Document:

Exhibit 10.5

 

	

    	
Tenant: Passage   BIO, Inc.

Premises:   Two Commerce Square, Suite 2850
    

 

LEASE

 

THIS LEASE (“Lease”) is entered into as of Sept. 26th, 2018, between PHILADELPHIA PLAZA - PHASE II LP, a Pennsylvania limited partnership (“Landlord”), and PASSAGE BIO, INC., a Delaware corporation (“Tenant”).

 

In consideration of the mutual covenants stated below, and intending to be legally bound, Landlord and Tenant covenant and agree as follows:

 

1.                                      KEY DEFINED TERMS.

 

(a)                                 “Abatement Period” means the period that begins on the Commencement Date and ends on the day immediately prior to the 6-month anniversary of the Commencement Date. During the Abatement Period, no Fixed Rent or Project Expenses are due or payable, but Tenant shall pay to Landlord Philadelphia use and occupancy taxes.

 

(b)                                 “Additional Rent” means all costs and expenses other than Fixed Rent that Tenant is obligated to pay Landlord pursuant to this Lease.

 

(c)                                  “Broker” means Savills Studley.

 

(d)                                 “Building” means the building known as Two Commerce Square located at 2001 Market Street, Philadelphia, Pennsylvania 19103, containing approximately 953,276 rentable square feet. Landlord hereby represents that the usable square footage of the Building and Premises has been determined pursuant to guidelines generally established by the Standard Method for Measuring Floor Area in Office Buildings (“BOMA”).

 

(e)                                  “Business Hours” means the hours of 8:00 a.m. to 6:00 p.m. on weekdays, and 9:00 a.m. to 1:00 p.m. on Saturdays, excluding Building holidays. The current Building holidays are: New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day; any change in Building holidays shall be consistent with other national holidays for which first class buildings in the Philadelphia, Pennsylvania area also closed for business.

 

(f)                                   “Commencement Date” means the date that is the earlier of: (i) the date on which Tenant first conducts any business in all or any portion of the Premises; or (ii) Substantial Completion of the Leasehold Improvements (as defined in Exhibit C) and delivery of the Premises to Tenant.

 

(g)                                  “Common Areas” means, to the extent they exist at the Project, the lobby, parking facilities, passenger and freight elevators, rooftop terrace, fitness or health center, plaza and sidewalk areas, multi-tenanted floor restrooms, and other similar areas of unrestricted access at the Project or designated for the benefit of Building tenants, and the areas on multi-tenant floors in the Building devoted to corridors, elevator lobbies, and other similar facilities serving the Premises.

 

(h)                                 “Expiration Date” means the last day of the Term, or such earlier date of termination of this Lease pursuant to the terms hereof.

 

(i)                                     “Fixed Rent” means fixed rent in the amounts set forth below:

 

	
TIME PERIOD
    	
 
    	
FIXED RENT PER R.S.F.
    	
 
    	
ANNUALIZED FIXED
   RENT
    	
 
    	
MONTHLY
   INSTALLMENT
    	
 
    
	
Commencement Date — end of Abatement Period
    	
 
    	
$
    	
0.00
    	
 
    	
$
    	
0.00
    	
 
    	
$
    	
0.00
    	
 
    
	
Fixed Rent Start Date — end of Rent Period 1
    	
 
    	
$
    	
23.00
    	
 
    	
$
    	
204,401.00
    	
 
    	
$
    	
17,033.42
    	
 
    
	
Rent Period 2
    	
 
    	
$
    	
23.58
    	
 
    	
$
    	
209,555.46
    	
 
    	
$
    	
17,462.96
    	
 
    
	
Rent Period 3
    	
 
    	
$
    	
24.17
    	
 
    	
$
    	
214,798.79
    	
 
    	
$
    	
17,899.90
    	
 
    
	
Rent Period 4
    	
 
    	
$
    	
24.77
    	
 
    	
$
    	
220,130.99
    	
 
    	
$
    	
18,344.25
    	
 
    
	
Rent Period 5
    	
 
    	
$
    	
25.39
    	
 
    	
$
    	
225,640.93
    	
 
    	
$
    	
18,803.41
    	
 
    
	
Rent Period 6
    	
 
    	
$
    	
26.02
    	
 
    	
$
    	
231,239.74
    	
 
    	
$
    	
19,269.98
    	
 
    
	
Rent Period 7
    	
 
    	
$
    	
26.67
    	
 
    	
$
    	
237,016.29
    	
 
    	
$
    	
19,751.36
    	
 
    
	
Rent Period 8 — End of Initial Term
    	
 
    	
$
    	
27.34
    	
 
    	
$
    	
242,970.58
    	
 
    	
$
    	
20,247.55
    	
 
    

 

Office Lease

 

 

(j)                                    “Fixed Rent Start Date” means the day immediately following the end of the Abatement Period.

 

(k)                                 “Initial Term” means the period commencing on the Commencement Date, and ending at 11:59 p.m. on: (i) if the Fixed Rent Start Date is the first day of a calendar month, the day immediately prior to the 84-month anniversary of the Fixed Rent Start Date; or (ii) if the Fixed Rent Start Date is not the first day of a calendar month, the last day of the calendar month containing the 84-month anniversary of the Fixed Rent Start Date.

 

(l)                                     “Laws” means federal, state, county, and local governmental and municipal laws, statutes, ordinances, rules, regulations, codes, decrees, orders, and other such requirements, and decisions by courts in cases where such decisions are considered binding precedents in the state or commonwealth in which the Premises are located (“State”), and decisions of federal courts applying the laws of the State, including without limitation Title III of the Americans with Disabilities Act of 1990, 42 U.S.C. §12181 et seq. and its regulations.

 

(m)                             “Premises” means the space presently known as Suite 2850 in the Building, as shown on Exhibit A attached hereto, which is deemed to contain 8,887 rentable square feet. Landlord hereby represents that the rentable square footage of the Premises has been determined pursuant to BOMA.

 

(n)                                 “Project” means the Building, together with the parcel of land owned by Landlord upon which the Building is located, and all Common Areas.

 

(o)                                 “Rent” means Fixed Rent and Additional Rent. Landlord may apply payments received from Tenant to any obligations of Tenant then due and owing without regard to any contrary Tenant instructions or requests. Additional Rent shall be paid by Tenant in the same manner as Fixed Rent, without setoff, deduction, or counterclaim, except as otherwise expressly set forth herein.

 

(p)                                 “Rent Period” means, with respect to the first Rent Period, the period that begins on the Commencement Date and ends on the last day of the calendar month preceding the month in which the first anniversary of the Commencement Date occurs; thereafter each succeeding Rent Period shall commence on the day following the end of the preceding Rent Period, and shall extend for 12 consecutive months.

 

(q)                                 “Security Deposit” means $34,066.84.

 

(r)                                    “Tenant’s NAICS Code” means Tenant’s 6-digit North American Industry Classification number under the North American Industry Classification System as promulgated by the Executive Office of the President, Office of Management and Budget, which is 541715.

 

(s)                                   “Term” means the Initial Term together with any extension of the term of this Lease agreed to by the parties in writing.

 

2.                                      PREMISES. Landlord leases to Tenant, and Tenant leases from Landlord, the Premises for the Term subject to the terms and conditions of this Lease. Tenant accepts the Premises in their “AS IS”, “WHERE IS”, “WITH ALL FAULTS” condition, except that Landlord shall complete the Leasehold Improvements pursuant to Exhibit C attached hereto, and subject to Landlord’s continuing obligations under this Lease.

 

2

 

3.                                      TERM.

 

(a)                                 The Term shall commence on the Commencement Date. The terms and provisions of this Lease are binding on the parties upon Tenant’s and Landlord’s execution of this Lease notwithstanding a later Commencement Date for the Term. The rentable area of the Premises and the Building on the Commencement Date shall be deemed to be as stated in Section 1. By execution and delivery of a Confirmation of Lease Term substantially in the form of Exhibit B attached hereto (“COLT”), Landlord and Tenant shall confirm the Commencement Date, rentable square footage of the Premises and all other matters stated therein. If Tenant fails to respond to a proposed COLT within 10 business days after Tenant’s receipt of such request, Landlord may thereafter send to Tenant a second proposed COLT, which includes in bold and 14-point capitalized type the following statement: “SECOND AND FINAL REQUEST—TENANT HAS 10 BUSINESS DAYS TO RESPOND PURSUANT TO SECTION 3”. If Tenant then fails to respond to such second proposed COLT within 10 business days after receipt thereof, Tenant shall be deemed to have approved all matters set forth therein, which shall then be conclusive and binding on Tenant.

 

(b)                                 Provided there is no Event of Default, Landlord shall use commercially reasonable efforts to achieve Substantial Completion of the Leasehold Improvements on or before the date that is 16 weeks after Landlord’s receipt of permits therefor, subject to Force Majeure Events (as defined in Section 25(g)). Provided there is no Event of Default, if Substantial Completion does not occur on or before the Outside Completion Date, then notwithstanding anything to the contrary herein from and after the Fixed Rent Start Date Tenant shall receive 1 day’s abatement of Fixed Rent for each day that elapses after the Outside Completion Date until Substantial Completion occurs, and the Term shall be extended by the same number of days. The “Outside Completion Date” means the date that is 20 weeks after Landlord’s receipt of permits for the Leasehold Improvements; provided, however, the Outside Completion Date shall be pushed back on a day-for-day basis for each day that Substantial Completion is delayed due to a Force Majeure Event (as defined in Section 25(g)).

 

(c)                                  Provided there is no Event of Default, if Substantial Completion does not occur on or before the Completion Termination Date, then notwithstanding anything to the contrary herein Tenant shall have the right to terminate this Lease by at least 30 days’ written notice to Landlord received within 15 days after the Completion Termination Date, provided this Lease shall remain in full force and effect and Tenant shall no longer have the right to terminate this Lease if Landlord delivers possession of the Premises to Tenant within 30 days after Landlord’s receipt of Tenant’s termination notice. The “Completion Termination Date” means the date that is 36 weeks after Landlord’s receipt of permits for the Leasehold Improvements; provided, however, the Completion Termination Date will be pushed back on a day-for-day basis for each day that Substantial Completion is delayed due to a Force Majeure Event (as defined in Section 25(g)). The termination right set forth in this paragraph and the rent abatement set forth in Section 3(b) shall be Tenant’s sole and exclusive remedies in connection with any delay in Substantial Completion, and Landlord shall not be liable for any other direct, indirect, special, consequential, or other damages suffered by Tenant as a result of any such delay.

 

4.                                      FIXED RENT; SECURITY DEPOSIT; LATE FEE.

 

(a)                                 Tenant covenants and agrees to pay to Landlord during the Term, without notice, demand, setoff, deduction, or counterclaim except as otherwise set forth in this Lease, Fixed Rent in the amounts set forth in Section 1. The Monthly Installment of Fixed Rent, the monthly amount of Estimated Operating Expenses as set forth in Section 5, and any estimated amount of utilities as set forth in Section 6, shall be payable to Landlord in advance on or before the first day of each month of the Term. If the Fixed Rent Start Date is not the first day of a calendar month, then the Fixed Rent due for the partial month commencing on the Fixed Rent Start Date shall be prorated based on the number of days in such month. All Rent payments shall be made by either (i) check or (ii) electronic funds transfer as follows (or as otherwise directed in writing by Landlord to Tenant from time to time): (A) ACH debit of funds, provided Tenant shall first complete Landlord’s then-current forms authorizing Landlord to automatically debit Tenant’s bank account; or (B) ACH credit of immediately available funds to an account designated by Landlord. “ACH” means Automated Clearing House network or similar system designated by Landlord. All Rent payments shall include the Building number and the Lease number, which numbers will be provided to Tenant in the COLT.

 

(b)                                 Contemporaneously with Tenant’s execution and delivery of this Lease, Tenant shall pay to Landlord the Security Deposit. No interest shall be paid to Tenant on the Security Deposit, and Landlord shall have the right to commingle the Security Deposit with other funds of Landlord. If there is an Event of Default by Tenant

 

3

 

under this Lease, Landlord may use, apply or retain the whole or any part of the Security Deposit for the payment of: (A) any rent or other sums that Tenant has not paid when due (beyond any applicable note and cure period); and/or (B) any sum that Landlord expends or is required to expend in connection with an Event of Default (as defined in Section 17). Landlord’s use of the Security Deposit shall not prevent Landlord from exercising any other remedy available to Landlord under this Lease, at law or in equity and shall not operate as either liquidated damages or as a limitation on any recovery to which Landlord may otherwise be entitled. If any portion of the Security Deposit is used, applied, or retained by Landlord in accordance with this Section 4(b), Tenant shall, within 10 business days after the written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount. Landlord shall return the Security Deposit or the balance thereof (as applicable) to Tenant within 1 month after the later of the Expiration Date, Tenant’s surrender of possession of the Premises to Landlord in the condition required under this Lease, Tenant’s payment of all outstanding Rent, and Landlord’s receipt of written notice from Tenant of its forwarding address. Upon the return of the Security Deposit or the balance thereof (as applicable) to Tenant, Landlord shall be completely relieved of liability with respect to the Security Deposit. If the originally named Tenant has assigned this Lease, Landlord may return the Security Deposit or the balance thereof (as applicable) to the current Tenant unless Landlord receives reasonably satisfactory evidence of the originally named Tenant’s right to receive the Security Deposit. If Landlord conveys ownership of the Building and Landlord delivers the Security Deposit to the transferee, Landlord shall thereupon be released from all liability for the return of such Security Deposit and Tenant shall look solely to the transferee for the return of the Security Deposit.

 

(c)                                  If Landlord does not receive the full payment from Tenant of any Rent when due under this Lease (without regard to any notice and/or cure period to which Tenant might be entitled), Tenant shall also pay to Landlord as Additional Rent a late fee in the amount of 5% of such overdue amount. Notwithstanding the foregoing, Landlord shall waive the above-referenced late fee 2 times during any 12 consecutive months of the Term, provided Tenant makes the required payment within 3 business days after receipt of notice of such late payment. With respect to any Rent payment (whether it be by check, ACH/wire, or other method) that is returned unpaid for any reason, Landlord shall have the right to assess a reasonable fee to Tenant as Additional Rent, which fee is currently $40.00 per returned payment.

 

5.                                      OPERATING EXPENSES.

 

(a)                                 Certain Definitions.

 

(i)                                     “Janitorial Expenses” means all costs associated with trash and garbage removal, recycling, cleaning, and sanitizing the Building, and the items of work set forth in Exhibit D attached hereto.

 

(ii)                                  “Operating Expenses” means collectively Project Expenses and Taxes.

 

(iii)                               “Project Expenses” means all costs and expenses paid, incurred, or accrued by Landlord in connection with the maintenance, operation, repair, and replacement of the Project including, without limitation: a management fee not to exceed 3% of gross rents and revenues from the Project; all costs associated with the removal of snow and ice from the Project; property management office rent; costs for “touchdown space” for tenants of Landlord and Landlord’s affiliates; conference room and fitness center costs; security measures; transportation program costs; Janitorial Expenses; Project Utility Costs (as defined in Section 6 below); capital expenditures, repairs, and replacements, necessary to comply with changes in applicable law effective after the Commencement Date or when made with the reasonable expectation of reducing other Project Expenses (but only to the extent of the actual reduction), and then only to the extent of the amortized costs of such capital item over the useful life of the improvement as reasonably determined by Landlord; valet, concierge, and card-access parking system costs; all insurance premiums and deductibles paid or payable by Landlord with respect to the Project; and the cost of providing those services required to be furnished by Landlord under this Lease. Notwithstanding the foregoing, “Project Expenses” shall not include any of the following: (A) repairs or other work occasioned by fire, windstorm, or other insured casualty or by the exercise of the right of eminent domain to the extent Landlord actually receives insurance proceeds or condemnation awards therefor; (B) leasing commissions, accountants’, consultants’, auditors or attorneys’ fees, costs and disbursements and other expenses incurred in connection with negotiations or disputes with other tenants or prospective tenants or other occupants, or associated with the enforcement of any other leases or the defense of Landlord’s title to or interest in the real property or any part thereof; (C) costs incurred by Landlord in connection with the original construction of the Building and related facilities; (D) costs (including permit, licenses

 

4

 

and inspection fees) incurred in renovating or otherwise improving or decorating, painting, or redecorating leased space for other tenants or other occupants or vacant space; (E) interest on debt or amortization payments on any mortgage or deeds of trust or any other borrowings and any ground rent; (F) any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord; (G) any fines or fees for Landlord’s failure to comply with Laws; (H) legal, accounting, and other expenses related to Landlord’s financing, refinancing, mortgaging, or selling the Building or the Project; (I) any increase in an insurance premium caused by the non-general office use, occupancy or act of another tenant; (J) costs for sculpture, decorations, painting or other objects of art in excess of amounts typically spent for such items in office buildings of comparable quality in the competitive area of the Building; (K) cost of any political, charitable, or civic contribution or donation; (L) reserves for repairs, maintenance, and replacements; (M) Taxes; (N) cost of utilities directly metered or submetered to Building tenants and paid separately by such tenants; (0) fines, interest, penalties, or liens arising by reason of Landlord’s failure to pay any Project Expenses when due, except that Project Expenses shall include interest or similar charges if the collecting authority permits such Project Expenses to be paid in installments with interest thereon, such payments are not considered overdue by such authority and Landlord pays the Project Expenses in such installments; (P) costs and expenses associated with hazardous waste or hazardous substances including but not limited to the cleanup of such hazardous waste or hazardous substances and the costs of any litigation (including, but not limited to reasonable attorneys’ fees) arising out of the discovery of such hazardous waste or hazardous substances; (Q) the portion of any wages, salaries, fees, or fringe benefits paid to personnel above the level of regional property manager; (R) costs of extraordinary services provided to other tenants of the Building or services to which Tenant is not entitled (including, without limitation, costs specially billed to and paid by specific tenants); (S) all costs relating to activities for the solicitation and execution of leases of space in the Building, including legal fees, real estate brokers’ commissions, expenses, fees, and advertising, moving expenses, design fees, rental concessions, rental credits, tenant improvement allowances, lease assumptions or any other cost and expenses incurred in the connection with the leasing of any space in the Building; (T) costs representing an amount paid to an affiliate of Landlord (exclusive of any management fee permitted under the Operating Expense inclusions (including the limitation set forth herein)) to the extent in excess of market rates for comparable services if rendered by unrelated third parties; (U) costs arising from Landlord’s default under this Lease or any other lease for space in the Building; (V) costs of selling the Project or any portion thereof or interest therein, including, without limitation any realty transfer taxes resulting from such sale; (W) costs or expenses arising from the gross negligence of Landlord or its agents or employees; (X) costs incurred to remedy, repair, or otherwise correct violations of Laws that exist on the Commencement Date; (Y) the depreciation of the Building and other real property structures in the Project, if any; (Z) legal expenses associated with the negotiation and enforcement of leases or the defense of Landlord’s title to the Building or other portions of the Project; (AA) Landlord’s general corporate overhead and general administrative expenses not directly related to the operation of the Project; (BB) cost of payroll for clerks and attendants, bookkeeping, garage keepers’ liability insurance, parking management fees, tickets and uniforms directly incurred in operating the parking facilities; (CC) costs or expenses incurred by Landlord for use of any portions of the Building to accommodate events including, but not limited to shows, promotions, kiosks, displays, filming, photography, private events or parties, ceremonies, and advertising beyond the normal expenses otherwise attributable to providing Building services, such as lighting and HVAC to such public portions of the Building in normal Building operations during standard Building hours of operation; (DD) any bad debt loss, rent loss or reserves for bad debts or rent loss; (EE) any costs that duplicate costs for which Landlord is reimbursed by any other party other than through Project Expenses; (FF) any costs or expenses which are of a type or nature ordinarily not included in operating expenses under sound accounting practices applicable generally to Class A office buildings in Philadelphia; (GG) any recalculation of or additional Project Expenses actually incurred more than two (2) years prior to the year in which Landlord proposes that such costs be included; (HH) costs actually reimbursed (or, if Landlord does not carry insurance that Landlord is required pursuant to this Lease to carry, then such costs as would have been reimbursed) through insurance proceeds to repair or replace damage by fire or other casualty, including specifically, without limitation, any deductible under any insurance policy in excess of the maximum deductible permitted in this Lease, as well as any other costs for which Landlord is actually reimbursed by any vendors or other third parties; (II) costs actually reimbursed through condemnation proceeds to repair, replace or rebuild the Building after a condemnation of any portion thereof; (JJ) expenditures for capital improvements or replacements, or other capital expenditures, except as expressly permitted above in this subsection (iii); (KK) advertising costs relating to marketing the Building; (LL) costs for overtime HVAC to tenants, it being intended that the costs of all overtime HVAC shall be billed (if not otherwise paid directly to the utility provider) to the tenants separately based on their respective usages; (MM) rentals for items which if purchased, rather than rented, would constitute a capital item, except to the extent a capital expense is permitted above; (NN) costs, including permit, license and inspection costs, incurred with respect to the installation of any individual tenant’s or other occupant’s improvements in the Building

 

5

 

or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for any individual tenant or other occupant of the Building; (00) tax penalties incurred as a result of Landlord’s failure to make payments and/or to file any tax or informational returns when due; (PP) costs arising from Landlord’s charitable or political contributions; (QQ) costs for the acquisition of (as contrasted with the maintenance of) sculpture, paintings or other objects of art; (RR) costs associated with the operation of the business of the partnership or entity which constitutes Landlord as the same are distinguished from the costs of operation of the Project, including partnership accounting and legal matters, costs of defending any lawsuits with or claims by any mortgagee, costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s interest in the Project, costs of any disputes between Landlord and its employees not engaged in Project operation, costs of disputes between Landlord and the building manager, or fees, damages, settlements or other amounts paid in connection with, or other amounts paid in connection with disputes with other tenants; (SS) any entertainment, dining or travel expenses for any purpose not related to property management; (TT) other than in connection with customary tenant-appreciation events, any flowers, balloons, or other gifts provided to any entity whatsoever, including, but not limited to, Tenant, other tenants, employees, vendors, contractors, prospective tenants and agents; (UU) costs of installing, operating and maintaining any specialty improvement that is not made available to Tenant; (VV) all costs for materials, utilities, goods, services or other benefits furnished by Landlord that are required to be directly paid for by Tenant or other tenants to Landlord or the service provider, or for which Tenant or other tenants contract directly with the service provider, including, without limitation, electricity costs which are paid directly by Tenant or other tenants to the provider of electric power; and any taxes, charges, assessments or other costs relating to such costs; (WW) any and all costs for the repair or replacement of any items under warranty from third parties to the extent of the warranty coverage, including, without limitation, any defects in the original construction of the Building or Premises, or any costs of Landlord’s performance of any construction warranty to Tenant or any other Building tenant; and (XX) any and all other expenses for which Landlord is reimbursed (other than pursuant to a general operating costs pass through. Landlord shall exercise all commercially reasonable remedies to obtain reimbursement of all amounts to which it is entitled from any and all third parties. Landlord shall not collect or be entitled to collect Project Expenses from all of its tenants in an amount in excess of 100% of the Project Expenses actually incurred by Landlord.

 

(iv)                              “Taxes” means all taxes, assessments, and other governmental charges, whether general or special, ordinary or extraordinary, foreseen or unforeseen, including without limitation business improvement district charges, improvement contributions paid to business improvement districts or similar organizations, gross receipts tax for the Building, and special assessments for public improvements or traffic districts, that are levied or assessed against, or with respect to the ownership of, all or any portion of the Project during the Term or, if levied or assessed prior to the Term, are properly allocable to the Term, business property operating license charges, and real estate tax appeal expenditures incurred by Landlord. “Taxes” shall not include: (i) any inheritance, estate, succession, transfer, gift, franchise, corporation, income or profit tax or capital levy that is or may be imposed upon Landlord; or (ii) any transfer tax or recording charge resulting from a transfer of the Building or the Project; provided, however, if at any time during the Term the method of taxation prevailing at the commencement of the Term shall be altered such that in lieu of or as a substitute in whole or in part for any Taxes now levied, assessed or imposed on real estate there shall be levied, assessed or imposed: (A) a tax on the rents received from such real estate; or (B) a license fee measured by the rents receivable by Landlord from the Premises or any portion thereof; or (C) a tax or license fee imposed upon the Premises or any portion thereof, then the same shall be included in Taxes. Tenant may not file or participate in any Tax appeals for any tax lot in the Project. Further, “Taxes” shall not include any sales, use, use and occupancy, transaction privilege, or other excise tax that may at any time be levied or imposed upon Tenant, or measured by any amount payable by Tenant under this Lease, whether such tax exists on the date of this Lease or is adopted hereafter (collectively, “Other Taxes”). Tenant shall pay all Other Taxes monthly or otherwise when due, whether collected by Landlord or collected directly by the applicable governmental agency; if applicable Law requires Landlord to collect any Other Taxes, such Other Taxes shall be payable to Landlord as Additional Rent.

 

(v)                                 “Tenant’s Share” means the rentable square footage of the Premises divided by the rentable square footage of the Building on the date of calculation, which on the date of this Lease is stipulated to be 0.93%. Tenant’s Share will change during the Term if the rentable square footage of the Premises and/or the Building changes.

 

(b)                                 Commencing on the Fixed Rent Start Date and continuing thereafter during the Term, Tenant shall pay to Landlord in advance on a monthly basis, payable pursuant to Section 5(c) below, Tenant’s Share of Operating Expenses. If the Building is operated as part of a complex of buildings or in conjunction with other

 

6

 

buildings or parcels of land, then Landlord may prorate the common expenses and costs with respect to each such building or parcel of land in such manner as Landlord, in its sole but reasonable judgment, shall determine. Landlord shall calculate Operating Expenses using generally accepted accounting principles, and may allocate certain categories of Operating Expenses to the applicable tenants on a commercially reasonable basis.

 

(c)                                  For each calendar year (or portion thereof) for which Tenant has an obligation to pay any Operating Expenses, Landlord shall send to Tenant a statement of the monthly amount of projected Operating Expenses due from Tenant for such calendar year (“Estimated Operating Expenses”), and Tenant shall pay to Landlord such monthly amount of Estimated Operating Expenses as provided in Section 5(b), without further notice, demand, setoff, deduction, or counterclaim. As soon as administratively available after each calendar year (which shall in any event be no later than one hundred twenty (120) days after the end of such calendar year), Landlord shall send to Tenant a reconciliation statement of the actual Operating Expenses for the prior calendar year (“Reconciliation Statement”). If the amount actually paid by Tenant as Estimated Operating Expenses exceeds the amount due per the Reconciliation Statement, Tenant shall receive a credit in an amount equal to the overpayment, which credit shall be applied towards future Rent until fully credited. If the credit exceeds the aggregate future Rent owed by Tenant, and there is no Event of Default, Landlord shall pay the excess amount to Tenant within 30 days after delivery of the Reconciliation Statement. If Landlord has undercharged Tenant, then Landlord shall either send Tenant an invoice setting forth the additional amount due or indicate the amount due as part of the Reconciliation Statement, which amount shall be paid in full by Tenant within 30 days after receipt of such invoice.

 

(d)                                 If, during the Term, less than 95% of the rentable area of the Building is or was occupied by tenants, Project Expenses shall be deemed for such year to be an amount equal to the costs that would have been incurred had the occupancy of the Building been at 95% throughout such year, as reasonably determined by Landlord and taking into account that certain expenses fluctuate with the Building’s occupancy level (e.g., Janitorial Expenses) and certain expenses do not so fluctuate (e.g., landscaping). In addition, if Landlord is not obligated or otherwise does not offer to furnish an item or a service to a particular tenant or portion of the Building (e.g., if a tenant separately contracts with an office cleaning firm to clean such tenant’s premises) and the cost of such item or service would otherwise be included in Project Expenses, Landlord shall equitably adjust the Project Expenses so the cost of the item or service is shared only by tenants actually receiving such item or service. All payment calculations under this Section shall be prorated for any partial calendar years during the Term and all calculations shall be based upon Project Expenses as grossed-up in accordance with the terms of this Lease. Tenant’s obligations under this Section shall survive the Expiration Date.

 

(e)                                  If Landlord or any affiliate of Landlord has elected to qualify as a real estate investment trust (“REIT”), any service required or permitted to be performed by Landlord pursuant to this Lease, the charge or cost of which may be treated as impermissible tenant service income under the laws governing a REIT, may be performed by an independent contractor of Landlord, Landlord’s property manager, or a taxable REIT subsidiary that is affiliated with either Landlord or Landlord’s property manager (each, a “Service Provider”). If Tenant is subject to a charge under this Lease for any such service, then at Landlord’s direction Tenant shall pay the charge for such service either to Landlord for further payment to the Service Provider or directly to the Service Provider and, in either case: (a) Landlord shall credit such payment against any charge for such service made by Landlord to Tenant under this Lease; and (b) Tenant’s payment of the Service Provider shall not relieve Landlord from any obligation under this Lease concerning the provisions of such services.

