufferance at a rate equal to 150 % of the Monthly Fixed Rent Rate in effect immediately prior to such holdover (prorated on a daily basis) (the “Holdover Rate”) and shall otherwise be on the terms and conditions set forth in this Lease, as far as applicable.

 

11.9                        Lease Subject to and Subordinate to Ground Lease. This Lease shall be subject and subordinate to the Amended, Restated and Consolidated Ground Lease between the Massachusetts Port Authority (as Landlord) and Boston Harbor Industrial Development LLC (as Tenant), dated as of March 31, 2010, notice of which is recorded with the Suffolk County Registry of Deeds in Book 46261, Page 23, and filed with the Suffolk Registry District of the Land Court as Document No. 776685 (the “MassPort Lease”).

 

36

 

11.9.1     Ground Lease Terminates Prior to Lease. In the event the Ground Lease is terminated prior to the termination of this Lease, Massport, at its option, may require Tenant to attorn to Massport as landlord and waive any right Tenant has to terminate this Lease, or surrender possession to the Premises as a result of the termination of the Ground Lease, at which time this Lease shall terminate simultaneously with the Ground Lease.

 

11.9.2     Tenant Receives Notice of Landlord Default. In the event Tenant receives notice from Massport that an “Event of Default” has occurred under the terms of the Ground Lease, Tenant shall thereafter be obligated to pay all Fixed Rent, Additional Rent and all other sums due hereunder to Massport or as Massport may direct in full satisfaction of Tenant’s rental obligations under this Lease.

 

11.10      Compliance with Massachusetts Port Authority’s Non-Discrimination and Affirmative Action Requirements. Tenant shall:

 

11.10.1                   Not discriminate against any person, employee, or applicant for employment because of that person’s membership in any legally protected class, including, but not limited to, their race, color, gender, religion, creed, national origin, ancestry, age being greater than forty years, sex, sexual orientation, disability, genetic information, or Vietnam-era veteran status in the use of the Premises, including the hiring and discharging of employees, the provision or use of services, the selection of suppliers and contractors, in the subleasing or refusing to sublease any portion of the Premises or providing or refusing to provide any services or use of any facility. In addition, Tenant its successors in interest, Subtenants, licensees, managers, operators, and assigns shall not discriminate against any person, employee, or applicant for employment who is a member of, or applies to perform service in, or has an obligation to perform service in a uniformed military service of the United States, including the National Guard, on the basis of that membership, application or obligation.

 

11.10.2                   Conspicuously post notices to employees and prospective employees setting forth the Fair Employee Practices Law of the Commonwealth of Massachusetts.

 

11.10.3                   Comply with all applicable federal, state and local laws, rules, regulations and orders and the Authority’s roles and orders (provided that, with respect to the Authority rules and orders, copies of such rules and orders have been provided to Tenant) pertaining to Civil Rights and Equal Opportunity, including but not limited to Executive Orders 11246 and 11478 as amended, unless otherwise exempt therefrom.

 

11.11      Waiver of Jury Trial. LANDLORD AND TENANT HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE. The waiver of trial by jury in the

 

37

 

immediately preceding sentence is voluntarily and intentionally made by Landlord and Tenant.

 

11.12      Time of Essence. TIME IS OF THE ESSENCE WITH RESPECT TO THE TERMS, CONDITIONS AND PROVISIONS OF THIS LEASE.

 

11.13      Survival of Obligation. The provisions of this Lease with respect to any obligation of Tenant or Landlord to pay any sum owing in order to perform any act after the expiration or other termination of this Lease shall survive the expiration or other termination of this Lease.

 

11.14      Representations. Tenant acknowledges that neither Landlord nor Landlord’s agents, employees or contractors have made any representations or promises with respect to the Premises, the Industrial Park or this Lease except as expressly set forth herein.

 

11.15      Patriot Act. Tenant represents and warrants to, and covenants with, Landlord that neither Tenant nor any of its respective constituent owners or affiliates currently are, or shall be at any time during the Term hereof, in violation of any laws relating to terrorism or money laundering, including without limitation Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism and/or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56).

 

11.16      No Offer. The submission of this Lease to Tenant shall not be construed as an offer, and Tenant shall not have any rights under this Lease unless Landlord executes a copy of this Lease and delivers it to Tenant.

 

11.17      Counterparts. This Lease may be executed in any number of identical counterparts, each of which shall be deemed to be an original and all, when taken together, shall constitute one and the same instrument. A facsimile, .PDF or similar transmission of a counterpart signed by a party hereto shall be regarded as signed by such party for purposes hereof.

 

11.18      Building Roof Amenities and Building Condition. Tenant shall have complimentary memberships to the Building rooftop paddle tennis club and shuffleboard courts, the number of such memberships to be determined by Landlord in its reasonable discretion (“Rooftop Club Memberships”). Tenant may purchase additional Rooftop Club Memberships at a discounted rate from time to time prevailing in the Building. Tenant shall also have use of the rooftop conference room, when available, for a nominal fee. During the Lease Term, the Building shall have a 1000kVA, 13.8 kV - 277 480V pad transformer, onsite café and property management, Building showers and lockers, Building common mother’s room and secure covered bike storage for Tenant’s use.

 

38

 

ARTICLE 12
  Landlord’s Covenants

 

Landlord covenants at all times during the Term:

 

12.1        Compliance with Law. To maintain the Building and Property in compliance with all applicable laws and to make all repairs, alterations, additions or replacements to the Building and Common Areas required by any law or ordinance or any order or regulation of any public authority, except to the extent required as a result of Tenant’s specific manner of use or any work performed by or on behalf of Tenant, and except that Landlord may defer compliance so long as the validity of any such law, ordinance, order or regulations shall be contested by Landlord in good faith and by appropriate legal proceedings, if Landlord first gives Tenant appropriate assurance or security against any loss, cost or expense on account thereof.

 

12.2        Repair and Maintenance. Except as otherwise provide in this Lease, subject to the provisions of Article 5, Landlord agrees to keep in good order, condition and repair, all Common Areas and all structural elements of the Building, the roof and roof membrane and all mechanical, electrical, life safety, sprinkler, heating, ventilation and air conditioning, and all other Building systems except that Landlord shall in no event be responsible to Tenant for any condition of the Premises or the Building caused by any negligent action or omission by Tenant or Tenant’s Parties. Landlord shall provide nightly cleaning of the Common Areas.

 

12.3        Representations and Warranties. Landlord hereby represents and warrants as follows:

 

12.3.1     Ownership. Landlord is the owner of the Premises whether by fee or leasehold interest of the Property and has authority to execute this Lease.

 

12.3.2     Enforceability. This Lease is enforceable against Landlord.

 

12.3.3     MassPort Lease. The expiration date of the existing term of the MassPort Lease is March 30, 2085 and there are no other leases that are superior to this Lease. Landlord shall not voluntarily terminate the MassPort Lease or amend the MassPort Lease in any way that would have a material adverse effect on this Lease or Tenant’s rights hereunder or increase Tenant’s costs. On or before the date hereof, Landlord shall provide to Tenant, at Tenant’s sole cost and expense, a nondisturbance agreement from Massport in form and substance satisfactory to Tenant (the “MassPort NDA”).

 

39

 

WITNESS the execution hereof under seal on the day and year first above written:

 

	
 
    	
Landlord:   BOSTON HARBOR INDUSTRIAL DEVELOPMENT LLC
    
	
 
    	
 
    
	
 
    	
/s/   Timothy A. Pappas
    
	
 
    	
Name:
    	
 Timothy A. Pappas
    
	
 
    	
Title:
    	
 President
    
	
 
    	
 
    
	
 
    	
Tenant:   AKOUOS, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Emmanuel Simons
    
	
 
    	
 
    	
Name:   Emmanuel Simons
    
	
 
    	
 
    	
Title:   President & CEO
    

 

40

 

 

41

 

 

42

 

 

43

 

 

44

 

 

45

 

 

46

 

 

47Exhibit 10.14

 

EXECUTION VERSION

 

Certain identified information has been marked in the exhibit because it is both (i) not material and (ii) would likely cause competitive harm to the Company, if publicly disclosed.

 

Double asterisks denote omissions.

 

 

LICENSE AGREEMENT

 

between

 

MASSACHUSETTS EYE AND EAR INFIRMARY AND
 THE SCHEPENS EYE RESEARCH INSTITUTE, INC.

 

and

 

AKOUOS, INC.

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
Article 1   – Definitions
    	
1
    
	
 
    	
 
    
	
Article 2   – Grant of Licenses, Reserved Rights and Sublicensing
    	
11
    
	
 
    	
 
    	
 
    
	
2.1
    	
License Grant
    	
11
    
	
2.2
    	
Responsibility for Affiliates
    	
11
    
	
2.3
    	
No Implied Licenses
    	
11
    
	
2.4
    	
Reserved Rights
    	
12
    
	
2.5
    	
Sublicensing
    	
13
    
	
2.6
    	
Future Ancestral Technology
    	
15
    
	
 
    	
 
    
	
Article 3   – Financial Terms
    	
15
    
	
 
    	
 
    	
 
    
	
3.1
    	
Equity
    	
15
    
	
3.2
    	
Milestone Payments
    	
16
    
	
3.3
    	
Royalties
    	
16
    
	
3.4
    	
Offsets from Payments
    	
18
    
	
3.5
    	
Infringement Damages
    	
19
    
	
3.6
    	
Payment
    	
19
    
	
3.7
    	
Sublicensing or Partnering Income
    	
19
    
	
3.8
    	
Patent Expenses
    	
21
    
	
3.9
    	
Waiver or Deferral
    	
21
    
	
3.10
    	
Form of Payments and Taxes
    	
21
    
	
3.11
    	
Currency Conversion
    	
21
    
	
3.12
    	
Interest
    	
22
    
	
3.13
    	
Right to Offset
    	
22
    
	
 
    	
 
    
	
Article 4   – Royalty Reports, Payments and Financial Records
    	
22
    
	
 
    	
 
    	
 
    
	
4.1
    	
Royalty Reports
    	
22
    
	
4.2
    	
Record Keeping
    	
23
    
	
 
    	
 
    
	
Article 5   – Operations under the License
    	
24
    
	
 
    	
 
    	
 
    
	
5.1
    	
Diligence Obligations
    	
24
    
	
5.2
    	
Regulatory Matters
    	
29
    
	
5.3
    	
Other Government Laws
    	
29
    
	
5.4
    	
Patent Marking
    	
29
    
	
5.5
    	
Publicity - Use of Name
    	
29
    
	
5.6
    	
U.S. Manufacture
    	
29
    
	
5.7
    	
Akouos’ Right to Subcontract
    	
29
    
	
5.8
    	
Ongoing Communication
    	
30
    
	
5.9
    	
Third Party License Requests
    	
30
    
	
 
    	
 
    
	
Article 6   – Reserved
    	
34
    
	
 
    	
 
    
	
Article 7   – Confidentiality
    	
34
    

 

 

	
7.1
    	
Non-Disclosure Obligation
    	
34
    
	
7.2
    	
Government-Required Disclosure
    	
34
    
	
 
    	
 
    
	
Article 8   – Intellectual Property
    	
35
    
	
 
    	
 
    	
 
    
	
8.1
    	
Ancestral Technology Patent   Preparation, Filing, Prosecution and Maintenance
    	
35
    
	
8.2
    	
Election Not to File and   Prosecute Patent Rights
    	
35
    
	
8.3
    	
Notice
    	
36
    
	
8.4
    	
Relinquishing Rights
    	
36
    
	
8.5
    	
Intellectual Property Rights
    	
37
    
	
 
    	
 
    
	
Article 9   – Patent Infringement and Enforcement
    	
37
    
	
 
    	
 
    	
 
    
	
9.1
    	
Notice
    	
37
    
	
9.2
    	
Enforcement
    	
37
    
	
9.3
    	
Distribution of Amounts Paid by   Third Parties
    	
39
    
	
9.4
    	
Declaratory Judgment or   Infringement Actions
    	
39
    
	
9.5
    	
Delegation
    	
39
    
	
 
    	
 
    
	
Article 10   – Term and Termination
    	
40
    
	
 
    	
 
    	
 
    
	
10.1
    	
Term
    	
40
    
	
10.2
    	
Termination by MEE
    	
40
    
	
10.3
    	
Termination by Akouos
    	
41
    
	
10.4
    	
Material Breach Dispute
    	
42
    
	
10.5
    	
Effect of Termination
    	
42
    
	
 
    	
 
    
	
Article 11   – Indemnification and Insurance
    	
44
    
	
 
    	
 
    	
 
    
	
11.1
    	
Indemnification
    	
44
    
	
11.2
    	
Insurance
    	
45
    
	
 
    	
 
    
	
Article 12   – Disclaimer of Warranties; Limitation of Liability
    	
46
    
	
 
    	
 
    
	
Article 13   – Representations and Warranties
    	
47
    
	
 
    	
 
    	
 
    
	
13.1
    	
Akouos’ Representations and   Warranties
    	
47
    
	
13.2
    	
MEE’s Representations and   Warranties and Covenants
    	
47
    
	
 
    	
 
    
	
Article 14   – Notices
    	
47
    
	
 
    	
 
    	
 
    
	
14.1
    	
Notices to MEE
    	
47
    
	
14.2
    	
Notices to Akouos
    	
48
    
	
 
    	
 
    
	
Article 15   – Dispute Resolution
    	
48
    
	
 
    	
 
    	
 
    
	
15.1
    	
Negotiation between the Parties
    	
48
    
	
15.2
    	
Arbitration
    	
48
    
	
15.3
    	
Governing Law
    	
49
    
	
 
    	
 
    
	
Article 16   – Force Majeure
    	
49
    
	
 
    	
 
    
	
Article 17   – Non-Assignability
    	
49
    
	
 
    	
 
    
	
Article 18   – Miscellaneous
    	
50
    
	
 
    	
 
    	
 
    
	
18.1
    	
Relationship of Parties
    	
50
    

 

 

	
18.2
    	
Further Actions
    	
50
    
	
18.3
    	
Use of Name; Publicity
    	
50
    
	
18.4
    	
Waiver
    	
50
    
	
18.5
    	
Severability
    	
50
    
	
18.6
    	
Amendment
    	
51
    
	
18.7
    	
Entire Agreement
    	
51
    
	
18.8
    	
Parties in Interest
    	
51
    
	
18.9
    	
Descriptive Headings
    	
51
    
	
18.10
    	
Counterparts
    	
51
    
	
18.11
    	
No Presumption
    	
51
    
	
18.12
    	
Interpretation
    	
51
    

 

 

LICENSE AGREEMENT

 

This License Agreement (“Agreement”), effective as of October 27, 2017 (“Effective Date”), is made between Massachusetts Eye and Ear Infirmary, a Massachusetts corporation having offices located at 243 Charles Street, Boston MA 02114 and The Schepens Eye Research Institute, Inc., a Massachusetts non-profit corporation having offices located at 20 Staniford Street, Boston, MA 021214 (collectively, “MEE”) and Akouos, Inc., a Delaware corporation having offices at [**], United States (“Akouos”).  Akouos and MEE shall hereinafter collectively be referred to as the “Parties” and each, individually, as a “Party”.

 

Background

 

WHEREAS, MEE owns or Controls certain Intellectual Property related to the Ancestral Technology and MEE has granted certain exclusive license rights under such Intellectual Property outside the Field of Use to Lonza Houston, Inc. (“Lonza”) pursuant to that certain License, Collaboration and Commercialization Agreement between MEE and Lonza dated as of August 24, 2016, as such agreement may be amended from time to time in accordance with its terms (the “Lonza-MEE Agreement”);

 

WHEREAS, Akouos and Lonza are concurrently entering into a separate definitive exclusive license agreement wherein Lonza is granting an exclusive sublicense to Akouos under Lonza’s rights in the Ancestral Technology Patent Rights and Ancestral Technology Know-How outside the Field of Use (such sublicense, the “Lonza-Akouos Agreement”);

 

WHEREAS, Akouos desires to obtain an exclusive license under the Licensed Intellectual Property in the Field of Use and an exclusive license under the BCH Patent Rights in the Expanded Field of Use, and MEE is willing to grant such licenses to Akouos upon the terms and conditions stated under this Agreement; and

 

WHEREAS, Akouos has represented to MEE that it has the capabilities and/or experience to develop, produce, market and sell products utilizing technology that is the subject of this Agreement and has the financial capacity and the strategic commitment to facilitate the transfer of the technology for the public interest.

 

NOW THEREFORE, MEE and Akouos, intending to be legally bound, do hereby agree as follows.

 

Article 1 — Definitions

 

The capitalized terms used herein shall have the meanings set forth below in this Article 1 unless otherwise expressly defined in this Agreement.

 

1.1                               “Affiliate” means any company, corporation or other business entity that is controlled by, controlling, or under common control of a Party, for so long as such control exists.  For this purpose “control” means direct or indirect beneficial ownership of at least fifty percent (50%) interest in the voting stock (or the equivalent) of the company, corporation or other business or having the right to direct, appoint or remove a majority of members of its board

 

 

of directors (or their equivalents) or having the power to control the general management of the company, corporation or other business, by law or contract; provided, however, that a business entity whose primary business is the investment in other companies shall not be deemed to “control” a Party.

 

1.2                               “Akouos Intellectual Property” means any Intellectual Property (other than the Licensed Intellectual Property or any MEE Intellectual Property) owned or Controlled by Akouos, whether prior to, on or after the Effective Date.

 

1.3                               “[**]” means all methods, tools, protocols and Intellectual Property related to the [**] sequence (as described [**] and any [**] viral vectors created from such technology as disclosed in PCT application [**] titled “[**].”

 

1.4                               “[**]” means all methods, tools, protocols and Intellectual Property related to and including the identified [**] Anc80 sequences (excluding [**]) and any variants and all viral vectors created from such technology as disclosed in PCT application [**] titled “[**].”

 

1.5                               “Ancestral Technology” means collectively, or individually, [**].

 

1.6                               “Ancestral Technology Know-How” means any Know-How that both (a) relates to the Ancestral Technology or the Licensed Products and (b) is necessary or useful for the exercise of the rights granted under Section 2.1 in the Field of Use in the Territory, which is Controlled by MEE at any time during the Term.  For clarity, if any of the aforementioned Know-How is jointly owned by MEE and a Third Party such that MEE does not Control all rights, title and interests therein, then Ancestral Technology Know-How includes MEE’s interest in such Know-How.  As of the Effective Date, the Ancestral Technology Know-How includes at least the information described in Schedule D hereto.