 

(f)                                   Landlord shall maintain in a safe and orderly manner all of its records pertaining to the Operating Expenses payable pursuant to this Lease in accordance with generally accepted accounting principles. Provided there is no outstanding uncured monetary default by Tenant under this Lease, Tenant shall have the right, at its sole cost and expense, to cause Landlord’s records related to a Reconciliation Statement to be audited provided: (i) Tenant provides notice of its intent to audit such Reconciliation Statement within 3 months after receipt of the Reconciliation Statement; (ii) the audit is performed by a certified public accountant that has not been retained on a contingency basis or other basis where its compensation relates to the cost savings of Tenant; (iii) any such audit may not occur more frequently than once during each 12-month period of the Term, nor apply to any year prior to the year of the then-current Reconciliation Statement being reviewed; (iv) the audit is completed within 1 month after the date that Landlord makes all of the necessary and applicable records available to Tenant or Tenant’s auditor; (v) the contents of Landlord’s records shall be kept confidential by Tenant, its auditor, and its other professional advisors, other than as required by applicable Law, and if requested by Landlord, Tenant and its auditor shall execute Landlord’s

 

7

 

standard confidentiality agreement as a condition to Tenant’s audit rights under this paragraph; and (vi) if Tenant’s auditor determines that an overpayment is due Tenant, Tenant’s auditor shall produce a detailed report addressed to both Landlord and Tenant, which report shall be delivered within 30 days after Tenant’s auditor’s completion of the audit. During completion of Tenant’s audit, Tenant shall nonetheless timely pay all of Tenant’s Share of Operating Expenses without setoff or deduction (except as expressly provided by this Lease). If Tenant’s audit report discloses any discrepancy, Landlord and Tenant shall use good faith efforts to resolve the dispute. If the parties are unable to reach agreement within 30 days after Landlord’s receipt of the audit report, Tenant shall have the right to refer the matter to a mutually acceptable independent certified public accountant (such approval by either party not to be unreasonably withheld, conditioned or delayed), who shall work in good faith with Landlord and Tenant to resolve the discrepancy; provided if Tenant does not do so within such 30-day period (which period shall be extended on a day-for-day basis for each day Landlord fails to approve Tenant’s reasonable selection of an accountant), Landlord’s calculations and the Reconciliation Statement at issue shall be deemed final and accepted by Tenant. The fees and costs of such independent accountant to which such dispute is referred shall be borne by the unsuccessful party and shall be shared pro rata to the extent each party is unsuccessful as determined by such independent certified public accountant, whose decision shall be final and binding. Within 30 days after resolution of the dispute, whether by agreement of the parties or a final decision of an independent accountant, Landlord shall pay or credit to Tenant, or Tenant shall pay to Landlord, as the case may be, all unpaid Operating Expenses due and owing.

 

6.                                      UTILITIES.

 

(a)                                 Commencing on the Commencement Date, and continuing throughout the Term, Tenant shall pay for utility services as follows without setoff, deduction, or counterclaim: (i) Tenant shall pay directly to the applicable utility service provider for any utilities that are separately metered (not submetered) to the Premises; (ii) Tenant shall pay Landlord for any utilities serving the Premises that are separately submetered based upon Tenant’s submetered usage, (Landlord shall be responsible for any maintenance and replacement costs associated with such submeters; the costs of which may be included in Operating Expenses); and (iii) Tenant shall pay Landlord for Tenant’s Share of Project Utility Costs, as set forth in Section 5 above. “Project Utility Costs” means the total cost for all utilities serving the Project, excluding the costs of utilities that are directly metered or submetered to Building tenants or paid separately by such tenants. As of the date hereof, to Landlord’s actual knowledge, but without prejudice to Landlord’s right to make modifications from time to time:

 

·                  Electric for the lights and plugs of the Premises is currently separately submetered, and electric for HVAC serving the Premises is paid as part of Operating Expenses pursuant to Section 5.

 

Notwithstanding anything to the contrary in this Lease, Landlord shall have the right to install meters, submeters, or other energy-reducing systems in the Premises at any time to measure any or all utilities serving the Premises, the costs of which shall be included in Project Expenses. For those utilities set forth in subsection (ii) above, Landlord shall have the right to either invoice Tenant for such utilities separately as Additional Rent (payable within 30 days after receipt of an invoice therefor), or include such utilities in amounts due as Project Expenses. Landlord shall have the right to estimate the utility charge, which estimated amount shall be payable to Landlord within 30 days after receipt of an invoice therefor and may be included along with the invoice for Project Expenses, provided Landlord shall be required to reconcile on an annual basis based on utility invoices received for such period. The cost of utilities payable by Tenant under this Section shall include all applicable taxes and Landlord’s then-current reasonable charges for reading the applicable meters, provided Landlord shall have the right to engage a third party to read the submeters, and Tenant shall reimburse Landlord for both the utilities consumed as evidenced by the meters plus the costs for reading the meters within 30 days after receipt of an invoice therefor. Tenant shall pay such rates as Landlord may establish from time to time, which shall not be in excess of any applicable rates chargeable by Law, or in excess of the general service rate or other such rate that would apply to Tenant’s consumption if charged by the utility or municipality serving the Building or general area in which the Building is located. If Tenant fails to pay timely any direct-metered utility charges from the applicable utility provider, and such failure continues uncured following fifteen (15) days written notice thereof Landlord shall have the right but not the obligation to pay such charges on Tenant’s behalf and bill Tenant for such costs plus the Administrative Fee (as defined in Section 17), which amount shall be payable to Landlord as Additional Rent within 30 days after receipt of an invoice therefor. Tenant shall at all times comply with the rules, regulations, terms, policies, and conditions applicable to the service, equipment, wiring, and requirements of the utility supplying electricity to the Building.

 

8

 

(b)                                 For any separately metered utilities, Landlord is hereby authorized to request and obtain, on behalf of Tenant, Tenant’s utility consumption data from the applicable utility provider for informational purposes and to enable Landlord to obtain full building Energy Star scoring for the Building. Landlord shall have the right to shut down the Building systems (including electricity and HVAC systems) for required maintenance, safety inspections, or any other reason, including without limitation in cases of emergency, provided, except in the case of an emergency, Landlord shall use commercially reasonable efforts to provide at least three (3) business days’ notice and to cause any planned shutdown to occur during non-business hours. Landlord shall not be liable for any interruption in providing any utility that Landlord is obligated to provide under this Lease, unless such interruption or delay: (i) renders the Premises or any material portion thereof untenantable for the normal conduct of Tenant’s business at the Premises, and Tenant has ceased using such untenantable portion, provided Tenant shall first endeavor to use any generator that serves the Premises or of which Tenant has the beneficial use; (ii) results from Landlord’s negligence or willful misconduct or is in Landlord’s control to remediate; and (iii) extends for a period longer than 3 consecutive days, in which case, Tenant’s obligation to pay Fixed Rent and Project Expenses shall be abated with respect to the untenantable portion of the Premises that Tenant has ceased using for the period beginning on the 4’ consecutive day after such conditions are met and ending on the earlier of: (A) the date Tenant recommences using the Premises or the applicable portion thereof; or (B) the date on which the service(s) is substantially restored. The rental abatement described above shall be Tenant’s sole remedy in the event of a utility interruption, and Tenant hereby waives any other rights against Landlord in connection therewith. Landlord shall have the right to change the utility providers to the Project at any time. In the event of a casualty or condemnation affecting the Building and/or the Premises, the terms of Sections 14 and 15, respectively, shall control over the provisions of this Section.

 

(c)                                  If Landlord reasonably determines that: (i) Tenant exceeds the design conditions for the heating, ventilation, and air conditioning (“HVAC”) system serving the Premises, introduces into the Premises equipment that overloads such system, or negligently causes such system to not adequately perform its proper functions; or (ii) the heavy concentration of personnel, motors, machines, or equipment used in the Premises, including telephone and computer equipment, or any other condition in the Premises caused by Tenant (for example, more than one shift per day or 24-hour use of the Premises), adversely affects the temperature or humidity otherwise maintained by such system, then Landlord shall notify Tenant in writing and Tenant shall have 20 days to remedy the situation to Landlord’s reasonable satisfaction. Landlord represents that the use of the Premises for general office use during Business Hours consistent with the use by other office tenants in the Building will not cause any of the adverse conditions set forth in the preceding sentence nor permit Landlord to have any right to install additional equipment at Tenant’s cost. If Tenant fails to timely remedy the situation to Landlord’s reasonable satisfaction, Landlord shall have the right to install one or more supplemental air conditioning units in the Premises with the cost thereof, including the cost of installation, operation and maintenance, being payable by Tenant to Landlord within 30 days after Landlord’s written demand. Tenant shall not change or adjust any closed or sealed thermostat or other element of the HVAC system serving the Premises without Landlord’s express prior written consent, such consent not to be unreasonably conditioned, withheld, or delayed. Landlord may install and operate meters or any other reasonable system for monitoring or estimating any services or utilities used by Tenant in excess of those required to be provided by Landlord (including a system for Landlord’s engineer reasonably to estimate any such excess usage). If such system indicates materially excess services or utilities, Tenant shall pay Landlord’s reasonable charges for installing and operating such system and any supplementary air conditioning, ventilation, heat, electrical, or other systems or equipment (or adjustments or modifications to the existing Building systems and equipment), and Landlord’s reasonable charges for such amount of excess services or utilities used by Tenant. All supplemental HVAC systems and equipment serving the Premises (including without limitation Tenant’s Supplemental HVAC, as defined in Section 11(a) below) shall be separately metered to the Premises at Tenant’s cost, and Tenant shall be solely responsible for all electricity registered by, and the maintenance and replacement of, such meters. Landlord has no obligation to keep cool any of Tenant’s information technology equipment that is placed together in one room, on a rack, or in any similar manner (“IT Equipment”), and Tenant waives any claim against Landlord ‘in connection with Tenant’s IT Equipment. Landlord shall have the option to require that the computer room and/or information technology closet in the Premises shall be separately submetered at Tenant’s expense, and Tenant shall pay Landlord for all electricity registered in such submeter. Within 1 month after written request, Tenant shall provide to Landlord electrical load information reasonably requested by Landlord with respect to any computer room and/or information technology closet in the Premises. Landlord shall provide Tenant, whenever reasonably practicable, advanced notice of any service slowdowns, interruptions, or stoppages and, to the extent any equipment being maintained, repaired, replaced, or improved is located within the Premises, shall use its commercially reasonable efforts (subject to union and governmental requirements) to schedule such work outside of Business Hours, except in the case of emergencies.

 

9

 

7.                                      LANDLORD SERVICES.

 

(a)                                 Subject to Section 5 and Section 6, Landlord shall provide the following to the Premises during the Term: (i) HVAC service in in accordance with the following temperature specifications during Business Hours: 72 degrees at 50% relative humidity; provided HVAC service to the Premises on Saturdays will be provided only upon Tenant’s prior request to Landlord received no later than noon on the preceding business day; (ii) electricity for lighting and standard office equipment for comparable buildings in the market in which the Project is located; (iii) water, sewer, and, to the extent applicable to the Building, gas, oil, and steam service; (iv) security as reasonably determined by Landlord for the Building and Common Areas on a 24/7 basis; and (v) cleaning services meeting the minimum specifications set forth in Exhibit D attached hereto. Tenant, at Tenant’s expense, shall make arrangements with the applicable utility companies and public bodies to provide, in Tenant’s name, telephone, cable, and any other utility service not provided by Landlord that Tenant desires at the Premises. The Building electrical system will be capable of providing an average of 6 watts per square foot of rentable area to the Premises for lighting and measured load.

 

(b)                                 Landlord shall not be obligated to furnish any services, supplies, or utilities other than as set forth in this Lease; provided, however, upon Tenant’s prior request sent in accordance with Section 25(p) below, Landlord may furnish additional services, supplies, or utilities, in which case Tenant shall pay to Landlord, immediately upon demand, Landlord’s then-current charge for such additional services, supplies, or utilities, or Tenant’s pro rata share thereof, if applicable, as reasonably determined by Landlord. Landlord’s current rate for HVAC service outside of Business Hours requested with at least 24 hours’ prior notice (or by noon for weekend service) is $92.00 per hour for cooling and $57.00 per hour for heating, per zone, with a 2-hour minimum if the service does not commence immediately following the end of a day’s Business Hours.

 

8.                                      USE; SIGNS; COMMON AREAS.

 

(a)                                 Tenant shall use the Premises for general office use (non-medical) and storage incidental thereto, and for no other purpose (“Permitted Use”). Tenant’s use of the Premises for the Permitted Use shall be subject to all applicable Laws, and to all reasonable requirements of the insurers of the Building. Tenant represents and warrants to Landlord, for informational purposes only, that Tenant’s current NAICS Code is set forth in Section 1 hereof, provided the foregoing shall not be construed in any manner as a restriction on the Permitted Use.

 

(b)                                 Landlord shall provide Tenant with Building-standard identification signage on all Building lobby directories and at the main entrance to the Premises, and directional signage at the elevator lobbies on any multi-tenant floors, the costs of which shall be paid for by Landlord for the originally named Tenant, otherwise by Tenant as Additional Rent within 30 days after written demand. Tenant shall not place, erect, or maintain any signs at the Premises, the Building, or the Project that are visible from outside of the Premises.

 

(c)                                  Subject to the Building rules and regulations, Tenant shall have the nonexclusive right in common with others to use the Common Areas for their intended purposes.

 

(d)                                 Provided Landlord does not unreasonably and materially interfere with Tenant’s normal and customary business operations and to the extent that the Tenant’s Leasehold Improvements are not damaged, and Tenant is not denied the beneficial use of its Premises, Landlord shall have the right in its sole but reasonable discretion to, from time to time, construct, maintain, operate, repair, close, limit, take out of service, alter, change, and modify all or any part of the Common Areas. Landlord, Landlord’s agents, contractors, and utility service providers shall have the right to install, use, and maintain ducts, pipes, wiring, and conduits in and through the Premises provided such use does not cause the usable area of the Premises to be reduced beyond a de minimis amount. Landlord shall use commercially reasonable efforts to schedule and conduct all such construction, maintenance, repairs, closures, alterations or changes so as to reasonably minimize any disruption or interference to Tenant’s business.

 

(e)                                  Subject to Landlord’s security measures and Force Majeure Events (as defined in Section 25(g)), Landlord shall provide Tenant with access to the Building and, if applicable, passenger elevator service for use in common with others for access to and from the Premises 24 hours per day, 7 days per week, except during emergencies. Landlord shall have the right to limit the number of elevators (if any) to be operated during repairs and during non-Business Hours and on weekends. If applicable, Landlord shall provide Tenant with access to the freight

 

10

 

elevator(s) of the Building from time to time following receipt of Tenant’s prior request, and Tenant shall pay Landlord’s then-current charge for use of such freight elevators.

 

(f)                                   During the Term and subject to: (i) availability; (ii) Landlord’s rules and regulations therefor; (iii) payment of Landlord’s then-current charge for use; and (iv) Landlord or a Landlord affiliate owning the building known as One Logan Square, Tenant’s employees who work in the Building shall have the nonexclusive, first-come, first-served use of the conference center that may from time to time exist in One Logan Square. All requests for use of a meeting room shall be made online to the extent available (currently such requests shall be made via http://etenants.com/, as the same may be modified by Landlord from time to time) otherwise via email or written communication to Landlord’s property manager for the Building. Neither Landlord nor any Landlord Indemnitee (as defined in Section 13(a)) shall have any liability to Tenant or any Tenant Agent for any damage, injury, loss, expense, compensation, or claim whatsoever arising out of the use of such conference center.

 

9.                                      TENANT’S ALTERATIONS.

 

(a)                                 The construction of the initial Leasehold Improvements (as defined in Exhibit C) shall be governed by the terms of Exhibit C attached hereto and made a part hereof. Except for the Leasehold Improvements and as otherwise set forth below, Tenant shall not, and shall not permit any Tenant Agent to, cut, drill into, or secure any fixture, apparatus, or equipment, or make alterations, improvements, or physical additions of any kind to any part of the Premises (collectively, “Alterations”) without first obtaining the written consent of Landlord, which consent shall not be unreasonably withheld, conditioned, or delayed. If Landlord fails to respond to a request for consent to a proposed Alteration within 10 business days after Landlord’s receipt of such request, the request shall be deemed denied. Notwithstanding the foregoing, if Landlord fails to respond within such 10 business-day period, Tenant may thereafter send to Landlord a second written requesting approval of the proposed Alteration, which request must set forth in bold and 14-point capitalized type on the first page thereof the following statement: “SECOND AND FINAL REQUEST—LANDLORD HAS 10 BUSINESS DAYS TO RESPOND PURSUANT TO SECTION 9” (“Second Alteration Request”). If Landlord then fails to respond to the Second Alteration Request within 10 business days after receipt thereof (“Second Alteration Request Response Period”), Landlord shall be deemed to have elected to consent to the proposed Alteration, provided Tenant shall otherwise have complied with all provisions of this Lease relating to such Alterations. Notwithstanding the foregoing, if Landlord notifies Tenant in writing within the Second Alteration Request Response Period that Landlord requires additional time to review the request, then the Second Alteration Request Response Period shall be extended by an additional 10 business days. “Tenant Agent” means any agent, employee, subtenant, assignee, contractor, client, family member, licensee, customer, invitee, or guest of Tenant. All Alterations shall be completed in compliance with all applicable Laws, and Landlord’s reasonable rules and regulations for construction, and sustainable guidelines and procedures, using new or comparable materials only, by a contractor reasonably approved in writing by Landlord, and on days and at times reasonably approved in writing by Landlord. Notwithstanding the foregoing, Landlord’s consent shall not be required for any Alteration costing less than $50,000.00 in the aggregate per calendar year and that: (i) is nonstructural; (ii) does not impact any of the Building systems, involve electrical work, require a building permit, materially affect the air quality in the Building, or require Landlord to incur additional costs as a result thereof; and (iii) is not visible from outside of the Premises.

 

(b)                                 Throughout the performance of Alterations, Tenant shall carry, or cause any contractor, subcontractor, or design professional to carry, via written contract, workers’ compensation insurance in statutory limits together with employer’s liability insurance, commercial general liability insurance (including, but not limited to, coverage for ongoing and products-completed operations), automobile liability, and umbrella/excess liability insurance in like form and limits in accordance with the terms and conditions required of Tenant under Section 12 below, and such other insurance coverage and limits as Landlord may otherwise reasonably require, which may include, without limitation, reasonable amounts of professional liability insurance with respect to design professionals, as well as contractor’s pollution liability with respect to contractors and subcontractors. Tenant shall also require any such contractor, subcontractor, or design professional to satisfy the same additional coverage terms as required of Tenant under Section 12 below with respect to naming Landlord, Landlord’s Property Manager, and Additional Insureds (as defined in Section 12) and any other applicable party whose name and address shall have been furnished to Tenant each as an additional insured, which have been furnished to Tenant by way of endorsement ISO CG 20 37 together with CG 20 10 or their equivalent, which shall be primary, and any other insurance that may be available to Landlord and any such additional insured will be excess and noncontributory, and waiving all rights of recovery and subrogation. In addition, Tenant shall carry “all risk” Builder’s Risk insurance covering the Alterations, unless

 

11

 

otherwise agreed upon in writing by Landlord and Tenant. Tenant shall provide to Landlord prior written notice of its intention to perform any Alteration, together with a certificate of insurance from each contractor evidencing that the insurance required under this Lease is in effect during all construction activities.

 

(c)                                  Promptly after final completion of any Alteration, Tenant shall provide Landlord with a release of liens from all contractors, subcontractors, and design professionals associated with such Alterations. Tenant shall be solely responsible for the installation and maintenance of its data, telecommunication, and security systems and wiring at the Premises, which shall be done in compliance with all applicable Laws, and Landlord’s rules and regulations. Tenant shall be responsible for all elements of Alterations (including, without limitation, compliance with Laws, and functionality of the design), and Landlord’s approval of any Alteration and the plans therefor shall in no event relieve Tenant of the responsibility for such design, or create responsibility or liability on Landlord’s part for their completeness, design sufficiency, or compliance with Laws. With respect to all improvements and Alterations made after the date hereof, Tenant acknowledges that (A) Tenant is not, under any circumstance, acting as the agent of Landlord; and (B) the Alterations were not made for the immediate use and benefit of Landlord. Nothing in this Lease or in any consent to the making of Alterations or improvements shall be deemed or construed in any way as constituting a request by Landlord, express or implied, to any contractor, subcontractor, or supplier for the performance of any labor or the furnishing of any materials for the use or benefit of Landlord. Tenant shall not overload any floor or part thereof in the Premises or the Building, including any public corridors or elevators, by bringing in, placing, storing, installing or removing any large or heavy articles, and Landlord may prohibit, or may direct and control the location and size of, safes and all other heavy articles, and may reasonably require, at Tenant’s sole cost and expense, supplementary supports of such material and dimensions as Landlord may deem necessary to properly distribute the weight. Any articles of personal property including business and trade fixtures not attached to, or built into, the Premises, Tenant’s trade machinery and equipment, free-standing cabinet work, and movable partitions, which were installed by Tenant in the Premises as part of the Leasehold Improvements or otherwise shall be and remain the property of Tenant and may be removed by Tenant at any time during the Term as long as Tenant is not in default hereunder (following the lapse of any applicable notice and cure periods) and provided Tenant repairs to Landlord’s reasonable satisfaction any damage to the Premises, the Building and any other part of the Project caused by such removal.

 

10.                               ASSIGNMENT AND SUBLETTING.

 

(a)                                 Except as expressly permitted pursuant to Section 10(c), neither Tenant nor Tenant’s legal representatives or successors-in-interest by operation of law or otherwise, shall sell, assign, transfer, hypothecate, mortgage, encumber, grant concessions or licenses, sublet, or otherwise dispose of all or any interest in this Lease or the Premises, or permit any person or entity other than Tenant to occupy any portion of the Premises (each of the foregoing is a “Transfer” to a “Transferee”), without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. If Landlord fails to respond to a request for consent to a proposed Transfer within 10 business days after Landlord’s receipt of such request and all of the Transfer Information, the request shall be deemed denied. Notwithstanding the foregoing, if Landlord fails to respond within such 10 business-day period, Tenant may thereafter send to Landlord a second written request for approval of the proposed Transfer, which request must set forth in bold and 14-point capitalized type on the first page thereof the following statement: “SECOND AND FINAL REQUEST—LANDLORD HAS 10 BUSINESS DAYS TO RESPOND PURSUANT TO SECTION 10” (“Second Transfer Request”). If Landlord then fails to respond to the Second Transfer Request within 10 business days after receipt thereof (“Second Transfer Request Response Period”), Landlord shall be deemed to have elected to consent to the proposed Transfer, but Landlord shall not be estopped by or deemed to have approved any specific terms of the Transfer (such as, for example, if the assignment document were to release Tenant from any further liability under this Lease or if the sublease provides for a sublease term extending beyond the term of this Lease). Notwithstanding the foregoing, if Landlord notifies Tenant in writing within the Second Transfer Request Response Period that Landlord requires additional time to review the request, then the Second Transfer Request Response Period shall be extended by an additional 5 business days. Any Transfer undertaken without Landlord’s prior written consent (other than pursuant to Section 10(c)) shall, at Landlord’s option, be void. For purposes of this Lease, a Transfer shall include, without limitation, any assignment by operation of law, and any merger, consolidation, or asset sale involving Tenant, any direct or indirect transfer of control of Tenant, and any transfer of a majority of the ownership interests in Tenant. Consent by Landlord to any one Transfer shall be held to apply only to the specific Transfer authorized, and shall not be construed as a waiver of the duty of Tenant, or Tenant’s legal representatives or

 

12

 

assigns, to obtain from Landlord consent to any other or subsequent Transfers pursuant to the foregoing, or as modifying or limiting the rights of Landlord under the foregoing covenant by Tenant.

 

(b)                                 Without limiting the bases upon which Landlord may reasonably withhold its consent to a proposed Transfer, it shall not be unreasonable for Landlord to withhold its consent if: (i) the proposed assignee shall have a net worth that is not acceptable to Landlord in Landlord’s reasonable discretion, taking into account the remaining obligations under this Lease and the fact that Tenant is not released; (ii) Tenant is proposing to Transfer to an existing tenant of the Building or the building known as One Commerce Square if owned by Landlord or Landlord’s affiliate(s), or to another prospect with whom Landlord or Landlord’s affiliate(s) are then actively negotiating in the Building or One Commerce Square, and comparable space is available in such buildings; or (iii) the nature of such Transferee’s proposed business operation would violate the terms of this Lease or of any other lease for the Building (including any exclusivity provisions).

 

(c)                                  Notwithstanding anything to the contrary in this Lease, Tenant shall have the right without the prior consent of Landlord, but after at least 15 days’ prior written notice to Landlord, to make a Transfer to any Affiliate (as defined below), or an entity into which Tenant merges or that acquires substantially all of the assets or stock of Tenant (“Surviving Entity”) (the Surviving Entity or Affiliate are also referred to as a “Permitted Transferee”); provided: (i) Tenant delivers to Landlord the Transfer Information (as defined below); (ii) the Surviving Entity shall have a tangible net worth at least equal to the net worth of Tenant on the date of this Lease or otherwise reasonably acceptable to Landlord taking into account the fact that the originally named Tenant is not being released; (iii) the originally named Tenant shall not be released or discharged from any liability under this Lease by reason of such Transfer, and the Permitted Transferee shall assume in writing all of the obligations and liabilities of Tenant under this Lease; (iv) the use of the Premises shall not change; and (v) such Transfer is not being made to circumvent Tenant’s obligations under this Lease. An “Affiliate” means a corporation, limited liability company, partnership, or other registered entity, 50% or more of whose equity interest is owned by the same persons or entities owning 50% or more of Tenant’s equity interests, a subsidiary, or a parent corporation.

 

(d)                                 If at any time during the Term Tenant desires to complete a Transfer, Tenant shall give written notice to Landlord of such desire together with the Transfer Information. If Tenant desires to assign this Lease or to sublease the entire Premises other than pursuant to Section 10(c) for the full (or substantially the full) Term of this Lease, Landlord shall have the right to accelerate the Expiration Date so that the Expiration Date shall be the date on which the proposed assignment or sublease would be effective. If Landlord elects to accelerate the Expiration Date pursuant to this paragraph, Tenant shall have the right to rescind its request for Landlord’s consent to the proposed assignment or sublease by giving written notice of such rescission to Landlord within 10 days after Tenant’s receipt of Landlord’s acceleration election notice. If Tenant does not so rescind its request, Tenant shall deliver the Premises in the same condition as Tenant is, by the terms of this Lease, required to deliver the Premises to Landlord upon the Expiration Date.

 

(e)                                  The “Transfer Information” means the following information: (i) a copy of the proposed form of assignment and assumption agreement, or sublease agreement, as applicable (with respect to a Permitted Transfer, such agreement to be delivered to Landlord within 10 business days after the transaction closes and with respect to all other Transfers, such agreement shall be provided in draft form and shall not be executed until Landlord’s consent has been given); and (ii) a copy of the then-current financials of the Transferee (either audited or certified by the chief financial officer or other officer of the Transferee).

 

(f)                                   Any sums or other economic consideration received by Tenant as a result of any Transfer (except rental or other payments received that are attributable to the amortization of the cost of leasehold improvements made to the transferred portion of the Premises by Tenant for the Transferee), less Tenant’s reasonable expenses incident to the Transfer, including, without limitation, standard leasing commissions) whether denominated rentals under the sublease or otherwise, that exceed, in the aggregate, the total sums which Tenant is obligated to pay Landlord under this Lease (prorated to reflect obligations allocable to that portion of the Premises subject to such Transfer) shall, at Landlord’s option, either be retained by Tenant or divided evenly between Landlord and Tenant, with Landlord’s portion being payable to Landlord as Additional Rent without affecting or reducing any other obligation of Tenant hereunder, provided such difference shall be further reduced by the sum of the following: (i) rental or other payments received that are attributable to the amortization of the cost of leasehold improvements made to the transferred portion of the Premises by Tenant for the Transferee; (ii) reasonable expenses incident to the

 

13

 

Transfer, including standard leasing commissions other economic concessions including, without limitation, planning allowance, lease takeover payments, moving expenses and the like paid by Tenant to or on behalf of the Transferee in connection with the Transfer; (iii) reasonable costs incurred by Tenant in advertising the transfer space; and (iv) Tenant’s and Landlord’s reasonable attorneys’ fees paid by Tenant to third parties in connection with the Transfer.

 

(g)                                  Regardless of Landlord’s consent to a proposed Transfer, no Transfer shall release Tenant from Tenant’s obligations or alter Tenant’s primary liability to fully and timely pay all Rent when due from time to time under this Lease and to fully and timely perform all of Tenant’s other obligations under this Lease, and the originally named Tenant and all assignees shall be jointly and severally liable for all Tenant obligations under this Lease. The acceptance of rental by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. If a Transferee defaults in the performance of any of the terms of this Lease, Landlord may proceed directly against the originally named Tenant without the necessity of exhausting remedies against such Transferee. If there has been a Transfer and an Event of Default occurs, Landlord may collect Rent from the Transferee and apply the net amount collected to the Rent herein reserved; but no such collection shall be deemed a waiver of the provisions of this Section, an acceptance of such Transferee as tenant hereunder or a release of Tenant from further performance of the covenants herein contained.