 

1.7                               “Ancestral Technology Patent Rights” means (a) the United States provisional patent application no. [**] filed on [**], any conversion, continuation, continuation-in-part (but only to the extent claiming or Covering an ANC 80 AAV vector), divisions, substitutions or foreign counterparts thereof, any patents issuing thereon, and any reissues, reexaminations, supplemental protection certificates or extensions thereof, including without limitation, the patents and patent applications set forth in Schedule A (which Schedule A will be updated from time to time on an as needed basis) and (b) any other Patent Rights which (i) claim or Cover the Ancestral Technology or any Licensed Product, (ii) are Controlled by MEE at any time during the Term, and (iii) are included in the license granted to Akouos under Section 2.1 after the Effective Date pursuant to the provisions of Section 2.6.

 

1.8                               “BCH” means Children’s Medical Center Corporation, a charitable corporation.

 

1.9                               “BCH Patents” means the PCT patent application no. [**] filed on [**], any conversion, continuation, continuation-in-part (but only to the extent claiming or Covering an ANC 80 AAV vector), divisions, substitutions or foreign counterparts thereof, any patents issuing

 

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thereon, and any reissues, reexaminations, supplemental protection certificates or extensions thereof.

 

1.10                        “BCH Patent Rights” means all of MEE’s rights, title and interests in the BCH Patents which MEE Controls at any time during the Term.  Akouos acknowledges that, as of the Effective Date, MEE co-owns the foregoing Patent Rights with BCH and MEE has a one- half, undivided ownership interest in the foregoing Patent Rights.

 

1.11                        “Clinical Study” means a clinical study in human subjects that has been approved by a Regulatory Authority and applicable institutional review board or ethics committee, and is designed to measure the safety and/or efficacy of a Licensed Product.  Clinical Studies shall include, but not be limited to, Phase I Studies, Phase II Studies, Phase III Studies and any clinical studies required to be conducted by any Regulatory Authorities following receipt of Regulatory Approval.

 

1.12                        “Combination Product” means any biopharmaceutical product that consists of (i) a component that is a Licensed Product and one or more other active ingredients, products, procedures, delivery mechanisms or devices, or components sold as a single formulation or (ii) any combination of a Licensed Product sold together with one or more other products or components for a single invoiced price.  If a Licensed Product is sold as part of a Combination Product in a country in the Territory, Net Sales for the Licensed Product included in such Combination Product in such country shall be calculated as follows:

 

(a)                                 If the Licensed Product is sold separately in such country and the other active ingredient(s), product(s), procedure(s), delivery mechanism(s) or device(s), or component(s) in the Combination Product are sold separately in such country, Net Sales for the Licensed Product shall be calculated by multiplying actual Net Sales of such Combination Product in such country by the fraction A/(A+B), where A is the invoice price of the Licensed Product when sold separately in such country and B is the total invoice price of the other active ingredient(s), product(s), procedure(s), delivery mechanism(s) or device(s), or component(s) in the Combination Product when sold separately in such country;

 

(b)                                 If the Licensed Product is sold separately in such country but the other active ingredient(s), product(s), procedure(s), delivery mechanism(s) or device(s), or component(s) in the Combination Product are not sold separately in such country, Net Sales for the Licensed Product shall be calculated by multiplying actual Net Sales of such Combination Product in such country by the fraction A/D, where A is the invoice price of the Licensed Product when sold separately in such country and D is the invoice price of the Combination Product in such country;

 

(c)                                  If the Licensed Product is not sold separately in such country but the other active ingredient(s), product(s), procedure(s), delivery mechanism(s) or device(s), or component(s) in the Combinations Product are sold separately in such country, Net Sales for the Licensed Product shall be calculated by multiplying actual Net Sales of such Combination Product by the fraction 1 — (B/D), where B is the invoice price

 

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of the other active ingredient(s), product(s) or component(s) in the Combination Product when sold separately in such country and D is the invoice price of the Combination Product in such country; or

 

(d)                                 If neither the Licensed Product nor the other active ingredient(s), product(s), procedure(s), delivery mechanism(s) or device(s), or component(s) in the Combination Product are sold separately in such country, the Parties shall determine Net Sales for the Licensed Product in such Combination Product by mutual agreement based on the relative contribution of the Licensed Product and each other active ingredient, product, procedure, delivery mechanism or device, or component to the Combination Product, and shall take into account in good faith any applicable allocations and calculations that may have been made for the same period in other countries; provided, however, if the Parties cannot agree on the Net Sales for the Licensed Product in such Combination Product after good faith negotiations, the Net Sales for the Licensed Product shall be calculated by dividing the actual Net Sales of such Combination Product by the total number of active ingredients, products, procedures, delivery mechanisms or devices, or components (including the Licensed Product) in such Combination Product.

 

1.13                        “Commercially Reasonable Efforts” means the level of efforts and resources (including the promptness with which such efforts and resources would be applied) consistent with the efforts and resources normally used by a similarly situated (i.e., in terms of size, stage and resources) biopharmaceutical, biotech or pharmaceutical (as applicable) company in the exercise of commercially reasonable business discretion relating to the research, development, manufacture, or commercialization of a biopharmaceutical product with similar product characteristics that is of similar market potential at a similar stage of development or commercialization, taking into account issues such as efficacy, safety, product profile, anticipated or approved labeling, present and future market potential, competitive market conditions, the proprietary position of the drug substance or product, the regulatory structure involved, and other key technical, legal, scientific, medical or commercial factors, and the potential profitability of the product.

 

1.14                        “Committed Licensed Gene Target” means a Licensed Gene Target (a) to which at least one (1) Licensed Product is directed, where the Licensed Product has obtained Regulatory Approval in at least one country, (b) for which a Sublicense has been granted or (c) which is not a Licensed Gene Target described in (a) or (b) above; provided, with respect to Licensed Gene Targets described in either (a) or (b), Akouos or any of its Affiliates or Sublicensees, as applicable, are using Commercially Reasonable Efforts to research, develop and commercialize Licensed Products directed to the Licensed Gene Target, as applicable; and, provided further, with respect to Licensed Gene Targets described in (c), (i) at least one Licensed Product is being researched, developed and commercialized, as applicable, with respect to such Licensed Gene Target using Commercially Reasonable Efforts under the General Development Plan and/or a Target Development Plan, as evidenced by reports delivered to MEE pursuant to Section 5.1.4, the relevant portion(s) of books and records prepared by or for Akouos and to which MEE is granted access by Akouos, or a written certification to that effect signed by an officer of Akouos or (ii) no

 

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Licensed Product is currently being researched, developed or commercialized with respect to such Licensed Gene Target under the General Development Plan and/or a Target Development Plan, but Commercially Reasonable Efforts will be used for the research, development and commercialization activities, as applicable, within the next [**] to [**] under the General Development Plan and/or a Target Development Plan.

 

1.15                        “Compulsory License” means a compulsory license under the Licensed Intellectual Property obtained by a Third Party through the order, decree, or grant of a competent governmental body or court, authorizing such Third Party to develop, make, have made, use, sell, offer to sell, import or otherwise exploit a Licensed Product or a product equivalent to a Licensed Product in the Field of Use or, with respect to such a license under the BCH Patent Rights, in the Expanded Field of Use, in any country in the Territory.

 

1.16                        “Confidential Information” means all technical, scientific and other know-how and information, trade secrets, knowledge, technology, means, methods, processes, practices, formulas, instructions, skills, techniques, procedures, specifications, data, results and other material, pre-clinical and Clinical Study results, manufacturing procedures, test procedures and purification and isolation techniques, and any tangible embodiments of any of the foregoing, and any scientific, manufacturing, marketing and business plans, any financial and personnel matters relating to a Party or its present or future products, sales, suppliers, customers, employees, investors or business, furnished by one Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) on or after the Effective Date.  Without limiting the foregoing, the terms of this Agreement will be deemed “Confidential Information” of both Parties and will be subject to the terms and conditions set forth in Article 7, and all records and reports delivered by Akouos to MEE hereunder shall be the Confidential Information of Akouos.

 

1.17                        “Control” or “Controlled” means, with respect to rights in any Intellectual Property, that a Party owns or has a license or sublicense to such rights and has the ability to grant a license or sublicense thereto as provided for in this Agreement, without violating the terms of any agreement or other arrangement with any Third Party, and without payment of any additional consideration to such Third Party.

 

1.18                        “Cover”, “Covering” or “Covered” means, with respect to a Licensed Product, that the manufacture, use or sale of the Licensed Product would, but for a license granted in this Agreement infringe a Valid Claim of the Ancestral Technology Patent Rights and/or BCH Patent Rights in the country in which the manufacture, use or sale occurs.

 

1.19                        “Expanded Field of Use” means the treatment, diagnosis, prevention and palliation of any and all balance disorders or diseases pertaining to the inner ear and/or any and all hearing diseases or disorders, including hearing disorders of the inner ear, regardless of Prevalence.  For clarity, the Expanded Field of Use includes the Field of Use.  For further clarity, in the case of any disorders or diseases affecting balance, hearing or the inner ear which also affect other sensory perceptions, organs or tissues, the Expanded Field of Use will only include such disorders or diseases to the extent pertaining to balance, hearing or the inner ear.

 

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1.20                        “Field of Use” means the treatment, diagnosis, prevention and palliation of any and all balance disorders or diseases pertaining to the inner ear and/or any and all hearing diseases or disorders, including hearing disorders of the inner ear, in each case, with a total Prevalence in the U.S. of less than 3,000 patients.  For clarity, in the case of any disorders or diseases affecting balance, hearing or the inner ear which also affect other sensory perceptions, organs or tissues, the Field of Use will only include such disorders or diseases to the extent pertaining to balance, hearing or the inner ear.

 

1.21                        “First Commercial Sale” means the initial transfer of a Licensed Product in a country following the receipt of Regulatory Approval from the relevant Regulatory Authority in such country by or on behalf of Akouos, an Affiliate or Sublicensee for cash or non-cash consideration to which a fair market value can be assigned for purposes of determining Net Sales.

 

1.22                        “Initiation” means, with respect to a Clinical Study, the first dosing of the first patient in such Clinical Study.

 

1.23                        “Intellectual Property” means all intellectual property and forms of protection directed thereto worldwide arising under statutory or common law, and whether or not perfected, including, without limitation, the following:

 

(a)                                 Patent Rights;

 

(b)                                 all works of authorship including copyrights, copyright applications, copyright registrations, mask works, mask work applications, and mask work registrations, including, but not limited to, any software, software code, source code, and user interfaces and rights associated therewith;

 

(c)                                  trademarks, including any logos, designs, variations or translations thereof all rights associated therewith;

 

(d)                                 all rights relating to the protection of trade secrets and Confidential Information; and

 

(e)                                  all Know-How.

 

1.24                        “Know-How” means any technical and other information which is not generally available to the public, including ideas, concepts, trade secrets, inventions (whether or not patentable), discoveries, know-how, data, formulae, specifications, processes, procedures and tests and other protocols, results of experimentation and testing, fermentation and purification or process development techniques and assay protocols.

 

1.25                        “Licensed Gene Target” means a gene target within the Expanded Field of Use having (i) a nucleotide sequence for a particular modality, and (ii) functional optimizations of such nucleotide sequence that are (a) within a [**]% identity of such nucleotide sequence or [**]% identity of the amino acid sequence of a protein encoded by such nucleotide sequence (each a “[**]% sequence”), (b) truncations of such nucleotide sequence or any

 

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[**]% sequence, or (c) fusions of such nucleotide sequence or any [**]% sequence.  For the purposes of this definition, “functional optimizations” are defined as modifications to a nucleotide sequence that retain the primary mechanism of action of such nucleotide sequence or a protein encoded by such nucleotide sequence and increase the primary functionality or applicability of such nucleotide sequence of the protein encoded by such nucleotide sequence.  For the avoidance of doubt, a gene target may be a Licensed Gene Target even if such target is known to have other utility with respect to the use thereof outside the Field of Use as well as within the Field of Use.  By way of non-limiting example, the following gene targets are “Licensed Gene Targets” for purposes of this Agreement: [**].

 

1.26                        “Licensed Intellectual Property” means (a) the Ancestral Technology Patent Rights, (b) BCH Patent Rights and (c) Ancestral Technology Know-How.

 

1.27                        “Licensed Product” means any therapeutic product directed to a specific Licensed Gene Target, which product is Covered by or incorporates, uses, is made through the use of or is based upon or derived from the Ancestral Technology or any Licensed Intellectual Property.  For the avoidance of doubt, a Licensed Product can comprise any of: (a) a Licensed Gene Target; (b) a nucleotide sequence that modulates the expression or activity of a Licensed Gene Target; or (c) a nucleotide sequence encoding a polypeptide that modulates the expression or activity of a Licensed Gene Target; provided, however, that each of (a), (b) and (c) may each be considered separate Licensed Products, as the case may be.

 

1.28                        “Maintained BCH Patent Rights” means any BCH Patent Rights for which MEE has or obtains at any time during the Term the legal or contractual right to prosecute, maintain, enforce and/or defend, including without limitation the right to sue for infringement.

 

1.29                        “MEE Intellectual Property” means any Intellectual Property of which MEE is the owner and which is or was discovered, invented or developed by or on behalf of MEE during the course of but completely separate and independent from this Agreement.

 

1.30                        “Net Sales” means all revenues recorded by or on behalf of Akouos or its Affiliates or Sublicensees from sales of Licensed Products in the Field of Use in the Territory to independent or unaffiliated Third Party purchasers of such Licensed Products.  The permitted deductions booked on an accrual basis by Akouos, its Affiliates and/or its Sublicensees under their respective accounting standards to calculate the recorded net sales from gross sales are as follows:

 

(a)                                 discounts actually granted, including without limitation, quantity, trade, cash and other discounts, rebates and charge-backs (excluding inventory management fees, discounts or credits);

 

(b)                                 amounts refunded or credits allowed for Licensed Products or other goods returned or not accepted by customers, including in connection with recalls (regardless of the Party requesting the recall);

 

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(c)                                  packaging, freight, transportation and prepaid charges related to the sale, transportation, delivery or return of Licensed Products;

 

(d)                                 taxes, tariffs, customs duties, surcharges and other governmental charges actually incurred and paid by Akouos, its Affiliates or its Sublicensees hereunder in connection with the sale, use, exportation, importation or delivery of Licensed Products or other goods to customers;

 

(e)                                  retroactive price reductions made to federal, state or local governments (or their agencies or programs);

 

(f)                                   any deductions to gross invoice price imposed by Regulatory Authorities or other governmental entities, including the annual fee on branded prescription pharmaceutical manufacturers and importers under the United States Patient Protection and Affordable Care Act; and

 

(g)                                  bad debts or provisions for bad debts, provided, that if any bad debt is subsequently collected, it shall be added to Net Sales.

 

Subject to the qualification stated below, upon any sale or other disposal of Licensed Products by or on behalf of Akouos, its Affiliates or its Sublicensees hereunder other than a bona fide arm’s length transaction exclusively for money at market value or upon any use of the Licensed Product for purposes which do not result in a disposal of such Licensed Product in consideration of sales revenue customary in the country of use, such sale, other disposal or use shall be deemed to constitute a sale at the then-current twelve (12) month average selling price in the country in which such sale, other disposal or use occurs.

 

Net Sales includes the fair market value of any non-cash consideration from sale of Licensed Products received by Akouos, its Affiliates or Sublicenses.  Net Sales shall exclude sales or transfers of Licensed Products (i) for use in Clinical Studies or (ii) for charitable or government-approved programs solely for compassionate use purposes or any similar program that provides for the legally-permitted sale or transfer to an end-user of a Licensed Product made in a country prior to receipt of Regulatory Approval for compassionate use of such Licensed Product in such country.

 

Licensed Products are considered “sold” when billed, invoiced, or payment is received, whichever occurs first.

 

1.31                        “Non-Anc80 Filed Technology” means all methods, tools, protocols and Intellectual Property related to and including the identified sequences (excluding [**] and [**]) and all viral vectors created from such technology as disclosed in any patent applications and any patents set forth in Schedule A.

 

1.32                        “Pass-Through Sublicense” means any Sublicense granted by Akouos or any of its Affiliates which Sublicense does not grant such Sublicensee a license or sublicense (as applicable) to any Patent Rights Controlled by Akouos (other than the Patent Rights included in the Licensed Intellectual Property).

 

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1.33                        “Patent Rights” means: (a) an issued or granted patent, including any extension, supplemental protection certificate, registration, confirmation, reissue, reexamination or renewal thereof; (b) a pending patent application, including any continuation, divisional, continuation-in-part, substitute or provisional application thereof; and (c) all counterparts or foreign equivalents of any of the foregoing issued by or filed in any country or other jurisdiction.

 

1.34                        “Person” means any natural person, corporation, firm, business trust, joint venture, association, organization, company, partnership or other business entity, or any government or agency or political subdivision thereof.

 

1.35                        “Phase I Study” means a study of a Licensed Product in humans, the principal purpose of which is a determination of safety, tolerability or pharmacokinetics in healthy individuals or patients in the target patient population prescribed by the relevant Regulatory Authority, from time to time, pursuant to applicable law or otherwise, including the trials referred to in 21 C.F.R. §312.21(a), as amended.

 

1.36                        “Phase I/II Study” means a Clinical Study of a Licensed Product in humans that combines a Phase I Study and a Phase II Study into a single protocol to determine the maximum tolerable dose of the Licensed Product and to further evaluate safety and/or efficacy of such product.

 

1.37                        “Phase II Study” means a study of a Licensed Product in humans, the principal purpose of which is a determination of safety and efficacy in the target patient population, which is prospectively designed to generate sufficient data that may permit commencement of a Pivotal Trial, or a similar Clinical Study prescribed by the relevant Regulatory Authority, from time to time, pursuant to applicable law or otherwise, including the trials referred to in 21 C.F.R. §312.21(b), as amended.

 

1.38                        “Phase III Study” means a study of a Licensed Product in humans of the efficacy and safety of such product, which is prospectively designed to demonstrate statistically whether such product is effective and safe for use in a particular indication in a manner sufficient (alone or together with one or more other such studies) to file an application for Regulatory Approval for the product, as further defined in 21 C.F.R. § 312.21(c) (or the equivalent thereof outside the United States).

 

1.39                        “Pivotal Trial” means a Clinical Study intended to provide the basis for Regulatory Approval.  For clarity, a Pivotal Trial shall include a Phase III Study, a Phase I/II Study or a later Clinical Study where the evidence from such Clinical Study is intended to be used as the basis for Regulatory Approval.