 

11.                               REPAIRS AND MAINTENANCE.

 

(a)                                 Except with respect to Landlord Repairs (as defined below) and any other obligations of Landlord expressly set forth in this Lease, Tenant, at Tenant’s expense, shall keep and maintain the Premises in good order and condition including promptly making all repairs necessary to keep and maintain such in good order and condition. When used in this Lease, “repairs” shall include repairs and any reasonably necessary replacements. Tenant shall have the option of replacing lights, ballasts, tubes, ceiling tiles, outlets and similar equipment itself or advising Landlord of Tenant’s desire to have Landlord make such repairs, in which case Tenant shall pay to Landlord for such repairs at Landlord’s then-standard rate. To the extent that Tenant requests that Landlord make any other repairs that are Tenant’s obligation to make under this Lease, Landlord may elect to make such repairs on Tenant’s behalf, at Tenant’s expense, and Tenant shall pay to Landlord such expense along with the Administrative Fee. If there is an uncured Event of Default, Landlord may elect to require that Tenant prepay the amount of such repair. All Tenant repairs shall comply with Laws and utilize materials and equipment that are at least equal in quality to those being repaired. In addition, Tenant shall maintain, at Tenant’s expense, Tenant’s Supplemental HVAC, Premises Hot Water Heaters, and/or Alterations in a clean and safe manner and in proper operating condition throughout the Term. “Tenant’s Supplemental HVAC” means any supplemental HVAC system serving the Premises (regardless of who installed it). “Premises Hot Water Heater” means any hot water heater serving the Premises (regardless of who installed it), including without limitation expansion tanks and any associated piping. Tenant shall maintain Tenant’s Supplemental HVAC under a service contract with a firm and upon such terms as may be reasonably satisfactory to Landlord, including inspection and maintenance on at least a semiannual basis, and provide Landlord with a copy thereof. Tenant shall maintain Premises Hot Water Heaters under a service contract with a firm and upon such terms as may be reasonably satisfactory to Landlord, including inspection and maintenance on at least an annual basis, and provide Landlord with a copy thereof. Within 5 business days after Landlord’s request, Tenant shall provide Landlord with evidence that such contracts are in place. Further, Tenant shall ensure that all Premises Hot Water Heaters installed by Tenant have a working automatic water shut-off device with audible alarm and a leak pan underneath. All repairs to the Building and/or the Project made necessary solely by reason of the installation, maintenance, and operation of Tenant’s Supplemental HVAC, Premises Hot Water Heaters, and Alterations shall be Tenant’s expense. In the event of an emergency, such as a burst waterline or act of God, Landlord shall have the right to make repairs for which Tenant is responsible hereunder (at Tenant’s cost) without giving Tenant prior notice, but in such case Landlord shall provide notice to Tenant as soon as practicable thereafter, and Landlord shall take commercially reasonable steps to minimize the costs incurred. Further, Landlord shall have the right to make repairs for which Tenant is responsible hereunder (at Tenant’s cost) with prior notice to Tenant if Landlord believes in its sole and absolute discretion that the repairs are necessary to prevent harm or damage to the Building, and Landlord shall take commercially reasonable steps to minimize the costs incurred.

 

(b)                                 Landlord, at Landlord’s expense (except to the extent such expenses are includable in Project Expenses), shall make all necessary repairs to: (i) the footings and foundations and the structural elements of the Building; (ii) the roof of the Building; (iii) the HVAC, plumbing, elevators (if any), electric, fire protection and fire alert systems within the Building core from the core to the point of connection for service to the Premises, but

 

14

 

specifically excluding Tenant’s Supplemental HVAC, Premises Hot Water Heaters, and Alterations; (iv) the Building exterior; and (v) the Common Areas (collectively, “Landlord Repairs”). All Landlord Repairs shall be made in accordance with the standard of a first class office building. Any provision of this Lease to the contrary notwithstanding, any repairs to the Project or any portion thereof made necessary by the willful misconduct of Tenant or any Tenant Agent shall be made at Tenant’s expense, subject to the waivers set forth in Section 12(c). Landlord shall, with respect to Landlord Repairs, use commercially reasonable efforts to minimize the disruption or interference to Tenant’s normal and customary business operations in the Premises.

 

(c)                                  The parties agree it is in their mutual best interest that the Building and Premises be operated and maintained in a manner that is environmentally responsible, fiscally prudent, and provides a safe and productive work environment. Accordingly, Landlord shall use commercially reasonable efforts to operate and maintain the Common Areas of the Building to: (1) minimize to the extent reasonably feasible: (i) direct and indirect energy consumption and greenhouse gas emissions; (ii) water consumption; (iii) the amount of material entering the waste stream; and (iv) negative impacts upon the indoor air quality of the Building; and (2) permit the Building to maintain its LEED rating and an Energy Star label, to the extent applicable, the costs of which shall be included in Project Expenses (except to the extent otherwise not permitted). Further, at no material cost to Tenant, Tenant shall use commercially reasonable efforts to conduct its operations in the Building and within the Premises to: (1) minimize to the extent reasonably feasible: (i) direct and indirect energy consumption and greenhouse gas emissions; (ii) water consumption; (iii) the amount of material entering the waste stream; and (iv) negative impacts upon the indoor air quality of the Building; and (2) permit the Building to maintain its LEED rating and an Energy Star label, to the extent applicable. Notwithstanding any of the foregoing, in no event shall Tenant be deemed to be in default of this subsection (c) unless Landlord provides written notice of reasonable rules and regulations to implement the foregoing and Tenant fails to use reasonable efforts to comply with such rules and regulations.

 

12.                               INSURANCE; SUBROGATION RIGHTS.

 

(a)                                 Tenant shall not violate, or permit the violation of, any condition imposed by any insurance policy then issued in respect of the Project and shall not do, or permit anything to be done, or keep or permit anything to be kept in the Premises, that would subject Landlord to any liability or responsibility for personal injury or death or property damage, increase any insurance rate in respect of the Project over the rate that would otherwise then be in effect, result in insurance companies of good standing refusing to insure the Project in amounts reasonably satisfactory to Landlord, or result in the cancellation of, or the assertion of any defense by the insurer in whole or in part to claims under, any policy of insurance in respect of the Project. If, by reason of any failure of Tenant to comply with this Lease, the premiums on Landlord’s insurance on the Project are higher than they otherwise would be, Tenant shall reimburse Landlord, on demand, for that part of such premiums attributable to such failure on the part of Tenant.

 

(b)                                 Tenant, at Tenant’s expense, shall obtain and keep in full force and effect at all times as of the Commencement Date (or Tenant’s earlier accessing of the Premises), all of the following insurance policies:

 

(i)                                     commercial general liability insurance written on an ISO CG 00 01 occurrence policy form or its equivalent, including a Separation of Insureds clause, coverage for contractual liability covering Tenant’s contractual obligations under this Lease as an insured contract, personal injury liability, host liquor liability, premises-operations and hazards thereto, as well as liability arising out of this Lease in respect of the Premises and the conduct or operation of business therein. The minimum limits of coverage shall be no less than $1,000,000 per occurrence and $2,000,000 general aggregate (applying per location) for bodily injury (including death and mental anguish) and property damage, $1,000,000 personal and advertising injury, and $1,000,000 products-completed operations (for which coverage shall be maintained continuously for a minimum period equal to the applicable statute of limitations or statute of repose, whichever is greater) or in such other amounts as Landlord may from time to time require.

 

(ii)                                  business automobile liability insurance covering liability arising from any auto (including, owned, non-owned, and hired auto, provided such non-owned and hired auto liability may be satisfied by endorsement to the commercial general liability policy) in an amount of no less than $1,000,000 combined single limit per accident for bodily injury and property damage.

 

15

 

(iii)                               workers’ compensation in statutory limits together with employer’s liability insurance in amounts of no less than $1,000,000 each accident, $1,000,000 disease policy limit, and $1,000,000 disease each employee.

 

(iv)                              umbrella/excess liability insurance on a follow form basis in amounts of no less than $10,000,000 per occurrence and $10,000,000 annual aggregate (applying per location) in excess of commercial general liability, employer’s liability, and automobile liability insurance policies, concurrent to, and no more restrictive than such underlying insurance policies. Such policy shall be endorsed to provide that this insurance is primary to, and noncontributory with, any other insurance in which Landlord and any Additional Insured is an insured, whether such other insurance is primary, excess, self-insurance, or insurance on any other basis, which must cause the umbrella/excess coverage to be vertically exhausted, whereby such coverage is not subject to any “Other Insurance” provision under Tenant’s umbrella/excess liability policy. The limits of liability may be satisfied by a combination of primary and excess liability insurance.

 

(v)                                 property insurance written on an ISO CP 10 30-Cause of Loss-Special Form, commonly referred to as the “all risk” policy form, or its equivalent, including, but not limited to, coverage against sprinkler leakage and other damage due to water, fire, windstorm, cyclone, tornado, hail, explosion, riot, civil commotion, aircraft, vehicle, smoke damage, vandalism, and malicious mischief insuring all present and future Tenant’s Property leased by or in the care, custody, and control of Tenant and located in the Premises in an amount of no less than the full replacement cost thereof, with an agreed amount endorsement (waiving applicable co-insurance clause). “Tenant’s Property” means Tenant’s trade fixtures, equipment, personal property, signage, and Specialty Alterations (as defined in Section 18(b)). Tenant shall not self-insure. Tenant shall neither have, nor make, any claim against Landlord for any loss or damage to Tenant’s Property, regardless of the cause of the loss or damage, including, without limitation, fire, explosion, falling plaster, steam, gas, air contaminants or emissions, electricity, electrical or electronic emanations or disturbance, water, rain, snow, or leaks from any part the Building or from the pipes, appliances, equipment, or plumbing works or from the roof or from any other place, nor shall Landlord be liable for any loss of or damage to property of Tenant or of others entrusted to employees of Landlord.

 

(vi)                              business interruption insurance covering any loss due to the occurrence of any of the hazards required to be insured against by Tenant pursuant to this Lease, in an amount sufficient to cover Tenant’s monetary obligations under this Lease for a period of at least 12 months.

 

(vii)                           boiler and machinery, if there is a boiler, supplemental air conditioning unit, or pressure object or similar equipment in the Premises.

 

(c)                                  All insurance policies required of Tenant under this Lease, including ongoing and products-completed operations coverage but exclusive of workers’ compensation, shall name Landlord, Landlord’s property manager, Brandywine Realty Trust, and any other applicable party whose name and address have been furnished to Tenant, each as an additional insured (collectively, “Additional Insureds”). All such coverages shall be primary and any other insurance that may be available to Landlord and any Additional Insured will be excess and noncontributory. Each Additional Insured shall be afforded coverage as broad as if this Lease had expressly covered the claim against the Additional Insured, and for the greater of the minimum amount called for by this Lease or Tenant’s actual policy limit.

 

(d)                                 Prior to the Commencement Date (or Tenant’s earlier accessing of the Premises), Tenant shall provide Landlord and/or Landlord’s designated agent with certificates that evidence that all insurance coverages required under this Lease are in place for the policy periods. Tenant shall also furnish to Landlord and/or Landlord’s designated agent throughout the Term replacement certificates at least 30 days prior to the expiration dates of the then-current policy or policies or, upon request by Landlord and/or Landlord’s designated agent from time to time, sufficient information to evidence that the insurance required under this Section is in full force and effect. In addition, all such policies shall contain a provision whereby the same cannot be canceled or materially altered without at least 30 days’ prior written notice of such cancellation or material alteration provided to Landlord, which shall be afforded by policy endorsement extending such notice to Landlord. Tenant shall include a waiver of the insurer’s right of subrogation against Landlord and Additional Insureds during the Term in each of Tenant’s liability and workers’ compensation policies. If Tenant fails to provide Landlord and/or Landlord’s designated agent with a requested insurance certificate as required under this Lease within 30 days after receipt of Landlord’s written request therefor, Tenant shall pay to

 

16

 

Landlord a fee equal to $25.00 for each day that elapses after such 30-day period until Landlord and/or Landlord’s designated agent receives the requested certificate. In no event will any acceptance of certificates of insurance by Landlord, or failure of Tenant to provide certificates of insurance as required hereunder, be construed as a waiver or limitation of Tenant’s obligations to maintain insurance coverage pursuant to this Section 12. All insurance required under this Lease shall be issued by an insurance company that has been in business for at least 5 years, is authorized to do business in the State, and is rated “A-/X” or greater by A.M. Best’s Insurance Reports or any successor publication of comparable standing. The limits of any such required insurance shall not in any way limit Tenant’s liability under this Lease or otherwise. If Tenant fails to maintain such insurance, Landlord may, but shall not be required to, procure and maintain the same, at Tenant’s expense, which expense shall be reimbursed by Tenant as Additional Rent within 30 days after written demand. The deductible or self-insured retention amount required under any insurance policy maintained by Tenant shall be the sole responsibility of Tenant and not exceed $25,000, unless otherwise approved by Landlord in writing.

 

(e)                                  When Alterations are in process, Tenant shall carry, or cause, any contractor, subcontractor, and design professional to carry the insurance specified in Section 9. In addition, Tenant shall require its movers and other vendors to procure insurance in like forms and amounts as required herein and deliver to Landlord and/or Landlord’s designated agent a certificate of insurance naming each Additional Insured as an additional insured, which policies shall be primary and any other insurance that may be available to Landlord and any Additional Insured will be excess and noncontributory.

 

(f)                                   Landlord shall obtain and maintain, or cause to be obtained or maintained, the following insurance during the Term: (i) replacement cost insurance including “all risk” property insurance on the Building, including without limitation leasehold improvements (exclusive of Tenant’s Property); (ii) commercial general liability insurance (including bodily injury and property damage) covering Landlord’s operations at the Project in amounts reasonably required by Landlord or any Mortgagee (as defined in Section 16); and (iii) such other insurance as reasonably required by Landlord or any Mortgagee.

 

(g)                                  Landlord and Tenant shall each include in each of its insurance policies (insuring the Building in case of Landlord, and insuring Tenant’s Property in the case of Tenant, against loss, damage, or destruction by fire or other casualty) a waiver of the insurer’s right of subrogation against the other party during the Term, and consent to a waiver of right of recovery pursuant to the terms of this paragraph. Both Landlord and Tenant agree to immediately give each insurance company which has issued to it policies of insurance written notice of the terms of such mutual waivers and to cause such insurance policies to be properly endorsed, if necessary, to prevent the invalidation thereof by reason of such waivers. If such waivers are unobtainable from the insurance carrier or unenforceable, then the party who was assured the waiver of subrogation shall receive from the other party: (i) an express agreement that such policy shall not be invalidated if the assured party waives the right of recovery against any party responsible for a casualty covered by the policy before the casualty; or (ii) any other form of permission for the release of the other party. Notwithstanding anything to the contrary in this Lease, each party hereby waives, releases, and agrees not to make any claim against or seek to recover from, the other party with respect to any claim (including a claim for negligence) that such party might otherwise have against the other party for loss, damage, or destruction with respect to its property occurring during the Term to the extent to which such party is, or is required to be, insured under a policy or policies containing a waiver of subrogation or permission to release liability. Nothing contained in this Section 12(g) shall be deemed to relieve either party of any duty imposed elsewhere in this Lease to repair, restore, or rebuild, or nullify any abatement of rents provided for elsewhere in this Lease.

 

13.                               INDEMNIFICATION.

 

(a)                                 Except to the extent the release of liability and waiver of subrogation provided in Section 12 above applies, Tenant shall defend, indemnify, and hold harmless Landlord, Landlord’s property manager, Brandywine Realty Trust, and each of Landlord’s directors, officers, members, partners, trustees, employees, and agents (collectively, “Landlord Indemnitees”) from and against any and all third-party claims, actions, damages, liabilities, and expenses (including all reasonable costs and expenses (including reasonable attorneys’ fees)) to the extent arising out of or from or related to: (i) any breach or default of any of Tenant’s obligations under this Lease; (ii) any negligence or willful act or omission of Tenant, any Tenant Indemnitees (as defined below), or any Tenant Agent; and (iii) any acts or omissions occurring at, or the condition, use, or operation of, the Premises, except in any such case to the extent arising from Landlord’s negligence or willful misconduct. If Tenant fails to promptly defend a

 

17

 

Landlord Indemnitee following written demand by the Landlord Indemnitee, the Landlord Indemnitee shall defend the same at Tenant’s expense, by retaining or employing counsel reasonably satisfactory to such Landlord Indemnitee.

 

(b)                                 Except to the extent the release of liability and waiver of subrogation provided in Section 12 above applies, Landlord shall defend, indemnify, and hold harmless Tenant and each of Tenant’s directors, officers, members, partners, trustees, employees, and agents (collectively, “Tenant Indemnitees”) from and against any and all third-party claims, actions, damages, liabilities, and expenses (including all reasonable costs and expenses (including reasonable attorneys’ fees)) to the extent arising out of or from or related to: (i) any breach or default of any of Landlord’s obligations under this Lease; and (ii) any negligence or willful misconduct of Landlord or any Landlord Indemnitees, except in any such case to the extent arising from Tenant’s negligence or willful misconduct. If Landlord fails to promptly defend a Tenant Indemnitee following written demand by the Tenant Indemnitee, the Tenant Indemnitee shall defend the same at Landlord’s expense, by retaining or employing counsel reasonably satisfactory to such Tenant Indemnitee.

 

(c)                                  Landlord’s and Tenant’s obligations under this Section shall not be limited by the amount or types of insurance maintained or required to be maintained under this Lease. The provisions of this Section shall survive the Expiration Date.

 

14.                               CASUALTY DAMAGE. If there occurs any casualty to the Project and: (i) insurance proceeds are unavailable to Landlord or are insufficient to restore the Project to substantially its pre-casualty condition; or (ii) more than 30% of the total area of the Building is damaged, Landlord shall have the right to terminate this Lease and all the unaccrued obligations of the parties hereto, by sending written notice of such termination to Tenant within 60 days after such casualty. Such notice shall specify a termination date not fewer than 30 nor more than 90 days after such notice is given to Tenant. If there occurs any casualty to the Premises and: (i) in Landlord’s reasonable judgment, the repair and restoration work would require more than 210 consecutive days to complete after the casualty (assuming normal work crews not engaged in overtime); or (ii) the casualty occurs during the last 12 months of the Term, Landlord and Tenant shall each have the right to terminate this Lease and all the unaccrued obligations of the parties hereto, by sending written notice of such termination to the other party within 60 days after the date of such casualty. Such notice shall specify a termination date not fewer than 30 nor more than 90 days after such notice is given to the other party, but in no event shall the termination date be after the last day of the Term. If this Lease is not terminated pursuant to this paragraph and Landlord fails to complete the repair or restoration work within 90 days after Landlord’s estimated date for completion of the repair and restoration work (subject to extension for delays caused solely by Tenant and Force Majeure Events), then Tenant shall have the right to terminate this Lease by sending at least 30 days’ prior written notice to Landlord within 30 days after such estimated date of completion, provided this Lease shall remain in full force and effect and Tenant shall no longer have the right to terminate this Lease if Landlord delivers possession of the Premises to Tenant within 30 days after Landlord’s receipt of Tenant’s termination notice. If there occurs any casualty to the Premises and neither party terminates this Lease, then Landlord shall use commercially reasonable efforts to cause the damage to be repaired (exclusive of Tenant’s Property) to a condition as nearly as practicable to that existing prior to the damage, with commercially reasonable speed and diligence, subject to delays that may arise by reason of adjustment of the loss under insurance policies, Laws, and Force Majeure Events. Landlord shall not be liable for any inconvenience or annoyance to Tenant or Tenant Indemnitees, injury to Tenant’s business, or pain and suffering, resulting in any way from such damage or the repair thereof. Notwithstanding the foregoing, Tenant’s obligation to pay Fixed Rent and Additional Rent shall be equitably adjusted or abated during the period (if any) during which Tenant is not reasonably able to use the Premises or an applicable portion thereof as a result of such casualty. Tenant shall have no right to terminate this Lease as a result of any damage or destruction of the Premises, except as expressly provided in this Section. The provisions of this Lease, including this Section, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, and any Law with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties, and any other statute or regulation, now or hereafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Premises.

 

15.                               CONDEMNATION. If a taking renders the Premises reasonably unsuitable for the Permitted Use or prevents reasonable access to the Premises, this Lease shall, at either party’s option exercised by written notice to the other within 30 days after such taking, terminate as of the date title to condemned real estate vests in the condemner, the Rent herein reserved shall be apportioned and paid in full by Tenant to Landlord to such date, all Rent prepaid for

 

18

 

period beyond that date shall forthwith be repaid by Landlord to Tenant, and neither party shall thereafter have any liability for any unaccrued obligations hereunder; provided, however, a condition to the exercise by Tenant of such right to terminate shall be that the portion of the Premises taken shall be of such extent and nature as materially to handicap, impede, or impair Tenant’s use of the balance of the Premises for its normal business operations. If this Lease is not terminated after a condemnation, then notwithstanding anything to the contrary in this Lease, Fixed Rent and Additional Rent shall be equitably reduced in proportion to the area of the Premises that has been taken for the balance of the Term. Tenant shall have the right to make a claim against the condemner for moving expenses and business dislocation damages to the extent that such claim does not reduce the sums otherwise payable by the condemner to Landlord.

 

16.                               SUBORDINATION; ESTOPPEL CERTIFICATE.

 

(a)                                 Provided Tenant’s right of possession of the Premises shall not be disturbed during the Term by the Mortgagee so long as there is no then existing Event of Default, this Lease shall be subordinate at all times to the lien of any mortgages and deeds of trust now or hereafter placed upon the Premises, Building, and/or Project and land of which they are a part (a “Mortgage”) without the necessity of any further instrument or act on the part of Tenant to effectuate such subordination. Tenant further agrees to execute and deliver within 10 days after demand such further instrument evidencing such subordination and attornment as shall be reasonably required by any Mortgagee. If Landlord shall be or is alleged to be in default of any of its obligations owing to Tenant under this Lease, Tenant shall give to the holder (the “Mortgagee”) of any mortgage or deed of trust now or hereafter placed upon the Premises, Building, and/or Project whose name and address has been furnished to Tenant, notice by overnight mail of any such default that Tenant shall have served upon Landlord. Tenant shall not be entitled to exercise any right or remedy as there may be because of any default by Landlord without having given such notice to the Mortgagee. The Mortgagee shall have thirty (30) days from receipt of Tenant’s notice within which to cure such default or such longer period as may be reasonably necessary to complete the cure provided Mortgagee is proceeding diligently to cure such default. Notwithstanding the foregoing, any Mortgagee may at any time subordinate its mortgage to this Lease, without Tenant’s consent, by notice in writing to Tenant, and thereupon this Lease shall be deemed prior to such Mortgage without regard to their respective dates of execution and delivery, and in that event the Mortgagee shall have the same rights with respect to this Lease as though it had been executed prior to the execution and delivery of the Mortgage.

 

(b)                                 Tenant shall attorn to any foreclosing mortgagee, purchaser at a foreclosure sale or by power of sale, or purchaser by deed in lieu of foreclosure. If the holder of a superior mortgage shall succeed to the rights of Landlord, then at the request of such party so succeeding to Landlord’s rights (herein sometimes called successor landlord) and upon such successor landlord’s written agreement to accept Tenant’s attornment, Tenant shall attorn to and recognize such successor landlord as Tenant’s landlord under this Lease and shall promptly, without payment to Tenant of any consideration therefor, execute and deliver any instrument that such successor landlord may request to evidence such attornment. Upon such attornment, this Lease shall continue in full force and effect as, or as if it were, a direct lease between the successor landlord and Tenant upon all of the terms, conditions, and covenants as are set forth in this Lease and shall be applicable after such attornment, except that the successor landlord shall not be bound by any modification of this Lease not approved by the mortgagee which materially increases Landlord’s obligations or materially decreases Tenant’s obligations under this Lease, or by any previous prepayment of more than one month’s rent, unless such modification or prepayment shall have been expressly approved in writing by the holder of the superior mortgage through or by reason of which the successor landlord shall have succeeded to the rights of Landlord. With respect to any assignment by Landlord of Landlord’s interest in this Lease, or the rents payable hereunder, conditional in nature or otherwise, which assignment is made to any Mortgagee, Tenant agrees that the execution thereof by Landlord, and the acceptance thereof by the Mortgagee, shall never be deemed an assumption by such Mortgagee of any of the obligations of Landlord hereunder, unless such Mortgagee shall, by written notice sent to Tenant, specifically elect, or unless such Mortgagee shall foreclose the Mortgage and take possession of the Premises. Tenant, upon receipt of written notice from a Mortgagee that such Mortgagee is entitled to collect Rent hereunder may in good faith remit such Rent to Mortgagee without incurring liability to Landlord for the nonpayment of such Rent. The provisions for attornment set forth in this Section 16(b) shall be self-operative and shall not require the execution of any further instrument. However, if Landlord reasonably requests a further instrument confirming such attornment, Tenant shall execute and deliver such instrument within 10 days after receipt of such request.

 

19

 

(c)                                  Tenant must at any time and from time to time, within 20 days after receipt of Landlord’s written request, execute and deliver to Landlord a commercially reasonable estoppel certificate in form reasonably satisfactory to Tenant certifying all reasonably requested information pertaining to this Lease.

 

17.                               DEFAULT AND REMEDIES.

 

(a)                                 An “Event of Default” shall be deemed to exist and Tenant shall be in default hereunder if: (i) Tenant fails to pay any Rent when due and such failure continues for more than 5 business days after Landlord has given Tenant written notice of such failure (such notice being in lieu of, and not in addition to, any applicable statutory notice); provided, however, in no event shall Landlord have any obligation to give Tenant more than 1 such notice in any 12-month period, after which there shall be an Event of Default if Tenant fails to pay any Rent when due during such 12-month period, regardless of Tenant’s receipt of notice of such nonpayment, and, provided further, there shall be an automatic Event of Default if Tenant fails to pay any Rent when due and the automatic stay of bankruptcy precludes issuance of a default notice; (ii) Tenant fails to bond over a mechanic’s or materialmen’s lien within 30 days after Landlord’s demand; (iii) there is any assignment or subletting (regardless of whether the same might be void under this Lease) in violation of the terms of this Lease and Tenant fails to undo or void such Transfer within ten (10) business days after written notice; (iv) Tenant fails to deliver any Landlord-requested estoppel certificate or subordination agreement within 5 business days after receipt of notice that such document was not received within the time period required under this Lease, provided (A) such notice states in bold that Tenant’s failure to respond within five (5) business days shall be an Event of Default and (B) it shall not be an Event of Default if Tenant’s failure to deliver such document is a result of Tenant’s good faith negotiation of the form of such document; (v) there is a filing of a voluntary petition for relief by Tenant or any guarantor, or the filing of a petition against Tenant or any guarantor in a proceeding under the federal bankruptcy or other insolvency laws that is not withdrawn or dismissed within 90 days thereafter, or Tenant’s rejection of this Lease after such a filing, or, under the provisions of any law providing for reorganization or winding up of corporations, the assumption by any court of competent jurisdiction of jurisdiction, custody, or control of Tenant or any substantial part of its property, or of any guarantor, where such jurisdiction, custody, or control remains in force, unrelinquished, unstayed, or unterminated for a period of 90 days, or the commencement of steps or proceedings toward the dissolution, winding up, or other termination of the existence of Tenant, or toward the liquidation of either of their respective assets, or the evidence of the inability of Tenant or any guarantor to pay its debts as they come due, including without limitation an admission in writing of its inability to pay its debts when due, or any judgment docketed against any guarantor which is not paid, bonded, or otherwise discharged within 45 days; or (v) Tenant fails to observe or perform any of Tenant’s other agreements or obligations under this Lease and such failure continues for more than 30 days after Landlord gives Tenant written notice of such failure (not to exceed an additional 90 days), or the expiration of such additional time period as is reasonably necessary to cure such failure, provided Tenant promptly commences and thereafter proceeds with all due diligence and in good faith to cure such failure.

 

(b)                                 Upon the occurrence of an Event of Default, Landlord, in addition to the other rights or remedies it may have under this Lease, at law, or in equity, and without prejudice to any of the same, shall have the option, without any notice to Tenant and with or without judicial process, to pursue any one or more of the following remedies:

 

(i)                                     Landlord shall have the right to terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and Tenant shall pay Landlord upon demand for the direct losses and damages that Landlord suffers or incurs by reason of such termination which shall equal damages in an amount equal to the total of: (A) the costs of repossessing the Premises and all other expenses reasonably incurred by Landlord in connection with Tenant’s default, plus the Administrative Fee; (B) the unpaid Rent earned as of the date of termination; and (C) all Rent for the period that would otherwise have constituted the remainder of the Term less the fair market rental of the Premises for such period (as reasonably determined by Landlord as of the time of such termination), discounted to present value at a rate of 2% per annum. The “Administrative Fee” means 5% of the costs incurred by Landlord in curing Tenant’s default or performing Tenant’s obligations hereunder.

 

(ii)                                  Landlord shall have the right to terminate Tenant’s right of possession (but not this Lease) and may repossess the Premises by forcible detainer or forcible entry and detainer suit or otherwise in accordance with Laws, without demand or notice of any kind to Tenant and without terminating this Lease. If Tenant receives written notice of a termination of its right to possession, such notice will serve as both a notice to vacate,

 

20

 

notice to pay or quit, and a demand for possession of, the Premises, and Landlord may immediately thereafter initiate a forcible detainer action without any further demand or notice of any kind to Tenant.

 

(iii)                               Landlord shall have the right to enter and take possession of all or any portion of the Premises without electing to terminate this Lease, in which case Landlord shall have the right to relet all, or any portion of the Premises on such terms as Landlord deems advisable. Landlord will not be required to incur any expenses to relet all or any portion of the Premises, although Landlord may at its option incur customary leasing commissions or other costs for the account of Tenant as Landlord shall deem necessary or appropriate to relet. If there is an Event of Default, Landlord shall use commercially reasonable efforts to mitigate its damages. However, Landlord shall not be required to give any special preference or priority to reletting the Premises over other vacant space in the Building, Landlord shall be deemed to have used commercially reasonable efforts if it uses the same efforts in marketing the Premises as used in marketing other vacant space at the Building, and in no event shall Landlord be responsible or liable for any failure to relet the Premises or any part thereof, or for any failure to collect any rent due upon a reletting. Landlord’s rejection of a prospective replacement tenant based on an offer of rentals below Landlord’s published rates for new leases of comparable space at the Building at the time in question, or below the rates provided in this Lease or containing terms less favorable than those contained herein, shall not give rise to a claim by Tenant that Landlord failed to mitigate its damages.

 

(iv)                              Landlord shall have the right to enter the Premises without terminating this Lease and without being liable for prosecution or any claim for damages therefor and maintain the Premises and repair or replace any damage thereto or do anything for which Tenant is responsible hereunder. Tenant shall reimburse Landlord immediately upon demand for any out-of-pocket costs which Landlord incurs in thus effecting Tenant’s compliance under this Lease, and Landlord shall not be liable to Tenant for any damages with respect thereto.

 

(v)                                 Landlord shall have the right to continue this Lease in full force and effect, whether or not Tenant shall have abandoned the Premises. If Landlord elects to continue this Lease in full force and effect pursuant to this Section, then Landlord shall be entitled to enforce all of its rights and remedies under this Lease, including the right to recover Rent as it becomes due. Landlord’s election not to terminate this Lease pursuant to this Section or pursuant to any other provision of this Lease, at law or in equity, shall not preclude Landlord from showing the Premises to potential tenants, subsequently electing to terminate this Lease, or pursuing any of its other remedies.