 

1.40                        “Prevalence” means the total number of U.S. patients affected by an indication as reasonably determined by (a) Akouos, acting in good faith, based on its analysis of credible publically available epidemiology data and/or disease experts, provided that Akouos complies with the requirements of Section 2.5.2 for notifying MEE of its determination of the Prevalence applicable to the disease indication(s) involved in any proposed Sublicense

 

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prior to the grant of any Sublicense or (b) if Akouos’ determination of Prevalence is challenged by MEE in accordance with Section 2.5.2, by the Parties in accordance with the process referenced in that Section.

 

1.41                        “Regulatory Approval” means any and all approvals (including any pricing approvals), licenses, registrations or authorizations of any Regulatory Authority that are necessary for the marketing and sale of a Licensed Product in a country or group of countries.

 

1.42                        “Regulatory Authority” means any applicable supra-national, federal, national, regional, state, provincial, or local regulatory agencies, departments, bureaus, commissions, councils, or other government entities, including the U.S. Food and Drug Administration or any successor entity thereto (“FDA”) and the European Medicines Agency or any successor entity thereto (“EMA”), regulating or otherwise exercising authority with respect to the development, manufacture or commercialization of any Licensed Product in the Territory.

 

1.43                        “Royalty Term” means, on a Licensed Product-by-Licensed Product and country-by-country basis, the period from and after the First Commercial Sale of such Licensed Product in such country until the later to occur of (a) the last to expire Valid Claim of the Ancestral Technology Patent Rights or, if applicable pursuant to Section 3.3, of the BCH Patent Rights which Covers such Licensed Product in such country and (b) ten (10) years after the First Commercial Sale of such Licensed Product in such country.

 

1.44                        “Sublicense” means any agreement in which a Sublicensee receives a sublicense from Akouos or any of its Affiliates granting it rights to some or all of the Licensed Intellectual Property rights granted under Section 2.1 of this Agreement.

 

1.45                        “Sublicensee” means any Person which receives a Sublicense under some or all of the rights granted to Akouos under this Agreement.

 

1.46                        “Territory” means worldwide.

 

1.47                        “Third Party” means any Person other than MEE, Akouos or any of their respective Affiliates.

 

1.48                        “Third Party License Agreement” means any agreement entered into by Akouos, any of its Affiliates or any Sublicensee with a Third Party, as applicable depending upon whether Akouos, its Affiliate or Sublicensee is the entity that will be paying royalties on Net Sales of the relevant Licensed Product(s), or any amendment or supplement thereto, in each case after the Effective Date, whereby royalties, fees or other payments are to be made by Akouos, its Affiliates or any Sublicensee (as applicable) to such Third Party in connection with the grant of license rights under Intellectual Property that covers or claims either the composition of matter, manufacture or the method of use of any vector or Licensed Gene Target or Licensed Gene Target regulatory element for the relevant Licensed Product in the Field of Use that is Controlled by such Third Party, which rights Akouos or its Affiliates or Sublicensee, as applicable, reasonably determine are necessary to manufacture, have

 

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made, import, export, use, sell, offer for sale or otherwise commercialize the Licensed Product in the Field of Use.

 

1.49                        “Valid Claim” means (a) a claim of an issued and unexpired patent, which claim has not been revoked or held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction and that has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue, reexamination or disclaimer or otherwise, or (b) a claim of a patent application that is being prosecuted in good faith and has been pending less than [**] from the date of filing of the earliest patent application from which such patent application claims priority, which claim has not been cancelled, withdrawn or abandoned or finally rejected by an administrative agency action from which no appeal can be taken.  For clarity, in the event that any pending claim of a patent application that does not meet the criteria under subpart (b) of this Section 1.45 subsequently becomes an issued claim that would qualify under subpart (a) of this Section 1.45, such claim, once it issues, shall thereafter be considered a Valid Claim under this definition.

 

Article 2 — Grant of Licenses, Reserved Rights and Sublicensing

 

2.1                               License Grant.  Subject to all of the applicable terms and conditions of this Agreement, MEE hereby grants to Akouos and its Affiliates (a) an exclusive, non-transferable (except as expressly contemplated in Article 17 (“Non-Assignability”)), sublicensable right and license, under the Licensed Intellectual Property (other than the BCH Patent Rights), to research, develop, make, have made, manufacture, use, sell, offer to sell, import, export, market, promote, distribute, register and otherwise commercially exploit Licensed Products, in the Field of Use in the Territory and (b) an exclusive, non-transferable (except as expressly contemplated in Article 17 (“Non-Assignability”)), sublicensable right and license, under the BCH Patent Rights to research, develop, make, have made, manufacture, use, sell, offer to sell, import, export, market, promote, distribute, register and otherwise commercially exploit Licensed Products in the Expanded Field of Use in the Territory.  For clarity, Akouos acknowledges that the license granted to it under the foregoing clause (b) is exclusive as to MEE, but does not prevent BCH (or any Third Party acquiring rights from BCH) from exploiting any rights, title or interests in the BCH Patents not Controlled by MEE.

 

2.2                               Responsibility for Affiliates.  Akouos shall have the right to cause the performance by any of its Affiliates of some or all of Akouos’ obligations hereunder.  Akouos shall be responsible and liable for any and all acts or omissions of its Affiliates in connection with the exercise by such Affiliates of their rights granted hereunder and their performance of any of Akouos’ obligations hereunder.  If MEE has a claim arising under this Agreement against an Affiliate, MEE may seek a remedy directly against Akouos and may, but is not required to, seek a remedy against the Affiliate.  Any termination of the Agreement under Article 10 as to Akouos also constitutes termination as to any Affiliates.

 

2.3                               No Implied Licenses.  This Agreement confers no license or rights by implication, estoppel or otherwise under any patent applications or patents owned in whole or in part

 

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by MEE other than the Ancestral Technology Patent Rights and BCH Patent Rights.  For the avoidance of doubt, neither Akouos, its Affiliates nor any Sublicensee shall use or practice the Licensed Intellectual Property with respect to any Licensed Gene Target for the treatment, diagnosis, prevention or palliation of any disease or disorder that is outside the Field of Use except as expressly permitted under Section 2.1, and no license or other rights are being granted to Akouos under the Licensed Intellectual Property for the Expanded Field of Use, except solely with respect to the BCH Patent Rights in accordance with the license granted under clause (b) of Section 2.1.

 

2.4                               Reserved Rights.  The licenses granted by MEE hereunder are subject to the following reserved rights:

 

2.4.1                     The rights of the United States of America, as set forth in Public laws 96-517 and 98-620, the regulations promulgated thereunder, and the policy of any federal funding agencies (if applicable).  Any rights granted hereunder, which are greater than permitted by Public Laws 96-517 and 98-620, are subject to modification as required to conform to the provisions of those statutes.

 

2.4.2                     No rights are granted to Akouos or its Affiliates under this Agreement outside the Field of Use except for the rights expressly granted in clause (b) of Section 2.1.  Notwithstanding the foregoing, MEE acknowledges that Akouos and Lonza are entering into a separate agreement under which Akouos will obtain exclusive license rights outside the Field of Use under the Ancestral Technology Patent Rights and Ancestral Technology Know-How.  Accordingly, MEE hereby waives any rights it has under the Lonza-MEE Agreement to grant any Third Parties a license under such Ancestral Technology Patent Rights and Ancestral Technology Know-How outside the Field of Use and agrees that it shall not request from Lonza any permission to grant any such licenses.  In addition, MEE reserves for itself the right to (a) use the Licensed Intellectual Property in the Expanded Field of Use for any of MEE’s academic, teaching and research purposes, alone or with another academic, government or non-profit research organization and (b) grant non-exclusive licenses under the Licensed Intellectual Property in the Expanded Field of Use to other academic, government or not-for-profit research organizations for their academic, teaching and research purposes, but, in either case of (a) or (b) above, not for commercial manufacture or use or licensing to any for-profit or commercial Thirty Party, use in human subjects, Clinical Studies or for diagnostic purposes involving human subjects, or for performing services for a fee; provided, however, that, notwithstanding the foregoing, MEE shall retain the right to (i) use the Licensed Intellectual Property in the Expanded Field of Use, either alone or together with any academic or government or non-profit Third Party collaborator or sponsor in any Clinical Studies or in human subjects, provided that such use does not involve any Committed Licensed Gene Target or any Core Product for which Akouos or its Affiliate or Sublicensee has commenced and is continuing to meet its diligence obligations under the provisions of Article 5, and (ii) conduct sponsored research and/or otherwise collaborate on research with any then-current Sublicensees of Akouos under this Agreement, or with any other for-profit or

 

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commercial Third Party but only if such other for-profit or commercial Third Party will not receive any commercial license rights or option to commercial license rights in the Field of Use or, with respect to the BCH Patent Rights, the Expanded Field of Use, for any Licensed Gene Target, and (iii) to grant commercial licenses under any intellectual property rights generated in the course of such sponsored research or other collaborative research to such then-current Sublicensees of Akouos, and the foregoing restrictions in this Section 2.4.2 upon uses by MEE with or licensing by MEE to any for-profit or commercial Third Party shall not apply to the specific situations described in either of subparts (i), (ii) or (iii) of this section.

 

2.4.3                     Within [**] after the end of each Calendar Quarter, MEE shall provide Akouos with the name(s) of the applicable academic, governmental or not-for- profit organizations to which it has granted any rights under the Licensed Intellectual Property in connection with the rights retained by MEE pursuant to Section 2.4.2 and a description of the research being conducted by such organizations.

 

2.4.4                     Akouos acknowledges that, prior to the Effective Date, MEE granted [**] certain non-exclusive, research rights under the Licensed Intellectual Property in the Expanded Field of Use pursuant to that certain [**] Agreement between MEE and [**] dated as of [**] (such agreement, the “[**] Agreement”).  For so long as the [**] Agreement remains in effect, Akouos’ rights under the Licensed Intellectual Property are subject to the licenses granted by MEE to [**] under the [**] Agreement as of the Effective Date.  Upon any termination or expiration of the license rights granted to [**] under the [**] Agreement, this Section 2.4.5 shall cease to apply.  With respect to the foregoing research rights granted by MEE to [**], MEE represents and warrants that (a) such rights do not conflict with the licenses granted to Akouos under this Agreement and (b) it has granted [**] no rights under the Licensed Intellectual Property, and no rights to acquire any license or ownership interest in the Licensed Intellectual Property, in each case other than the rights granted under the [**] Agreement.  MEE shall not amend or waive, or take any action or omit to taking any action, that would alter any of [**] rights or obligations under the [**] Agreement in any manner that materially adversely affects, or would reasonably be expected to materially adversely affect, Akouos’ rights and benefits under this Agreement.  By way of non-limiting example, MEE shall not amend the [**] Agreement to grant [**] any rights to develop or commercialize any products or services using any of the Licensed Intellectual Property.

 

2.5                               Sublicensing.

 

2.5.1                     Right to Grant Sublicenses.  Subject to the terms and conditions of this Agreement, Akouos and its Affiliates shall have the right to sublicense their rights under the Agreement, in whole or in part, to one or more Third Parties.  Akouos and its Affiliates may permit any of its Sublicensees to grant sublicenses to Third Parties, including through multiple tiers, under their rights to the Licensed Intellectual Property; provided, however, that in connection only with any Pass-

 

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Through Sublicense, Akouos and its Affiliates shall not authorize any Sublicensee to permit such Sublicensee’s own sublicensees to grant any further sublicenses of such rights without Akouos’ prior written consent, such consent not to be unreasonably withheld, conditioned or delayed.  Subject to Sections 5.1.5 and 10.2.4 of this Agreement, Akouos shall be responsible for any breach of a Sublicense by a Sublicensee that results in a material breach of this Agreement.

 

2.5.2                     Notice.  Akouos shall promptly provide in writing to MEE, at or around the time that Akouos or its Affiliate enters into bona fide discussions with a Third Party regarding the terms of a potential Sublicense, the identity of any of its or its Affiliates’ proposed new Sublicensees and the estimated Prevalence of the relevant disease indications for the Licensed Gene Targets involved in any such Sublicense (such notice, a “Sublicense Notice”).  In the event that MEE disagrees in good faith with the Prevalence as estimated by Akouos in a Sublicense Notice such that any such disagreement would affect whether or not such indication(s) would fall within the Field of Use, MEE must notify Akouos in writing of its disagreement (“Objection Notice”) within [**] after MEE’s receipt of such Sublicense Notice.  If MEE fails to send its Objection Notice to Akouos within the aforementioned [**] period, then MEE will be deemed to have waived its right to disagree with, dispute or otherwise challenge Akouos’ determination of Prevalence for the indications associated with the Licensed Gene Target identified in the Sublicense Notice.  If MEE provides Akouos with a timely Objection Notice, then MEE and Akouos will resolve the disagreement, prior to the execution of any such Sublicense by Akouos or its Affiliate, with Lonza using a process consistent with the Prevalence challenge mechanism described in Section 2.7.2 of the version of the Lonza-MEE Agreement in existence as of the Effective Date.  Notwithstanding anything in the Lonza-MEE Agreement to the contrary, MEE agrees that Akouos will be entitled to designate its own representative to the JSC (as defined in the Lonza-MEE Agreement) and, if applicable, to appoint [**] of the [**] KOLs (as defined in the Lonza-MEE Agreement) solely for purposes of, and in connection with, the resolution of any dispute regarding Prevalence under this Section 2.5.2.

 

2.5.3                     Content of Sublicenses.  In each Sublicense, Akouos or its Affiliate, as applicable, shall secure all appropriate covenants (including with respect to confidentiality and Net Sales reporting obligations) from its Sublicensees sufficient to ensure that Akouos can comply with all of its covenants and obligations to MEE under this Agreement.

 

2.5.4                     Copies of Sublicenses to MEE.  Akouos shall deliver or cause to be delivered to MEE a copy of any and all fully executed Sublicenses (which copy may be redacted to remove provisions which are not necessary to monitor compliance with this Agreement) within [**] after execution by Akouos or its Affiliate, as applicable, and the relevant Sublicensee.  Akouos shall also provide MEE [**] with a copy of the reports received by Akouos or its Affiliate, as applicable, from its Sublicensee during the preceding [**] period, beginning [**] from the effective date of the sublicense agreement, to the extent such reports are related to (1) Akouos’

 

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compliance with its obligations under Section 5.1 of this Agreement and (2) Akouos’ obligations with respect to the payment of royalties under Section 3.3 of this Agreement.

 

2.5.5                     Akouos’ Continuing Obligations.  Nothing in Section 2.5 may be construed to relieve Akouos of its obligations to MEE under this Agreement, including but not limited to Akouos’ obligations under Section 5.1.

 

2.6                               Future Ancestral Technology.  If, after the Effective Date and during the Term, Lonza obtains a license or the right to acquire a license to any MEE Intellectual Property which qualifies under the definition of “Future Ancestral Technology” or “Arising Patent Rights” (as such terms are defined in the Lonza-Akouos Agreement), MEE or Lonza shall promptly notify Akouos in writing.  Akouos may notify MEE in writing that it wishes to obtain a license within the Field of Use under any such Patent Rights solely with respect to those claims that are licensed by Lonza from MEE under the Lonza-MEE Agreement, in which case MEE shall grant Akouos a license under such claims by amending this Agreement to include such claims in the definition of Ancestral Technology Patent Rights if MEE is not, at the time of its receipt of Akouos’ notice, subject to any legal or pre-existing contractual obligations or restraints that would prevent it from granting the requested license.  Akouos shall be required to pay to MEE the same amount of additional upfront consideration for such license from MEE in the Field of Use as was paid by Akouos to Lonza under the Lonza-Akouos Agreement in exchange for a sublicense to the same Patent Rights outside the Field of Use.  For clarity if Akouos is not obligated to pay Lonza any additional upfront consideration in exchange for a sublicense to any Future Ancestral Technology or Arising Patent Rights outside the Field of Use under the Lonza-Akouos Agreement, then Akouos will not be obligated to pay any additional up-front consideration to MEE in exchange for a license to such Future Ancestral Technology and/or Arising Patent Rights hereunder.  The other financial terms of this Agreement (e.g., milestone payments, royalty payments and Sublicense Income Payments) will apply to the requested license.

 

Article 3 — Financial Terms

 

As the sole monetary consideration for the rights granted by MEE under this Agreement, Akouos shall make the following payments to MEE according to this Article 3.  As additional consideration for such rights, Akouos shall issue certain shares of Akouos’ common stock in accordance with Section 3.1.

 

3.1                               Equity.  Akouos shall issue, pursuant to the Stock Grant Agreement between Akouos and MEE (the “Stock Grant Agreement”) a total of [**] shares of common stock of Akouos, $0.0001 par value per share, (the “Shares”) in the name of MEE.  Akouos represents to MEE that, immediately prior to the Effective Date, the aggregate number of Shares equals [**] percent ([**]%) of Akouos’ issued and outstanding common stock calculated on a Fully Diluted Basis after giving effect to such issuance.  For purposes of this Section 3.1, “Fully Diluted Basis” shall mean that the total number of issued and outstanding shares of the Akouos’ common stock shall be calculated to include conversion of all issued and outstanding securities then convertible into common stock, the exercise of all then

 

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outstanding options and warrants to purchase shares of common stock, whether or not then exercisable, and shall assume the issuance or grant of all securities reserved for issuance pursuant to any Akouos stock or stock option plan in effect on the date of the calculation.  The Shares shall vest in equal monthly installments over a two (2) year period beginning on the Effective Date, pursuant to the terms of the Stock Grant Agreement.  The Stock Grant Agreement shall permit Akouos to repurchase any unvested Shares upon a termination of this Agreement in the entirety by Akouos due to an uncured material breach by MEE.  In addition, upon request, MEE shall enter into a voting agreement and right of first refusal and co-sale agreement to the same extent that any other owner of common stock of Akouos has entered into such agreements as of the Effective Date, provided, however, that MEE shall not be required under the terms of such agreements in relation to the Shares to agree to modify or amend the terms of this Agreement.  The proviso in the immediately preceding sentence shall control over any provision of any such agreements in relation to the Shares that conflicts with such proviso (but only to the extent of such conflict).