 

(c)                                  Upon the occurrence of an Event of Default, Tenant shall be liable to Landlord for, and Landlord shall be entitled to recover: (i) all Rent accrued and unpaid; (ii) all reasonable costs and expenses incurred by Landlord in recovering possession of the Premises, including reasonable legal fees, and removal and storage of Tenant’s property; (iii) the costs and expenses of restoring the Premises to the condition in which the same were to have been surrendered by Tenant as of the Expiration Date; (iv) the costs of reletting commissions; (v) all legal fees and court costs incurred by Landlord in connection with the Event of Default; and (vi) the unamortized portion (as reasonably determined by Landlord) of brokerage commissions and consulting fees incurred by Landlord, and tenant concessions including free rent given by Landlord, in connection with this Lease.

 

(d)                                 Any amount payable by Tenant under this Lease that is not paid when due shall bear interest at the rate of 1% per month until paid by Tenant to Landlord.

 

(e)                                  Neither any delay or forbearance by Landlord in exercising any right or remedy hereunder nor Landlord’s undertaking or performing any act that Landlord is not expressly required to undertake under this Lease shall be construed to be a waiver of Landlord’s rights or to represent any agreement by Landlord to thereafter undertake or perform such act. Landlord’s waiver of any breach by Tenant of any covenant or condition herein contained (which waiver shall be effective only if so expressed in writing by Landlord) or Landlord’s failure to exercise any right or remedy in respect of any such breach shall not constitute a waiver or relinquishment for the future of Landlord’s right to have any such covenant or condition duly performed or observed by Tenant, or of Landlord’s rights arising because of any subsequent breach of any such covenant or condition, nor bar any right or remedy of Landlord in respect of such breach or any subsequent breach.

 

(f)                                   If there is a default by Tenant in the performance of any covenant, agreement, term, provision, or condition contained in this Lease that results in an emergency situation or there is an Event of Default, then in either case Landlord, in addition to any other rights and remedies it has under this Lease and without thereby

 

21

 

waiving such default, may perform the same for the account of and at the expense of Tenant (but shall not be obligated to do so), without notice in a case of emergency and in any other case if such default continues after 5 days from the date that Landlord gives written notice to Tenant of its intention to do so. Landlord may invoice Tenant for all amounts paid by Landlord and all losses, costs, and expenses incurred by Landlord in connection with any such performance by Landlord pursuant to this paragraph, plus the Administrative Fee, including, without limitation, all amounts paid and costs and expenses incurred by Landlord for any property, material, labor, or services provided, furnished, or rendered, or caused to be provided, furnished, or rendered, by Landlord to Tenant (together with interest at the rate of 1% per month from the date Landlord pays the amount or incurs the loss, cost, or expense until the date of full repayment by Tenant) monthly or immediately, at Landlord’s option, and shall be due and payable by Tenant to Landlord as Additional Rent within 30 days after Tenant receives the invoice. Any reservation of a right by Landlord to enter upon the Premises and to make or perform any repairs, alterations, or other work in, to, or about the Premises, which, in the first instance, is Tenant’s obligation pursuant to this Lease, shall not be deemed to impose any obligation on Landlord to do so, render Landlord liable to Tenant or any third party for the failure to do so, or relieve Tenant from any obligation to indemnify Landlord as otherwise provided elsewhere in this Lease.

 

(g)                                  The rights granted to Landlord in this Section shall be cumulative of every other right or remedy provided in this Lease or which Landlord may otherwise have at law or in equity or by statute, and the exercise of one or more rights or remedies shall not prejudice or impair the concurrent or subsequent exercise of other rights or remedies or constitute a forfeiture or waiver of Rent or damages accruing to Landlord by reason of any Event of Default under this Lease. Landlord shall have all rights and remedies now or hereafter existing at law or in equity with respect to the enforcement of Tenant’s obligations hereunder and the recovery of the Premises. No right or remedy herein conferred upon or reserved to Landlord shall be exclusive of any other right or remedy, but shall be cumulative and in addition to all other rights and remedies given hereunder or now or hereafter existing at law or in equity. Landlord shall be entitled to injunctive relief in case of the violation, or attempted or threatened violation, of any covenant, agreement, condition or provision of this Lease, or to a decree compelling performance of any covenant, agreement, condition or provision of this Lease.

 

(h)                                 No payment by Tenant or receipt by Landlord of a lesser amount than any payment of Fixed Rent or Additional Rent herein stipulated shall be deemed to be other than on account of the earliest stipulated Fixed Rent or Additional Rent due and payable hereunder, nor shall any endorsement or statement or any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or pursue any other right or remedy provided for in this Lease, at law or in equity, and acceptance of such partial payment shall be deemed subject to Landlord’s reservation of all rights.

 

(i)                                     Tenant further waives the right to any notices to quit as may be specified in the Landlord and Tenant Act of Pennsylvania, Act of April 6, 1951, as amended, or any similar or successor provision of law, and agrees that 5 days’ notice shall be sufficient in any case where a longer period may be statutorily specified.

 

(j)                                    In addition to, and not in lieu of any of the foregoing rights granted to Landlord:

 

(1)                                 WHEN THIS LEASE OR TENANT’S RIGHT OF POSSESSION SHALL BE TERMINATED BY COVENANT OR CONDITION BROKEN, OR FOR ANY OTHER REASON, EITHER DURING THE TERM OF THIS LEASE OR ANY RENEWAL OR EXTENSION THEREOF, AND ALSO WHEN AND AS SOON AS THE TERM HEREBY CREATED OR ANY EXTENSION THEREOF SHALL HAVE EXPIRED, IT SHALL BE LAWFUL FOR ANY ATTORNEY AS ATTORNEY FOR TENANT TO FILE AN AGREEMENT FOR ENTERING IN ANY COMPETENT COURT AN ACTION TO CONFESS JUDGMENT IN EJECTMENT AGAINST TENANT AND ALL PERSONS CLAIMING UNDER TENANT, WHEREUPON, IF LANDLORD SO DESIRES, A WRIT OF EXECUTION OR OF POSSESSION MAY ISSUE FORTHWITH, WITHOUT ANY PRIOR WRIT OF PROCEEDINGS, WHATSOEVER, AND PROVIDED IF FOR ANY REASON AFTER SUCH ACTION SHALL HAVE BEEN COMMENCED THE SAME SHALL BE DETERMINED AND THE POSSESSION OF THE PREMISES HEREBY DEMISED REMAIN IN OR BE RESTORED TO TENANT, LANDLORD SHALL HAVE THE RIGHT UPON ANY SUBSEQUENT DEFAULT OR DEFAULTS, OR UPON THE TERMINATION OF THIS LEASE AS HEREINBEFORE SET FORTH, TO BRING ONE OR MORE ACTION OR ACTIONS AS HEREINBEFORE SET FORTH TO RECOVER POSSESSION OF THE SAID PREMISES.

 

22

 

(2)                                 In any action to confess judgment in ejectment, Landlord shall first cause to be filed in such action an affidavit made by it or someone acting for it setting forth the facts necessary to authorize the entry of judgment, of which facts such affidavit shall be conclusive evidence, and if a true copy of this Lease (and of the truth of the copy such affidavit shall be sufficient evidence) be filed in such action, it shall not be necessary to file the original as a warrant of attorney, any rule of Court, custom or practice to the contrary notwithstanding.

 

TENANT WAIVER. TENANT SPECIFICALLY ACKNOWLEDGES THAT TENANT HAS VOLUNTARILY, KNOWINGLY, AND INTELLIGENTLY WAIVED CERTAIN DUE PROCESS RIGHTS TO A PREJUDGMENT HEARING BY AGREEING TO THE TERMS OF THE FOREGOING PARAGRAPHS REGARDING CONFESSION OF JUDGMENT. TENANT FURTHER SPECIFICALLY AGREES THAT IN THE EVENT OF DEFAULT, LANDLORD MAY PURSUE MULTIPLE REMEDIES INCLUDING OBTAINING POSSESSION PURSUANT TO A JUDGMENT BY CONFESSION FURTHERMORE, TENANT SPECIFICALLY WAIVES ANY CLAIM AGAINST LANDLORD AND LANDLORD’S COUNSEL FOR VIOLATION OF TENANT’S CONSTITUTIONAL RIGHTS IN THE EVENT THAT JUDGMENT IS CONFESSED PURSUANT TO THIS LEASE.

 

	
 
    	
TENANT: PASSAGE BIO, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ STEPHEN SQUINTO
    
	
 
    	
Name:
    	
STEPHEN SQUINTO
    
	
 
    	
Title:
    	
CEO
    
	
 
    	
Date:
    	
9/25/18
    

 

(k)                                 If Landlord defaults in the performance of any of its maintenance or repair obligations under this Lease, Tenant may send to Landlord written notice thereof, which notice must identify with reasonable specificity the default and Tenant’s remedies under this paragraph (“Reminder Notice”). If Landlord fails to either: (i) dispute the existence of such default within 5 business days; or (ii) cure such default within Landlord’s Cure Period, then a “Landlord Failure” is deemed to exist and Tenant will have all rights and remedies available at law or in equity for a landlord default. “Landlord’s Cure Period” means 30 days after Landlord’s receipt of a Reminder Notice, provided if cure cannot be reasonably effected by Landlord within such 30-day period, Landlord’s Cure Period includes such additional time as may be reasonably necessary for Landlord to cure, provided Landlord commences to cure within such 30-day period and diligently prosecutes such cure to completion. If a Landlord Failure results in an imminent, material threat to persons or Tenant’s property at the Premises, the Reminder Notice must so state and if Landlord fails to cure such Landlord Failure, then Tenant may, subject to the terms of this paragraph, perform such cure with respect to the Premises. Except to the extent specifically set forth otherwise in this paragraph, in no event shall Tenant have the right to terminate or cancel this Lease, withhold or abate rent, or setoff any claim for damages against Rent as a result of any default or breach by Landlord of its covenants or obligations or any representations, warranties, or promises hereunder. In effecting such cure, Tenant shall not take or permit to be taken any action or omission that could jeopardize the effectiveness of the roof, HVAC, or other warranties for the Building or otherwise affect any Building system. All actions taken by Tenant to cure a Landlord Failure pursuant to this paragraph must be in accordance with all Laws. Tenant may use only contractors who are duly licensed in the State, perform such work in comparable buildings in the normal course of their business, charge rates that are reasonable and competitive, and are reasonably approved by Landlord. Upon commencing such work, Tenant’s contractors must complete the cure within a reasonable period of time, and in a good and workmanlike manner. Prior to commencing any such work, Tenant must cause its contractors and subcontractors to provide to Landlord certificates evidencing adequate insurance coverage naming Landlord and any other associated or affiliated entity as addition insureds. Tenant shall indemnify, defend, protect, and hold harmless Landlord from and against any and all loss, cost, damage, or liability incurred by Landlord arising out of or from or related to Tenant’s performance of any such cure, including, without limitation, claims made by other occupants of the Building that Tenant’s performance of such work interfered with their occupancy of space in the Building. Upon Tenant’s cure of the Landlord Failure, Landlord shall reimburse Tenant for Tenant’s reasonable, out-of-pocket, third-party costs incurred in curing the Landlord Failure within 30 days after Landlord’s receipt of an Invoice for such costs (with such back-up documentation as Landlord might reasonably request). An “Invoice” means a detailed notice of the work completed and the materials used, all reasonably requested lien waivers, together with a schedule of all costs expended by Tenant in performing such work. An “Objection”

 

23

 

means a written objection by Landlord to the payment of such Invoice setting forth with reasonable particularity Landlord’s reasons for its claim that such action did not have to be taken by Landlord pursuant to this Lease or that the charges set forth on the Invoice(s) are excessive or otherwise not complete. If Landlord delivers an Objection to Tenant and if such parties are not able to resolve any dispute regarding Tenant’s Invoice or Landlord’s Objection within 30 days after Tenant receives such Objection, then Tenant may pay amounts due to Landlord under this Lease into an escrow account until such Invoice and any Objection thereto are satisfactorily resolved by the parties or by a court of competent jurisdiction.

 

18.                               SURRENDER; HOLDOVER.

 

(a)                                 By no later than the Expiration Date or earlier termination of Tenant’s right to possession of the Premises (such earlier date, the “Surrender Date”), Tenant shall vacate and surrender the Premises to Landlord in good order and condition, free of all Transferees, vacant, broom clean, and in conformity with the applicable provisions of this Lease, including without limitation Sections 9 and 11. Tenant shall have no right to hold over beyond the Surrender Date, and if Tenant does not vacate as required such failure shall be deemed an Event of Default and Tenant’s occupancy shall not be construed to effect or constitute anything other than a tenancy at sufferance. During any period of occupancy beyond the Surrender Date, the amount of Rent owed by Tenant to Landlord will be the Holdover Percentage of the Rent for the month immediately prior to the Expiration Date, without prorating for any partial month of holdover in excess of five (5) days, and except that any provisions in this Lease that limit the amount or defer the payment of Additional Rent are null and void. The “Holdover Percentage” equals: (i) 150% for the first two (2) months of holdover; and (ii) 200% for any period of holdover beyond two (2) months. The acceptance of Rent by Landlord or the failure or delay of Landlord in notifying or evicting Tenant following the Surrender Date shall not create any tenancy rights in Tenant and any such payments by Tenant may be applied by Landlord against its costs and expenses, including reasonable attorneys’ fees, incurred by Landlord as a result of such holdover. The provisions of this Section shall not constitute a waiver by Landlord of any right of reentry as set forth in this Lease; nor shall receipt of any Rent or any other act in apparent affirmance of the tenancy operate as a waiver of Landlord’s right to terminate this Lease for a breach of any of the terms, covenants, or obligations herein on Tenant’s part to be performed. No option to extend this Lease shall have been deemed to have occurred by Tenant’s holdover, and any and all options to extend this Lease or expand the Premises shall be deemed terminated and of no further effect as of the first date that Tenant holds over. In addition, if Tenant fails to vacate and surrender the Premises as herein required by the Surrender Date, Tenant shall indemnify, defend, and hold harmless Landlord from and against any and all costs, losses, expenses, or liabilities incurred as a result of or related to such failure, including without limitation, claims made by any succeeding tenant and real estate brokers’ claims and reasonable attorneys’ fees. Tenant’s obligation to pay Rent and to perform all other Lease obligations for the period up to and including the Surrender Date, and the provisions of this Section, shall survive the Expiration Date. In no way shall the remedies to Landlord set forth above be construed to constitute liquidated damages for Landlord’s losses resulting from Tenant’s holdover.

 

(b)                                 Prior to the Surrender Date, Tenant, at Tenant’s expense, shall remove from the Premises Tenant’s Property and all telephone, security (but excluding communication equipment system) wiring and cabling, and restore in a good and workmanlike manner any damage to the Premises and/or the Building caused by such removal or replace the damaged component of the Premises and/or the Building if such component cannot be restored as aforesaid as reasonably determined by Landlord. Notwithstanding the foregoing, Tenant shall not be required to remove a Specialty Alteration if at the time Tenant requests Landlord’s consent to such Specialty Alteration, Tenant provides Landlord with written notification that Tenant desires to not be required to remove such Specialty Alteration and Landlord consents in writing to Tenant’s non-removal request. A “Specialty Alteration” means an Alteration that: (i) Landlord required to be removed in connection with Landlord’s consent to making such Alteration; or (ii) is not Building standard, including without limitation kitchens (other than a pantry installed for the use of Tenant’s employees only), executive restrooms, computer room installations, supplemental HVAC equipment and components, safes, vaults, libraries or file rooms requiring reinforcement of floors, internal staircases, slab penetrations, non-Building standard life safety systems, security systems, specialty door locksets (such as cipher locks) or lighting, and any demising improvements done by or on behalf of Tenant after the Commencement Date. If Tenant fails to remove any of Tenant’s Property, wiring, or cabling as required herein, the same shall be deemed abandoned and Landlord, at Tenant’s expense, may remove and dispose of same and repair and restore any damage caused thereby, or, at Landlord’s election, such Tenant’s Property, wiring, and cabling shall become Landlord’s property. Tenant shall not remove any Alteration (other than Specialty Alterations) from the Premises without the prior written consent of Landlord.

 

24

 

19.                               RULES AND REGULATIONS. Tenant covenants that Tenant and Tenant Agents shall comply with the rules and regulations set forth on Exhibit E attached hereto. Landlord shall have the right to rescind and/or augment any of the rules and regulations and to make such other and further written rules and regulations as in the reasonable judgment of Landlord shall from time to time be needed for the safety, protection, care, and cleanliness of the Project, the operation thereof, the preservation of good order therein, and the protection and comfort of its tenants, their agents, employees, and invitees, so long as any rescinding or augmentation of the rules and regulations does not materially increase Tenant’s obligations or materially decrease Tenant’s rights under this Lease, which when delivered to Tenant shall be binding upon Tenant in a like manner as if originally prescribed. In the event of an inconsistency between the rules and regulations and this Lease, the provisions of this Lease shall control. Landlord shall not have any liability to Tenant for any failure of any other tenants to comply with any of the rules and regulations. Notwithstanding the foregoing, Landlord shall apply the rules and regulations to, and enforce the rules and regulations against, all tenants of the Building in a nondiscriminatory manner.

 

20.                               GOVERNMENTAL REGULATIONS.

 

(a)                                 Landlord represents to Tenant that, as of the date of this Lease, to Landlord’s actual knowledge without independent investigation: (i) the Premises are, and as of the Commencement Date the Premises will be, in material compliance with all Laws; and (ii) there are no hazardous substances on the Premises in violation of environmental Laws, nor will there be as of the Commencement Date. Tenant shall not use, generate, manufacture, refine, transport, treat, store, handle, dispose, bring, or otherwise cause to be brought or permit any Tenant Agent to bring, in, on, or about any part of the Project, any hazardous waste, solid waste, hazardous substance, toxic substance, petroleum product or derivative, asbestos, polychlorinated biphenyl, hazardous material, pollutant, contaminant, or similar material or substance as defined by the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., as the same may from time to time be amended, and the regulations promulgated pursuant thereto (CERCLA), or now or hereafter defined or regulated as such by any other Law (“Hazardous Material”). Notwithstanding the foregoing, Tenant shall be permitted to bring onto the Premises office cleaning supplies and products normally found in modern offices provided Tenant only brings a reasonable quantity of such supplies and products onto the Premises and Tenant shall at all times comply with all Laws pertaining to the storage, handling, use, disposal, and application of such supplies and products, and all Laws pertaining to the communication to employees and other third parties of any hazards associated with such supplies and products. Tenant shall not cause or permit to exist any release, spillage, emission, or discharge of any Hazardous Material on or about the Premises (“Release”). In the event of a Release in the Premises, Tenant shall immediately notify Landlord in writing, report such Release to the relevant government agencies as, and if, required by applicable Law, and promptly remove the Hazardous Material and otherwise investigate and remediate the Release in accordance with applicable Law and to the reasonable satisfaction of Landlord. Landlord shall have the right, but not the obligation, to enter upon the Premises to investigate and/or remediate the Release in lieu of Tenant, and Tenant shall reimburse Landlord as Additional Rent for the actual reasonable costs of such remediation and investigation. Tenant shall promptly notify Landlord if Tenant acquires knowledge of the presence of any Hazardous Material on or about the Premises, except as Tenant is permitted to bring onto the Premises under this Lease. Landlord shall have the right to inspect and assess the Premises for the purpose of determining whether Tenant is handling any Hazardous Material in violation of this Lease or applicable Law, or to ascertain the presence of any Release. This subsection shall survive the Expiration Date.

 

(b)                                 Tenant shall, and shall cause Tenant Agents to, use the Premises in compliance with all applicable Laws. Tenant shall, at its sole cost and expense, promptly comply with each and all of such Laws, except in the case of required structural changes not triggered by Tenant’s particular use or manner of use or change in use of the Premises, or Tenant’s Alterations. Without limiting the generality of the foregoing, Tenant shall: (i) obtain, at Tenant’s expense, before engaging in Tenant’s business or profession within the Premises, all necessary licenses and permits including, but not limited to, state and local business licenses, and permits; and (ii) remain in compliance with and keep in full force and effect at all times all licenses, consents, and permits necessary for the lawful conduct of Tenant’s business or profession at the Premises. Tenant shall pay all personal property taxes, income taxes, gross receipts taxes, and other taxes, assessments, duties, impositions, and similar charges that are or may be assessed, levied, or imposed upon Tenant or Tenant’s Property. Tenant shall also comply with all applicable Laws that do not relate to the physical condition of the Premises and with which only the occupant can comply, such as laws governing maximum occupancy, workplace smoking, VDT regulations, and illegal business operations, such as gambling. The judgment of any court of competent jurisdiction or the admission of Tenant in any judicial, governmental or regulatory

 

25

 

action, regardless of whether Landlord is a party thereto, that Tenant has violated any of such Laws shall be conclusive of that fact as between Landlord and Tenant.

 

(c)                                  Notwithstanding anything to the contrary in this Lease, if the requirement of any public authority obligates either Landlord or Tenant to expend money in order to bring the Premises and/or any area of the Project into compliance with Laws as a result of: (i) Tenant’s particular use (other than general office use) or alteration of the Premises; (ii) Tenant’s change in the use of the Premises; (iii) the manner of conduct of Tenant’s business or operation of its installations, equipment, or other property therein; (iv) any cause or condition created by or at the instance of Tenant or any Tenant Agent, other than by Landlord’s performance of any work for or on behalf of Tenant; or (v) breach of any of Tenant’s obligations hereunder, then Tenant shall bear all costs of bringing the Premises and/or Project into compliance with Laws, whether such costs are related to structural or nonstructural elements of the Premises or Project.

 

(d)                                 Except to the extent Tenant shall comply as set forth above in this Section 21, during the Term Landlord shall comply with all applicable Laws regarding the Project (including the Premises), including without limitation compliance with Title III of the Americans with Disabilities Act of 1990, 42 U.S.C. §12181 et seq. and its regulations as to the design and construction of the Common Areas.

 

(e)                                  Each party hereto hereby acknowledges and agrees that it will not knowingly violate any applicable Laws regarding bribery, corruption, and/or prohibited business practices as they concern each such party’s respective activities under or in connection with this Lease, and each such party will be solely responsible for and will hold harmless the other party from and against any claims or liabilities in connection with any of such responsible party’s own violations of any such Laws.

 

21.                               NOTICES. Wherever in this Lease it is required or permitted that notice or demand be given or served by either party to this Lease to or on the other party, such notice or demand will be duly given or served if in writing and either: (i) personally served; (ii) delivered by prepaid nationally recognized courier service (e.g., Federal Express, UPS, and USPS) with evidence of receipt required for delivery; (iii) delivered by registered or certified mail, return receipt requested, postage prepaid; or (iv) if an email address is provided by the recipient, emailed; in all such cases addressed to the parties at the addresses set forth below. Each such notice will be deemed to have been given to or served upon the party to which addressed on the date the same is delivered or delivery is refused. Each party has the right to change its address for notices (provided such new address is in the continental United States) by a writing sent to the other party in accordance with this Section, and each party will, if requested, within 10 days confirm to the other its notice address. Notices from Landlord may be given by either an agent or attorney acting on behalf of Landlord. Notwithstanding the foregoing: (a) any notice from Landlord to Tenant regarding ordinary business operations (e.g., exercise of a right of access to the Premises, notice of maintenance activities or Landlord access, changes in rules and regulations, etc.) may be given by written notice left at the Premises or delivered by regular mail, facsimile, or electronic means (such as email) to any person at the Premises whom Landlord reasonably believes is authorized to receive such notice on behalf of Tenant without copies; and (b) invoices, notices of change in billing or notice address, and statements of estimated or reconciliation of Operating Expenses and/or utilities, may be sent by regular mail or electronic means (such as email) to Tenant’s billing contact without copies.

 

	
Tenant:
    	
 
    	
Prior to Commencement Date:
   Passage BIO, Inc.
   Attn: Monique Molloy
   Gene Therapy Program
   University of Pennsylvania
   Perelman School of Medicine
   125 S. 31st St., Ste. 1200
   Philadelphia, PA 19104
   Phone: (215) 573-9020
   Email for billing contact: moniquek@upenn.edu
    	
 
    	
 
    

 

26

 

	
 
    	
 
    	
From and after the Commencement Date:
   Passage BIO, Inc.
   Attn: Monique Molloy
   2001 Market Street, Suite 2850
   Philadelphia, PA 19103
   Phone: (215) 573-9020
   Email for billing contact: moniquek@upenn.edu
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Landlord:
    	
 
    	
Philadelphia Plaza - Phase II LP
   c/o Brandywine Realty Trust
   Attn: Jeff DeVuono, Executive Vice President & Senior
   Managing Director (RE: Building 182)
   FMC Tower at Cira Centre South
   2929 Walnut St., Suite 1700
   Philadelphia, PA 19104
   Phone No. 610-325-5600
   Email: jeff.devuono@bdnreit.com
    	
 
    	
With a copy to:
   Email: Legal.Notices@bdnreit.com
    

 

22.                               BROKERS. Landlord and Tenant each represents and warrants to the other that such representing party has had no dealings, negotiations, or consultations with respect to the Premises or this transaction with any broker or finder other than a Landlord affiliate and Broker. Each party shall indemnify, defend, and hold harmless the other from and against any and all liability, cost, and expense (including reasonable attorneys’ fees and court costs), arising out of or from or related to its misrepresentation or breach of warranty under this Section. Landlord shall pay Broker a commission in connection with this Lease pursuant to the terms of a separate written agreement between Landlord and Broker. This Section shall survive the Expiration Date.

 

23.                               LANDLORD’S LIABILITY. Landlord’s obligations hereunder shall be binding upon Landlord only for the period of time that Landlord is in ownership of the Building, and upon termination of that ownership, Tenant, except as to any obligations that are then due and owing, shall look solely to Landlord’s successor-in-interest in ownership of the Building for the satisfaction of each and every obligation of Landlord hereunder. Upon request and without charge, Tenant shall attorn to any successor to Landlord’s interest in this Lease. Landlord may transfer its interest in the Building without the consent of Tenant, and such transfer or subsequent transfer shall not be deemed a violation on Landlord’s part of any of the terms of this Lease. Landlord shall have no personal liability under any of the terms, conditions, or covenants of this Lease. Tenant and Tenant Agents shall look solely to the equity of Landlord in the Building and/or the rents and/or net proceeds actually received therefrom for the satisfaction of any claim, remedy, or cause of action of any kind whatsoever arising from the relationship between the parties or any rights and obligations they may have relating to the Project, this Lease, or anything related to either, including without limitation as a result of the breach of any Section of this Lease by Landlord. In addition, no recourse shall be had for an obligation of Landlord hereunder, or for any claim based thereon or otherwise in respect thereof or the relationship between the parties, against any past, present, or future Landlord Indemnitee (other than Landlord), whether by virtue of any statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such other liability being expressly waived and released by Tenant with respect to the Landlord Indemnitees (other than Landlord).

 

24.                               RELOCATION. [INTENTIONALLY DELETED]

 

25.                               GENERAL PROVISIONS.

 

(a)                                 Provided Tenant has performed all of the terms and conditions of this Lease to be performed by Tenant, including the payment of Rent, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term, without hindrance from Landlord or anyone lawfully or equitably claiming by, through, or under Landlord, under and subject to the terms and conditions of this Lease and of any deeds of trust now or hereafter affecting all or any portion of the Premises.

 

(b)                                 Subject to the terms and provisions of Section 10, the respective rights and obligations provided in this Lease shall bind and inure to the benefit of the parties hereto, their successors and assigns.

 

27

 

(c)                                  This Lease shall be governed in accordance with the Laws of the State, without regard to choice of law principles. Landlord and Tenant hereby consent to the exclusive jurisdiction of the state and federal courts located in the jurisdiction in which the Project is located.

 

(d)                                 In connection with any litigation or arbitration arising out of this Lease, Landlord or Tenant, whichever is the prevailing party as determined by the trier of fact in such litigation, shall be entitled to recover from the other party all reasonable costs and expenses incurred by the prevailing party in connection with such litigation, including reasonable attorneys’ fees. If, in the context of a bankruptcy case, Landlord is compelled at any time to incur any expense, including attorneys’ fees, in enforcing or attempting to enforce the terms of this Lease or to enforce or attempt to enforce any actions required under the Bankruptcy Code to be taken by the trustee or by Tenant, as debtor-in-possession, then the sum so paid by Landlord shall be awarded to Landlord by the Bankruptcy Court and shall be immediately due and payable by the trustee or by Tenant’s bankruptcy estate to Landlord in accordance with the terms of the order of the Bankruptcy Court.

 

(e)                                  This Lease, which by this reference incorporates all exhibits, riders, schedules, and other attachments hereto, supersedes all prior discussions, proposals, negotiations and discussions between the parties and this Lease contains all of the agreements, conditions, understandings, representations, and warranties made between the parties hereto with respect to the subject matter hereof, and may not be modified orally or in any manner other than by an agreement in writing signed by both parties hereto or their respective successors-in-interest. Whenever placed before one or more items, the words “include”, “includes”, and “including” shall mean considered as part of a larger group, and not limited to the item(s) recited. Except to the extent expressly set forth otherwise in this Lease, neither Landlord, nor anyone acting on Landlord’s behalf, has made any representation, warranty, estimation, or promise of any kind or nature whatsoever relating to the physical condition of the Building or the land under the Building or suitability, including without limitation, the fitness of the Premises for Tenant’s intended use. If any provisions of this Lease are held to be invalid, void, or unenforceable, the remaining provisions hereof shall in no way be affected or impaired and such remaining provisions shall remain in full force and effect.