 

3.2                               Milestone Payments.  With respect to each Licensed Gene Target, Akouos shall make development and sales milestone payments in the amounts corresponding to the achievement by either Akouos or its Affiliate or by any of its Sublicensees of the development and sales milestones set forth on Schedule B and shall pay the Pass-Through Sublicense Execution Milestone set forth on Schedule B to MEE in connection with the execution of any Pass-Through Sublicense.  Within [**] after achievement of any such milestone event by Akouos or any of its Affiliates or within [**] after receiving notice from any of its Sublicensees that any such sales or development milestone event has been achieved, as the case may be, Akouos shall notify MEE of such achievement in writing and MEE shall issue Akouos an invoice for the amount of the corresponding milestone payment as determined by Section 3.6, which invoice Akouos shall pay or cause to be paid within [**] following its receipt thereof.  Each milestone payment shall be payable only once upon the first achievement of such milestone with respect to each Licensed Gene Target by Akouos or any of its Affiliates or Sublicensees (other than by Sublicensees pursuant to a Pass-Through Sublicense), and no amount shall be due for subsequent or repeated achievements of such milestone with respect to such Licensed Gene Target by Akouos or any of its Affiliates or Sublicensees (other than by Sublicensees pursuant to a Pass-Through Sublicense), even if multiple Licensed Products are directed to a particular Licensed Gene Target or if a Licensed Product directed to a particular Licensed Gene Target is developed for multiple indications.  With respect to the achievement of such milestones by Sublicensees pursuant to a Pass-Through Sublicense, each milestone payment shall be payable each time such milestone is achieved by such a Sublicensee with respect to each Licensed Gene Target, regardless of the number of times the milestone is achieved by such Sublicensee with respect to the same Licensed Gene Target.  For the avoidance of doubt, only Net Sales of Licensed Products for which any royalties are payable under Section 3.3 shall be used for determining whether the sales milestones set forth in Schedule B have been met.

 

3.3                               Royalties.  In further consideration of the license granted to Akouos in this Agreement and subject to Sections 3.3.1, 3.4 and 3.5, Akouos shall pay to MEE, during each applicable

 

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Royalty Term, royalties at the applicable royalty rates set forth in Schedule C, based on the portion of annual worldwide Net Sales within each of the royalty tiers set forth in such Schedule C.  For the avoidance of doubt, such royalties shall be payable in respect of annual worldwide Net Sales of each Licensed Product in the Field of Use recorded by Akouos, Affiliates and Sublicensees, including any Sublicensees having a Pass-Through Sublicense.  In addition, in no event shall the mere manufacture of a Licensed Product without a sale or other transfer give rise to a royalty obligation.  Notwithstanding anything to the contrary in this Agreement, the Parties agree that, unless and until Akouos obtains an exclusive commercial license from either BCH or its Affiliate (or otherwise under any applicable Inter-Institutional Agreement) for BCH’s jointly owned undivided half share of the applicable BCH Patent Rights (the “BCH Joint Share”), no royalties shall be due or payable under this Agreement in respect of sales of Licensed Products (i) in the Field of Use, where such Licensed Products are Covered by one or more Valid Claims of BCH Patent Rights but not by any Ancestral Technology Patent Rights or Ancestral Technology Know-How or (ii) outside the Field of Use.  Once Akouos obtains under a definitive written agreement the BCH Joint Share of the applicable BCH Patent Rights, Akouos will thereafter be responsible to pay an additional royalty to MEE on the annual Net Sales of Licensed Products which meet the criteria set forth in clause (i) and/or clause (ii) above, during the applicable Royalty Term, such additional royalty to be in the same amount as the royalty to be paid to BCH under such definitive written agreement, and shall be in addition to the other royalty payments owed to MEE under this Section 3.3.  For clarity, the BCH Joint Share and any related agreement which provides or grants the BCH Joint Share will not be considered to qualify as a Third Party License Agreement under this Agreement.

 

3.3.1                     Royalty Reduction.  The royalties payable to MEE hereunder shall be subject to the following reductions set forth in paragraphs (a) through (c) of this Section 3.3.1, which shall apply in addition to the royalty offsets as described in Section 3.4; provided, however, that in no event shall the cumulative application of any applicable royalty reductions described in this Section 3.3.1 and any applicable offsets described in Section 3.4 below, result in the reduction of any single royalty payment or the applicable royalty rate to MEE to an amount that is less than [**] percent ([**]%) of Net Sales of Licensed Products for the period covered by such payment in any country or for the annual Net Sales of the relevant Licensed Products in any country:

 

(a)                                 Non-Patent Covered Licensed Products.  If the use and/or sale of a Licensed Product are not Covered by a Valid Claim (either because no patent was ever issued for such territory or the patent is no longer of effect), but the use or sale of the Licensed Product uses or incorporates Ancestral Technology Know-How, then, in respect of Net Sales in such country, the royalties payable on the annual Net Sales of such Licensed Products sold in such country by Akouos, its Affiliates and Sublicensees during the Royalty Term shall be calculated at rates that are reduced by [**] percent ([**]%) from the amounts set forth in Schedule C.

 

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(b)                                 Compulsory Licenses.  In the event that MEE or Akouos receives a request for a Compulsory License anywhere in the world, it shall promptly notify the other Party.  If any Third Party obtains a Compulsory License in any country, then MEE or Akouos (whoever has first notice) shall promptly notify the other Party.  For purposes of calculating the royalties due to MEE under Section 3.3 with respect to Net Sales of any Licensed Product in such country where a Compulsory License has been granted, the royalty rate payable by Akouos hereunder for Net Sales of any Licensed Product in such country will be adjusted to match any lower royalty rate granted to such compulsory licensee.  In the event any Third Party is granted a sublicense of the rights under Section 2.1 by Akouos in order to avoid the imposition of a Compulsory License (such Third Party, a “Compulsory Sublicensee”), where the royalty rate payable by such Compulsory Sublicensee on Net Sales of Licensed Products is less than the royalty rate paid by Akouos’ other Sublicensee(s) on the Net Sales of Licensed Products, then the royalty rate payable by Akouos to MEE hereunder for Net Sales the of Licensed Product by the Compulsory Sublicensee shall be reduced on a pro rata basis relative to the difference between the percentage rate that is paid by such Compulsory Sublicensee to Akouos and the percentage rate payable by the Akouos’ other Sublicensees on Net Sales of Licensed Product.  For example, if the royalty percentage rate payable to Akouos by a Compulsory Sublicensee on the first [**] dollars ($[**]) of annual Net Sales of a Licensed Product is [**] percent ([**]%) and the royalty percentage rate payable to Akouos by its other Sublicensees on Net Sales of the same Licensed Product is [**] percent ([**]%), then the royalty rate payable by Akouos to MEE for Net Sales of the Licensed Product by the Compulsory Sublicensee shall be reduced by [**] percent ([**]%) from [**] percent ([**]%) to [**] percent ([**]%).

 

(c)                                  Generic Competition.  Royalties payable on Net Sales of Licensed Products in any given country shall be subject to additional reductions of (i) [**] percent ([**]%) following a decrease in Net Sales of at least [**] percent ([**]%) but less than [**] percent ([**]%) and (ii) [**] percent ([**]%) following a decrease in Net Sales of [**] percent ([**]%) or greater; in each case, where such decrease in Net Sales is reasonably attributable to entry of one or more “generic” or “biosimilar” product(s) (as applicable) in such country in a particular calendar quarter compared to the average Net Sales of such Licensed Product in such country over the four (4) prior calendar quarters immediately preceding entry of such product.

 

3.4                               Offsets from Payments.

 

3.4.1                     Third Party Intellectual Property.  If Akouos or any of its Affiliates or Sublicensees enter into one or more Third Party License Agreements, Akouos will be entitled to deduct from its payments to MEE under Section 3.3 of this Agreement a portion of the total, aggregate royalties payable under all such Third Party License

 

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Agreements (“Aggregate Third Party Royalties”), provided the Aggregate Third Party Royalties paid by Akouos and/or its Affiliates or Sublicensees in the relevant Calendar Quarter plus the applicable MEE Royalty (before applying this deduction) exceed [**] percent ([**]%) of worldwide Net Sales for such Calendar Quarter.  The amount of such deduction shall be determined by the formula defined in Schedule E.  For clarity, if the Aggregate Third Party Royalties combined with the MEE Royalty are less than [**] percent ([**]%) then there will be no deduction applicable to MEE’s royalty amount.

 

3.4.2                     Examples of the calculation of the deduction permitted under Section 3.4.1 are set forth in Schedule E.

 

3.5                               Infringement Damages.  Akouos shall be entitled to deduct from any amounts payable to MEE under this Article 3 (a) any amounts required to be paid to a Third Party or a Sublicensee by Akouos or any of its Affiliates in order to satisfy an award of damages or comply with a settlement agreement arising out of any Claims that use of the Licensed Intellectual Property by Akouos or its Affiliates or Sublicensees independent of any Akouos Intellectual Property infringes, violates or misappropriates any rights of such Third Party in or to any Intellectual Property and (b) any costs and expenses (including without limitation reasonable attorney’s fees) incurred in connection with defending and/or settling any such Claims and/or any invalidity, infringement or other actions referred to in Section 9.4.

 

3.6                               Payment.  Akouos shall pay such royalties due to MEE under this Agreement within [**] after the last day of each Calendar Quarter.

 

3.7                               Sublicensing or Partnering Income.

 

3.7.1                     Sublicense Income Payments.  Except as set forth in Section 3.7.3 and subject to the exclusions in Section 3.7.4, Akouos shall pay MEE a percentage of all types of payments and consideration Akouos or any of its Affiliates receives from a Sublicensee, including but not limited to sublicense issue fees, upfront payments, option fee or option rights payments, option exercise payments, development and sales milestone payments (subject to Section 3.2), annual payments or maintenance fees, technology access fees, and any other similar license, assignment or option fees or payments made by Sublicensees, in consideration for any Sublicense (“Sublicense Income”) as set forth below (each such percentage payment a “Sublicense Income Payment”):

 

(a)                                 [**] percent ([**]%) of Sublicense Income attributable to a Licensed Product received after the Effective Date and prior to [**] for the Licensed Product;

 

(b)                                 [**] percent ([**]%) of the Sublicense Income attributable to a Licensed Product received on or after the [**] for the Licensed Product and prior to [**] for the Licensed Product; and

 

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(c)                                  [**] percent ([**]%) of the Sublicense Income attributable to a Licensed Product received on or after the [**] for the Licensed Product.

 

3.7.2                     Sublicense Income from Pass-Through Sublicenses.  Except as set forth in Section 3.7.3, Akouos shall pay MEE a percentage of Sublicense Income it or its Affiliate receives from a Sublicensee under any Pass-Through Sublicenses as set forth below, which payments shall be in lieu of the amounts referred to in subsections (a) through (c) of Section 3.7.1 above:

 

(a)                                 [**] percent ([**]%) of the Sublicense Income attributable to a Licensed Product received under a Pass-Through Sublicense prior to the [**] for such Licensed Product of at least [**]; and

 

(b)                                 [**] percent ([**]%) of the Sublicense Income attributable to a Licensed Product received under a Pass-Through Sublicense after the [**] for such Licensed Product of at least [**].

 

3.7.3                     Without limiting Akouos’ rights under Section 3.7.5, where the Sublicense Income Payment corresponds to the Pass-Through Sublicense Execution Milestone (e.g., it is an upfront license fee) or the achievement of one of the development and/or sales milestones in Schedule B, Akouos shall pay to MEE the greater of the amount associated with such milestone in Schedule B or the payment amount due after applying the applicable percentage under Section 3.7.1 and 3.7.2 to the Sublicense Income received from a Sublicensee in connection with the achievement of such milestone.

 

3.7.4                     Exclusions.  Excluded from Sublicense Income with respect to which Akouos must pay such percentage pursuant to Section 3.7.1 or 3.7.2, as applicable, are fees or payments for services rendered, reimbursements of R&D expenses (including fully-burdened internal costs and overhead if such costs and overhead was paid by a Sublicensee to Akouos) or patent expenses, payments for equity or debt (provided that such portion that represents a premium in excess of the fair market value for any equity or debt securities shall not be excluded), the attributed (non-monetary) value of any Sublicense granted by Akouos to a Third Party as part of a cross-license arrangement in connection with the settlement of a Claim of infringement, and royalty payments received by Akouos or an Affiliate with respect to the sale of Licensed Products.

 

3.7.5                     No Double Payment.  Notwithstanding anything to the contrary in Section 3.7, Akouos shall be entitled to (i) deduct from any Sublicense Income Payment due to MEE the amount of any development milestone payment paid by a Sublicensee to Akouos with respect to a Licensed Product when the amount of any development milestone payment has previously or concurrently been paid by Akouos to MEE with respect to such Licensed Gene Target pursuant to Section 3.2, and (ii) deduct from any Sublicense Income Payment due to MEE the amount of any sales milestone payment paid by a Sublicensee to Akouos with respect to a Licensed

 

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Product when the amount of any sales milestone payment has previously or concurrently been paid by Akouos to MEE with respect to such Licensed Gene Target pursuant to Section 3.2; provided, however, that in both (i) and (ii) any amount paid to MEE pursuant to Section 3.2 may be deducted from Sublicense Income Payments received from a particular Sublicensee only once.

 

3.8                               Patent Expenses.  Akouos shall fully reimburse MEE for patent expenses specifically related to Licensed Products incurred and paid by MEE for the Ancestral Technology Patent Rights after the Effective Date of the Agreement, to the extent such portion of those expenses is not required to be reimbursed by any Third Party; provided, however, that with respect to the expenses generally related to the Ancestral Technology Patent Rights (i.e. patent family solely owned by MEE), Akouos shall only be responsible for [**] of such expenses.  MEE shall submit invoices to Akouos for Akouos’ share of such patent expenses not later than [**] after MEE incurs such expenses.  Each such invoice shall include a reasonably detailed description of the expenses.  Akouos shall pay amounts shown on such invoices within [**] after Akouos’ receipt of the invoice.

 

3.9                               Waiver or Deferral.  Waiver or deferral by MEE of any payment owed under Section 3.2 or Section 3.3 may not be construed as a waiver or deferral of any subsequent payment owed by Akouos to MEE.

 

3.10                        Form of Payments and Taxes.  Payments may be paid by check made payable to MEE and sent to:

 

Massachusetts Eye and Ear Infirmary

243 Charles Street

Boston, MA 02114

 

or such other addresses which MEE may designate in writing from time to time.  Checks are to be made payable to “Massachusetts Eye and Ear Infirmary”.  Payments may instead be made by wire transfer using the following information:

 

Massachusetts Eye & Ear Infirmary General Fund

Account # [**]

 

Bank:

[**]

 

Akouos shall pay all amounts payable to MEE under this Agreement in United States funds without deduction for taxes, exchange, collection or other charges that may be imposed by any country or political subdivision with respect to any amounts payable to MEE under this Agreement.  Akouos is responsible for paying, or ensuring payment of, such taxes, exchange, collection or other charges, other than taxes attributable to MEE’s net income.

 

3.11                        Currency Conversion.  If any currency conversion is required in connection with any payment owed to MEE, the conversion will be made at the buying rate for the transfer of

 

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such other currency as quoted by the Wall Street Journal on the last business day of the applicable accounting period in the case of any payment payable with respect to a specified accounting period or, in the case of any other payment, the last business day before the date the payment is due.

 

3.12                        Interest.  Any payment owed to MEE under this Agreement that is not made when due will accrue interest beginning on the first day following the due date specified in Article 3.  The interest will be calculated at the annual rate of the sum of(a) [**] percent ([**]%) plus (b), the prime interest rate quoted by Bank of America on the date the payment is due, the interest being compounded on the last day of each Calendar Quarter.  However, the annual rate may not exceed the maximum legal interest rate allowed in Massachusetts.  The payment of interest as required by this Section 3.12 does not foreclose MEE from exercising any other rights or remedies it has as a consequence of the lateness of any payment.

 

3.13                        Right to Offset.  Without limiting its rights under Section 10.3, Akouos shall have the right to offset any amount owed to it by MEE under or in connection with this Agreement, including in connection with any breach, against any future payments owed by Akouos to MEE under this Agreement, in each case based on a final determination by an arbitrator pursuant to an arbitration proceeding administered pursuant to Section 15.2.  Such offsets shall be in addition to any other rights or remedies available under this Agreement and applicable law; provided, however, that, in no event may any payment to MEE hereunder be reduced as a result of the application of any offset permitted under this Section 3.13 by more than [**] percent ([**]%).  In the event that Akouos is not able to deduct the full amount of the permitted deduction from the amount due to MEE as a result of the proviso set forth in the preceding sentence, Akouos shall be entitled to deduct any undeducted excess amount from subsequent amounts owed to MEE (subject in each case to the proviso set forth in the preceding sentence).

 

Article 4 — Royalty Reports, Payments and Financial Records

 

4.1                               Royalty Reports.  Within [**] after March 31, June 30, September 30 and December 31, of each year in which this Agreement is in effect following First Commercial Sale of a Licensed Product in any country, Akouos shall deliver to MEE full, true and accurate reports of its activities and those of its Affiliates or Sublicensee(s), if any, relating to the sale of Licensed Products and any Sublicense Income received during the preceding three (3) month period (each such three (3) month period, a “Calendar Quarter”).  These reports must include the following with respect to the preceding Calendar Quarter:

 

(a)                                 Number of Licensed Products sold by Akouos, and any Affiliates or Sublicensees, in the Territory;

 

(b)                                 Total revenues recorded for the Licensed Products sold by Akouos and any Affiliates or Sublicensees;

 

(c)                                  Deductions applicable to determining Net Sales;

 

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(d)                                 The nature and amount of Sublicense Income received by Akouos or its Affiliates; and

 

(e)                                  Total royalties due to MEE.

 

With each report, Akouos shall pay to MEE the royalties accrued during the preceding Calendar Quarter.  If no royalties are due, Akouos shall so report.  If multiple Licensed Products are Covered by the license granted under this Agreement, Akouos shall separately identify Net Sales of each Licensed Product in the section of the royalty report responsive to clause (b) above.

 

4.2                               Record Keeping.

 

4.2.1                     Books and Records.  Akouos shall keep, and shall require its Affiliates and Sublicensees to keep, true books of account containing an accurate record (together with supporting documentation) of all data necessary for determining the amounts payable to MEE for a period of [**] following the end of the calendar year to which they pertain.  Akouos shall keep it records at its principal place of business or the principal place of business of the appropriate division of Akouos to which this Agreement relates and shall require its Affiliates and Sublicenses to keep their books and records in the same manner.

 

4.2.2                     Inspections.  In order for MEE to determine the correctness of any report or payment made under this Agreement, Akouos shall make its records available for inspection in accordance with this Section 4.2.2 for a period of [**] following the end of the calendar year to which they pertain.  Akouos shall also require any Affiliates to make their records available for inspection by MEE, in the same manner as provided in this Section 4.2.2.

 

[**], MEE may cause a certified public accountant selected by MEE and reasonably acceptable to Akouos to inspect such records during regular business hours; provided, however, MEE may only cause any specific records to be inspected [**].  In conducting inspections under this Section 4.2.2, Akouos agrees that MEE’s accountant may have access to all records which MEE reasonably believes to be relevant to calculating royalties owed to MEE under Article 3.  Akouos may require the accountant to sign a customary nondisclosure agreement prior to undertaking any such inspection, and any and all books, records, reports and other documents inspected by such accountant shall be deemed Akouos’ Confidential Information.  MEE may receive a summary of the accountant’s findings but shall not permit the accountant to disclose such books, records, reports and other documents to MEE.

 

If the inspections show an underpayment of any payment owed to MEE under Article 3, Akouos shall pay MEE the unpaid amounts due hereunder, plus interest as set forth in Section 3.12, within [**] after receiving a written audit report from the accountant.  MEE is responsible for the cost of any inspection, unless the examination shows an underreporting in excess of [**] percent ([**]%) for any

 

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twelve (12) month period, in which case Akouos shall reimburse MEE for the cost of the inspection within [**] of receipt of an invoice.

 

Article 5 — Operations under the License

 

5.1                               Diligence Obligations.

 

5.1.1                     General Obligations.

 

(a)                                 Within [**] after the Effective Date, and as updated within [**] after every twelve (12) month anniversary of the Effective Date thereafter during the Term, Akouos shall provide MEE with a bona fide written development plan that describes Akouos’ overall program for researching and developing Licensed Products in the Field of Use (“General Development Plan”).  The General Development Plan shall set forth a description of all Committed Licensed Gene Targets and the particular Licensed Products that Akouos initially intends to develop with respect to each of such Committed Licensed Gene Targets in the Field of Use and shall cite Akouos’ goals and objectives for the [**] period following the date of the General Development Plan.

 

(b)                                 Akouos, either directly or through its Affiliate(s) or Sublicensee(s), shall, after the date that is [**] from the Effective Date, use Commercially Reasonable Efforts for each Committed Licensed Gene Target to research, develop and, once approved by the relevant Regulatory Authority, commercialize Licensed Products directed to such Committed Licensed Gene Target in the Field of Use and to market and sell such Licensed Products to customers located in at least [**] of the following countries: [**] (each a “Major Market”).  For the avoidance of doubt, the obligation to use Commercially Reasonable Efforts shall apply to each Committed Licensed Gene Target after the date that is [**] after the Effective Date if Akouos (or its Affiliate or Sublicensee, as applicable) has commenced any research, development or commercial activities for such Committed Licensed Gene Target.  For clarity, Akouos shall have no obligation to use any particular level of effort (including any effort) to develop or commercialize Licensed Products in any particular country or countries other than for the countries expressly provided in this Section 5.1.1(b).

 

(c)                                  During the time period from the Effective Date of this Agreement until the [**] anniversary of the Effective Date Akouos will use Commercially Reasonable Efforts to raise a total of at least [**] U.S. Dollars (US $[**]) in capital funding across all fundraising rounds, tranches and sources to fund its operations, including cash for the purchase of capital stock, debt financing, grant funding and other sources of non-dilutive capital, and Sublicense Income (net of any Sublicense Income Payment to MEE); provided, however that, in the event that as of such [**] anniversary date, Akouos has not actually received funding in the total amount described

 

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above despite having used Commercially Reasonable Efforts to secure funding in that amount, but is expected to have received such amount if all amounts that are then committed under binding definitive agreements with third parties under pending additional tranches of funding that are due and expected within the subsequent [**] period, then Akouos shall not be considered in breach of this Section 5.1.1(c) and the Parties shall discuss and consider in good faith and shall make a reasonable adjustment to the total amount described above, or an extension to such period as may be reasonable in the circumstances.

 

5.1.2                     Licensed Gene Target-Specific Obligations.

 

(a)                                 In addition to the general diligence obligations described in Section 5.1.1 above, within [**] after the Effective Date, Akouos shall provide MEE with a minimum of [**] separate, bona fide written development plans, each describing Akouos’ specific program for researching and developing one or more Licensed Products with respect to a different Licensed Gene Target in the Field of Use (each such plan, a “Target Development Plan” and each such associated Licensed Product, a “Core Product”); provided, however that, Akouos shall have the right to satisfy such obligation and the obligations of this Section 5.1.2 with a total of at least [**] such Target Development Plans/Core Products, collectively, provided to Lonza and MEE in total across this Agreement and the Lonza-Akouos Agreement, as long as at least [**] of such Target Development Plans/Core Products falls within the Field of Use under this Agreement.  Each Target Development Plan shall set forth the particular Licensed Product(s) that Akouos intends to develop with respect to the corresponding Licensed Gene Target and shall include Akouos’ anticipated timelines for the achievement of key clinical development, regulatory and commercial milestone events.  Akouos shall update each of the Target Development Plans at least [**], provided, however, that the first such update need not be delivered sooner than [**] after the date of the initial Target Development Plan.

 

(b)                                 Akouos shall, either directly or through its Affiliate(s) or Sublicensee(s) (except that Akouos may not satisfy the obligations of this Section 5.1.2 through any Pass-Through Sublicense), use Commercially Reasonable Efforts for diligence to proceed with the research, development and commercialization activities (once approved by the relevant Regulatory Authority), as applicable, as set forth under each Target Development Plan and for each associated Core Product as soon as practicable, consistent with the then-current Target Development Plan for such Core Product.  For the avoidance of doubt, Akouos shall not be required to develop and commercialize Core Products simultaneously, and may stagger the development and commercialization timelines for each Core Product.  In addition, Akouos may at any time, upon written notice to MEE, suspend its activities under any particular Target Development Plan and commence

 

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development activities instead under a replacement Target Development Plan involving an alternate Licensed Gene Target/Core Product which is not already covered by a Target Development Plan, in which case Akouos’ obligations under this Section 5.1.2 shall cease to apply with respect to the Licensed Gene Target designated for development under the suspended Target Development Plan and shall instead apply to the Licensed Gene Target designated for development under the replacement Development Plan.  For the avoidance of doubt, the selection by Akouos of any alternate Licensed Gene Target as a potential replacement for an existing Licensed Gene Target associated with a Core Product will be subject to the availability of such Licensed Gene Target for selection under the provisions of Section 5.9 in view of Third Party sublicensing discussions already underway or agreements that may have already been executed with a Third Party pursuant to Section 5.9 at the time that Akouos desires to select such alternate Licensed Gene Target.

 

5.1.3                     Licensed Product Minimum Diligence Obligations.  Without limiting Akouos’ obligations under Section 5.1.2, and in addition to the general diligence obligations stated under Section 5.1.1, commencing on the date that is [**] after the Effective Date, Akouos shall, or shall cause its Affiliates and/or Sublicensees to, use Commercially Reasonable Efforts to achieve the following development objectives with respect to each Licensed Product it develops in the Field of Use on its own or with its Affiliates or Sublicensees:

 

(a)                                 [**];

 

(b)                                 [**];

 

(c)                                  [**];

 

(d)                                 [**]; and

 

(e)                                  [**].

 

For the avoidance of doubt, Akouos shall not be required to cause its Sublicensees to use Commercially Reasonable Efforts to achieve the foregoing development objectives to the extent such objectives have already been achieved as of the date the relevant Sublicense was granted.

 

5.1.4                     Development and Commercialization Reports; Additional Requirements for General Development Plan and Target Development Plans.

 

(a)                                 On or before each anniversary of the Effective Date, Akouos shall provide to MEE a written report describing the efforts by Akouos, its Affiliates and its Sublicensees, as applicable, to develop and commercialize Licensed Products.  The report shall be in sufficient detail to permit MEE to ascertain Akouos’ compliance with the due diligence provisions of this Agreement.

 

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Akouos shall include at least the following in these reports: (i) a summary of Akouos’, its Affiliates’ and its Sublicensees’ progress toward meeting the goals and objectives that had been established for the previous year; and (ii) a summary of Akouos’, its Affiliates’, and its Sublicensees’ goals and objectives for the ensuing year for developing and commercializing Licensed Intellectual Property, including an identification of additional Licensed Products that Akouos and its Sublicensee(s) intend to develop, if any.

 

(b)                                 Each annual General Development Plan that is submitted by Akouos to MEE, and each update thereto, and each Target Development Plan submitted by Akouos or by its Affiliate or Sublicensee, and each [**] update thereto, will include along with the description of the actual development plan activities, the additional information and elements as described in Schedule F.

 

5.1.5                     Activities of Affiliates and Sublicensees.  Activities by Akouos’ Affiliates and Sublicensees will be considered Akouos’ activities under this Agreement for purposes of determining whether Akouos has complied with its obligation to use Commercially Reasonable Efforts; provided, however, that the activities carried out under a Pass-Through Sublicense granted pursuant to this Agreement may not be used to show compliance with any of the obligations of Section 5.1.2.  Notwithstanding the foregoing, if, due to the acts or omissions of a Sublicensee, any of the diligence obligations under this Section 5.1 have not been met or are not being met, Akouos shall have the right, but not the obligation, upon written notice to MEE, to (a) carry out such diligence obligations on its own or through another Sublicensee, (b) cause the relevant Sublicensee to cure the deficiency within any applicable cure periods provided for in the Sublicense or, if none apply, within a reasonable period of time or (c) in the case of a Pass-Through Sublicense granted under Section 5.9, terminate the Pass-Through Sublicense in accordance with its terms, in which case, the corresponding Target Development Plan with respect to the terminated Licensed Gene Target shall be deemed null and void and will no longer be deemed a Committed Licensed Gene Target unless and until it subsequently re-qualifies as a Committed Licensed Gene Target.  If Akouos exercises any of the foregoing rights promptly after becoming aware of the deficiency, the acts or omissions of the Sublicensee shall not be deemed a breach by Akouos of its diligence obligations under this Agreement.

 

5.1.6                     Failure to Achieve Development Objectives.  In the event that, despite the use of Commercially Reasonable Efforts, Akouos becomes aware that, due to any relevant scientific, regulatory, safety, development, or commercial circumstances beyond the reasonable control of Akouos or any of its Affiliates or Sublicensees, as applicable, (a) any of the development or regulatory or commercial launch milestone dates set forth in Section 5.1.3 will not be achieved or (b) any similarly material milestone dates or development commitments set forth in the General Development Plan or any Target Development Plan will not be achieved, or (c) it

 

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will be unable to commence or continue the pre-clinical or clinical development activities as contemplated under the applicable Target Development Plan or General Development Plan, then Akouos will notify MEE in writing in advance of such failure to achieve the expected development or regulatory or commercial launch milestone dates, and the Parties will confer in good faith to discuss a revised General Development Plan or Target Development Plan, as applicable, that is acceptable to Akouos and MEE and mitigates or otherwise takes into account such circumstances.  For the avoidance of doubt, failure to achieve any of the minimum diligence obligations or perform any particular activities specified in a General Development Plan or Target Development Plan (including as either may be updated) will not, in and of itself, be considered a breach of this Agreement so long as Akouos has complied with its obligations to continuously use Commercially Reasonable Efforts to achieve such minimum diligence obligations and the objectives and timelines of the General Development Plan or Target Development Plan, as applicable.  MEE shall notify Akouos of any objections to any revised General Development Plan or Target Development Plan within [**] after submission by Akouos, failing which such General Development Plan or Target Development Plan shall be deemed approved by MEE.  In the event that MEE provides Akouos with timely notice of its objection to any revised General Development Plan or Target Development Plan and, following at least [**] of efforts to reach agreement on a revised General Development Plan or Target Development Plan, the Parties cannot agree on a revision or other remedy, then MEE may request that Akouos provide further evidence of its Commercially Reasonable Efforts to achieve the relevant milestone set forth above.  If, and only if, after reviewing such further information requested and provided, MEE makes a determination that Akouos has failed to demonstrate that Akouos has used Commercially Reasonable Efforts to meet its diligence obligations as stated under this Article 5 for any Committed Licensed Gene Target or any Licensed Product directed to any Committed Licensed Gene Target, MEE shall notify Akouos of such determination in writing and may treat such failure to meet its diligence obligations as a material breach of this Agreement.  Any such allegation of breach shall be subject to Akouos’ rights under this Agreement to dispute and/or cure it.

 

5.1.7                     For the avoidance of doubt, if Akouos materially breaches any of the diligence requirements of Section 5.1.1, 5.1.2 or 5.1.3 with respect to any of the [**] Target Development Plans or any of the associated Core Products that are the subject of this Agreement, then, unless MEE elects at its sole discretion to instead trigger the provisions of Section 5.9 in view of such failure, if such breach is not cured in accordance with the relevant provisions of Section 10.2, MEE shall have the right to terminate this Agreement with respect to all existing and potential future Licensed Gene Targets (regardless of whether or not such Licensed Gene Target is listed as a Committed Licensed Gene Target at such time) other than those for which Akouos or its Affiliate or Sublicensee is continuing to satisfy its diligence obligations under this Article 5, in accordance with the termination provisions of Section 10.2.2.

 

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5.2                               Regulatory Matters.  As between Akouos and MEE, Akouos shall own and maintain all Regulatory Approvals for the Licensed Product in its own name and shall act as the sole point of contact for all communications with Regulatory Authorities in connection with the development, commercialization and manufacturing of the Licensed Product.  MEE shall provide Akouos with all reasonably requested assistance in connection Akouos’ filings and correspondence with Regulatory Authorities.

 

5.3                               Other Government Laws.  Akouos shall comply with, and ensure that its Affiliates and Sublicensees comply with, all mandatory and applicable government statutes and regulations that relate to Licensed Products.  These include but are not limited to FDA statutes and regulations, the Export Administration Act of 1979, as amended, codified in 50 App. U.S.C. 2041 et seq. and the regulations promulgated thereunder or other applicable export statutes or regulations.

 

5.4                               Patent Marking.  To the extent commercially feasible and consistent with prevailing business practices and applicable law, Akouos shall mark, and shall require its Affiliates and Sublicensees to mark, all Licensed Products sold in the United States with the word “Patent” and the number or numbers of the Patent Rights applicable to the Licensed Product.

 

5.5                               Publicity - Use of Name.  Akouos, its Affiliate and Sublicensees are not permitted to use the name of “Massachusetts Eye and Ear Infirmary” or any variation, adaptation, or abbreviation thereof, its related entities or its employees, or any adaptations thereof, in any advertising, promotional or sales literature, or in any securities report required by the Securities and Exchange Commission (except as required by law), without the prior written consent of MEE in each case.  However Akouos may (a) refer to publications in the scientific literature by employees of MEE or (b) state that a license from MEE has been granted as provided in this Agreement.  The Parties shall issue a mutually acceptable joint press release announcing this Agreement as soon as practicable after the Effective Date.

 

5.6                               U.S. Manufacture.  Subject to Article 6, in partial consideration of the rights granted by MEE to Akouos under this Agreement, Akouos shall, unless waived, manufacture in the United States Licensed Products which are leased, used or sold in the United States.  Akouos shall also require any Affiliate(s) or Sublicensee(s) to comply with this U.S. manufacture requirement.

 

5.7                               Akouos’ Right to Subcontract.  With or without MEE’s consent, Akouos may perform any of its obligations under this Agreement by subcontracting such performance to one or more Third Parties; provided, however, that any such subcontracting shall be solely with respect to specific obligations and not with respect to the performance of all of Akouos’ obligations under this Agreement, and provided further, that Akouos may only engage a Third Party subcontractor if (a) no rights of MEE under this Agreement (including the right to receive payments under this Agreement) would be diminished or otherwise adversely affected as a result of such subcontracting and (b) the subcontractor undertakes the obligations of confidentiality and non-use regarding Confidential Information that are consistent with those undertaken by the Parties pursuant to Article 7 hereof.  No such

 

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subcontract granted or entered into by Akouos as contemplated by this Section 5.7 shall relieve Akouos of any of its obligations under this Agreement except to the extent such obligations are performed by the relevant subcontractor in accordance with Akouos’ obligations under this Agreement.

 

5.8                               Ongoing Communication.  Subject to any obligations of confidentiality to which each respective Party may be subject, each Party shall make appropriate personnel available from time to time at the other Party’s reasonable request to answer questions from the other Party concerning the status of the development of the Ancestral Technology and to discuss and attempt to resolve any issues or concerns a Party may have.  Without limiting the generality of the foregoing, (a) if Akouos wishes to permit one or more Sublicensees to develop Licensed Products which target multiple Licensed Gene Targets, or (b) if Akouos wishes to amend a Pass-Through Sublicense to license new Intellectual Property to the relevant Third Party such that the Sublicense is no longer a Pass-Through Sublicense, then, in either case, Akouos shall notify MEE in writing and the Parties shall discuss in good faith any amendments to this Agreement and/or financial reconciliation which the Parties determine to be appropriate in light of such circumstances.

 

5.9                               Third Party License Requests.

 

5.9.1                     Obligation to Sublicense or Develop Certain Licensed Gene Targets.  If a Third Party notifies MEE that it is interested in obtaining a license under the Licensed Intellectual Property to develop and/or commercialize one or more Licensed Products with respect to a particular Licensed Gene Target for which Akouos has not (either by itself or through any of its Affiliates or Sublicensees) commenced diligence activities for, or has commenced diligence activities for but has materially breached its diligence obligations under either Section 5.1.1, 5.1.2 or 5.1.3 (without curing such breach under the provisions of Section 10.2), (such Licensed Gene Target, a “Proposed Gene Target” and such request, a “Third Party License Request”), MEE may, in its discretion, provide written notice to Akouos of such Third Party License Request.  Such notice shall include, at a minimum, the identities of the Proposed Gene Target, the Third Party requesting the license and the clinical indications for which the Third Party intends to develop Licensed Products under the license.  Within [**] after Akouos’ receipt of any such notice of a Third Party License Request, Akouos shall elect either to (a) negotiate to enter into a Pass-Through Sublicense for the development and commercialization of one or more Licensed Products for the Proposed Gene Target identified in the Third Party License Request or (b) submit a Target Development Plan to MEE under which Akouos, its Affiliate, a Sublicensee or the Third Party who submitted the Third Party License Request would develop and commercialize such Licensed Product(s) (a “Proposed Target Development Plan”), and shall provide MEE with written notice of such election (an “Election Notice”) prior to the end of such [**] period.

 

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5.9.2                     Negotiation of Sublicenses.