 

(f)                                   TIME IS OF THE ESSENCE UNDER ALL PROVISIONS OF THIS LEASE, INCLUDING ALL NOTICE PROVISIONS.

 

(g)                                  If Landlord or Tenant is in any way delayed or prevented from performing any obligation (except for payment of any amount due by a party hereunder and the giving of notice with respect to the exercise of a Lease option) due to fire or other casualty (or reasonable delays in the adjustment of insurance claims), acts of terrorism, war or other emergency (including severe weather emergency), governmental delay beyond what is commercially reasonable (provided the party claiming the delay provides reasonable evidence to the other party that the party claiming the delay is diligently pursuing the approval or permit that is the subject to the governmental delay), inability to obtain any materials or services (exclusive of delays in connection with long-lead items requested by Tenant for the Leasehold Improvements), acts of God, strike, lockout or other labor dispute, orders or regulations of any federal, state, county or municipal authority, embargoes, or any other cause beyond such party’s reasonable control (whether similar or dissimilar to the foregoing events) (each, a “Force Majeure Event”), then the time for performance of such obligation shall be excused for the period of such delay or prevention (and such party shall not be deemed in default with respect to the performance of its obligations) and extended for a period equal to the period of such delay or prevention. Financial disability or hardship shall never constitute a Force Majeure Event. No such inability or delay due to a Force Majeure Event shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of Rent (except as otherwise expressly set forth herein), or relieve the other party from any of its obligations under this Lease, or impose any liability upon such party or its agents, by reason of inconvenience or annoyance to the other party, or injury to or interruption of the other party’s business, or otherwise.

 

(h)                                 Excepting payments of Fixed Rent, Operating Expenses, and utilities (which are to be paid as set forth in Sections 4, 5, and 6) and unless a specific time is otherwise set forth in this Lease for any Tenant payments, all amounts due from Tenant to Landlord shall be paid by Tenant to Landlord as Additional Rent within 30 days after receipt of an invoice therefor.

 

(i)                                     Unless Tenant’s financials are publicly available online at no cost to Landlord, within 10 business days after written request by Landlord (but not more than once during any 12-month period unless a default has occurred under this Lease or Landlord has a reasonable basis to suspect that Tenant has suffered a material adverse

 

28

 

change in its financial position, or in the event of a sale, financing, or refinancing by Landlord of all or any portion of the Project), Tenant shall furnish to Landlord, Mortgagee, or Landlord’s prospective mortgagee or purchaser, reasonably requested financial information. In connection therewith and upon Tenant’s request, Landlord and Tenant shall execute a mutually acceptable confidentiality agreement on Landlord’s form therefor.

 

(j)                                    Tenant represents and warrants to Landlord that: (i) Tenant was duly organized and is validly existing and in good standing under the Laws of the jurisdiction set forth for Tenant in the first sentence of this Lease; (ii) Tenant is legally authorized to do business in the State; (iii) the person(s) executing this Lease on behalf of Tenant is(are) duly authorized to do so; and (iv) Tenant has the full corporate or partnership power and authority to enter into this Lease and has taken all corporate or partnership action, as the case may be, necessary to carry out the transaction contemplated herein, so that when executed, this Lease constitutes a valid and binding obligation enforceable in accordance with its terms. From time to time upon Landlord’s request, Tenant will provide Landlord with corporate resolutions or other proof in a form acceptable to Landlord authorizing the execution of this Lease at the time of such execution. Landlord represents and warrants to Tenant that: (i) Landlord was duly organized and is validly existing and in good standing under the Laws of the jurisdiction set forth for Landlord in the first sentence of this Lease; (ii) Landlord is legally authorized to do business in the State; (iii) the person(s) executing this Lease on behalf of Landlord is(are) duly authorized to do so; and (iv) Landlord has the full corporate or partnership power and authority to enter into this Lease and has taken all corporate or partnership action, as the case may be, necessary to carry out the transaction contemplated herein, so that when executed, this Lease constitutes a valid and binding obligation enforceable in accordance with its terms

 

(k)                                 Each party hereto represents and warrants to the other that such party is not a party with whom the other is prohibited from doing business pursuant to the regulations of the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury, including those parties named on OFAC’s Specially Designated Nationals and Blocked Persons List. Each party hereto is currently in compliance with, and shall at all times during the Term remain in compliance with, the regulations of OFAC and any other governmental requirement relating thereto. Each party hereto shall defend, indemnify, and hold harmless the other from and against any and all claims, damages, losses, risks, liabilities, and expenses (including reasonable attorneys’ fees and costs) incurred by the other to the extent arising from or related to any breach of the foregoing certifications. The foregoing indemnity obligations shall survive the Expiration Date.

 

(l)                                     Neither Tenant, nor anyone acting through, under, or on behalf of Tenant, shall have the right to record this Lease, nor any memorandum, notice, affidavit, or other writing with respect thereto.

 

(m)                             Whenever Tenant is required to obtain Landlord’s consent pursuant to this Lease or the exhibits hereto, Landlord’s consent shall not be unreasonably conditioned, withheld, or delayed. Tenant shall not claim any money damages by way of setoff, counterclaim, or defense, based on any claim that Landlord unreasonably withheld its consent, in which case Tenant’s sole and exclusive remedy shall be an action for specific performance, injunction, or declaratory judgment. Notwithstanding the foregoing, if a court determines that Landlord acted maliciously or in bad faith in unreasonably withholding, conditioning, or delaying its consent or approval in an instance where Landlord was obligated not to unreasonably withheld, condition, or delay its consent or approval, then the limitation on damages and remedies provided for in this paragraph shall have no further application.

 

(n)                                 All requests made to Landlord to perform repairs or furnish services, supplies, utilities, or freight elevator usage (if applicable), shall be made online to the extent available (currently such requests shall be made via http://etenants.com/, as the same may be modified by Landlord from time to time) otherwise via email or written communication to Landlord’s property manager for the Building. Whenever Tenant requests Landlord to take any action not required of Landlord under this Lease or give any consent required or permitted to be given by Landlord under this Lease (for example, a request for a Transfer consent, a consent to an Alteration, or a subordination of Landlord’s lien, but other than a request for services, supplies, or utilities which is governed by Section 7(b)), Tenant shall pay to Landlord for Landlord’s administrative and/or professional costs in connection with each such action or consent Landlord’s reasonable costs incurred by Landlord in reviewing and taking the proposed action or consent, including reasonable attorneys’, engineers’ and/or architects’ fees (as applicable). The foregoing amount shall be paid by Tenant to Landlord within 30 days after Landlord’s delivery to Tenant of an invoice for such amount. Tenant shall pay such amount without regard to whether Landlord takes the requested action or gives the requested consent.

 

29

 

(o)                                 All requests made to Landlord to perform repairs or furnish services, supplies, utilities, or freight elevator usage (if applicable), shall be made online to the extent available (currently such requests shall be made via http://etenants.com/, as the same may be modified by Landlord from time to time) otherwise via email or written communication to Landlord’s property manager for the Building.

 

(p)                                 Tenant acknowledges and agrees that Landlord shall not be considered a “business associate” for any purpose under the Health Insurance Portability and Accountability Act of 1996 and all related implementing regulations and guidance.

 

(q)                                 Tenant shall cause any work performed on behalf of Tenant to be performed by contractors who work in harmony, and shall not interfere, with any labor employed by Landlord or Landlord’s contractors. If at any time any of the contractors performing work on behalf of Tenant does not work in harmony or interferes with any labor employed by Landlord, other tenants, or their respective mechanics or contractors, then the permission granted by Landlord to Tenant to do or cause any work to be done in or about the Premises may be withdrawn by Landlord with 48 hours’ written notice to Tenant.

 

(r)                                    This Lease may be executed in any number of counterparts, each of which when taken together shall be deemed to be one and the same instrument. This Lease shall not be binding nor shall either party have any obligations or liabilities or any rights with respect hereto, or with respect to the Premises, unless and until both parties have executed and delivered this Lease. The parties acknowledge and agree that notwithstanding any law or presumption to the contrary, the exchange of copies of this Lease and signature pages by electronic transmission shall constitute effective execution and delivery of this Lease for all purposes, and signatures of the parties hereto transmitted and/or produced electronically shall be deemed to be their original signature for all purposes.

 

(s)                                   Landlord and persons authorized by Landlord may enter the Premises at all reasonable times upon reasonable advance notice or, in the case of an emergency, at any time without notice. Landlord shall not be liable for inconvenience to or disturbance of Tenant by reason of any such entry; provided, however, in the case of repairs or work, such shall be done, so far as practicable, so as to not unreasonably interfere with Tenant’s use of the Premises.

 

(t)                                    If more than one person executes this Lease as Tenant, each of them is jointly and severally liable for the keeping, observing, and performing of all of the terms, covenants, conditions, provisions, and agreements of this Lease to be kept, observed, and performed by Tenant.

 

(u)                                 TO THE EXTENT PERMITTED BY APPLICABLE LAW, LANDLORD AND TENANT HEREBY WAIVE TRIAL• BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER AGAINST THE OTHER ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, OR TENANT’S USE OR OCCUPANCY OF THE BUILDING, ANY CLAIM OR INJURY OR DAMAGE, OR ANY EMERGENCY OR OTHER STATUTORY REMEDY WITH RESPECT THERETO. TENANT CONSENTS TO SERVICE OF PROCESS AND ANY PLEADING RELATING TO ANY SUCH ACTION AT THE PREMISES; PROVIDED, HOWEVER, NOTHING HEREIN SHALL BE CONSTRUED AS REQUIRING SUCH SERVICE AT THE PREMISES. TENANT WAIVES ANY RIGHT TO RAISE ANY NONCOMPULSORY COUNTERCLAIM IN ANY SUMMARY OR EXPEDITED ACTION OR PROCEEDING INSTITUTED BY LANDLORD. LANDLORD, TENANT, ALL GUARANTORS, AND ALL GENERAL PARTNERS EACH WAIVES ANY OBJECTION TO THE VENUE OF ANY ACTION FILED IN ANY COURT SITUATED IN THE JURISDICTION IN WHICH THE BUILDING IS LOCATED, AND WAIVES ANY RIGHT, CLAIM, OR POWER UNDER THE DOCTRINE OF FORUM NON CONVENIENS OR OTHERWISE TO TRANSFER ANY SUCH ACTION TO ANY OTHER COURT.

 

(v)                                 Except in connection with a Tenant holdover or Landlord’s remedies set forth in this Lease for an Event of Default, and notwithstanding anything to the contrary in this Lease, each party waives, and the other shall not be liable to the waiving party for, any claim against the other party or the other party’s agents, invitees, employees, or contractors, for loss of business opportunity, loss of profits, loss of income, economic loss, consequential damages, or punitive damages; the foregoing waiver shall survive the expiration or sooner termination of this Lease..

 

30

 

26.                               EXTENSION OPTION.

 

(a)                                 Provided: (i) no Event of Default exists; (ii) this Lease is in full force and effect; (iii) Tenant is the originally named Tenant or a Permitted Transferee; and (iv) Tenant is not currently subleasing the Premises (other than to a Permitted Transferee and/or Scout Bio), Tenant shall have the right to extend the Term (“Extension Option”) for 60 months beyond the end of the Initial Term (“Extension Term”) by delivering Tenant’s written extension election notice to Landlord no later than the Extension Deadline, with time being of the essence. The “Extension Deadline” means the date that is 12 months prior to the expiration of the Initial Term. The terms and conditions of this Lease during the Extension Term shall remain unchanged except Tenant shall only be entitled to the 1 Extension Term provided above, the annual Fixed Rent for the Extension Term shall be the Extension Rent (as defined below), the Expiration Date shall be the last day of the Extension Term (or such earlier date of termination of this Lease pursuant to the terms hereof), and, except to the extent reflected in the Extension Rent, Landlord shall have no obligation to perform any tenant improvements to the Premises or provide any tenant improvement allowance to Tenant. Upon Tenant’s delivery of its written extension election notice, Tenant may not thereafter revoke its exercise of the Extension Option. Notwithstanding anything to the contrary in this Lease, Tenant shall have no right to extend the Term other than or beyond the 1, 60-month Extension Term described in this paragraph.

 

(b)                                 “Extension Rent” means the fair market extension term base rent for space comparable to the Premises in comparable buildings in the market in which the Project is located. In determining the Extension Rent, Landlord, Tenant and any broker shall take into account all relevant factors including, without limitation, prevailing market allowances and concessions for renewing tenants, space measurement methods and loss factors, the lease term, the size of the space, the location of the building(s), the amenities offered at the building(s), the age of the building(s), and whether Project Expenses and other pass-through expenses are on a triple net, base year, expense stop or other basis. In lieu of directly providing any prevailing market allowances and/or concessions, Landlord may elect to reduce the Extension Rent by the economic equivalent thereof to reflect the fact that such allowances and concessions were not provided directly to Tenant. During the Extension Term, Tenant shall not be entitled to any tenant improvement allowances, free rent periods or other economic concessions (if any) that Tenant was entitled to during the Initial Term, except to the extent such items are indirectly incorporated into the Extension Rent as set forth in this Section. When the Extension Rent is being determined for the first year of the Extension Term, the Extension Rent for the second and all subsequent years of the Extension Term shall also be determined in accordance with the same procedures as are set forth herein and based upon the then prevailing annual rent escalation factor in the applicable leasing market.

 

(c)                                  If Tenant timely exercises the Extension Option and Landlord and Tenant do not agree upon the Extension Rent in writing by the date that is the later of 20 days after Landlord’s receipt of Tenant’s extension notice or 3 months prior to the Extension Deadline, then within 15 days after either party notifies the other in writing that such notifying party desires to determine the Extension Rent in accordance with the procedures set forth in this Section, Landlord and Tenant shall each deliver to the other party a written statement of such delivering party’s determination of the Extension Rent, together with such supporting documentation as the delivering party desires to deliver. Within 10 days after such 15-day period, Landlord and Tenant shall appoint a real estate broker having a minimum of 10 years’ experience in the market in which the Project is located who shall select either Landlord’s determination or Tenant’s determination, whichever the broker finds more accurately reflects the Extension Rent. The broker shall be instructed to notify Landlord and Tenant of such selection within 10 days after such broker’s appointment. The broker shall have no power or authority to select any Extension Rent other than the Extension Rent submitted by Landlord or Tenant nor shall the broker have any power or authority to modify any of the provisions of this Lease, and the decision of the broker shall be final and binding upon Landlord and Tenant. If Landlord and Tenant do not timely agree in writing upon the appointment of the broker, Landlord and Tenant shall each select a broker, who together will select a third qualified broker with a minimum of 10 years’ experience in the market in which the Project is located, who will determine the Extension Rent. If Tenant fails to timely notify Landlord of Tenant’s selection, Landlord shall have the right to unilaterally appoint the broker. The fee and expenses of the broker shall be shared equally by Landlord and Tenant.

 

(d)                                 Upon Tenant’s timely and proper exercise of the Extension Option pursuant to the terms above and satisfaction of the above conditions: (i) the “Term” shall include the Extension Term, subject only to the determination of Extension Rent; and (ii) upon Landlord’s request, Tenant shall execute prior to the expiration of the then-expiring Term, an appropriate amendment to this Lease, in form and content reasonably satisfactory to both

 

31

 

Landlord and Tenant, memorializing the extension of the Term for the ensuing Extension Term (provided Tenant’s failure to execute such amendment shall not negate the effectiveness of Tenant’s exercise of the Extension Option).

 

27.                               TERMINATION OPTION. Provided: (i) no Event of Default; (ii) this Lease is in full force and effect; (iv) Tenant is the originally named Tenant or a Permitted Transferee Tenant has the right to terminate this Lease effective at 11:59 p.m. on the Termination Date, in accordance with and subject to each of the following terms and conditions (“Termination Option”). The “Termination Date” means the last day of the 60th full calendar month after the Fixed Rent Start Date. If Tenant desires to exercise the Termination Option, Tenant must give to Landlord irrevocable written notice of Tenant’s exercise of the Termination Option (“Termination Notice”), together with 50% of the Termination Payment (as defined below). The Termination Notice and 50% of the Termination Payment must be received by Landlord no later than the date that is 12 months prior to the Termination Date, and the balance of the Termination Payment must be received by Landlord no later than 15 days prior to the Termination Date, failing which the Termination Option is deemed waived (provided Landlord reserves the right to waive in writing the requirement that Tenant fully and/or timely pay the Termination Payment). The “Termination Payment” means the sum of the unamortized (amortized on a straight-line basis with interest at 8%) amount as of the Termination Date of the following in connection with this Lease and any amendment to this Lease: (i) brokerage commissions and attorneys’ fees paid by Landlord; (ii) rent concessions; and (iii) total cost incurred by Landlord for improvements to the Premises, including without limitation the Leasehold Improvements (as defined in Exhibit C), plus any and all allowances to Tenant, including without limitation the Improvement Allowance (as defined in Exhibit C). Tenant’s payment of the Termination Payment is a condition precedent to the termination of this Lease on the Termination Date, and such obligation survives the Expiration Date. Tenant acknowledges and agrees that the Termination Payment is not a penalty and is fair and reasonable compensation to Landlord for the loss of expected rentals from Tenant. The Termination Payment is payable only by wire transfer or cashier’s check. Time is of the essence with respect to the dates and deadlines set forth herein. As of the date Tenant delivers the Termination Notice, any and all unexercised rights or options of Tenant to extend the Term or expand the Premises (whether expansion options, rights of first refusal, rights of first offer, or otherwise), and any and all outstanding tenant improvement allowance not properly claimed by Tenant in accordance with this Lease shall immediately terminate and are automatically, without further action required by any party, null and void and of no force or effect. If Tenant timely and properly exercises the Termination Option in accordance with this paragraph, this Lease and the Term shall come to an end on the Termination Date with the same force and effect as if the Term were fixed to expire on such date, the Expiration Date shall be the Termination Date, and the terms and provisions of Section 18 shall apply. Upon Tenant’s request after the Commencement Date, Landlord shall notify Tenant of its calculation of the Termination Payment.

 

28.                               RIGHT OF FIRST OFFER.

 

(a)                                 Provided: (i) no Event of Default exists; (ii) this Lease is in full force and effect; (iv) Tenant is the originally named Tenant or a Permitted Transferee; and (iii) Tenant (together with any Permitted Transferee and/or Scout Bio) has not subleased any portion of the Premises, then, Landlord shall notify Tenant in writing (“Landlord’s ROFO Notice”) when any rentable space located on the 28th or 29th floor of the Building (“Potential ROFO Space”) becomes available for lease (as defined below) from Landlord or Landlord reasonably anticipates that such space will become available for lease from Landlord prior to the last 24 months of the Initial Term. Landlord’s ROFO Notice shall identify the portion of the Potential ROFO Space that is available to lease (such identified space, “ROFO Space”), and include the anticipated availability date and basic market economic terms for the lease of the ROFO Space and, subject to the terms and provisions of this Section, Tenant shall have the one-time right (“ROFO”) to lease all (but not less than all) of the ROFO Space by delivering Tenant’s written notice of such election to Landlord (“Tenant’s ROFO Notice”) within 10 days after Tenant’s receipt of Landlord’s ROFO Notice.

 

(b)                                 Upon Tenant’s delivery of Tenant’s ROFO Notice, Tenant may not thereafter revoke Tenant’s exercise of the ROFO. If an Event of Default exists at any time after Landlord receives Tenant’s ROFO Notice but before the first day that Tenant commences to lease the ROFO Space, Landlord, at Landlord’s option, shall have the right to nullify Tenant’s exercise of the ROFO with respect to the ROFO Space. If Tenant notifies Landlord that Tenant elects not to lease the ROFO Space or if Tenant fails to timely deliver Tenant’s ROFO Notice to Landlord with respect thereto, then Landlord shall have the right to enter into a lease agreement(s) for the ROFO Space under one or more leases containing such terms as Landlord deems acceptable in Landlord’s sole discretion, and the ROFO shall be void and have no further force or effect with respect to such space; provided, however, the ROFO shall survive with respect to the balance of the Potential ROFO Space such that Landlord shall send a Landlord’s ROFO Notice

 

32

 

when Potential ROFO Space becomes available for lease or Landlord reasonably anticipates that such space will become available for lease from Landlord prior to the last 36 months of the Initial Term. Notwithstanding the foregoing, if Tenant receives a Landlord’s ROFO Notice during the first 12 months of the Initial Term and Tenant notifies Landlord that Tenant elects not to lease such ROFO Space or if Tenant fails to timely deliver Tenant’s ROFO Notice to Landlord with respect thereto, then if Landlord fails to enter into a lease for such ROFO Space within 9 months after the date of Landlord’s ROFO Notice, then Landlord shall be required to submit a new Landlord’s ROFO Notice to Tenant with respect to such ROFO Space prior to leasing such space to any third party.

 

(c)                                  The ROFO shall be subject, subordinate, and in all respects inferior to the rights of any third-party tenant leasing space at the Building as of the date of this Lease that have existing rights in their existing leases to the ROFO Space. Landlord may at any time choose to use any space that is or about to become vacant within the Building for marketing or property management purposes without in any such case notifying or offering such space to Tenant or giving rise to any right of Tenant hereunder. Space is “available to lease” if and when: (i) the lease for any tenant of all or a portion of the space expires or is otherwise terminated, provided space shall not be deemed to be or become available if the space is assigned or subleased by the tenant of the space, or relet by the tenant or subtenant of the space by renewal, extension, or new lease; and (ii) to the extent that all or a portion of the ROFO Space is available for lease from Landlord as of the date of this Lease, Landlord has entered into a lease with a third-party tenant for such currently available ROFO Space and the term of that lease has expired (including, without limitation, the expiration of any lease term extension period(s), regardless of whether the extension right or agreement is contained in such lease or is agreed to at any time by Landlord and the tenant under such lease or otherwise) or been terminated.

 

(d)                                 Except to the extent expressly set forth in Landlord’s ROFO Notice to the contrary, if Tenant elects to lease the ROFO Space, such space shall become subject to this Lease upon the same terms and conditions as are then applicable to the original Premises, except that Tenant shall take the ROFO Space in “AS IS” condition and Landlord shall have no obligation to make any improvements or alterations to the ROFO Space, the term of Tenant’s lease of the ROFO Space shall be the term specified in Landlord’s ROFO Notice, and Tenant shall not be entitled to any tenant improvement allowances, free rent periods, or other special concessions granted to Tenant with respect to the original Premises. Landlord shall determine the exact location of any demising walls (if any) for the ROFO Space. Upon Tenant’s leasing of the ROFO Space, the “Premises” shall include the ROFO Space and, except as otherwise set forth in this Section, all computations made under this Lease based upon or affected by the rentable area of the Premises shall be recomputed to include the ROFO Space.

 

(e)                                  If Tenant timely exercises its right to lease the ROFO Space: (i) Tenant’s lease of the ROFO Space shall commence upon the later of: (A) the date of availability specified in Landlord’s ROFO Notice; or (B) 180 days following the date Landlord tenders possession of the ROFO Space in vacant condition; and (ii) upon Landlord’s request, Tenant shall execute an appropriate new lease or amendment, in form and content reasonably satisfactory to both Landlord and Tenant, memorializing the expansion of the Premises as set forth in this Section (provided Landlord or Tenant’s failure to execute such lease or amendment shall not negate the effectiveness of Tenant’s exercise of the ROFO).

 

[SIGNATURES ON FOLLOWING PAGE]

 

33

 

TENANT CONFESSION CERTIFICATION: Tenant acknowledges and agrees that any failure of Tenant to execute Section 17 of this Lease shall be an absolute bar from Tenant (or Tenant’s successors or assigns) claiming, alleging or petitioning, including, but not limited to, in any petition to open said confession, that such Section is invalid and not binding upon Tenant (or Tenant’s successors or assigns).

 

IN WITNESS WHEREOF, the parties hereto have executed this Lease under seal as of the day and year first-above stated.

 

	
LANDLORD:

PHILADELPHIA   PLAZA - PHASE II LP
    	
 
    	
TENANT:

PASSAGE   BIO, INC.
    
	
 
    	
 
    	
 
    
	
By:   Brandywine Commerce Sub II LLC, its general partner
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   George Johnstone
    	
 
    	
By:
    	
/s/   Stephen Squinto
    
	
Name:
    	
George   Johnstone
    	
 
    	
Name:
    	
Stephen   Squinto
    
	
Title:
    	
EVP,   Operations
    	
 
    	
Title:
    	
CEO
    
	
Date:
    	
9/25/2018
    	
 
    	
Date:
    	
9/25/18
    

 

	
Exhibits:
    	
 
    
	
Exhibit A:
    	
Location   Plan of Premises
    
	
Exhibit B:
    	
Form of   COLT
    
	
Exhibit C:
    	
Leasehold   Improvements
    
	
Exhibit D:
    	
Cleaning   Specifications
    
	
Exhibit E:
    	
Rules and   Regulations
    

 

[Signature Page]

 

 

EXHIBIT A
 LOCATION PLAN OF PREMISES (NOT TO SCALE)

 

 

A-1

 

EXHIBIT B
  FORM OF COLT

 

CONFIRMATION OF LEASE TERM

 

THIS CONFIRMATION OF LEASE TERM (“COLT”) is made as of                       between                             , (“Landlord”) and                                                  , (“Tenant”).

 

1.                                      Landlord and Tenant are parties to that certain lease dated            (“Lease Document”), with respect to the premises described in the Lease Document, known as Suite   consisting of approximately rentable square feet (“Premises”), located at                                   .

 

2.                                      All capitalized terms, if not defined in this COLT, have the meaning give such terms in the Lease Document.

 

3.                                      Tenant has accepted possession of the Premises in their “AS IS” “WHERE IS” condition and all improvements required to be made by Landlord per the Lease Document have been completed [except for the following punch list items:           ].

 

4.                                      The Lease Document provides for the commencement and expiration of the Term of the lease of the Premises, which Term commences and expires as follows:

 

a.              Commencement of the Term of the Premises:

 

b.              Expiration of the Term of the Premises:

 

5.                                      The required amount of the Security Deposit and/or Letter of Credit per the Lease Document is $                                                                     . Tenant has delivered the Security Deposit and/or Letter of Credit per the Lease Document in the amount of $             .

 

6.                                      The Building Number is            and the Lease Number is           .

 

	
LANDLORD:

PHILADELPHIA   PLAZA - PHASE II LP
    	
 
    	
TENANT:

PASSAGE   BIO, INC.
    
	
 
    	
 
    	
 
    
	
By:   Brandywine Commerce Sub II LLC, its general partner
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Title:
    	
 
    	
 
    	
Title:
    	
 
    
	
Date:
    	
 
    	
 
    	
Date:
    	
 
    

 

B-1

 

EXHIBIT C
 LEASEHOLD IMPROVEMENTS

 

This Exhibit C-Leasehold Improvements (“Exhibit”) is a part of the Lease to which this Exhibit is attached. Capitalized terms not defined in this Exhibit shall have the meanings set forth for such terms in the Lease.

 

1.              Process.

 

(a)                                 Proposed CD’s. Tenant has delivered to Landlord, in hard copy and .pdf format, proposed construction drawings and specifications prepared by the Architect for the Leasehold Improvements stamped for permit filing, together with any underlying detailed information Landlord may require for its review (“Proposed CD’s”), for Landlord’s approval in accordance with Section 1(b) below (once approved, the “CD’s”). The CD’s may include construction working drawings, mechanical, electrical, plumbing, and other technical specifications, and the finishing details, including wall finishes and colors, and technical and mechanical equipment installation, if any, detailing installation of the Leasehold Improvements, and shall be based on the space plan attached hereto as Exhibit C-1. The design of the Leasehold Improvements must be consistent with sound architectural and construction practices in first-class office buildings comparable in size and market to the Building. “Architect” means the licensed architect engaged by Tenant, subject to Landlord’s reasonable approval, to prepare the CD’s. “Leasehold Improvements” means the improvements, alterations, and other physical additions to be made or provided to, constructed, delivered, or installed at, or otherwise acquired for, the Premises in accordance with the CD’s, or otherwise approved in writing by Landlord or paid for in whole or in part from the Improvement Allowance (as defined in Section 10 below), including without limitation all necessary demising walls and associated work. Any provision of this Exhibit to the contrary notwithstanding, the Leasehold Improvements shall not include any telephone, telephone switching, telephone, data, and security cabling and systems, furniture, computers, servers, Tenant’s trade fixtures and equipment, and other personal property installed (or to be installed) by or on behalf of Tenant in the Premises or any of the associated permits for any of the foregoing (“Tenant’s Equipment”).

 

(b)                                 Landlord’s Approval of CD’s. Within 1 business days after Landlord’s receipt of the Proposed CD’s, Landlord shall notify Tenant in writing as to whether Landlord approves or disapproves such Proposed CD’s, which approval shall not be unreasonably withheld, and may contain conditions. If Landlord disapproves of the Proposed CD’s, or approves the Proposed CD’s subject to modifications, Landlord shall state in its written notice to Tenant the reasons therefor, and Tenant, upon receipt of such written notice, shall revise and resubmit the Proposed CD’s to Landlord for review within 5 business days thereafter and Landlord’s reasonable approval, which approval shall not be unreasonably withheld. This process shall continue until the Proposed CD’s are approved by Landlord. All design, construction, and installation in connection with the Leasehold Improvements shall conform to the requirements of applicable building, plumbing, and electrical codes and the requirements of any authority having jurisdiction over, or with respect to, such Leasehold Improvements. Landlord’s approval of the CD’s is not a representation that: (i) such CD’s are in compliance with all applicable Laws; or (ii) the CD’s or design is sufficient for the intended purposes. Tenant shall be responsible for all elements of the design of the Leasehold Improvements and the CD’s (including, without limitation, compliance with Laws, functionality of design, the structural integrity of the design, the configuration of the Premises, and the placement of Tenant’s furniture, appliances, and equipment), and Landlord’s approval of the Leasehold Improvements or the CD’s shall in no event relieve Tenant of the responsibility for such design, or create responsibility or liability on Landlord’s part for their completeness, design sufficiency, or compliance with Laws.