 

(a)                                 If Akouos elects under Section 5.9.1 to negotiate to enter into a Pass-Through Sublicense with respect to a Proposed Gene Target, Akouos shall, promptly after delivering the corresponding Election Notice to MEE, commence good faith discussions with the Third Party that submitted the Third Party License Request, or a different Third Party identified by Akouos in the Election Notice and reasonably acceptable to MEE, with respect to such Pass-Through Sublicense and negotiate in good faith to enter into such Pass-Through Sublicense.  So long as the relevant Third Party continues to negotiate in good faith, Akouos shall continue such negotiations for [**], extendable as needed to [**] after the initiation date of the negotiations for such relevant Election Notice (or such longer period as MEE may agree to in writing), or until any earlier execution and delivery of the Pass-Through Sublicense.  In no event shall Akouos be required, in connection with the execution of any Pass-Through Sublicense, to grant or otherwise procure for any Third Party, any rights to any Intellectual Property other than the Licensed Intellectual Property.  Upon execution and delivery of such Pass-Through Sublicense, the Pass-Through Sublicense shall be subject to all of the terms and conditions of this Agreement as are applicable to any other Pass-Through Sublicense and Akouos shall have no further obligations under this Section 5.9 with respect to the Third Party License Request.

 

(b)                                 In the event Akouos fails to enter into a Sublicense in accordance with Section 5.9.2(a) within the timeframe permitted thereunder, then Akouos shall promptly provide MEE with a written explanation for such failure together with an unredacted copy of the latest version of the term sheet or Sublicense agreement that was last under consideration between Akouos and such Third Party.  As long as such explanation from Akouos is reasonably detailed and contains a commercial justification (i.e., it provides MEE with a relatively clear understanding of why Akouos’ negotiations with such Third Party failed) and is provided by Akouos in good faith, then Akouos shall have no further obligation to negotiate with or grant a Pass-Through Sublicense to such Third Party in regards to such Proposed Gene Target.  If MEE concludes in good faith that Akouos’ explanation or rationale for failure to conclude the deal is not based on reasonable good-faith objections by Akouos or reasonable then-current market-based terms or expectations or is not reasonably detailed enough for it to understand why Akouos’ negotiations with the Third Party failed, then it may request that Akouos provide it with additional information regarding the outcome of Akouos’ negotiations with such Third Party and the basis for Akouos’ failure to conclude a deal with such Third Party and Akouos shall provide that information to MEE in a timely manner.  If, however, Akouos does not provide MEE with a written explanation for its failure to negotiate a license with the relevant Third Party following the conclusion of the aforementioned [**] period or does not provide MEE with the additional information and the reasonable rationale as requested by it pursuant to the

 

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immediately preceding sentence, as applicable, then MEE shall have the right to terminate this Agreement with respect only to the Licensed Gene Target which was the subject of the Third Party License Request submitted by such Third Party, in accordance with Section 10.2.1; provided, however, that if such Licensed Gene Target was originally the subject of one of the [**] Target Development Plans or any associated Core Product and, following an uncured breach by Akouos of its diligence obligations under Section 5.1.1, 5.1.2 or 5.1.3 with respect to such Target Development Plan or associated Core Product, MEE elected to exercise its option under Section 5.1.7 by providing Akouos with a Third Party License Request for the Licensed Gene Target associated with such Target Development Plan or Core Product pursuant to Section 5.9.1, then MEE shall have the right to terminate the Agreement pursuant to the termination provisions of Section 10.2.2 as a result of Akouos’ failure to negotiate a license with the relevant Third Party as set forth in this Section 5.9.2(b).  Either type of such elected termination shall be MEE’s sole and exclusive remedy for Akouos’ failure to enter into a Sublicense in accordance with Section 5.9.2(a).  For clarity, any Sublicense resulting from any negotiations with such potential Third Party Sublicensee shall be consistent with the terms and conditions of this Agreement.

 

5.9.3                     Submission of Proposed Target Development Plan.

 

(a)                                 If Akouos elects under Section 5.9.1 to submit a Proposed Target Development Plan, Akouos shall have [**] from the delivery of the Election Notice to submit its Proposed Target Development Plan to MEE.  MEE shall then have [**] to review and comment on the Proposed Target Development Plan.  Within [**] after submission of its Proposed Target Development Plan, Akouos shall submit in good faith a final Proposed Target Development Plan to MEE, which final Proposed Target Development Plan must (i) be consistent with all of the diligence obligations as stated in Sections 5.1.1, 5.1.2 and 5.1.3 herein, (ii) reasonably demonstrate how Akouos anticipates it will meet its obligations to use Commercially Reasonable Efforts under this Agreement with respect to the applicable Licensed Gene Target, and (iii) take into account MEE’s reasonable comments.  Any final Target Development Plan submitted under this Section 5.9.3(a) shall be subject to all of the terms and conditions of this Agreement as are applicable to any other Target Development Plan, and, upon such submission, Akouos will be required to continuously satisfy its diligence obligations as stated in this Agreement for the pursuit of such Target Development Plan, and shall have no further obligations under this Section 5.9 with respect to the associated Third Party License Request.

 

(b)                                 If MEE concludes in good faith that Akouos’ Proposed Target Development Plan fails to comply with the requirements set forth in Section 5.9.3(a), then it may request that Akouos provide it with additional information regarding

 

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its anticipated development and commercialization efforts and/or make modifications to the plan with respect to such Licensed Product(s) and Akouos shall provide such reasonably requested additional information and make such reasonably requested modifications in a timely manner.  If Akouos does not provide MEE with the Proposed Target Development Plan(s) required under this Section 5.9.3(b), or does not provide MEE with the additional information requested by it pursuant to the immediately preceding sentence, MEE shall have the right to terminate this Agreement with respect to the Licensed Gene Target that was the subject of the Third Party License Request, in accordance with Section 10.2.1.  Such termination shall be MEE’s sole and exclusive remedy for Akouos’ failure to submit such Proposed Target Development Plan(s) and/or additional information.

 

5.9.4                     Exemptions.  If, after receipt of a written notice from MEE of a Third Party License Request, Akouos determines that based on compelling bona fide scientific, technical or commercial strategic reasons, carrying out either of the actions contemplated under clauses (a) and (b) of Section 5.9.1 would be reasonably likely to materially hinder or otherwise materially jeopardize (a) the competitive position of Akouos, (b) Akouos’ rights under this Agreement as they relate to Licensed Gene Targets other than the Proposed Gene Target, (c) Akouos’ relationships with its Sublicensees, suppliers, customers and/or other Third Parties or (d) the successful development and commercialization of Licensed Products pursuant to this Agreement, Akouos may request in writing that MEE withdraw the Third Party License Request.  Any such request shall be accompanied by a reasonably detailed statement of the compelling reasons for the request.  If Akouos’ concerns, taking into account Akouos’ then-current Development Plan, Intellectual Property portfolio, status of the development of sublicensing of Licensed Products, and other factors relevant to Akouos, meet the standard described above for an exception, MEE shall promptly grant Akouos’ request to have the Third Party License Request withdrawn.  Upon any such withdrawal, Akouos shall have no obligations with respect to the Third Party License Request under Section 5.9.1 or any duplicate or substantially similar Third Party License Request, and MEE’s termination rights under Section 10.2.1 or under Section 10.2.2, if applicable, shall not come into effect with respect to the Third Party License Request or any duplicate or substantially similar Third Party License Request.  If the parties disagree as to whether Akouos’ concerns meet the relevant standard for an exception, the dispute resolution process set forth in Article 15 shall apply.  Notwithstanding anything to the contrary in this Section 5.9.4, Akouos may not request that MEE withdraw Third Party License Requests with respect to more than [**] Licensed Gene Targets in any [**] period under this Agreement.

 

5.9.5                     MEE shall not submit any notices of a Third Party License Request to Akouos during the first [**] after the Effective Date without Akouos’ prior written approval.  After such [**] period, MEE may submit no more than [**] such notices during any [**] period without Akouos’ prior written approval; provided, however, that any request withdrawn by MEE pursuant to Akouos’ written request under Section

 

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5.9.4 shall not be counted toward such limit of [**] notices of Third Party License Requests.

 

Article 6 — Reserved

 

Article 7 — Confidentiality

 

7.1                               Non-Disclosure Obligation.  Each Party agrees, during the term of this Agreement, and for [**] thereafter, to employ all reasonable efforts to maintain the other Party’s Confidential Information secret and confidential, such efforts to be no less than the degree of care employed by such Party to preserve and safeguard its own confidential information.  The Receiving Party shall not use the Disclosing Party’s Confidential Information for any purpose other than as expressly permitted under this Agreement and shall not disclose or reveal the Disclosing Party’s Confidential Information to anyone except employees or agents for consultants to the Receiving Party or its Affiliates (and in the case of Akouos as the Receiving Party, its actual or potential Sublicensees, subcontractors, investors and/or potential acquirers) (collectively, “Representatives”) who have a need to know the information and who are subject to written obligations of confidentiality under which they are required to abide by the obligations of confidentiality and restrictions on use set forth in Section 7 and are advised by the Receiving Party of the confidential nature of the Confidential Information.  The Receiving Party shall be responsible for any breach of this Article 7 by its Representatives.  The Receiving Party’s obligations under this Section 7.1 shall not extend to any information that:

 

7.1.1                     at the time of disclosure is in the public domain;

 

7.1.2                     becomes part of the public domain, by publication or otherwise, through no breach of this Agreement by the Receiving Party;

 

7.1.3                     at the time of disclosure is already in possession of the Receiving Party, as established by contemporaneous written records;

 

7.1.4                     is lawfully provided to the Receiving Party, without restriction as to confidentiality or use, by a Third Party not known by the Receiving Party to be subject to any obligation of confidentiality with respect to such information; or

 

7.1.5                     is independently developed by a Party without use of or reference to the other Party’s Confidential Information, as established by contemporaneous written records.

 

7.2                               Government-Required Disclosure.  If a duly constituted government authority, court or regulatory agency orders that a Party hereto disclose information subject to an obligation of confidentiality under this Agreement, such Party shall comply with the order, but shall notify the other Party as soon as possible, so as to provide the said Party an opportunity to apply to a court of record for relief from the order.  In addition, nothing in this Agreement shall prohibit the Receiving Party from disclosing Confidential Information to the extent

 

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such disclosure is necessary to comply with the rules of any stock exchange, so long as the Receiving Party uses reasonable efforts to seek confidential treatment therefor.

 

Article 8 — Intellectual Property

 

8.1                               Ancestral Technology Patent Preparation, Filing, Prosecution and Maintenance.

 

8.1.1                     Responsibility.  As between the Parties, MEE shall be responsible for prosecuting and maintaining all patents and patent applications within the Ancestral Technology Patent Rights and Maintained BCH Patent Rights.  Title to all such patents and patent applications shall reside in MEE.  MEE shall have full and complete control over all patent matters in connection therewith under all such Patent Rights.  For purposes of this Agreement, patent prosecution includes ex parte prosecution, interference proceedings, reissues, reexaminations and oppositions.  MEE shall provide, or cause its agent to provide, copies of relevant correspondence between MEE and the United States Patent Office or the various foreign patent offices to Akouos.  Akouos designates the following individual or department for receiving the patent-related correspondence:

 

Dr. Emmanuel Simons

Akouos, Inc.

[**]

 

MEE shall be available to consult with Akouos on matters relating to preparing, filing, prosecuting or maintaining any of the applications or patents within the Ancestral Technology Patent Rights and BCH Patent Rights solely with respect to matters which are reasonably likely to pertain to the practice of the Patent Rights in the Field of Use if the BCH Patent Rights are not involved, and solely with respect to matters which are reasonably likely to pertain to the practice of the Patent Rights in the Expanded Field of Use if the BCH Patent Rights are involved, which matters may be of particular interest to Akouos, and MEE shall consider any comments received from Akouos with respect thereto in good faith.

 

8.2                               Election Not to File and Prosecute Patent Rights.

 

8.2.1                     If MEE elects not to file or to continue to prosecute or maintain any Ancestral Technology Patent Rights directly related to the Field of Use or any Maintained BCH Patent Rights directly related to the Expanded Field of Use, then it shall notify Akouos in writing at least [**] before any deadline applicable to the filing, prosecution or maintenance of such Patent Rights, as the case may be, or any other date by which an action must be taken to establish or preserve such Patent Rights in such country or possession.  In such case, and subject to the existing contractual rights of Third Parties as of the Effective Date to file, prosecute or maintain such Patent Rights, Akouos shall have the right, but not the obligation, with respect to the Ancestral Technology Patent Rights directly related to the Field of Use if the BCH Patent Rights are not involved, and with respect to the Ancestral Technology

 

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Patent Rights directly related to the Expanded Field of Use if the BCH Patent Rights are involved, to pursue the filing or support the continued prosecution or maintenance of such Patent Rights, and subject to the existing contractual rights of Third Parties as of the Effective Date to file, prosecute or maintain such Patent Rights, may delegate any such right to any of its Affiliates or Sublicensees.

 

8.2.2                     If Akouos or any of its Affiliates or Sublicensees assumes responsibility as permitted under Section 8.2.1 for the prosecution and maintenance of any Ancestral Technology Patent Rights in the Field of Use or any Maintained BCH Patent Rights in the Expanded Field of Use, and at any time thereafter elects not to continue prosecution or maintenance of any such Patent Rights, then Akouos shall notify MEE in writing at least [**] before any deadline applicable to the filing, prosecution or maintenance of such Patent Rights, as the case may be, or any other date by which an action must be taken to establish or preserve such Patent Rights in such country.  If Akouos elects not to assume responsibility for the prosecution and maintenance of any such Patent Rights, then it will notify MEE within [**] after Akouos’ receipt of the notice from MEE referred to in Section 8.2.1.

 

8.2.3                     If Akouos (or any of its Sublicensees) does not continue prosecution or maintenance of any abandoned Ancestral Technology Patent Rights, then such Ancestral Technology Patent Rights shall not extend the Royalty Term (i.e., no royalty payments shall be due under this Agreement on account of such abandoned Ancestral Technology Patent Rights).

 

8.3                               Notice.  Akouos shall provide prompt notice to MEE of any information that comes to its attention that Akouos reasonably believes is likely to materially affect the patentability, validity or enforceability of any patent application or patent within the Ancestral Technology Patent Rights and/or BCH Patent Rights.

 

8.4                               Relinquishing Rights.  Akouos may surrender its licenses under any of the patents or patent applications within the Ancestral Technology Patent Rights and/or BCH Patent Rights in any country of the Territory by giving [**] advance written notice to MEE.  However, if Akouos is surrendering any patent or application within such Patent Rights on which an interference proceeding or opposition has been declared or filed, the notice period is [**].  If Akouos so surrenders its rights, it will remain responsible for its portion of the patent-related expenses incurred by MEE during the applicable notice period.  Thereafter, Akouos will have no further obligation to pay any patent expenses for the patents or patent applications that it surrendered.  Notwithstanding the foregoing, if such surrender is with respect to all Patent Rights in all countries licensed to Akouos under this Agreement, and thus results in termination of all of Akouos’ other rights under this Agreement, then the termination notice provision in Section 10.3 below shall apply.

 

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8.5                               Intellectual Property Rights.

 

8.5.1                     Licensed Intellectual Property Rights.  Except as explicitly stated in this Agreement, Akouos will not, under this Agreement, acquire any right, title, license or other interest in any Licensed Intellectual Property.

 

8.5.2                     MEE Intellectual Property Rights.  Except as explicitly stated in this Agreement, Akouos will not, under this Agreement, acquire any right, title, or interest in any MEE Intellectual Property.

 

8.5.3                     Akouos Intellectual Property Rights.  MEE will not, under this Agreement, acquire any right, title, or interest in any Akouos Intellectual Property.

 

8.5.4                     Inventorship and Ownership of Inventions.  Except as otherwise expressly stated to the contrary herein, the ownership of all Intellectual Property made, conceived, reduced to practice or otherwise arising under or in connection with this Agreement will be determined in accordance with inventorship.  Inventorship of all Intellectual Property will be determined in accordance with the applicable patent laws of the United States.

 

8.5.5                     Akouos Owns.  Akouos shall own all right, title and interest in all Akouos Intellectual Property conceived by employees or individuals working for the benefit of Akouos and/or its Affiliates, either solely or jointly, during and in the course of the Agreement, including any intellectual property that is an improvement of, or derivative of, any Akouos Intellectual Property.

 

Article 9 — Patent Infringement and Enforcement

 

9.1                               Notice.  If either Party learns of an infringement, unauthorized use, misappropriation or ownership claim or threatened infringement or other such claim in the Field of Use by a Third Party with respect to any Licensed Intellectual Property and/or in the Expanded Field of Use by a Third Party with respect to any BCH Patent Rights, such Party shall promptly notify the other Party and shall provide available evidence of such infringement.  Any such infringement, unauthorized use, misappropriation or ownership claim or threatened infringement or other such claim is referred to herein as “Infringement”; provided, however, for purposes of this Article 9, the foregoing shall be deemed Infringement with respect to BCH Patent Rights only if such BCH Patent Rights are Maintained BCH Patent Rights.

 

9.2                               Enforcement.

 

9.2.1                     Procedure.  MEE shall have the first right, but not the duty, to institute Infringement actions against Third Parties.  If MEE does not initiate efforts to cease such Infringement or institute an Infringement proceeding against an offending Third Party within [**] after being notified or otherwise learning of such Infringement, Akouos shall have the right, but not the duty, solely with respect to the Field of Use if the BCH Patent Rights are not involved, and solely with respect to the Expanded Field of Use if the BCH Patent Rights are involved, to initiate

 

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efforts to cease such Infringement or institute an Infringement proceeding against an offending Third Party with respect to any Infringement by such Third Party.  Before Akouos commences any legal proceeding with respect to the Infringement, Akouos shall consider in good faith the views of MEE, particularly as they relate to the potential effects outside of the Field of Use if the BCH Patent Rights are not involved, and the potential effects outside of the Expanded Field of Use if the BCH Patent Rights are involved, and the effects on the public interest, provided that those views are provided to Akouos in a timely manner.  If requested by Akouos, MEE will join such proceeding as a party-plaintiff if such joinder is required by law (as reasonably determined by Akouos) to maintain standing, at Akouos’ expense.

 

9.2.2                     Akouos’ Right to Join.  Akouos shall have the right to join any legal proceeding brought by MEE under this Section 9.2 solely with respect to Infringements in the Field of Use if the BCH Patent Rights are not involved, and solely with respect to Infringements in the Expanded Field of Use if the BCH Patent Rights are involved, and to fund a pro-rata share of the out-of-pocket costs and expenses associated with the legal proceeding incurred by MEE from the date of joining based on allocating an equal portion of such expenses to all parties (including any Third Parties) joining in such proceeding.  If Akouos elects to join as a party plaintiff pursuant to this Section 9.2.2, Akouos may jointly participate in the action with MEE, but where MEE is a party, MEE’s counsel will be lead counsel.

 

9.2.3                     MEE’s Right to Join.  MEE independently has the right to join any Infringement proceeding that is brought by Akouos for the Field of Use or for the Expanded Field of Use as permitted under this Section 9.2 and shall be responsible for funding its pro rata portion of the out-of-pocket costs and expenses associated with the legal proceedings incurred by Akouos from the date of joining based on allocating an equal portion of such costs and expenses to Akouos, MEE, and any Third Party joining in such proceeding, as applicable.  If MEE elects to join as a party plaintiff pursuant to this Section 9.2.3, MEE may jointly participate in the action with Akouos, but Akouos’ counsel will be lead counsel.

 

9.2.4                     Cooperation.  Each Party shall execute all necessary and proper documents, take such actions as shall be appropriate to allow the other Party to institute and prosecute such Infringement actions and shall otherwise cooperate in the institution and prosecution of such actions (including, without limitation, consenting to being named as a nominal party thereto) at the initiating Party’s request and expense.

 

9.2.5                     Costs and Expenses.  The costs and expenses of any Infringement action (including fees of attorneys and other professionals) shall be borne by the Party instituting the action, or, if the Parties elect to cooperate in instituting and maintaining such action, such costs and expenses shall be borne by the Parties in such proportions as set forth in Sections 9.2.2 and 9.2.3, as applicable.

 

9.2.6                     Settlement.  Regardless of whether MEE is joined or joins any Infringement proceeding initiated by Akouos pursuant to this Article 9, no settlement, consent

 

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judgment or other voluntary final disposition of the Infringement proceeding may be entered into without the consent of MEE unless such voluntary disposition (a) includes a full release of MEE’s liability and no admission of guilt or other wrongdoing on the part of MEE with respect to the claim(s) giving rise to the legal proceeding, (b) provides for no obligations or liability on the part of MEE and (c) does not adversely affect the validity or enforceability of the Ancestral Technology Patent Rights and/or BCH Patent Rights.  For the avoidance of doubt, for as long as it remains the exclusive licensee of the Licensed Intellectual Property, Akouos shall have the right, without MEE’s consent, to grant Sublicenses, that meet the obligations of this Agreement, to Third Parties for the purpose of settling litigation.

 

9.3                               Distribution of Amounts Paid by Third Parties.  Any award paid by Third Parties as a result of such an Infringement action (whether by way of settlement or otherwise) solely with respect to the Field of Use if the BCH Patent Rights are not involved, and solely with respect to the Expanded Field of Use if the BCH Patent Rights are involved, shall be applied first to reimburse all participating Parties for all out-of-pocket costs and expenses incurred by the Parties with respect to such action on a pro rata basis and, if after such reimbursement any funds shall remain from such award, [**] percent ([**]%) of such remaining funds shall be paid to Akouos and [**] percent ([**]%) of such remaining funds shall be [**] between MEE and any Third Parties joining the Infringement action.  Any such amounts awarded to Akouos shall be treated as Net Sales and subject to Akouos’ obligation to make royalty payments pursuant to Section 3.3.

 

9.4                               Declaratory Judgment or Infringement Actions.  In the event that any Third Party initiates an Infringement action in the form of a declaratory judgment action or similar action alleging the invalidity or unenforceability of the Ancestral Technology Patent Rights and/or the BCH Patent Rights, or if any Third Party brings an Infringement action against Akouos or its Affiliates or Sublicensees because of the exercise of the licenses granted under this Agreement (any of the foregoing actions, “Third Party Infringement Actions”), then Akouos shall have the right, solely with respect to the Field of Use if the BCH Patent Rights are not involved, and solely with respect to the Expanded Field of Use if the BCH Patent Rights are involved, to defend such Third Party Infringement Action under its own control and at its own expense; provided, however, that MEE shall have the right to intervene and assume sole control of such defense, at its own expense.  The Party in control of the defense of any Third Party Infringement Action shall not enter into any settlement, consent judgment or other voluntary final disposition of any action under this Section 9.4 without the consent of the non-controlling Party, unless such voluntary disposition (a) includes a full release of the non-controlling Party’s liability and no admission of guilt or other wrongdoing on the part of the non-controlling Party with respect to the claim(s) giving rise to the legal proceeding, (b) provides for no obligations or liability on the part of the non-controlling Party, and (c) does not adversely affect the validity or enforceability of the Ancestral Technology Patent Rights or the BCH Patent Rights.

 

9.5                               Delegation.  Akouos shall have the right to delegate any of its rights and obligations under this Article 9 to any of its Sublicensees upon written notice to MEE, in which case all

 

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references to Akouos, as they relate to such delegated rights and obligations, shall refer to the relevant Sublicensee.

 

Article 10 — Term and Termination

 

10.1                        Term.  Unless terminated earlier under the provisions of this Agreement, the term of this Agreement (the “Term”) shall commence on the Effective Date and shall expire on the expiration date of the last to expire Royalty Term.

 

10.2                        Termination by MEE.  MEE shall have the right to terminate this Agreement:

 

10.2.1              On a Licensed Gene Target-by-Licensed Gene Target basis (i) if Akouos materially breaches any of its diligence obligations under Section 5.1.1 or Section 5.1.3 with respect to a particular Licensed Gene Target or under Section 5.9.3 with respect to any Proposed Target Development Plan or (ii) if Akouos does not timely negotiate in good faith and attempt to enter into a Sublicense concerning a Proposed Gene Target in accordance with clause (a) of Section 5.9.1 and, in either case of (i) or (ii), Akouos has not cured such breach within [**] after receiving written notice from MEE provided, in either case, that such notice of the Third Party License Request has not been withdrawn by MEE;

 

10.2.2              With respect to all existing and potential future Licensed Gene Targets (regardless of whether or not such Licensed Gene Target is listed as a Committed Licensed Gene Target at the time of termination), other than those then existing Committed Licensed Gene Targets as of the date of termination under this Section 10.2.2 for which Akouos or any of its Affiliates or Sublicensees is continuing to satisfy its diligence obligations under the provisions of Article 5, if Akouos materially breaches any of its diligence obligations under Section 5.1.1, 5.1.2 or 5.1.3 with respect to any one or more of the Target Development Plans or any one or more of the associated Core Products that is the subject of this Agreement, or with respect to any Proposed Target Development Plan submitted under Section 5.9 in lieu of any of the [**] Target Development Plans or for any of its [**] Core Products, unless Akouos has cured the breach within [**] after receiving written notice from MEE specifying the nature of the breach.  For clarity, upon any termination of the Agreement by MEE under this Section 10.2.2, all license rights granted under Section 2.1 of this Agreement with respect to any and all existing or potential future Licensed Gene Targets (regardless of whether or not such Licensed Gene Target is listed as a Committed Licensed Gene Target at the time of termination) will be terminated automatically and immediately upon the effective date of such termination, except for only those then existing Committed Licensed Gene Targets for which Akouos or any of its Affiliates or Sublicensees is continuing to satisfy all of its diligence obligations as applicable under the provisions of Article 5.  Also for clarity, MEE shall have the right to elect, at its sole discretion, in lieu of termination of the Agreement under this Section 10.2.2, to trigger the provisions of Section 5.9 for any Target Development Plan for which Akouos or any of its Affiliates or

 

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Sublicensees has failed to meet its diligence obligations under Section 5.1.1, 5.1.2 or 5.1.3;

 

10.2.3              In its entirety if Akouos fails to pay on schedule any milestone or royalty or other payment not subject to a good faith dispute, which is payable with respect to a particular Licensed Product under Article 3 of this Agreement, and Akouos has not cured the default by making the required payment, together with interest due, within [**] of receiving a written notice of default from MEE requesting such payment, unless such failure is due to the failure of a Sublicensee to pay corresponding amounts due to Akouos under the relevant Sublicense, in which case termination by MEE shall only be effective if Akouos fails to cure such breach within [**] after receipt of such corresponding amounts from the relevant Sublicensee;

 

10.2.4              In its entirety, if Akouos or any of its Affiliates or in part on a Licensed Gene Target-by Licensed Gene Target basis, if a Sublicensee under the Ancestral Technology Patent Rights or BCH Patent Rights initiates or participates as a plaintiff in any legal, administrative or declaratory action or proceeding in any jurisdiction that seeks to challenge the validity or enforceability of such Patent Rights (a “Patent Challenge”) and such Patent Challenge is not required under a court order or subpoena and is not a defense against a claim, action or proceeding asserted by Lonza, MEE or their Affiliates or licensees against Akouos, its Affiliates or its Sublicensees; provided, however, MEE may not terminate this Agreement if (a) such Patent Challenge is brought by a Sublicensee and (b) Akouos or any its Affiliates terminates such Sublicensee’s sublicense to the applicable Patent Right(s) within [**] of MEE providing notice to Akouos of such Patent Challenge;

 

10.2.5              In its entirety, if Akouos materially breaches any of its obligations to procure and maintain insurance under Section 11.2, unless Akouos has cured the breach within [**] of receiving written notice from MEE specifying the nature of the breach; or

 

10.2.6              In its entirety, if Akouos becomes judicially declared insolvent or has a petition in bankruptcy filed for or against it, unless (a) Akouos provides reasonable evidence to MEE showing that it is no longer insolvent within [**] of receiving such termination notice from MEE or (b) such bankruptcy petition is dismissed or resolved within [**] of being filed.

 

Notwithstanding anything to the contrary, termination by MEE pursuant to this Section 10.2 due to acts or omissions of one or more Sublicensees shall be with solely with respect to the Licensed Gene Target(s) to which such Sublicensee(s) have rights under the relevant Sublicense(s).

 

10.3                        Termination by Akouos.  Akouos has the right to terminate this Agreement in its entirety or on a Licensed Gene Target-by-Licensed Gene Target basis with or without cause by giving MEE ninety (90) days prior written notice.  In the event that this Agreement is terminated by Akouos pursuant to this Section 10.3 due to a material breach of this

 

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Agreement by MEE, which breach remains uncured as of the effective date of termination, and without limiting Akouos’ rights under Section 3.13, Akouos shall also be entitled to set-off against any monies payable to MEE hereunder all amounts Akouos reasonably believes constitute its direct damages incurred by such breach, subject to final resolution or settlement in accordance with Sections 15.1 and/or 15.2, without prejudice to any and all of Akouos’ rights to bring an action against MEE for damages and any other available remedies in law or equity.  In the event Akouos sets off amounts it reasonably believes constitute its direct damages incurred by such breach and, after a final resolution or settlement of any dispute arising from such breach in accordance with Sections 15.1 and/or 15.2, the actual damages determined by the Parties or by the arbitrator, as the case may be, to have been incurred by Akouos are less than the amounts so offset, Akouos shall promptly (and in any case within [**] of such final determination) pay the difference to MEE, plus interest at the rate of [**] percent ([**]%), calculated from and after the date Akouos exercised its right to set-off such amount.

 

10.4                        Material Breach Dispute.  Any dispute regarding an alleged material breach of this Agreement shall be resolved in accordance with Article 15 hereof.  Notwithstanding anything to the contrary contained in Section 10.2 or elsewhere in the Agreement, the applicable cure period for any alleged breach that is in dispute shall be tolled pending the resolution of such dispute pursuant to Article 15, and it is understood and acknowledged that, during the pendency of a dispute pursuant to Article 15, all of the terms and conditions of this Agreement shall remain in effect, and the Parties shall continue to perform all of their respective obligations under this Agreement.

 

10.5                        Effect of Termination.

 

10.5.1              Expiration of Royalty Term.  Upon expiration of the Royalty Term in a particular country for any Licensed Product (but not in the event of any termination of this Agreement in its entirety or in part for any reason by either MEE or by Akouos), the license granted to Akouos under this Agreement with respect to such Licensed Product and only for such Licensed Product will become irrevocable, perpetual, and fully-paid in that country and shall remain exclusive in that country.  Akouos shall have no further obligations under Article 5 with respect to such Licensed Product in that country.

 

10.5.2              Termination of License Rights.  Upon termination of this Agreement for any reason with respect to all Licensed Gene Targets or with respect to all Licensed Products, the Agreement shall be terminated in its entirety and all license rights granted under Section 2.1 shall terminate immediately and automatically upon the effective date of such termination.  Upon any termination of this Agreement in part on a Licensed Gene Target-by-Licensed Gene Target basis or a Licensed Product by Licensed Product basis under any of the provisions of this Article 10 (except for a termination under Section 10.2.2, for which the license termination consequences shall be as stated in Section 10.2.2), all license rights granted under Section 2.1 with respect to each such terminated Licensed Gene Target and each related

 

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Licensed Product for each such terminated Licensed Gene Target will terminate immediately and automatically upon the effective date of such termination.

 

10.5.3              No release.  Upon termination of this Agreement for any reason, nothing in this Agreement may be construed to release either Party from any obligation that accrued prior to the effective date of the termination.

 

10.5.4              Survival.  The following provisions shall survive any expiration or termination of this Agreement for any reason: Articles 1, 7 (for the [**] period set forth in Section 7.1), 8, 12, and 15-18; and Sections 4.2.1 (for the [**] period specified therein), 4.2.2 (for the [**] period specified therein), 10.5, and  11.1.

 

10.5.5              Inventory.  Akouos and any Affiliate(s) may, after the effective date of termination for any or all Licensed Gene Targets, sell all Licensed Products for such Licensed Gene Targets that are in inventory as of the date of written notice of termination, and complete and sell Licensed Products for such Licensed Gene Targets which Akouos can clearly demonstrate were in the process of manufacture as of the date of written notice of termination, provided that Akouos shall pay to MEE the royalties thereon as required by Article 3 and shall submit the reports required by Article 4 on the sales of Licensed Products.

 

10.5.6              Sublicense Survival.  In the event of any termination of this Agreement with respect to any Licensed Gene Targets, where such termination has not been caused by any action or inaction on the part of any Sublicensee of such Licensed Gene Targets or by any material breach by such Sublicensee of its obligations under its Sublicense from Akouos, such termination of this Agreement shall be without prejudice to the rights of the non-breaching Sublicensee of such Licensed Gene Targets of Akouos and MEE shall, if requested by the Sublicensee, enter into a license agreement directly with the Sublicensee (the “Replacement Sublicense Agreement”) on substantially the same terms and conditions as those set forth in this Agreement; provided, however, that (a) the Replacement Sublicense Agreement shall provide that in no event shall such Sublicensee be liable to MEE for any actual or alleged default by Akouos of this Agreement, (b) the scope and territory of the license grant under the Replacement Sublicense Agreement shall be the same as that granted by Akouos to such Sublicensee pursuant to the Sublicense between Akouos and such Sublicensee, (c) the financial terms of any Replacement Sublicense Agreement shall be such that MEE shall receive the same consideration Akouos would have received under the Sublicense, (d) the Sublicensee shall not have any obligations under the Replacement Sublicense Agreement that are greater than or inconsistent with the obligations of the Sublicensee under this Sublicense and (e) MEE will not have any obligations under Replacement Sublicense Agreement that are greater than or inconsistent with the obligations of Akouos under the Sublicense.  Each such Sublicensee of Akouos shall be deemed a third party beneficiary of this Section 10.5.6 with the right to enforce it directly against MEE.

 

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10.5.7              No Liability for Termination.  Any termination pursuant to this Article 10 shall be without any liability or obligation of the terminating party, other than with respect to any breach of this Agreement prior to termination.

 

Article 11 — Indemnification and Insurance

 

11.1                        Indemnification.

 

11.1.1              Akouos shall defend MEE and its trustees, officers, medical and professional staff, employees, directors, agents, and their successors and assigns (the “MEE Indemnitees”) against any and all Third Party claims, demands, suits, allegations, actions or other proceedings (collectively, “Claims”) to the extent resulting from: (a) Akouos’ negligence or willful misconduct, (b) personal bodily injury, illness, death or damage or loss of physical property caused by (i) exposure to or the storage or handling of any Licensed Products researched, developed, manufactured or commercialized by Akouos or by any of its Affiliates or Sublicensees, or (ii) the research, development, manufacture or commercialization of any Licensed Product hereunder by Akouos or by any of its Affiliates or Sublicensees, or (c) any breach by Akouos of its representations or warranties set forth in Section 13.1.  Akouos shall indemnify (i.e., pay) any and all liabilities, damages, losses, awards, judgments, settlement amounts, costs or expenses (including reasonable attorneys’ fees) (collectively, “Losses”) finally awarded to such Third Party by a court of competent jurisdiction, or agreed to in monetary settlement, with respect to any such Claims.  Akouos’ obligations under to this Section 11.1 shall not apply (i) to the extent such Claims result from the negligence or willful misconduct of any of the MEE Indemnitees, or (ii) with respect to Claims arising out of breach by MEE of its representations or warranties set forth in Section 13.2.

 

11.1.2              MEE shall defend Akouos and its Affiliates and each of their respective employees, officers, directors and agents, and their successors and assigns (“Akouos Indemnitees”) against any and all Claims to the extent resulting from (a) MEE’s negligence or willful misconduct, (b) any breach by MEE of its representations or warranties set forth in Section 13.2 or (c) Infringement Actions, except to the extent Akouos has the right to defend such action under its own control.  MEE shall indemnify (i.e., pay) any and all Losses finally awarded to such Third Party by a court of competent jurisdiction, or agreed to in monetary settlement, with respect to any such Claims.  MEE’s obligations pursuant to this Section 11.1.2 shall not apply (i) to the extent that such Claims result from the negligence or willful misconduct of any of the Akouos Indemnitees, (ii) to the extent that such Claim is attributable to the allegedly infringing use of any Akouos Intellectual Property, or (iii) with respect to Claims arising out of a breach by Akouos of its representations or warranties set forth in Section 13.1 or the breach by Akouos of any of the provisions of this Agreement.  In addition, and notwithstanding the foregoing, MEE shall reimburse Akouos for the amount of any payments made to MEE hereunder in respect of the development or commercialization of any products that, after MEE’s receipt of such payments, the Parties agree or an arbitrator determines or a

 

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determination is made under the process referenced in Section 2.5.2, are not Licensed Products within the Field of Use and instead are outside the Field of Use and subject to Akouos’ obligations to make royalty and other payments under the Lonza-Akouos Agreement.  In such event, MEE and Akouos shall discuss and cooperate in good faith regarding the timing and rate of repayment to Akouos for any such reimbursement, reasonably taking into account the effect upon MEE’s then-current budget and resources, and will, to the extent reasonable and appropriate, seek to apply a credit (in lieu of reimbursement in whole or in part), against any amounts that are or will likely be owed by Akouos to MEE under this Agreement in the same calendar year.