 

(c)                                  TEA for Construction Costs; Contractor Selection. After Landlord’s approval of the CD’s, Landlord shall submit the CD’s to Landlord’s selected general contractors for bidding. Tenant shall have the right to participate in the selection of the general contractor for the Leasehold Improvements. Landlord shall competitively bid the Leasehold Improvements with a minimum of three qualified contractors, including Haas Peters and StructureTone and select the lowest qualified bidder. Tenant may submit one contractor of its choice to be included in the bid process, provided such contractor is union, reasonably approved by Landlord, meets Landlord’s insurance requirements, and complies with all contractor rules and regulations. Landlord shall then prepare a TEA for the Construction Costs, and deliver such TEA to Tenant for approval in accordance with Section 1(d) below. “TEA” means a Tenant expenditure authorization, which may be in the form of a written document and/or an email sent via electronic transmittal to Tenant’s Representative (as defined in Section 1(g)). “Construction Costs” means all costs in the permitting, demolition, construction, acquisition, and installation of the Leasehold Improvements, including, without limitation,

 

C-1

 

contractor fees, overhead, and profit, and the cost of all labor and materials supplied by the general contractor engaged by Landlord (“Contractor”), suppliers, independent contractors, and subcontractors arising in connection with the Leasehold Improvements.

 

(d)                                 Tenant’s Approval Process. Within 5 business days after Tenant’s receipt of a TEA from Landlord, Tenant shall notify Landlord in writing as to whether Tenant approves or disapproves of such TEA, which approval shall not be unreasonably withheld, conditioned, or delayed. If Tenant disapproves of a TEA: (i) Tenant shall provide Landlord with a reasonably detailed written statement setting forth the reason(s) for such disapproval; (ii) Landlord and Tenant shall work together in good faith to promptly resolve any open issues; (iii) Landlord shall promptly have the TEA revised and resubmitted to Tenant for Tenant’s approval; and (iv) this process shall continue until Tenant approval is given, except that Tenant shall approve or disapprove any revisions within 2 business days after Tenant’s receipt thereof. Tenant’s disapproval of a TEA shall be deemed unreasonable if the TEA is substantially based on the CD’s. If Tenant fails to timely deliver to Landlord Tenant’s written, reasonable disapproval, Tenant shall be deemed to have given its approval, and Landlord shall be authorized (but not required) to proceed thereon.

 

(e)                                  Change Orders. Tenant shall have the right to make changes to the CD’s provided: (i) such changes are approved in writing by Landlord (“Approved Changes”); and (ii) the net costs to Landlord (including any delays) arising therefrom (the “Additional Costs”) shall be included in Improvement Costs. It shall be deemed reasonable for Landlord to deny consent to a requested change to the CD’s if Landlord determines that Substantial Completion will be delayed. Landlord shall have the right to issue a TEA for Additional Costs, which shall be included in the total Construction Costs.

 

(f)                                   Tenant’s and Landlord’s Representative. “Tenant’s Representative” means Monique Molloy, whose email address is moniquek@upenn.edu. “Landlord’s Representative” means Joe Traynor, whose email address is joseph.traynor@bdnreit.com. Each party shall have the right to designate a substitute individual as Tenant’s Representative or Landlord’s Representative, as applicable, from time to time by written notice to the other. All correspondence and information to be delivered to Tenant with respect to this Exhibit shall be delivered to Tenant’s Representative, and all correspondence and information to be delivered to Landlord with respect to this Exhibit shall be delivered to Landlord’s Representative. Notwithstanding anything to the contrary in the Lease, communications between Landlord’s Representative and Tenant’s Representative in connection with this Exhibit may be given via electronic means such as email without copies. Tenant’s Representative shall have authority to grant any consents or approvals by Tenant under this Exhibit, and for authorizing and executing any and all change orders or other documents in connection with this Exhibit, and Landlord shall have the right to rely thereon. Tenant hereby ratifies all actions and decisions with regard to the Leasehold Improvements that Tenant’s Representative may have taken or made prior to the execution of the Lease. Landlord shall not be obligated to respond to or act upon any plan, drawing, change order, approval, or other matter relating to the Leasehold Improvements until it has been executed by Tenant’s Representative or a senior officer of Tenant.

 

2.              Completion of Leasehold Improvements.

 

(a)                                 Allocation. Except to the extent that the CD’s, the Approved Changes, and/or this Exhibit provide that Tenant shall complete a portion of the Leasehold Improvements, Landlord shall cause the Leasehold Improvements to be made, constructed, or installed in a good and workmanlike manner substantially in accordance with the CD’s and Approved Changes.

 

(b)                                 Building Standards. Except as expressly set forth otherwise in the CD’s and/or the Approved Changes, Landlord shall cause the Leasehold Improvements to be constructed or installed to Building Standards; provided, however, Landlord shall have the right to substitute, after providing written notice to Tenant and providing Tenant with an opportunity to approve said substitution comparable non-Building Standard materials, fixtures, finishes, and items to the extent Building Standard items are not readily available. “Building Standard” means the quality and quantity of materials, finishes, ways and means, and workmanship specified from time to time by Landlord as being standard for leasehold improvements at the Building or for other areas at the Building, as applicable.

 

3.              Central Systems. Neither Tenant nor any of its agents or contractors shall alter, modify, or in any manner disturb any of the Building systems or components within the Building core servicing the tenants of the Building or Building operations generally (such as base building plumbing, electrical, heating, ventilation and air conditioning, fire

 

C-2

 

protection and fire alert systems, elevators, structural systems, building maintenance systems, or anything located within the core of the Building or central to the operation of the Building).

 

4.              Tenant’s Equipment. Tenant shall be solely responsible for the procuring, ordering, delivery, and installation of Tenant’s Equipment in compliance with all Laws. Tenant shall coordinate the installation of Tenant’s Equipment (including cabling) at the Premises with Contractor’s completion of the Leasehold Improvements.

 

5.              Cooperation. Tenant and Tenant’s Representative shall cooperate with Landlord, Architect, and the Contractor to promote the efficient and expeditious completion of the Leasehold Improvements.

 

6.              Substantial Completion. “Substantial Completion” means the later of the date on which: (i) the Leasehold Improvements have been completed in accordance with the CD’s (and any Approved Changes) except for Punch List work; and (ii) Landlord has obtained a final inspection approval, or temporary or permanent certificate of occupancy from the applicable local governing authority. If issuance of such approval or certificate is conditioned upon Tenant’s installation of its equipment, racking, cabling, or furniture, or completion of any other work or activity in the Premises for which Tenant is responsible, and the governmental authority will not issue the approval or certificate, or schedule an inspection of the Leasehold Improvements due to Tenant’s failure to complete any work, installation, or activity (including the installation of the Tenant’s Equipment), then Substantial Completion shall be deemed to have occurred without Landlord having obtained the approval or temporary or permanent certificate of occupancy and correspondingly, the Commencement Date shall be established. “Punch List” means the list of items of Leasehold Improvements, if any, that require correction, repair, or replacement, do not materially affect Tenant’s ability to use the Premises for the Permitted Use, and are listed in a writing prepared in accordance with Section 7 below.

 

7.              Punch List. Prior to Substantial Completion, the Architect shall prepare a preliminary Punch List in writing for Landlord’s and Tenant’s review. Landlord shall schedule a walkthrough of the Premises with Tenant’s Representative to occur on Substantial Completion, from which Landlord and Tenant shall generate a final Punch List. Landlord shall diligently pursue completion of any Punch List work, and make commercially reasonable efforts to complete all Punch List work within 30 days after Substantial Completion. Landlord shall obtain from Contractor a commercially customary one-year warranty for the Leasehold Improvements, and Landlord shall use commercially reasonable efforts to make a claim under such warranties on behalf of Tenant to the extent necessary. The taking of possession of the Premises by Tenant shall constitute an acknowledgment by Tenant that the Premises are in good condition and that all work and materials provided by Landlord are satisfactory except as to (i) any latent defects discovered within the first 12 months of the Term; (ii) items contained in the Punch List; and (iii) items covered by the one-year warranty.

 

8.              Tenant Delay. In the event of Tenant Delay, Substantial Completion shall be deemed to be the date Substantial Completion would have occurred but for Tenant Delays. Landlord shall have no obligation to expend any funds, employ any additional labor, contract for overtime work, or otherwise take any action to compensate for any Tenant Delay. Tenant shall reimburse Landlord for any incremental costs in labor, materials, and supplies incurred due to Tenant Delay. “Tenant Delay” means any actual delay in Substantial Completion as a result of any of the following: (i) Tenant fails to fully and timely comply with the terms of this Exhibit, including without limitation Tenant’s failure to comply with any of the deadlines specified in this Exhibit; (ii) Tenant changes the CD’s, including any Approved Changes, notwithstanding Landlord’s approval of such changes (provided Landlord notified Tenant in writing of the anticipated period of Tenant Delay and Tenant thereafter elects to proceed with such Approved Changes); (iii) delays caused by any governmental or quasi-governmental authorities arising from the Leasehold Improvements being designed to include items or improvements not typically found in office space of other comparable buildings in the market in which the Building is located; (iv) Tenant or any Tenant Agent interferes with the work of Landlord or Contractor including, without limitation, during any pre-commencement entry period or in connection with Tenant’s installation of Tenant’s Equipment; or (v) any other delay solely caused by Tenant or any Tenant Agent.

 

9.              Early Access. Subject to the terms herein and Tenant’s compliance with all applicable Laws, Tenant shall have reasonable access to the Premises (“Early Access”) during completion of the Leasehold Improvements to coordinate installation of Tenant’s cabling and wiring and during the 2-week period immediately prior to Substantial Completion to install its furniture, fixtures, and equipment; provided in any such case Tenant’s Early Access does not unreasonably interfere with, or unreasonably delay completion of the Leasehold Improvements, and Tenant first provides Landlord with a certificate of insurance as required under the Lease. Tenant shall be fully responsible for all costs related to Early Access. All insurance, waiver, indemnity, and alteration provisions of the Lease shall be in full force and effect

 

C-3

 

during Early Access. Tenant shall ensure that its phone/data, security, and other vendors comply with all applicable Laws and pull their permits and perform their work in conjunction with the Leasehold Improvements so as not to delay completion of the Leasehold Improvements and any and all inspections therefor. Tenant and its contractors shall coordinate all activities with Landlord in advance and in writing, and shall comply with Landlord’s instructions and directions so that Tenant’s early entry does not interfere with or delay any work to be performed by Landlord. Any delay resulting from Early Access, including without limitation due to a Tenant vendor’s work delaying Landlord’s ability to obtain its permits, shall be deemed a Tenant Delay.

 

10.       Costs.

 

(a)                                 Improvement Allowance. Landlord shall provide the Improvement Allowance to Tenant in accordance with this Exhibit. “Improvement Allowance” means an amount equal to the product of $45.00 multiplied by the total rentable square footage of the Premises, which product equals $399,915.00. The Improvement Allowance shall be applied solely towards payment of the Improvement Costs, but specifically excluding costs for Tenant’s Equipment, cabling, moving, utilities, and movable furniture, fixtures, or equipment that has no permanent connection to the structure of the Building. Notwithstanding the foregoing, if, after payment in full of the Leasehold Improvements and no outstanding Event of Default, there are unused Improvement Allowance dollars, then by written notice to Landlord received no later than the 6-month anniversary of the Commencement Date, Tenant may apply up to $37,325.40 of the Improvement Allowance towards the actual and reasonable, out-of-pocket, documented costs incurred by Tenant for moving to the Premises and voice and data cabling expenses (“Reimbursable Costs”). Subject to the preceding sentence, Landlord shall reimburse Tenant up to the total Reimbursable Costs within 30 days after Landlord’s receipt of an invoice therefor (no more frequently than once per month) together with reasonable supporting documentation, evidence of payment in full by Tenant, and unconditional lien waivers (on Landlord’s form therefor). Any portion of the Reimbursable Costs for which Tenant has not submitted an invoice for reimbursement on or before the 6-month anniversary of the Commencement Date shall be deemed waived by Tenant and will not be paid to Tenant or credited against Rent. Tenant shall mark and tag all cabling installed by it or on its behalf by no later than Substantial Completion, and notwithstanding anything to the contrary in this Lease, shall surrender such cabling with the Premises by no later than the Surrender Date. “Improvement Costs” means the sum of: (i) the Planning Costs; (ii) the Construction Costs; and (iii) Construction Management Fee (as defined in Section 10(b) below). “Planning Costs” means all actual, reasonable, documented, third-party costs incurred by Tenant and directly related to the design of the Leasehold Improvements including, without limitation, the professional fees of any engineers, consultants, architects, and/or space planners and other professionals preparing and/or reviewing the CD’s. If, as of the 6-month anniversary of the Commencement Date, any portion of the Improvement Allowance remains unused, the Improvement Allowance shall be deemed reduced by such unused amount, and Landlord shall retain such undisbursed portion of the Improvement Allowance which shall be deemed waived by Tenant and shall not be paid to Tenant, credited against Rent, or applied to Tenant’s moving costs or prior lease obligations.

 

(b)                                 Construction Management Fee. Tenant must pay the Construction Management Fee to Landlord as compensation for Landlord’s construction management services under this Exhibit. “Construction Management Fee” means a fee in the amount of 2% of the Construction Costs. Landlord may deduct all or a portion of Construction Management Fee from the Improvement Allowance, and/or invoice Tenant therefor if the entirety of the Improvement Allowance has been expended, payable to Landlord within 30 days after the date of such invoice.

 

(c)                                  Excess Costs. Tenant shall be solely responsible for all Improvement Costs in excess of the Improvement Allowance (“Excess Costs”). Landlord may issue a TEA for Excess Costs, after the Improvement Allowance is exhausted. Tenant shall pay Excess Costs to Landlord within 30 days after receipt of an invoice therefor from time to time, provided Landlord shall have the right to invoice Tenant with respect to particular components of the Leasehold Improvements and the applicable amount of Excess Costs (as reasonably determined by Landlord) upon substantial completion of such component. Notwithstanding anything to the contrary herein, if the requirement of any public authority obligates either Landlord or Tenant to expend money in order to bring the Premises and/or any area of the Project into compliance with Laws solely as a result of the Leasehold Improvements (as opposed to a pre-existing violation), then Tenant shall bear all costs of bringing the Premises and/or Project into compliance with Laws, whether such costs are related to structural or nonstructural elements of the Premises or Project.

 

C-4

 

EXHIBIT C-1
 SPACE PLAN (NOT TO SCALE)

 

 

C-1-1

 

EXHIBIT D
 CLEANING SPECIFICATIONS

 

 

These specifications are subject to change without notice. The cost for any cleaning over and above the standard cleaning specifications are to be paid by tenant.

 

D-1

 

EXHIBIT E
 RULES AND REGULATIONS

 

 

RULES AND REGULATIONS

 

1.                                      Sidewalks, entrances, passages, elevators, vestibules, stairways, corridors, halls, lobby, and any other part of the Building shall not be obstructed or encumbered by Tenant or used for any purpose other than ingress or egress to and from the Premises. Landlord shall have the right to control and operate the common portions of the Building and exterior facilities furnished for common use of the Building’s tenants (such as the eating, smoking, and parking areas) in such a manner as Landlord deems appropriate.

 

2.                                      No awnings or other projections may be attached to the outside walls of the Building without the prior written consent of Landlord. All drapes and window blinds shall be of a quality, type, design, and color, and attached in a manner approved in writing by Landlord.

 

3.                                      No showcases, display cases, or other articles may be put in front of or affixed to any part of the exterior of the Building, or placed in hallways or vestibules without the prior written consent of Landlord. All supplies shall be kept in designated storage areas. Tenant shall not use or permit the use of any portion of the Project for outdoor storage. No mats, trash, or other objects may be placed in the public corridors, hallways, stairs, or other common areas of the Building.

 

4.                                      Restrooms and other plumbing fixtures shall not be used for any purposes other than those for which they were constructed, and no debris, rubbish, rags, or other substances may be thrown therein. Only standard toilet tissue may be flushed in commodes. All damage resulting from any misuse of these fixtures shall be the responsibility of the tenant who, or whose employees, agents, visitors, clients, or licensees, caused such damage. Bathing and changing of clothes is permitted only in designated shower/locker facilities, and is not permitted in restrooms.

 

5.                                      Tenant shall not, without the prior written consent of Landlord, mark, paint, drill into, bore, cut, string wires, or in any way deface any part of the Premises or the Building except for the reasonable hanging of decorative or instructional materials on the walls of the Premises. Tenant shall remove seasonal decorations that are visible outside of the Premises within 30 days after the end of the applicable season.

 

6.                                      Tenant shall not construct, install, maintain, use, or operate in any part of the Project any electrical device, wiring, or other apparatus in connection with a loud speaker system or other sound/communication system that may be heard outside the Premises.

 

7.                                      No bicycles, mopeds, skateboards, scooters, or other vehicles may be brought into, used, or kept in or about the Building or in the common areas of the Project other than in locations specifically designated thereof. No animals or pets of any kind (other than a service animal performing a specified task), including without limitation fish, rodents, and birds, may be brought into, used, or kept in or about the Building Rollerblading and roller skating is not permitted in the Building or in the common areas of the Project

 

8.                                      Tenant shall not cause or permit any unusual or objectionable odors to be produced upon or permeate from the Premises.

 

9.                                      No space in the Project may be used for the manufacture of goods for sale in the ordinary course of business, or for sale at auction of merchandise, goods, or property of any kind.

 

 

E-1

 

 

10.                               Tenant shall not make any unseemly or disturbing noises, or disturb or interfere with the occupants of the Building or neighboring buildings or residences by voice, musical instrument, radio, talking machines, whistling, singing, lewd behavior, or in any other way All passage through the Building’s hallways, elevators, and main lobby shall be conducted in a quiet, businesslike manner Tenant shall not commit or suffer any waste upon the Premises, the Building, or the Project, or any nuisance, or do any other act or thing that may disturb the quiet enjoyment of any other tenant in the Building or Project.

 

11.                               Tenant shall not throw anything out of the doors, windows, or down corridors or stairs of the Building.

 

12.                               Tenant shall not place, install, or operate in the Premises or in any part of the Project, any engine, stove, machinery, or electrical equipment not directly related to its business, including without limitation space heaters, coffee cup warmers, and small refrigerators, conduct mechanical operations, cook thereon or therein, or place or use in or about the Premises or the Project any explosives, gasoline, kerosene oil, acids, caustics, canned heat, charcoal, or any other flammable, explosive or hazardous material, without the prior written consent of Landlord Notwithstanding the foregoing, Tenant shall have the right to install and use a coffee machine, microwave oven, toaster, ice maker, refrigerator, and/or vending machine in compliance with all applicable Laws in a kitchen or break room designated as such by Landlord, provided Tenant shall use only stainless steel braided hoses. All supply waterlines shall be of copper (not plastic) tubing.

 

13.                               No smoking (including without limitation of cigarettes, cigars, and e-cigarettes) is permitted anywhere in the Premises, the Building, or the Project, including but not limited to restrooms, hallways, elevators, stairs, lobby, exit and entrance vestibules, sidewalks, and parking lot areas, provided smoking shall be permitted in any Landlord-designated exterior smoking area. All cigarette ashes and butts shall be deposited in the containers provided for such disposal, and shall not be disposed of on sidewalks, parking lot areas, or toilets.

 

14.                               Tenant shall not install any additional locks or bolts of any kind upon any door or window of the Building without the prior written consent of Landlord. Tenant shall, upon the termination of its tenancy, return to Landlord all keys for the Premises, either furnished to or otherwise procured by Tenant, and all security access cards to the Building.

 

15.                               Tenant shall keep all doors to hallways and corridors closed during Business Hours except as they may be used for ingress or egress.

 

16.                               Tenant shall not use the name of the Building, Project, Landlord, or Landlord’s agents or affiliates in any way in connection with its business except as the address thereof. Landlord shall also have the right to prohibit any advertising by Tenant that, in Landlord’s sole opinion, tends to impair the reputation of the Building or its desirability as a building for offices, and upon written notice from Landlord, Tenant shall refrain from or discontinue such advertising.

 

17.                               Tenant shall be responsible for all security access cards issued to it, and shall secure the return of all security cards from all employees terminating employment with them. Lost cards shall cost $35.00 per card to replace. No person/company other than Building tenants and/or their employees may have security access cards unless Landlord grants prior written approval.

 

18.                               All deliveries to the Building that involve the use of a hand cart, hand truck, or other heavy equipment or device shall be made via the freight elevator, if such freight elevator exists in the Building. Tenant shall be responsible to Landlord for any loss or damage resulting from any deliveries made by or for Tenant to the Building. Tenant shall procure and deliver to Landlord a certificate of insurance from its movers, which certificate shall name Landlord as an additional insured.

 

19.                               Landlord reserves the right to inspect all freight to be brought into the Building, and to exclude from the Building all freight or other material that violates any of these rules and regulations.

 

 

E-2

 

 

20.                               Tenant shall refer all contractors, contractor’s representatives, and installation technicians rendering any service on or to the Premises, to Landlord for Landlord’s approval and supervision before performance of any contractual service or access to Building. This provision shall apply to all work performed in the Building including installation of telephones, telegraph equipment, electrical devices and attachments, and installations of any nature affecting floors, walls, woodwork, trim, windows, ceilings, equipment, or any other physical portion of the Building. Landlord reserves the right to require that all agents of contractors and vendors sign in and out of the Building.

 

21.                               If Tenant desires to introduce electrical, signaling, telegraphic, telephonic, protective alarm or other wires, apparatus or devices, Landlord shall direct where and how the same are to be placed, and except as so directed, no installation boring or cutting shall be permitted, without Landlord’s consent, not to be unreasonably withheld, conditioned, or delayed. Landlord shall have the right to prevent and to cut off the transmission of excessive or dangerous current of electricity or annoyances into or through the Building or the Premises and to require the changing of wiring connections or layout at Tenant’s expense, to the extent that Landlord may reasonably deem necessary, and further to require compliance with such reasonable and uniformly applied rules as Landlord may establish relating thereto, and in the event of non-compliance with the requirements or rules, Landlord shall have the right immediately to cut wiring or to do what it reasonably considers necessary to remove the danger, annoyance, or electrical interference with apparatus in any part of the Building. All wires installed by Tenant must be clearly tagged at the distributing boards and junction boxes and elsewhere where required by Landlord, with the suite number of the office to which such wires lead, and the purpose for which the wires respectively are used, together with the name of the concern, if any, operating such wires

 

22.                               Landlord reserves the right to exclude from the Building at all times any person who is not known or does not properly identify himself or herself to Landlord’s management or security personnel.

 

23.                               Landlord may require, at its sole option, all persons entering the Building outside of Business Hours to register at the time they enter and at the time they leave the Building.

 

24.                               No space within the Building, or in the common areas such as the parking lot, may be used at any time for the purpose of lodging, sleeping, or for any immoral or illegal purposes.

 

25.                               Tenant shall not use the hallways, stairs, lobby, or other common areas of the Building as lounging areas during breaks or during lunch periods.

 

26.                               No canvassing, soliciting, or peddling is permitted in the Building or its common areas.

 

27.                               Tenant shall comply with all Laws regarding the collection, sorting, separation, and recycling of garbage, trash, rubbish and other refuse, and Landlord’s recycling policy for the Building.

 

28.                               Landlord does not maintain suite finishes that are non-standard, such as kitchens, bathrooms, wallpaper, special lights, etc. However, should the need arise for repair of items not maintained by Landlord, Landlord at its sole option, may arrange for the work to be done at tenant’s expense.

 

29.                               Tenant shall clean at least once a year, at its expense, drapes in the Premises that are visible from the exterior of the Building.

 

30.                               No pictures, signage, advertising, decals, banners, etc. may be placed in or on windows in such a manner as they are visible from the exterior, without the prior written consent of Landlord.

 

31.                               Tenant is prohibited at all times from eating or drinking in hallways, elevators, restrooms, lobbies, or lobby vestibules outside of the Premises. Food storage shall be limited to a Landlord-approved kitchen or break room.

 

 

E-3

 

 

32.                               Tenant shall be responsible to Landlord for any acts of vandalism performed in the Building by its employees, invitees, agents, contractors, licensees, subtenants, and assignees.

 

33.                               Tenant shall not permit the visit to the Premises of persons in such numbers or under such conditions as to interfere with the use and enjoyment by other tenants of the entrances, hallways, elevators, lobby, exterior common areas, or other public portions or facilities of the Building.

 

34.                               Landlord’s employees shall not perform any work or do anything outside of their regular duties unless under special instructions from Landlord. Requests for such requirements shall be submitted in writing to Landlord.

 

35.                               Tenant is prohibited from interfering in any manner with the installation and/or maintenance of the heating, air conditioning and ventilation facilities and equipment at the Project.

 

36.                               Landlord shall not be responsible for lost or stolen personal property, equipment, money, or jewelry regardless of whether such loss occurs when an area is locked against entry or not.

 

37.                               Landlord shall not permit entrance to the Premises by use of pass key controlled by Landlord, to any person at any time without written permission of Tenant, except employees, contractors or service personnel supervised or employed by Landlord.

 

38.                               Tenant shall observe and comply with the driving and parking signs and markers on the Project grounds and surrounding areas. Tenant shall comply with all reasonable and uniformly applied parking regulations promulgated by Landlord from time to time for the orderly use of vehicle parking areas. Parked vehicles shall not be used for vending or any other business or other activity while parked in the parking areas. Vehicles shall be parked only in striped parking spaces, except for loading and unloading, which shall occur solely in zones marked for such purpose, and be so conducted as to not unreasonably interfere with traffic flow or with loading and unloading areas of other tenants. Tractor trailers shall be parked in areas designated for tractor trailer parking. Employee and tenant vehicles shall not be parked in spaces marked for visitor parking or other specific use. All vehicles entering or parking in the parking areas shall do so at owner’s sole risk and Landlord assumes no responsibility for any damage, destruction, vandalism, or theft. Tenant shall cooperate with Landlord in any reasonable and uniformly applied measures implemented by Landlord to control abuse of the parking areas, including without limitation access control programs, tenant and guest vehicle identification programs, and validated parking programs, provided no such validated parking program shall result in Tenant being charged for spaces to which it has a right to free use under the Lease. Each vehicle owner shall promptly respond to any sounding vehicle alarm or horn, and failure to do so may result in temporary or permanent exclusion of such vehicle from the parking areas. Any vehicle that violates the parking regulations may be cited, towed at the expense of the owner, temporarily or permanently excluded from the parking areas, or subject to other lawful consequence

 

39.                               Tenant shall not enter other separate tenants’ hallways, restrooms, or premises except with prior written approval from Landlord’s management.

 

40.                               Tenant shall not place weights anywhere beyond the load-per-square-foot carrying capacity of the Building.

 

41.                               Tenant shall comply with all laws, regulations, or other governmental requirements with respect to energy savings, not permit any waste of any utility services provided Landlord, and cooperate with Landlord fully to ensure the most effective and efficient operation of the Building.

 

42.                               The finishes, including floor and wall coverings, and the furnishings and fixtures in any areas of the Premises that are visible from the common areas of the Building are subject to Landlord’s approval in its sole discretion. Selections for these areas shall be pre-approved in writing by Landlord.

 

43.                               Power strips and extension cords shall not be combined (also known as daisy chaining).

 

 

E-4

 

 

44.                               Candles and open flames are prohibited in the Building.

 

45.                               Guns, firearms, and other dangerous weapons (concealed or otherwise) are not allowed at the Project, subject to applicable Law (if any) requiring Landlord to so permit at the Project.

 

Landlord reserves the right to rescind any of these rules and make such other and further rules and regulations as in the judgment of Landlord shall from time to time be needed for the safety, protection, care, and cleanliness of the Project, the operations thereof, the preservation of good order therein, and the protection and comfort of its tenants, their agents, employees, and invitees, which rules when made and notice thereof given to Tenant shall be binding upon Tenant in a like manner as if originally prescribed. As used in these rules and regulations, capitalized terms shall have the respective meanings given to them in the Lease to which these rules and regulations are attached, provided Tenant shall be responsible for compliance herewith by everyone under Tenant’s reasonable control, including without limitation its employees, invitees, agents, contractors, licensees, subtenants and assignees, and a violation of these rules and regulations by any of the foregoing is deemed a violation by Tenant.

 

 

E-5

 

CONFIRMATION OF LEASE TERM

 

THIS CONFIRMATION OF LEASE TERM (“COLT”) is made as of January 7, 2019 between PHILADELPHIA PLAZA - PHASE II, LP, (“Landlord”) and PASSAGE BIO, INC., (“Tenant”).

 

5.      Landlord and Tenant are parties to that certain lease dated 9/26/2018 (“Lease Document”), with respect to the premises described in the Lease Document, known as Suite 2850 consisting of approximately 8,887 rentable square feet (“Premises”), located at 2001 Market Street, Philadelphia, PA 19103.

 

6.      All capitalized terms, if not defined in this COLT, have the meanings given to such terms in the Lease Document.

 

7.      Tenant has accepted possession of the Premises in their “AS IS” “WHERE IS” condition and all improvements required to be made by Landlord per the Lease Document have been completed.

 

8.      The Lease Document provides for the commencement and expiration of the Term of the lease of the Premises, which Term commences and expires as follows:

 

a.     Commencement of the Term of the Premises:  12/28/2018

 

b.     Expiration of the Term of the Premises:  6/30/2026

 

9.      The required amount of the Security Deposit and/or Letter of Credit per the Lease Document is $34,066.84. Tenant has delivered the Security Deposit and/or Letter of Credit per the Lease Document in the amount of $34,066.84.

 

10.    The Building Number is 182 and the Lease Number is 019121. This information must accompany every payment of Rent made by Tenant to Landlord per the Lease Document.

 

	
TENANT:
    	
LANDLORD:
    
	
 
    	
 
    
	
PASSAGE BIO, INC.
    	