 

11.1.3              Each Party agrees, at its own expense, to provide attorneys reasonably acceptable to the other Party to defend against any actions brought or filed against the MEE Indemnitees or Akouos Indemnitees, as the case may be, with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought.  The assumption of control of the defense of a Claim by a Party pursuant to Section 11.1 or 11.2, as applicable, shall not be construed as an acknowledgement that such Party is liable to indemnify the MEE Indemnitees or Akouos Indemnitees (as the case may be) in respect of the Claim, nor shall it constitute a waiver by such Party of any defenses it may assert against any claim for indemnification.  In the event that it is ultimately determined that a Party that has undertaken to indemnify the MEE Indemnitees or Akouos Indemnitees, as the case may be, is not obligated to indemnify, defend or hold harmless such MEE Indemnitees or Akouos Indemnitees, the other Party shall reimburse such Party for any and all costs and expenses (including lawyers’ fees and costs of suit) and any Losses incurred by such Party in its defense of the Claim with respect to such the applicable indemnitee(s).

 

11.1.4              Each Party’s obligations under Section 11.1.1 or 11.1.2, as applicable, are contingent on the MEE Indemnitee(s) or Akouos Indemnitee(s), as applicable, giving the indemnifying Party prompt, written notice of the Claim for which indemnification is sought, primary control over the defense and/or settlement of the Claim, and all reasonably requested information and assistance in connection therewith.  The MEE Indemnitee(s) or Akouos Indemnitee(s), as applicable, shall be entitled to participate in (but not control) such defense and/or settlement proceedings at their own cost and expense using counsel of their choosing.

 

11.2                        Insurance.  No later than the time any Licensed Product is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by Akouos, any Affiliate or Sublicensee, or any agent thereof, Akouos shall, at its own cost and expense procure and maintain commercial general liability (“CGL”) insurance or other coverage acceptable to MEE in amounts not less than [**] USD ($[**]) per incident or occurrence and [**] USD ($[**]) annual aggregate and naming the MEE Indemnitees as additional insureds.  Akouos shall provide (a) product liability coverage; and (b) contractual liability coverage for the required indemnification under Section 11.1 of this Agreement.  The minimum amount of insurance coverage required by Akouos under this Section 11.2 should

 

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not be construed by Akouos as creating a limit of Akouos’ liability with respect to its indemnification requirement under Section 11.1 of this Agreement.  Akouos shall be required to provide, upon request of MEE, evidence of such insurance.  Akouos shall provide MEE with written notice at least [**] prior to the cancellation, non-renewal or material change in such insurance.  If Akouos does not obtain replacement insurance providing comparable coverage within such [**] period, then (i) MEE shall have the right to terminate this Agreement effective at the end of such [**] without notice of any additional waiting period; and (ii) Akouos shall maintain such CGL or other insurance during the period that any such Licensed Product is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by Akouos, an Affiliate, Sublicensee or agent of Akouos, and, if such insurance is on a claims-made basis, for a reasonable period after the last sale of a Licensed Product by Akouos, an Affiliate, Sublicensee or agent of Akouos, such period not to be less than [**] unless Akouos obtains the prior written consent of MEE for any shorter period.

 

Article 12 — Disclaimer of Warranties; Limitation of Liability

 

12.1                        MEE MAKES NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY PATENT, TRADEMARK, SOFTWARE, NON-PUBLIC OR OTHER INFORMATION, OR TANGIBLE RESEARCH PROPERTY, LICENSED OR OTHERWISE PROVIDED TO AKOUOS HEREUNDER AND HEREBY DISCLAIMS THE SAME.

 

12.2                        MEE DOES NOT WARRANT THE VALIDITY OF THE ANCESTRAL TECHNOLOGY PATENT RIGHTS AND BCH PATENT RIGHTS LICENSED HEREUNDER AND MAKES NO REPRESENTATION WHATSOEVER WITH REGARD TO THE SCOPE OF SUCH PATENT RIGHTS OR THAT SUCH PATENT RIGHTS MAY BE EXPLOITED BY AKOUOS OR ITS AFFILIATE OR SUBLICENSEE WITHOUT INFRINGING OTHER PATENTS.

 

12.3                        EXCEPT WITH RESPECT TO ANY BREACH OF ARTICLE 7, NEITHER PARTY, NOR THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SHALL BE LIABLE TO THE OTHER WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT FOR ANY INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING INCIDENTAL, ECONOMIC DAMAGES OR LOST PROFITS, EVEN IF SUCH PARTY HAS BEEN INFORMED, SHOULD HAVE KNOWN OR IN FACT KNEW OF THE POSSIBILITY OF SUCH DAMAGES.

 

12.4                        The Parties acknowledge and agree that they are entering into this Agreement in reliance upon the exclusions and limitations set forth in this Article 12, and that the same reflect an allocation of risk (including the risk that a contract remedy may fail of its essential purpose) and that the same form an essential basis of the bargain between the Parties.

 

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Article 13 — Representations and Warranties

 

13.1                        Akouos’ Representations and Warranties.  Akouos represents and warrants to MEE that: (a) it is and shall be at all times during the Term a valid legal entity existing under the law of its state with the power to carry on its business as it is currently being conducted; (b) the execution and delivery of this Agreement has been duly authorized and no further approval, corporate or otherwise, is required in order to execute this valid, binding and enforceable Agreement; and (c) its execution, delivery, and performance of this Agreement shall not conflict in any material fashion with the terms of any other agreement or instrument to which it is or becomes a party or by which it is or becomes bound.

 

13.2                        MEE’s Representations and Warranties and Covenants.  MEE represents and warrants to Akouos that:  (a) it is and shall be at all times during the Term a valid legal entity existing under the law of its state with the power to carry on its business as it is currently being conducted; (b) the execution and delivery of this Agreement has been duly authorized and no further approval, corporate or otherwise, is required in order to execute this valid, binding and enforceable Agreement; (c) it has, and will at all times during the Term retain, the right to grant the licenses granted or contemplated to be granted hereunder; (d) each individual listed as an inventor of the Ancestral Technology Patent Rights has assigned all of his or her rights, title and interests in and to such Ancestral Technology Patent Rights to MEE pursuant to a binding written agreement between such inventor and MEE; (e) each individual listed as an inventor of the BCH Patents has assigned all of his or her rights, title and interests in and to such BCH Patents to MEE and/or BCH (and if to BCH, BCH has assigned to MEE a one-half, undivided ownership interest therein), pursuant to a binding written agreement between such inventor and MEE and/or BCH, as applicable; (f) it is not a party to any agreement that is inconsistent or in conflict with the rights and licenses granted to Akouos hereunder; (g) its execution, delivery and performance of this Agreement shall not conflict with the terms of any other agreement to which it is a party or by which it is bound; (h) that, as of the Effective Date, there are no patents or patent applications, other than the Ancestral Technology Patent Rights and BCH Patent Rights, owned or otherwise Controlled by MEE the claims of which read on any claims in the Licensed Intellectual Property; (i) that, as of the Effective Date, no claims have been asserted or threatened against MEE, nor to MEE’s knowledge are there any valid grounds for any claim of any such kind (1) challenging the validity, effectiveness, or ownership of the Licensed Intellectual Property, and/or (2) to the effect that the use, development or commercialization of Licensed Products using the Licensed Intellectual Property infringes or will infringe on any intellectual property right of any person; and (j) that, as of the Effective Date, neither the Ancestral Technology Patent Rights nor the BCH Patent Rights are the subject of any litigation procedure, discovery process, interference, reissue, reexamination, opposition, appeal proceedings or any other legal dispute.

 

Article 14 — Notices

 

14.1                        Notices to MEE.  Unless otherwise specified in this Agreement, reports, notices and other communications from Akouos to MEE as provided hereunder must be sent to:

 

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Massachusetts Eye and Ear Infirmary

243 Charles Street

Boston MA 02114

 

or other individuals or addresses as MEE subsequently furnish by written notice to Akouos.

 

14.2                        Notices to Akouos.  Unless otherwise specified in this Agreement, reports, notices and other communications from MEE to Akouos as provided hereunder must be sent to:

 

Akouos, Inc.

Attn: Dr. Emmanuel Simons, CEO

[**]

 

or other individuals or addresses as Akouos subsequently furnish by written notice to MEE.

 

Article 15 — Dispute Resolution

 

15.1                        Negotiation between the Parties.  The Parties shall first attempt to resolve any controversy or dispute that arises from or under this Agreement, or any claim for a breach of the Agreement, by good faith negotiations during a [**] period, first between their respective business development representatives.  In the event that no agreement is reached with respect to such dispute [**] after the commencement of such discussion, the matter shall be referred to the President and CEO of MEE and the CEO of Akouos (“Senior Executives”), who will discuss the matter in good faith and attempt to resolve it.

 

15.2                        Arbitration.  Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or validity thereof, that is not resolved within [**] after its referral to the Senior Executives pursuant to Section 15.1, but excluding any dispute, controversy or claim concerning the validity, enforceability, infringement or misappropriation of any intellectual property, shall be finally settled by binding arbitration conducted in the English language in New York City, New York by a single neutral arbitrator under the commercial arbitration rules of the American Arbitration Association, which shall administer the arbitration and act as appointing authority.  Disputes about arbitration procedure shall be resolved by the arbitrator.  The arbitrator shall not be a current or former employee or director, or a current stockholder, of either Party or any of their respective Affiliates or Sublicensees and shall have at least fifteen (15) years of pharmaceutical or biotechnology industry experience.  The arbitrator shall be authorized to grant interim relief, including to prevent the destruction of goods or documents involved in the dispute, protect trade secrets and provide for security for a prospective monetary award.  Within [**] after selection of the arbitrator, the arbitrator shall conduct the preliminary conference.  In addressing any of the subjects within the scope of the preliminary conference, the arbitrator shall take into account both the desirability of making discovery efficient and cost-effective and the needs of the Parties for an understanding of any legitimate issue raised in the arbitration.  In addition, each Party shall have the right to take up to [**] of deposition testimony, including expert deposition testimony.  The hearing shall commence within [**] after the selection of the arbitrator.

 

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The arbitrator shall, in his or her discretion, allow each Party to submit concise written statements of position and shall permit the submission of rebuttal statements, subject to reasonable limitations on the length of such statements to be established by the arbitrator.  The hearing shall be no longer than [**] in duration.  The arbitrator shall also permit the submission of expert reports.  The arbitrator shall render his or her decision and award within [**] after the arbitrator declares the hearing closed, and the decision and award shall include a written statement describing the essential findings and conclusions on which the decision and award are based, including the calculation of any damages awarded.  The arbitrator will, in rendering his or her decision, apply the substantive law of the State of New York, without reference to its conflict of laws principles, and, with respect to disputes concerning rights in Intellectual Property, the laws of the United States of America.  The arbitrator’s authority to award special, incidental, consequential or punitive damages shall be subject to the limitation set forth in Section 12.3.  The decision and award rendered by the arbitrator shall be final, binding and non-appealable, and judgment may be entered upon it in any court of competent jurisdiction.  Each Party shall bear its own attorney’s fees, costs, and disbursements arising out of the arbitration, and shall pay an equal share of the fees and costs of the arbitrator.

 

15.3                        Governing Law.  The construction, validity and performance of the Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to its conflicts of laws provisions (other than Section 5-1401 of the New York General Obligations Law).

 

Article 16 — Force Majeure

 

Any delay in the performance of any of the duties or obligations of either Party hereto (except the payment of money due hereunder) shall not be considered a breach of this Agreement, and the time required for performance shall be extended for a period equal to the period of such delay, if such delay has been caused by or is the result of acts of God; acts of public enemy; insurrections; riots; injunctions; embargoes; labor disputes, including strikes, lockouts, job actions, or boycotts; fires; explosions; earthquakes; floods; shortages of energy; governmental prohibition or restriction; or other unforeseeable causes beyond the reasonable control and without the negligence of the Party so affected.  The Party so affected shall give prompt notice to the other Party of such cause, and shall take whatever reasonable steps are necessary to relieve the effect of such cause as rapidly as reasonably possible.

 

Article 17 — Non-Assignability

 

This Agreement shall be binding upon the successors and assigns of the Parties and the name of a Party appearing herein shall be deemed to include the names of its successors and assigns.  Neither Party may assign its interest under this Agreement without the prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned or delayed; provided, however, that either Party shall be entitled, without the prior written consent of the other Party, to assign this Agreement in its entirety to an Affiliate or the acquirer of all or substantially all of its assets or capital stock relating to the activities contemplated under this Agreement, whether through purchase, merger, consolidation or otherwise.  Any permitted assignment or transfer of this

 

49

 

Agreement by either Party will be conditioned upon that Party’s permitted assignee agreeing in writing to comply with all the terms and conditions contained in this Agreement and, in the case of assignment or transfer by MEE, MEE’s permitted assignee assuming sole and exclusive Control of the Licensed Intellectual Property.  Any purported assignment in violation of the foregoing will be void ab initio.  No assignment shall relieve any Party of responsibility for the performance of any obligations that accrued prior to the effective date of such assignment except to the extent they are performed by the relevant assignee in accordance with this Agreement.

 

Article 18 — Miscellaneous

 

18.1                        Relationship of Parties.  Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employer-employee or joint venture relationship between the Parties.  No Party shall incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided herein.

 

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

 

18.3                        Use of Name; Publicity.  Except as otherwise provided herein, (a) neither Party shall have any right, express or implied, to use in any manner the name or other designation of the other Party or any other trade name, trademark or logos of the other Party for any purpose in connection with the performance of this Agreement; and (b) neither Party shall make any public announcement concerning this Agreement or the subject matter hereof without the prior written consent of the other Party; provided however, that nothing in this Section 18.3 shall prevent either Party from issuing statements that such Party determines to be necessary to comply with applicable law (including any stock exchange on which securities issued by such Party are traded), and provided further, that Akouos may (i) refer to publications in the scientific literature by employees of MEE and/or (ii) state that a license from MEE has been granted as provided in this Agreement.

 

18.4                        Waiver.  A waiver by either Party of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof.  All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either Party.

 

18.5                        Severability.  When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

 

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18.6                        Amendment.  No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party.

 

18.7                        Entire Agreement.  This Agreement together with the Stock Grant Agreement and the schedules hereto sets forth the entire agreement and understanding between the Parties as to the subject matter hereof and supersedes any and all prior discussions and negotiations between them, and neither of the Parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein or as duly set forth on or subsequent to the date hereof in writing and signed by a proper and duly authorized officer or representative of the Party to be bound thereby.

 

18.8                        Parties in Interest.  All of the terms and provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties hereto and their respective permitted successors and assigns.

 

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

 

18.10                 Counterparts.  This Agreement may be signed in counterparts, each and every one of which shall be deemed an original, notwithstanding variations in format or file designation which may result from the electronic transmission, storage and printing of copies of this Agreement from separate computers or printers.  Facsimile signatures shall be treated as original signatures.

 

18.11                 No Presumption.  The Parties agree that they have participated equally in the formation of this Agreement and that the language herein should not be presumptively construed against either of them.

 

18.12                 Interpretation.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references herein to Articles, Sections, and Schedules shall be deemed references to Articles and Sections of, and Schedules to, this Agreement unless the context shall otherwise require.  Except where the context otherwise requires, wherever used, the singular shall include the plural, the plural the singular, the use of any gender shall be applicable to all genders and the word “or” is used in the inclusive sense (and/or).  Whenever this Agreement refers to a number of days, unless otherwise specified, such number refers to calendar days.  Each Party represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting hereof.  In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption will apply against the Party which drafted such terms and provisions.  Unless the context otherwise requires, countries shall include all territories and possessions.

 

* * *

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date last signed by the Parties hereto.

 

	
 
    	
AKOUOS INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Emmanuel Simons
    
	
 
    	
 
    	
Name:   Emmanuel Simons
    
	
 
    	
 
    	
Title:   CEO & President
    
	
 
    	
 
    
	
 
    	
MASSACHUSETTS EYE AND EAR INFIRMARY AND THE SCHEPENS EYE   RESEARCH EYE AND RESEARCH INSTITUTE, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   John Fernandez
    
	
 
    	
 
    	
Name:   John Fernandez
    
	
 
    	
 
    	
Title:   President & CEO
    

 

 

SCHEDULE A

 

ANCESTRAL TECHNOLOGY PATENT RIGHTS

 

Anc80

U.S. Prov. Appln. No. 61/889,827

PCT Appln. No. PCT/US2014/060163 (W015054653)

U.S. Appln. No. 15/095,856

Canada Appln. No. CA 2,927,077

Europe Appln. No. EP 14789476.0

New Zealand Appln. No. NZ 718926

India Appln. No. IN 201637/014659

Australia Appln. No. AU 2014331708

China Appln. No. CN 201480065410.2

Japan Appln. No. JP 2016-547984

 

Anc110

U.S. Prov. Appln. No. 62/199,059

U.S. Prov. Appln. No. 62/203,002

PCT Appln. No. PCT/U52016/044819(WO 2017/019994)

 

 

SCHEDULE B

 

MILESTONE PAYMENTS

 

	
Milestone
    	
 
    	
Value
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
Sales Milestone when annual world-wide (WW) Net Sales equal or   exceeds $[**]
    	
 
    	
[**]
    
	
Sales Milestone when annual WW Net Sales equals or exceeds $[**]
    	
 
    	
[**]
    
	
Sales Milestone when annual WW Net Sales equals or exceeds $[**]
    	
 
    	
[**]
    

 

*The parties acknowledge and agree that the [**] Milestone shall only become due and payable following the [**].  For clarity, the [**] Milestone shall not be payable in connection with the [**]; provided, however, that the [**] Milestone shall in all such cases become payable at the time that [**].

 

 

SCHEDULE C

 

ROYALTY PAYMENTS

 

	
Annual Net Sales
    	
 
    	
Royalty
    
	
Where the portion of Net Sales of Licensed Product is less than   [**] dollars (US$[**]) in a single calendar year (“[**]% Tier”)
    	
 
    	
[**] Percent ([**]%)
    
	
Where the portion of Net Sales of Licensed Product is greater   than or equal to [**] dollars (US$[**]) and less than or equal to [**]   dollars (US$[**]) in a single calendar year (“[**]% Tier”)
    	
 
    	
[**] Percent ([**]%)
    
	
Where the portion of Net Sales of Licensed Product is greater   than [**] dollars (US$[**]) in a single calendar year
    	
 
    	
[**] Percent ([**]%)
    

 

 

SCHEDULE E

 

ROYALTY OFFSET FOR

THIRD PARTY INTELLECTUAL PROPERTY

 

[**].

 

The following examples illustrate the calculation of the royalty offset permitted under Section 3.4.1 using the following formula set forth above and assume that none of the royalty rate reductions specified in Section 3.3.1 apply:

 

Example #1:                        [**].

 

Example #2:                        [**]

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