Philadelphia Plaza -   Phase II, LP, a Pennsylvania limited partnership 

By: Brandywine Commerce   Sub II LLC, its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    

 

TENANT NOTICE:  If Landlord has not
 received Executed COLT
 within 10 days....DEEMED ACCEPTED

	
DATED:
    	
 
    	
January 17, 2019
    	
 
    

 

1

 

	

    	
www.brandywinerealty.com
 One Logan Square | 130 N. 18th Street |   Suite 100 | Philadelphia, PA 19103 | t 215.656.4070 f 215.656.4071
    

 

	
January 7,   2019
    	
Via   Federal Express
    

 

Passage Bio, Inc.

Attn: Monique Molloy

Two Commerce Square

2001 Market Street, Suite 2850

Philadelphia, PA  19103

 

Re:                             Confirmation of Lease Terms (“COLT”) for SUITE 2850 at Two Commerce Square, Philadelphia, PA 19103

 

Dear Ms. Molloy:

 

Enclosed are two (2) Confirmation of Lease Term (“COLT”) documents regarding the above-referenced Premises.

 

Please have both documents signed and dated and return to my attention for further processing within ten (10) days. Upon receipt, I will have both signed on behalf of the Landlord and will return a fully executed COLT to you for your files.

 

If Landlord has not received this document within ten (10) days, the information stated on the Confirmation of Lease Term shall be deemed accepted.

 

If you have any questions, please feel free to contact Brian Orr at (215) 656-4465 or Dan Galbally at (215) 656-4466. Thank you.

 

Sincerely,
 Brandywine Realty Trust

 

	
/s/   Patti Cohen
    	
 
    
	
Patti   Cohen
    	
 
    
	
Leasing   Administrative Asst.
    	
 
    

 

EnclosureExhibit 10.6

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*], HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO PASSAGE BIO, INC. IF PUBLICLY DISCLOSED.

 

RESEARCH, COLLABORATION & LICENSE AGREEMENT

 

DATED AS OF SEPTEMBER 18, 2018

 

BY AND BETWEEN

 

THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA

 

AND

 

PASSAGE BIO, INC.

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Article 1
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
Article 2
    	
COLLABORATION PROGRAMS;   GOVERNANCE
    	
12
    
	
 
    	
 
    	
 
    
	
2.1
    	
Overall Project
    	
12
    
	
 
    	
 
    	
 
    
	
2.2
    	
Research
    	
12
    
	
 
    	
 
    	
 
    
	
2.3
    	
Funding of the Research   Program
    	
14
    
	
 
    	
 
    	
 
    
	
2.4
    	
Unavailability of   Dr. James M. Wilson
    	
14
    
	
 
    	
 
    	
 
    
	
2.5
    	
New Program Option
    	
15
    
	
 
    	
 
    	
 
    
	
2.6
    	
Exclusive CNS Option
    	
16
    
	
 
    	
 
    	
 
    
	
2.7
    	
Manufacturing Patent   Rights Option
    	
17
    
	
 
    	
 
    	
 
    
	
2.8
    	
Natural History Studies
    	
17
    
	
 
    	
 
    	
 
    
	
2.9
    	
AAV Next Generation
    	
17
    
	
 
    	
 
    	
 
    
	
2.10
    	
Exclusivity
    	
18
    
	
 
    	
 
    	
 
    
	
2.11
    	
Program Failure
    	
19
    
	
 
    	
 
    	
 
    
	
2.12
    	
Governance
    	
19
    
	
 
    	
 
    	
 
    
	
Article 3
    	
LICENSES AND OTHER RIGHTS
    	
21
    
	
 
    	
 
    	
 
    
	
3.1
    	
Grant of License
    	
21
    
	
 
    	
 
    	
 
    
	
3.2
    	
Retained Rights
    	
23
    
	
 
    	
 
    	
 
    
	
3.3
    	
U.S. Government Rights
    	
23
    
	
 
    	
 
    	
 
    
	
3.4
    	
Grant of Sublicense by   Licensee
    	
23
    
	
 
    	
 
    	
 
    
	
3.5
    	
Delivery of Know-How
    	
24
    
	
 
    	
 
    	
 
    
	
3.6
    	
No Implied License
    	
24
    
	
 
    	
 
    	
 
    
	
Article 4
    	
FINANCIAL PROVISIONS
    	
25
    
	
 
    	
 
    	
 
    
	
4.1
    	
Payments
    	
25
    
	
 
    	
 
    	
 
    
	
4.2
    	
Milestone Payments
    	
26
    
	
 
    	
 
    	
 
    
	
4.3
    	
Royalties
    	
27
    
	
 
    	
 
    	
 
    
	
4.4
    	
Penn Sublicense Income
    	
29
    
	
 
    	
 
    	
 
    
	
4.5
    	
Mode of Payment and   Currency
    	
30
    
	
 
    	
 
    	
 
    
	
4.6
    	
Royalty and Penn   Sublicense Income Reports
    	
30
    
	
 
    	
 
    	
 
    
	
4.7
    	
Late Payments
    	
31
    
	
 
    	
 
    	
 
    
	
4.8
    	
Default Payment
    	
31
    
	
 
    	
 
    	
 
    
	
4.9
    	
Accounting
    	
31
    

 

i

 

TABLE OF CONTENTS
  (continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
4.10
    	
Books and Records
    	
31
    
	
 
    	
 
    	
 
    
	
4.11
    	
Audits
    	
31
    
	
 
    	
 
    	
 
    
	
4.12
    	
Taxes
    	
32
    
	
 
    	
 
    	
 
    
	
Article 5
    	
CLINICAL DEVELOPMENT,   REGULATORY AFFAIRS; COMMERCIALIZATION
    	
32
    
	
 
    	
 
    	
 
    
	
5.1
    	
Development Plan
    	
32
    
	
 
    	
 
    	
 
    
	
5.2
    	
Clinical
    	
32
    
	
 
    	
 
    	
 
    
	
5.3
    	
Commercialization
    	
33
    
	
 
    	
 
    	
 
    
	
5.4
    	
Manufacturing
    	
33
    
	
 
    	
 
    	
 
    
	
5.5
    	
Regulatory
    	
33
    
	
 
    	
 
    	
 
    
	
5.6
    	
General Diligence
    	
33
    
	
 
    	
 
    	
 
    
	
5.7
    	
Financial Diligence
    	
33
    
	
 
    	
 
    	
 
    
	
5.8
    	
Diligence Events
    	
34
    
	
 
    	
 
    	
 
    
	
5.9
    	
Progress Reports
    	
34
    
	
 
    	
 
    	
 
    
	
Article 6
    	
INTELLECTUAL PROPERTY
    	
35
    
	
 
    	
 
    	
 
    
	
6.1
    	
Patent Filing   Prosecution and Maintenance
    	
35
    
	
 
    	
 
    	
 
    
	
6.2
    	
Patent Costs
    	
36
    
	
 
    	
 
    	
 
    
	
6.3
    	
Infringement
    	
37
    
	
 
    	
 
    	
 
    
	
6.4
    	
Patent Marking
    	
39
    
	
 
    	
 
    	
 
    
	
Article 7
    	
CONFIDENTIALITY&   PUBLICATION
    	
39
    
	
 
    	
 
    	
 
    
	
7.1
    	
Confidential   Information
    	
39
    
	
 
    	
 
    	
 
    
	
7.2
    	
Exceptions to   Confidentiality
    	
39
    
	
 
    	
 
    	
 
    
	
7.3
    	
Penn Intellectual   Property
    	
40
    
	
 
    	
 
    	
 
    
	
7.4
    	
Publications
    	
40
    
	
 
    	
 
    	
 
    
	
Article 8
    	
REPRESENTATIONS,   WARRANTIES AND COVENANTS
    	
40
    
	
 
    	
 
    	
 
    
	
8.1
    	
Mutual Representations   and Warranties
    	
40
    
	
 
    	
 
    	
 
    
	
8.2
    	
Representation and   Warranties of Penn
    	
41
    
	
 
    	
 
    	
 
    
	
8.3
    	
Disclaimer of   Representations and Warranties
    	
41
    
	
 
    	
 
    	
 
    
	
8.4
    	
Covenants of Licensee
    	
42
    
	
 
    	
 
    	
 
    
	
Article 9
    	
INDEMNIFICATION;   INSURANCE AND LIMITATION OF LIABILITY
    	
43
    
	
 
    	
 
    	
 
    
	
9.1
    	
Indemnification by   Licensee
    	
43
    
	
 
    	
 
    	
 
    
	
9.2
    	
Insurance
    	
44
    

 

ii

 

TABLE OF CONTENTS
  (continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
9.3
    	
LIMITATION OF LIABILITY
    	
45
    
	
 
    	
 
    	
 
    
	
Article 10
    	
TERM AND TERMINATION
    	
45
    
	
 
    	
 
    	
 
    
	
10.1
    	
Term
    	
45
    
	
 
    	
 
    	
 
    
	
10.2
    	
Termination of the   Agreement for Convenience
    	
45
    
	
 
    	
 
    	
 
    
	
10.3
    	
Termination For Cause
    	
45
    
	
 
    	
 
    	
 
    
	
10.4
    	
Effects of Termination
    	
46
    
	
 
    	
 
    	
 
    
	
Article 11
    	
ADDITIONAL PROVISIONS
    	
47
    
	
 
    	
 
    	
 
    
	
11.1
    	
Relationship of the   Parties
    	
47
    
	
 
    	
 
    	
 
    
	
11.2
    	
Expenses
    	
48
    
	
 
    	
 
    	
 
    
	
11.3
    	
Third Party Beneficiary
    	
48
    
	
 
    	
 
    	
 
    
	
11.4
    	
Use of Names
    	
48
    
	
 
    	
 
    	
 
    
	
11.5
    	
No Discrimination
    	
48
    
	
 
    	
 
    	
 
    
	
11.6
    	
Successors and   Assignment
    	
48
    
	
 
    	
 
    	
 
    
	
11.7
    	
Further Actions
    	
48
    
	
 
    	
 
    	
 
    
	
11.8
    	
Entire Agreement of the   Parties; Amendments
    	
48
    
	
 
    	
 
    	
 
    
	
11.9
    	
Governing Law
    	
49
    
	
 
    	
 
    	
 
    
	
11.10
    	
Dispute Resolution
    	
49
    
	
 
    	
 
    	
 
    
	
11.11
    	
Notices and Deliveries
    	
49
    
	
 
    	
 
    	
 
    
	
11.12
    	
Waiver
    	
50
    
	
 
    	
 
    	
 
    
	
11.13
    	
Severability
    	
50
    
	
 
    	
 
    	
 
    
	
11.14
    	
Interpretation
    	
50
    
	
 
    	
 
    	
 
    
	
11.15
    	
Counterparts
    	
50
    

 

iii

 

UNIVERSITY OF PENNSYLVANIA

 

RESEARCH, COLLBORATION & LICENSE AGREEMENT

 

This Research, Collaboration & License Agreement (this “Agreement”) is dated as of September 18, 2018 (the “Effective Date”) by and between The Trustees of the University of Pennsylvania, a Pennsylvania nonprofit corporation (“Penn”), and Passage Bio, Inc., a corporation organized under the laws of the state of Delaware (“Licensee”). Penn and Licensee may be referred to herein as a “Party” or, collectively, as “Parties”.

 

RECITALS:

 

WHEREAS, Licensee is a biopharmaceutical company with expertise in the development, manufacture and commercialization of human therapeutic products for treatment of genetic disorders.

 

WHEREAS, Penn, through Dr. James M. Wilson and the Wilson Laboratory, have technology and expertise in the research and development of gene therapy products.

 

WHEREAS, the Research Program contemplated by this Agreement is of mutual interest to Licensee and Penn and furthers the educational, scholarship and research objectives of Penn as a nonprofit, tax-exempt, educational Penn, and may benefit Licensee and Penn through the creation or discovery of new inventions and the development and commercialization of Licensed Products (as defined below).

 

NOW, THEREFORE, in consideration of the various promises and undertakings set forth herein, the Parties agree as follows:

 

ARTICLE 1
 DEFINITIONS

 

Unless otherwise specifically provided herein, the following terms shall have the following meanings:

 

1.1                               “Next Generation Capsid” means a specific adeno associated virus identified by sequence that is discovered, developed or engineered in the Next Generation Program before the Effective Date or in the course of the Next Generation Program.

 

1.2                               “Next Generation Capsid Data Package” means a written data package prepared by the Wilson Laboratory with respect to a Next Generation Capsid containing: (a) a summary of the scientific rationale and data for such Next Generation Capsid; (b) [*], and (c) [*].

 

1.3                               “AAV” means adeno-associated virus.

 

1.4                               “Achievement Date” means with respect to a Diligence Event, the corresponding date such Diligence Event is to be achieved as provided in Section 5.8 below.

 

1.5                               “Affiliate” means a Person that controls, is controlled by or is under common control with a Party, but only for so long as such control exists. For the purposes of this Section 1.6, the word “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct

 

 

the management and policies of such Person, whether by the ownership of more than fifty percent (50%) of the voting stock of such Person, or by contract or otherwise.

 

1.6                               “BLA” means (a) a biologics license application as that term is used in defined in the PHS Act and the regulations promulgated thereunder, (b) a marketing authorization application in the European Union, or (c) any equivalent or comparable application, registration or certification in any other country or region.

 

1.7                               “Calendar Quarter” mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31 of each Calendar Year.

 

1.8                               “Calendar Year” means each successive period of twelve (12) months commencing on January 1 and ending on December 31.

 

1.9                               “cGLP” means the current good laboratory practice regulations promulgated by the FDA, published at 21 U.S. C.F.R. § 58, and equivalent non-United States regulations and standards in the Territory, as applicable, as such current laboratory practices, regulations and standards may be amended from time to time.

 

1.10                        “cGMP” means those current practices, as amended from time to time, related to the manufacture of pharmaceutical products and any precursors thereto promulgated in guidelines and regulations of standard compilations including the GMP Rules of the World Health Organization, the United States Code of Federal Regulations, the Guide to Inspection of Bulk Pharmaceutical Chemicals (established by the United States Department of Health and Human Services), the Pharmaceutical Inspection Convention, and the European Community Guide to Good Manufacturing Practice in the production of pharmaceutical products, and equivalent guidelines, regulations and standards in the Territory, as such guidelines, regulations and standards may be amended from time to time.

 

1.11                        “Challenge” will be interpreted as follows. Licensee or a Sublicensee (including sub-Sublicensees) will be deemed to have made a “Challenge” of the Penn Patent Rights if Licensee or such Sublicensee (including sub-Sublicensees), respectively: (a) institutes or voluntarily joins as a party to, or causes its counsel to institute on Licensee’s or such Sublicensee’s (including sub-Sublicensees) behalf, any interference, opposition, re-examination, post-grant review or similar proceeding with respect to any Penn Patent Right with the U.S. Patent and Trademark Office or any foreign patent office; or (b) makes any filing or institutes or voluntarily joins as a party to any legal proceeding, or causes its counsel to make any filing or institute or voluntarily join as a party to any legal proceeding on Licensee’s or such Sublicensee’s (including sub-Sublicensees) behalf, with a court or other Governmental Body (including, without limitation, the U.S. Patent and Trademark Office or any foreign patent office) having authority to determine the validity, enforceability or scope of the Penn Patent Rights, in which one or more claims or allegations challenges the validity or enforceability of any Penn Patent Right.

 

1.12                        “Change of Control” means the occurrence of any of the following events: (a) any Person becomes the owner, directly or indirectly, of more than fifty percent (50%) of the total voting power (on an as converted basis) of the equity units or other interests of Licensee then outstanding that are normally entitled to vote in the election of directors of Licensee other than in connection with a financing or series of financing transactions; (b) the merger, consolidation or amalgamation of Licensee with or into any other Person, other than any transaction in which the holders of the outstanding voting securities of Licensee immediately prior to the transaction own, directly or indirectly, not less than fifty percent (50%) of the total voting power (on an as converted basis) of

 

2

 

the voting securities of the party surviving such merger, consolidation or amalgamation; or (c) the sale of all or substantially all of the assets of Licensee.

 

1.13                        “Clinical Study” means a Phase 1 Study, Phase 1/2 Study, Phase 2 Study, or Phase 3 Study, or such other study in humans that is conducted in accordance with good clinical practices and is designed to generate data in support or maintenance of an application for Regulatory Approval.

 

1.14                        “CNS Monogenic Rare Disorder” means a rare disease or condition (as determined in accordance with Sec. 526 of the FD&C Act or corresponding Laws outside the United States) with significant morbidity in the central nervous system (CNS) or peripheral nervous system (PNS) [*]. For further clarity, [*].

 

1.15                        “Combination Product” means a Licensed Product that is delivered with one or more additional active ingredients and/or other items or services incident to the administration of any such Licensed Product (with or without one or more such other active ingredients) [*], in each such case when any of the foregoing are co-formulated, co-packaged or sold under one pricing scheme (whether payment of such price is paid to the same or to more than one seller).

 

1.16                        “Commercially Reasonable Efforts” means the efforts and resources that a similarly situated biotechnology company would use for its own internally discovered technology of similar commercial potential and similar stage of development, taking into account the likely timing of the technology’s entry into the market and any patent and other proprietary position, safety and efficacy, product profile, the then-current competitive and regulatory environments for the product. Without limiting the foregoing, Commercially Reasonable Efforts requires, with respect to such obligations, that the Party (a) promptly assign responsibility for such obligation to specific employee(s) who are accountable for progress and monitor such progress on an on-going basis, (b) set annual objectives for carrying out such obligations, and (c) allocate resources designed to advance progress with respect to such objectives.

 

1.17                        “Compulsory License” means a compulsory license under Penn Patent Rights 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 or import a Licensed Product in any country.

 

1.18                        “Controlled” means, with respect to intellectual property rights, that a Party or one of its Affiliates owns or has a license or sublicense to such intellectual property rights and has the ability to provide, grant a license or sublicense to, or assign its right, title and interest in and to, such intellectual property rights as provided for in the Agreement without (i) violating the terms of any other agreement or other arrangement with any Third Party from whom the Party or its Affiliate acquired such intellectual property rights, (ii) requiring additional obligations, liabilities or financial consideration to such Third Party in connection with the grant of such license or sublicense (other than consideration for which Licensee agrees to bear the entire cost), or (iii) violating the terms of, or requiring additional obligations, liabilities or financial consideration to a Third Party under, [*].

 

1.19                        “Development Transition Point” or “DTP” means on a Licensed Product-by-Licensed Product basis the date on which the IND-enabling studies for such Licensed Product under the Research Program have been completed and immediately prior to filing of the IND, unless otherwise agreed by the Parties.

 

1.20                        “Diligence Event” means each of the events that Company is expected to accomplish in the development of each Licensed Product in each Indication set forth in Section 5.8.

 

3

 

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

 

1.22                        “FD&C Act” means the United States Federal Food, Drug and Cosmetic Act, as amended.

 

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

 

1.24                        “Field of Use” means prophylactic, diagnostic and therapeutic uses in humans. For clarity, [*].

 

1.25                        “FIH” means on a Licensed Product-by-Licensed Product basis, a first in human Clinical Study for a Licensed Product.

 

1.26                        “First Commercial Sale” means, on a country-by-country basis, the first commercial transfer or disposition for value of Licensed Product in such country to a Third Party by Licensee, or any of its Affiliates or Sublicensees, in each case, after Regulatory Approvals have been obtained for such country.

 

1.27                        “FPFD” means, on a Licensed Product-by-Licensed Product basis with respect to each Clinical Study, the first dosing of the first patient in such Clinical Study.

 

1.28                        “GAAP” means United States generally accepted accounting principles applied on a consistent basis.

 

1.29                        “Gene Therapy Product” means a pharmaceutical product (or proposed or prospective pharmaceutical product) that inserts one or more functional genes into a patient’s cells using an AAV. For clarity, Gene Therapy Products do not include (a) [*] or (b) [*].

 

1.30                        “Generic Product” means, with respect to a particular Licensed Product in a country, a generic or biosimilar pharmaceutical product, that is not produced, licensed or owned by Licensee, any of its Affiliates or Sublicensees, that: (a) is bioequivalent or biosimilar to such Licensed Product; and (b) is approved for use in such country by a Regulatory Authority by referencing the prior approval, in whole or part, or safety and efficacy data submitted in support of the prior approval, of the Licensed Product. Generic Product includes, but is not limited to, any pharmaceutical products for which Regulatory Approval is obtained via: (i) a bioequivalence or bioavailability showing such as those covered by section 505(j) of the FD&C Act or an equivalent outside the United States; or (ii) a biosimilarity or interchangeability determination such as those covered by section 351(k) of the PHS Act or an equivalent outside the United States.

 

1.31                        “Governmental Body” means any: (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, provincial, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or entity and any court or other tribunal); (d) multi-national or supranational organization or body; or (e) individual, entity, or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature.

 

1.32                        “IND” means an Investigational New Drug Application as defined in the FD&C Act and the regulations promulgated thereunder, or the equivalent application to the equivalent Regulatory Authority in any other regulatory jurisdiction, including a Clinical Trial Authorization (“CTA”) to

 

4

 

the European Medicines Agency, the filing of which is necessary to initiate or conduct clinical testing of a pharmaceutical product in humans in such jurisdiction.

 

1.33                        “Indication” means each of the following indications for a Gene Therapy Product: (a) Amyotrophic Lateral Sclerosis (“ALS”) through AAV delivery of nucleic acid polymers that silence nucleic acid or protein polymers encoded by the C9ORF72 gene, (b) Krabbe disease (globoid cell leukodystrophy) through delivery of nucleic acid polymers for expression of galactosylceramidase. (c) Metachromatic leukodystrophy (“MLD”) through AAV delivery of nucleic acid polymers for expression of arylsulfatase A, (d) galactosidase deficiency (“GLB1 Deficiency”), for GM1 gangliosidosis-1 and mucopolysaccharidosis type IV (“MPS IV”) through AAV delivery of nucleic acid polymers for expression of GLB1, (e) Frontotemporal dementia (FTD) through AAV delivery of nucleic acid polymers for expression of progranulin, and (f) AAV delivery of nucleic acid polymers for a specific named gene replacement transgene for a specific disease indication with treatment targeted to a specific locus (“New Indication”) added to the Agreement through exercise of a New Indication Option (collectively, the “Indications”).

 

1.34                        “Know-How” means intellectual property, data, results, pre-clinical and clinical protocols and study data, chemical structures, chemical sequences, information, inventions, formulas, techniques, methods, processes, procedures and developments. “Know-How” does not include Penn Patent Rights claiming any of the foregoing. “Know-How” also does not include Licensed Materials.

 

1.35                        “Law” or “Laws” means all applicable laws, statutes, rules, regulations, ordinances and other pronouncements having the binding effect of law of any Governmental Body.

 

1.36                        “Licensed Know-How” means all Know-How that is Controlled by Penn and (a) developed by the Wilson Laboratory as of the Effective Date or (b) developed or discovered in the Wilson Laboratory under the Next Generation Program or the Research Program (including but not limited to all Research Results), and in each case (a) and (b) is necessary or reasonably useful to develop, make, use, sell, offer for sale or import a Licensed Product in the Field of Use.

 

1.37                        “Licensed Material” means biological or chemical materials that are Controlled by Penn and available from the Wilson Laboratory at Penn and necessary or useful to exploit the licenses granted to Licensee under the Agreement, to the extent that Penn is (as of the Effective Date or at any relevant time during the Research Term thereafter) able to grant rights to such materials to Licensee. Such biological and chemical materials include cell lines, viral seed stocks, product-specific reference materials, platform or product specific assay controls and reagents that are not available as standard commercial items.

 

1.38                        “Licensed Product” means any (a) process, service or method covered by a Valid Claim or whose use or practice would, absent the License, constitute an infringement, inducement of infringement or contributory infringement of any Valid Claim, or would infringe a Valid Claim once issued (“Method”); (b) article, composition, apparatus, substance, chemical or any other material covered by a Valid Claim or whose manufacture, import, use, offer for sale or sale would, absent the License, constitute an infringement, inducement of infringement or contributory infringement of any Valid Claim or would infringe a Valid Claim once issued; or (c) service, article, composition, apparatus, chemical, substance or any other material made, used or sold by or utilizing or practicing a Method, or (d) any product that incorporates or makes use or is made through use of Licensed Know-How.

 

1.39                        “Major Markets” means the United States, Japan, France, Germany, Spain, Italy and the United Kingdom.

 

5

 

1.40                        “Manufacturing Patent Rights” means (a) the Patent Rights Controlled by Penn (i) [*], (ii) [*] and (iii) [*], (b) any continuations, provisionals, continued prosecution applications, substitutions, extensions and term restorations, registrations, confirmations, reexaminations, renewals or reissues thereof, including divisions, but excluding continuations-in-part except to the extent of claims entirely supported in the specification and entitled to the priority date of the parent application, and (c) any corresponding foreign Patent Rights to the foregoing.

 

1.41                        “MHLW” means the Ministry of Health, Labor and Welfare of Japan.

 

1.42                        “Net Sales” means the gross consideration invoiced or received by Licensee or any of its Affiliates or Sublicensees (including all sub-Sublicensees) for Sales of Licensed Product (including any cash amounts plus the fair market value of any other forms of consideration), less the following deductions (to the extent included in and not already deducted from the gross amounts invoiced or otherwise charged) to the extent reasonable and customary:

 

1.42.1              trade discounts, including trade, cash and quantity discounts or rebates, credits or refunds;

 

1.42.2              allowances or credits actually granted upon claims, returns or rejections of products;

 

1.42.3              charges included in the gross sales price for freight, insurance, transportation, postage, handling and any other charges relating to the Sale, transportation, delivery or return of such Licensed Product;

 

1.42.4              customs duties, sales, excise and use taxes actually paid in connection with the transportation, distribution, use or Sale of such Licensed Product (but excluding what is commonly known as income taxes);

 

1.42.5              bad debt expense and amounts actually written off by reason of uncollectible debt not to exceed [*] of the Net Sales of Licensed Product.

 

Even if there is overlap between any of deductions described above, each individual item shall only be deducted once in the overall Net Sales calculation.

 

In the case of a Combination Product, the Parties shall negotiate in good faith, at the latest [*] before the expected launch of such Combination Product, an allocation of Net Sales of such Combination Product to the respective Licensed Product components and other component(s) thereof, as the case may be, based on the fair market value of such components for the purposes of determining a product-specific allocation of such Net Sales. Payments related to such Combination Product under this Agreement, including Royalties and Milestone Payments, will be calculated, due and payable based only on the portion of such Net Sales so allocated to the Licensed Product components.

 

In case of disagreement and failure by the Parties to agree upon an allocation of Net Sales of such Combination Product to the respective Licensed Product components and other component(s) thereof, [*].

 

1.43                        “Next Generation Program” means the next generation AAV capsid discovery, development and engineering program controlled by Penn and developed or conducted by the Wilson Laboratory from [*] until June 30, 2021, which program has been and will continue to be solely funded by Penn (including NIH grant funding to Penn), and not by any commercial Third Party. The Next Generation Program is limited to the following research activities [*].

 

6

 

1.44                        “Option Condition” means either of the following conditions: (a) Licensee has a principal place of business in Philadelphia, PA; or (b) Licensee has had an initial public offering or has been acquired by a non-Affiliated Third Party.

 

1.45                        “Patent Rights” means (a) patents and patent applications, together with any unlisted patents and patent applications claiming priority thereto, and any continuations, continuations-in-part, reissues, reexamination certificates, substitutions, divisionals, supplementary protection certificates, renewals, registrations, extensions including all confirmations, revalidations, patents of addition, PCTs, and pediatric exclusivity periods and all foreign counterparts thereof, and any patents issued or issuing with respect to any of the foregoing and (b) all official correspondence relating to the foregoing.

 

1.46                        “Penn Patent Rights” means Penn Patent Rights A, Penn Patent Rights B, and Manufacturing Patent Rights, collectively.

 

1.47                        “Penn Patent Rights A” means (a) the Patent Rights listed in Exhibit A, (b) [*], (c) any continuations, provisionals, continued prosecution applications, substitutions, extensions and term restorations, registrations, confirmations, reexaminations, renewals or reissues thereof, including divisions, and further including continuations-in-part (to the extent related directly to the subject matter of the parent application or containing new information developed pursuant to the Research Program), (d) Penn’s interest in and to any jointly owned Patent Rights of the kind described in Section 2.2.4, and (e) any corresponding foreign Patent Rights to the foregoing.

 

1.48                        “Penn Patent Rights B” means (a) [*], (b) any continuations, provisionals, continued prosecution applications, substitutions, extensions and term restorations, registrations, confirmations, reexaminations, renewals or reissues thereof, including divisions, and further including continuations-in-part (to the extent related directly to the subject matter of the parent application or containing new information developed pursuant to the Research Program), and (c) any corresponding foreign Patent Rights to the foregoing.

 

1.49                        “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.

 

1.50                        “Phase 1 Study” means a clinical study of a drug candidate in human patients with the primary objective of characterizing its safety, tolerability, and pharmacokinetics and identifying a recommended dose and regimen for future studies as described in 21 C.F.R. §312.21(a), or a comparable clinical study prescribed by the relevant Regulatory Authority in a country other than the United States. The drug candidate can be administered to patients as a single agent or in combination with other investigational or marketed agents.

 

1.51                        “Phase 1/2 Study” means a clinical study of a drug candidate in diseased human patients that satisfies the requirements of a Phase 1 Study and a Phase 2 Study.

 

1.52                        “Phase 2 Study” means a clinical study of a drug candidate in human patients with the primary objective of characterizing its activity in a specific disease state as well as generating more detailed safety, tolerability, and pharmacokinetics information as described in 21 C.F.R. §312.21(b), or a comparable clinical study prescribed by the relevant Regulatory Authority in a country other than the United States including a human clinical trial that is also designed to satisfy the requirements of 21 C.F.R. §312.21(a) or corresponding foreign regulations and is subsequently optimized or expanded to satisfy the requirements of 21 C.F.R. §312.21(b) (or corresponding foreign

 

7

 

regulations) or otherwise to enable a Phase 3 Clinical Study (e.g., a phase 1/2 trial). The relevant drug candidate may be administered to patients as a single agent or in combination with other investigational or marketed agents.

 

1.53                        “Phase 3 Study” means a clinical study of a drug candidate in human patients that incorporates accepted endpoints for confirmation of statistical significance of efficacy and safety with the aim to obtain Regulatory Approval in any country as described in 21 C.F.R. 312.21(c), or a comparable clinical study prescribed by the relevant Regulatory Authority in a country other than the United States. The relevant drug candidate may be administered to patients as a single agent or in combination with other investigational or marketed agents.

 

1.54                        “PHS Act” means the United States Public Health Service Act, as amended.

 

1.55                        “Regulatory Approval” means, with respect to a product in any regulatory jurisdiction, approval from the applicable Regulatory Authority sufficient for the manufacture, distribution, use, marketing and sale of such pharmaceutical product in such jurisdiction in accordance with Laws. “Regulatory Approval” does not include authorization by a Regulatory Authority to conduct named patient, compassionate use or other similar activities.

 

1.56                        “Regulatory Authority” means any Governmental Body, including the FDA, EMA or MHLW, or any successor agency thereto, that has responsibility for granting any licenses or approvals or granting pricing or reimbursement approvals necessary for the marketing and sale of a pharmaceutical product in any country.

 

1.57                        “Research Plan” means the research plan setting forth the Parties’ roles and responsibilities for the Research Program as set forth in Exhibit B hereto, respectively, and as may be amended from time to time with written approval of the JSC or (to the extent provided herein) both Parties.

 

1.58                        “Research Program” means the pre-clinical discovery, research, and development program of Licensed Products in the Field of Use for the Indications funded by Licensee and to be conducted by the Parties hereunder.

 

1.59                        “Research Results” means all any and all ideas, information, inventions, developments, animate and inanimate materials, including live animals, discoveries, software, Know-How, methods, techniques, formulae, data, software, processes, methodologies, techniques, biological materials, software and works of authorship, whether patentable or copyrightable, that are first conceived, discovered, developed, reduced to practice, or generated in the performance of the Research Program by the Wilson Laboratory, including any unpatentable inventions discovered, developed or conceived in the conduct of the Research Program. Research Results expressly excludes Penn Patent Rights.

 

1.60                        “Sale” means any transaction for which consideration is received or invoiced by Licensee, its Affiliates or Sublicensees for sale, use, lease, transfer or other disposition of a Licensed Product to or for the benefit of a Third Party. For clarity, sale, use, lease, transfer or other disposition of a Licensed Product by Licensee or any of its Affiliates or Sublicensees to another of these entities for resale (or other disposition) by such entity to a Third Party shall not be deemed a Sale.

 

1.61                        “Service Center Cores” means the following core laboratories at Penn that report directly to Dr. James M. Wilson: [*].

 

8

 

1.62                        “Specified Obligations” means the licenses, options, and obligations that Penn has granted or owes to a Third Party that are identified in Exhibit F [*].

 

1.63                        “Sublicense Documents” means any and all agreements, amendments or written understandings entered into with a Sublicensee (including any of its Affiliates) that are directly or indirectly related to a Sublicense, Penn Patent Rights or Licensed Product. For clarity, a development agreement or distribution agreement for a Licensed Product is a Sublicense Document.

 

1.64                        “Sublicensee” means a Person (including any Affiliate) to which a Sublicense is granted pursuant to the terms of Section 3.4.

 

1.65                        “Sublicense Income” means income received by Licensee or its Affiliates in consideration for a Sublicense or for a grant of the right to negotiate or obtain a Sublicense, subject to the exclusions below. Sublicense Income includes such income received from a Sublicensee in the form of license issue fees, milestone payments and the like but specifically excludes (a) [*], (b) [*], (c) [*], (d) [*], or (e) [*].

 

1.66                        “Tax” means all taxes, duties, fees, premiums, assessments, imposts, levies, rates, withholdings, dues, government contributions and other charges of any kind whatsoever, whether direct or indirect, together with all interest, penalties, fines, additions to tax or other additional amounts, imposed by any Governmental Body.

 

1.67                        “Third Party” means any Person other than Penn, Licensee or any of their respective Affiliates.

 

1.68                        “United States” or “US” means the United States of America, its territories and possessions.

 

1.69                        “USD” or “$” means US dollars.

 

1.70                        “Valid Claim” means a claim of (a) an issued and unexpired patent in Penn Patent Rights which claim has not been revoked or held unenforceable or invalid by a decision of a court of governmental agency of competent jurisdiction from which no further appeal can be taken or has been taken within the time allowed for appeal, and has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer; or (b) a pending patent application (that has been pending for no more than [*] from the filing date of such application) that is included in Penn Patent Rights which was filed and is being prosecuted in good faith, and has not been abandoned or finally disallowed without the possibility of appeal or re-filing of the application.

 

1.71                        “Wilson Laboratory” means Dr. James M. Wilson and all individuals [*].

 

1.72                        Other Terms. The definition of each of the following terms is set forth in the section of the Agreement indicated below:

 

	
Defined Term
    	
 
    	
Section
    
	
Next Generation Indication Exclusivity Period
    	
 
    	
2.9.3
    
	
Next Generation Option Fee
    	
 
    	
4.1.3
    
	
AAV Next Generation Option
    	
 
    	
2.9.2
    
	
AAV Option Period
    	
 
    	
2.9.2
    
	
Advance Payment
    	
 
    	
6.2.4
    
	
Agreement
    	
 
    	
Introductory Clause
    

 

9

 

	
Defined Term
    	
 
    	
Section
    
	
Alliance Manager
    	
 
    	
2.12.2
    
	
ALS
    	
 
    	
1.33
    
	
Anti-Stacking Percentage
    	
 
    	
4.3.4(b)(ii)
    
	
Available Rare CNS Indications
    	
 
    	
2.6
    
	
Capsid Lock
    	
 
    	
2.9.1
    
	
CNS Field
    	
 
    	
2.6
    
	
Commercial Milestone
    	
 
    	
4.2.2(a)
    
	
Commercial Milestone Payment
    	
 
    	
4.2.2(a)
    
	
Confidential Information
    	
 
    	
7.1
    
	
CTA
    	
 
    	
1.32
    
	
Development Milestone
    	
 
    	
4.2.1(a)
    
	
Development Milestone Payment
    	
 
    	
4.2.1(a)
    
	
Disclosing Party
    	
 
    	
7.1
    
	
Dispositive Rejection Condition
    	
 
    	
2.5.2
    
	
Effective Date
    	
 
    	
Introductory Clause
    
	
Failed Indication
    	
 
    	
2.11
    
	
Financial Report
    	
 
    	
4.6
    
	
First Notice
    	
 
    	
2.5.1
    
	
First Notice Period
    	
 
    	
2.5.1
    
	
GLB1 Deficiency
    	
 
    	
1.33
    
	
GM-1
    	
 
    	
1.33
    
	
Historic Patent Costs
    	
 
    	
6.2.1
    
	
Infringement Notice
    	
 
    	
6.3.1
    
	
Joint Steering Committee (“JSC”)
    	
 
    	
2.12.1(a)
    
	
License
    	
 
    	
3.1
    
	
Licensee
    	
 
    	
Introductory Clause
    
	
License Maintenance Fee
    	
 
    	
4.1.4
    
	
Limited Exclusivity Covenant
    	
 
    	
2.10
    
	
Maximum Anti-Stacking Reduction
    	
 
    	
4.3.4(b)(iv)
    
	
Method
    	
 
    	
1.38
    
	
MLD
    	
 
    	
1.33
    
	
MPS IV
    	
 
    	
1.33
    
	
New Indication
    	
 
    	
1.33
    
	
New Indication Option
    	
 
    	
2.5.1; see also 2.5.2
    
	
New Indication Option Fee
    	
 
    	
4.1.5
    
	
New Program
    	
 
    	
2.5.1
    
	
New Program Budget
    	
 
    	
2.5.1
    
	
Ongoing Patent Costs
    	
 
    	
6.2.2
    
	
Party or Parties
    	
 
    	
Introductory Clause
    
	
Patent Costs
    	
 
    	
6.2.1
    
	
Patent Counsel
    	
 
    	
6.1.1
    
	
Penn
    	
 
    	
Introductory Clause
    
	
Penn Indemnitees
    	
 
    	
9.1.1
    
	
Penn Sublicense Income
    	
 
    	
4.4.1
    
	
Product Specific Patent Rights
    	
 
    	
6.1.1
    
	
Progress Report
    	
 
    	
5.9.1
    
	
Prosecution Request
    	
 
    	
6.1.2
    

 

10

 

	
Defined Term
    	
 
    	
Section
    
	
Receiving Party
    	
 
    	
7.1
    
	
Research Support Amount
    	
 
    	
2.2.1
    
	
Research Term
    	
 
    	
2.2.1
    
	
R&D Extension Term
    	
 
    	
2.2.1
    
	
Royalty
    	
 
    	
4.3.1
    
	
Royalty Period
    	
 
    	
4.3.2
    
	
SDR Report
    	
 
    	
3.4.4
    
	
Specified Licensed Product
    	
 
    	
3.1.4
    
	
Sublicense
    	
 
    	
3.4.1
    
	
Term
    	
 
    	
10.1
    

 

ARTICLE 2
 COLLABORATION PROGRAMS; GOVERNANCE

 

2.1                               Overall Project

 

The Parties desire to collaborate with respect to the pre-clinical development of Licensed Products, as set forth in more detail in this Article 2, in each Indication within the Field of Use, with the goal of identifying one or more Licensed Products for clinical development and commercialization in each Indication. As more specifically outlined herein, Penn will be responsible, in consultation with Licensee through the JSC, for preclinical development activities, including all IND-enabling non-clinical studies and research grade manufacturing, and all activities set forth in the Research Plan that are not identified therein as Licensee’s responsibilities. Licensee will be responsible for regulatory strategy and operations, clinical development, GMP manufacture, and commercialization of all Licensed Product.

 

2.2                               Research

 

2.2.1                     During the period of four (4) years following the Effective Date (“Research Term”), Licensee shall provide an amount to be agreed upon based on the Research Plan in research and development funding (“Research Support Amount”) to Penn to fund the Research Program. The Research Support Amount is intended to fund Penn’s pre-clinical research and development activities under the Research Plan through IND-enabling studies for the five named Indications as of the Effective Date, but additional funding may be added to the Research Support Amount by mutual written agreement of the Parties for additional Indications added to the Research Program as provided in this Agreement. Such Research Support Amount shall be inclusive of Penn’s standard indirect charges and all funding shall be paid in advance of any Research Program work being conducted. As more specifically outlined in Section 2.3.1, Licensee shall remit such funds in each year of the Research Term in accordance with a payment schedule and such funds will be allocated to Licensed Product research and development programs as set forth in the Research Plan and the Parties’ agreed-upon budget. Upon mutual agreement of the Parties, the Research Term may be extended for up to [*] in [*] intervals (each such interval, an “R&D Extension Term,” which shall extend the Research Term) with an additional commitment by Licensee to fund Penn at an amount mutually agreed upon by the Parties for each R&D Extension Term. For clarity, neither Party is under any obligation to extend the Research Term.

 

11

 

2.2.2                     Penn will use commercially reasonable efforts to conduct the Research Program in accordance with the Research Plan and the other terms and conditions of this Agreement. Without limiting the foregoing, within each Indication, Penn will be responsible, in consultation with Licensee through the JSC, for the completion of the Research Plan for the research and development work up to completion of IND-enabling studies, including [*]. Penn shall be responsible through the Research Plan for the [*]. Licensee shall be responsible for the clinical and commercial manufacture of the Licensed Product in accordance with relevant cGMP.

 

2.2.3                     The JSC shall review the Research Plan at least once per Calendar Year. The JSC may amend the Research Plan at any time, including amendments to include further activities, including corresponding revisions to the budget.

 

2.2.4                     Penn shall maintain records of the results of the Research Program in sufficient detail and in good scientific manner appropriate for patent purposes to properly reflect all work done and results achieved. Penn will provide task-based, scientific reports of the progress and results of the Research Program on the schedule specified in the Research Plan or on another schedule to be agreed in writing by the Parties. Upon Licensee’s reasonable request and at Licensee’s cost and expense, Penn will disclose and deliver Research Results to Licensee, and will provide Licensee with such additional information and technical assistance as may be reasonably needed for Licensee to interpret and use such Research Results. Penn shall maintain records of the use of the funds provided by Licensee and shall make such records available to Licensee upon reasonable notice during Penn’s normal business hours, but not more frequently than each anniversary of the Effective Date. All Research Results shall be solely and exclusively owned by Penn, except to the extent (if any) that the Research Results include any jointly invented patentable inventions for which a joint ownership interest vests in Licensee or any of its personnel under default provisions of applicable U.S. patent Law. The Parties acknowledge that any such joint inventions will be subject to the provisions of Section 7.4 to the same extent as any other Research Results. In addition, unless otherwise agreed by the Parties on a case-by-case basis, any Patent Rights corresponding to such joint inventions: (i) will be jointly owned by the Parties; and (ii) will be subject to this Agreement’s royalty obligations and exclusivity terms, and also to the provisions of Article 6, [*].

 

2.2.5                     The Parties hereby acknowledge that there are inherent uncertainties involved in the research and development of products and such uncertainties form part of the business risk involved in undertaking the Research Program. Accordingly, in the event that upon completion of the portion of the Research Plan associated with a specific Indication, the Parties do not develop or identify a suitable candidate to propose as a development candidate for that Indication, [*].

 

2.2.6                     Each Party will have the right to engage Third Party subcontractors to perform certain of its obligations under this Agreement; provided that Penn’s right to engage Third Party subcontractors is subject to Licensee’s prior written consent, which may not be unreasonably withheld. Any subcontractor to be engaged by a Party to perform a Party’s obligations set forth in the Agreement must meet the qualifications typically required by such Party for the performance of work similar in scope and complexity to the subcontracted activity and will enter into such Party’s standard nondisclosure agreement consistent with such Party’s standard practices which agreement shall be as least as protective as the nondisclosure obligations set forth herein. Any Party engaging a subcontractor hereunder will remain responsible and obligated for such activities and will

 

12

 

not grant rights to such subcontractor that interfere with the rights of the other Party under this Agreement. Furthermore, if Penn engages any subcontractor to perform any activities that would otherwise be performed by the Wilson Laboratory, [*].

 

2.3                               Funding of the Research Program

 

2.3.1                     The initial budget for the Research Program, broken down by Calendar Quarter, is set forth in Exhibit C. On or before [*] of each year, the Parties, through the JSC (subject to clause (b) of Section 2.3.2), will agree on an updated budget for the remainder of the Research Program, also broken down by Calendar Quarter. Subject to the terms and conditions of this Agreement, Licensee shall pay Penn research and development funding to cover the cost of the performance of the Research Plan by Penn in accordance with the agreed-upon budget (as updated from time to time pursuant to this Agreement) and the terms of Section 4.5 (including reasonable and documented external expenses incurred by Licensee in accordance with the Research Plan and as agreed to by the Parties through the JSC). The budget for each Research Plan shall be separated by Calendar Quarter and paid in advance prior to the work to be performed for such Calendar Quarter in which such activities will take place.

 

2.3.2                     If at any time Penn determines that it will require additional funds for the Research Program, it will notify Licensee through the JSC and provide a good faith estimate and itemized budget of the additional amount. Notwithstanding the foregoing: (a) changes to the scope of or budget for the Research Plan for a given Calendar Year will require approval of the JSC if the budget impact is greater than [*] of the agreed upon budget for such Calendar Year; and (b) [*].

 

2.3.3                     Unless otherwise indicated in the Research Plan or agreed-upon budget, title to any equipment, laboratory animals, or any other tangible materials made or acquired with funds provided under this Agreement will vest in Penn, and such equipment, animals, or tangible materials will remain the property of Penn following termination or expiration of this Agreement (but subject to any license grants to Licensee hereunder).

 

2.4                               Unavailability of Dr. James M. Wilson

 

If James M. Wilson, MD, PhD becomes unavailable to oversee and support Penn’s performance of the research under the Research Plan for any reason, Penn may propose another member of its faculty who is acceptable to Licensee, in its sole discretion, to oversee the performance of Penn’s portion of the Research Program. If Licensee agrees to the proposed substitution, the Parties will amend the definition of the Wilson Laboratory (effective on a going-forward basis) to describe the group within Penn that will be continuing the Research Program and Next Generation Program. If a substitute faculty member acceptable to Licensee has not been agreed upon within [*] after James M. Wilson, MD, PhD is no longer available to oversee and support the performance of the Research Plan, or if the Parties have not agreed upon an amendment to the definition of the Wilson Laboratory within that same time period, Licensee may terminate this Agreement upon written notice thereof to Penn, subject to the provisions of Section 10.4.

 

2.5                               New Program Option

 

2.5.1                     Penn Initiated Programs. During the Research Term, (a) provided that either Option Condition is met and (b) pursuant to the terms of a future confidentiality agreement between the Parties (to be negotiated in good faith), Penn, through the Wilson Laboratory,

 

13

 

will provide Licensee with a first notification of each new Gene Therapy Product development program for a CNS Monogenic Rare Disorder, developed or anticipated to be performed in the Wilson Laboratory and funded by Penn and/or the NIH (“New Program”), provided that Penn has the right to grant a license for such proposed New Indication without violating the terms of a Specified Obligation (“First Notice”). For clarity, [*]. Such First Notice will be provided at least [*] (“First Notice Period”). If Licensee has interest to include a New Program in the License granted under this Agreement, Licensee shall formally notify Penn in writing during the First Notice Period of its interest in such New Program and Penn will develop and propose within [*] a work plan and budget for the preclinical development costs through IND-enabling studies to be conducted at Penn for a Licensed Product under such New Program subject to the reasonable review and approval by Licensee (“New Program Budget”). Within [*] of Licensee’s receipt of the New Program Budget and work plan, Licensee shall decide whether to exercise its option to such New Program (the “New Indication Option”). Exercise of any New Indication Option shall [*]. If Licensee exercises a New Indication Option by written notice to Penn, then a) the Parties will amend the Research Program and Research Plan to include such New Program, b) the Research Support Amount will be increased by the amount of the New Program Budget, c) Licensee will pay the New Indication Option Fee and d) the definition of “Indication” will be amended to include the New Indication. If Licensee fails to notify Penn of its desire to exercise such New Indication Option in the time period set forth above and provide Penn written notice of such exercise, [*] within [*] of Licensee’s notice of its desire to exercise of such New Indication Option, such New Indication Option shall terminate and Penn shall be free to license such program to a Third Party. For clarity, such First Notice shall have no impact on the Wilson Laboratory’s ability to apply for federal or not-for-profit funding for such New Program, but if Penn has in fact applied for, or at the time intends to apply for, any such funding for the New Program, Penn will so advise Licensee when providing the First Notice.

 

2.5.2                     Licensee Initiated Programs. During the Research Term, if Licensee wishes to include a new Gene Therapy Product development program for a CNS Monogenic Rare Disorder to be conducted in the Wilson Laboratory for a New Indication, then Licensee may formally make such request in writing to Penn during the Research Term. Penn may decline to progress with the program for the following reasons, assuming such reasons exist without any breach of Section 2.5.1: (a) [*]; (b) [*]; (c) [*]; (d) [*]; (e) [*]; or (f) [*] (each of (a) through (f), a “Dispositive Rejection Condition”). If the New Indication is not subject to a Dispositive Rejection Condition, Penn will then develop and propose within [*] a work plan and budget for the preclinical development costs through IND-enabling studies to be conducted at Penn for such program including any budget therefor. Any such agreed budget will be added to the pre-existing Research Support Amount. Licensee shall have [*] to negotiate and, if applicable, accept such work plan and budget. If accepted, within [*] of Licensee’s acceptance of such budget, the definition of “Indication” (and the Research Program and Research Plan) will be amended to include the New Indication, and (for purposes of any provisions of this Agreement other than Section 2.5.1) Licensee will thereupon be deemed to have exercised a New Indication Option for such New Indication, obligating Licensee to pay a New Indication Option Fee in accordance with Section 4.1.5. [*]. For clarity, [*]. For further clarity, [*].

 

2.5.3                     Termination of the New Program Option and New Indication Options. Such First Notice obligation of Penn under Section 2.5.1 shall terminate upon the earlier of: (i) expiration of the Research Term, and (ii) exercise by Licensee of seven (7) New Indication

 

14

 

Options pursuant to Sections 2.5.1 and 2.5.2, and Penn shall have no obligation to perform any additional New Program, grant a license to any additional New Indication or provide a First Notice to Licensee of any New Program after such period.

 

2.6                               Exclusive CNS Option

 

During the Research Term, Licensee will have an exclusive option to include in the License any Next Generation Capsid for a Licensed Product for any New Indication for which a Research Plan is being conducted (or for which a Research Plan will be conducted if Licensee exercises a corresponding New Indication Option under Section 2.5) by Penn for Licensee within the field of CNS Monogenic Rare Disorders (“CNS Field”), to the extent that such New Indication is not listed on Exhibit D as being specifically excluded from this option (“Available Rare CNS Indications”). During the period starting on the Effective Date and ending at the earlier of: (a) [*] or (b) [*], Penn shall not grant any right to any commercial Third Party to a Next Generation Capsid for a Gene Therapy Product for any Available Rare CNS Indications without first notifying Licensee in writing, in which case Licensee shall have [*] from receipt of such notice to exercise its option with respect to such New Indication in accordance with the New Indication Option procedure set forth in Section 2.5.1 and (at Licensee’s discretion) the AAV Next Generation Option for such New Indication. Licensee acknowledges that the foregoing option will not apply to those New Indications set forth on Exhibit D. [*]

 

2.7                               Manufacturing Patent Rights Option

 

During the Research Term, Licensee will have the option to include in the License Manufacturing Patent Rights. During the Research Term, Penn, through the Wilson Laboratory, shall notify Licensee once every [*] of any available candidate Manufacturing Patent Rights applicable to the Field of Use for any of the Indications (“Manufacturing Patent Rights Package”) (where “available” means that the Specified Obligations do not prevent such candidate Manufacturing Patent Rights from being licensed to Licensee). For clarity, [*]. During the Research Term, on a Licensed Product-by-Licensed Product per Indication basis, Penn grants to Licensee an option to a non-exclusive license to Manufacturing Patent Rights for the applicable Licensed Product(s) for the Indication in the Field of Use. The option on a Licensed Product-by-Licensed Product and Indication-by-Indication basis shall be exercisable at Licensee’s discretion at any time during the Research Term and, if longer, until [*]. Such option will expire at the end of the exercise period described in the preceding sentence. Upon exercise of such option, a new Exhibit A-2 shall be created by the Parties to include the relevant licensed Manufacturing Patent Rights.

 

2.8                               Natural History Studies

 

During the Research Term, Penn Orphan Center, through the Wilson Laboratory, shall conduct natural history studies relating to the Research Program with funding from the Licensee and additional commercial Third Parties, subject to the Parties’ having reached mutual agreement upon the terms of the funding, non-exclusive rights to the data arising from such studies and other terms in a clinical research agreement.

 

2.9                               AAV Next Generation

 

2.9.1                     Generally. It is anticipated that Licensed Product development under the Research Program for certain Indications may include the use of an available Next Generation Capsid and related technology Controlled by Penn arising from the Next Generation Program. As used throughout this Section 2.9, “available” means that the Specified Obligations do not

 

15

 

prevent the Next Generation Capsid from being offered or licensed to Licensee as contemplated herein. For clarity, [*] (with such Next Generation Capsid selection being referred to herein as the “Capsid Lock”) [*].

 

2.9.2                     AAV Next Generation Option. During the term of the Next Generation Program, Penn, through the Wilson Laboratory, will notify Licensee of any available Next Generation Capsids (in accordance with the applicable provisions of Section 2.9.4). On an Indication-by-Indication basis, Penn hereby grants to Licensee: (a) an exclusive option to an exclusive license to Penn-Controlled Patent Rights claiming each such Next Generation Capsid and related technology arising from the Next Generation Program selected by Licensee for the applicable CNS Monogenic Rare Disorder Indication in the Field of Use which are conceived and reduced to practice in the Wilson Laboratory in the conduct of the Next Generation Program; (b) an option to a nonexclusive license to Licensed Know-How related to the Next Generation Capsids for such Indication in the Field of Use (the “AAV Next Generation Option”). On an Indication-by-Indication basis, each AAV Next Generation Option period shall begin on [*] and expire [*] for the first Licensed Product for such Indication during the Research Term (each an “AAV Option Period”). The AAV Next Generation Option on an Indication-by-Indication basis shall be exercisable at Licensee’s discretion at any time during the applicable AAV Option Period upon provision of formal written notice to Penn and payment of a Next Generation Option Fee for each affected Indication during such AAV Option Period. Upon exercise of an AAV Next Generation Option, a new Exhibit A-1 shall be created by the Parties to include the relevant licensed Penn Patent Rights B and Licensed Know-How.

 

2.9.3                     Next Generation Capsid Exclusivity Period. After Licensee’s exercise of an AAV Next Generation Option for an Indication, Licensee shall have the greater of: (a) [*] from Penn’s initiation of work under the Research Program for such Indication and (b) [*] from Licensee’s exercise of the AAV Next Generation Option for such Indication to determine which Next Generation Capsid will be used in the Licensed Product for such Indication (“Next Generation Indication Exclusivity Period”) provided that Penn conducts the Research Plan through IND-enabling studies for such Indication under this Agreement. During such Next Generation Indication Exclusivity Period (or earlier if all rights to the Indication have been terminated) and subject to Penn’s retained rights in Section 3.2, Penn shall not license a Next Generation Capsid to another commercial Third Party for such Indication. [*]

 

2.9.4                     Next Generation Capsid Data Packages. During the AAV Option Period, Penn, through the Wilson Laboratory, shall notify Licensee once every [*] of any available Next Generation Capsids in the Field of Use for the Indications. For each available Next Generation Capsid developed during the AAV Option Period, the Wilson Laboratory will at the time of such notification provide Licensee a Next Generation Capsid Data Package. For each available Next Generation Capsid developed before the AAV Option Period, the Wilson Laboratory will provide a Next Generation Capsid Data Package if reasonably requested by Licensee.

 

2.10                        Exclusivity

 

On an Indication-by-Indication basis during the Research Term until DTP for such Indication plus an additional one (1) year after achievement of DTP for such Indication, Penn will ensure that the Wilson Laboratory shall not collaborate with any commercial Third Party to develop another Gene Therapy Product for the same Indication (as that term is defined as of the Effective Date and as it

 

16

 

may be updated throughout the Agreement when additional New Indications are included pursuant to this Agreement) (“Limited Exclusivity Covenant”). Notwithstanding the foregoing, the Limited Exclusivity Covenant shall end on an Indication-by-Indication and Licensed Product-by-Licensed Product basis upon the earlier of (a) [*] after the end of the portion of the funded Research Program at Penn associated with that specific Indication and (b) [*].

 

2.11                        Program Failure

 

In the event that the portion of the Research Program associated with any Licensed Product for any Indication fails at a key decision point during the Research Program, as such failure is objectively defined in the work plan for such project, and a decision is subsequently made by the Licensee to discontinue further development of the program for such Indication (“Failed Indication”), any remaining Research Support Amount allocated for the Failed Indication program (minus wind-down and non-cancellable expenses) will be reallocated to Licensed Product development programs for other Indications selected by Licensee under the Research Program budgeted during the subsequent twelve (12) month period. Such Failed Indication will be removed promptly from the Indication definition of the Agreement, with written confirmation of such reversion of rights promptly provided by Licensee to Penn. In addition any [*] shall terminate immediately with respect to any Failed Indication.

 

2.12                        Governance

 

2.12.1              Joint Steering Committee.

 

(a)                                 Formation; Composition. Within [*] of the Effective Date, the Parties will establish a joint steering committee (the “Joint Steering Committee” or “JSC”) comprised of three (3) representatives from each Party with sufficient seniority within the applicable Party to make decisions arising within the scope of the JSC’s responsibilities. The JSC may change its size from time to time by mutual consent of its members, provided that the JSC will consist at all times of an equal number of representatives of each of Penn and Licensee. Each Party may replace its JSC representatives at any time upon written notice to the other Party.

 

(b)                                 Specific Responsibilities. The JSC will:

 

(i)                                     oversee the Research Program; provided, however, that any post-DPT activities of Licensee are outside the purview of the JSC except to the extent (if any) otherwise expressly agreed in the Research Plan;

 

(ii)                                  on or before November 1 of each year, approve (once acceptable to the JSC) an updated budget in accordance with Section 2.3.1 and subject to clause (b) of Section 2.3.2;

 

(iii)                               approve (once acceptable to the JSC) any amendments to the Research Plan (including any changes to the budget that are greater than [*] of the then-current budget for the then-current Calendar Year), subject to clause (b) of Section 2.3.2;

 

(iv)                              [*];

 

(v)                                 review and (if acceptable) approve of IND submissions and any other filing with a Regulatory Authority prior to IND submissions relating to a Licensed Product;

 

17

 

(vi)                              use good-faith efforts to resolve any disagreement between the Parties relating to the Research Program or Research Plan;

 

(vii)                           establish such additional subcommittees as it deems necessary to achieve the objectives and intent of the Research Program; and

 

(viii)                        use good-faith efforts to resolve other issues presented to it by either Party pertaining to the administration of the Research Program or other matters covered by this Agreement.

 

(c)                                  Reporting. Each Party shall keep the JSC informed on the progress of the activities under the Research Program then currently ongoing under the Research Plan, including delivering quarterly written updates of its progress under the Research Plan to the JSC at least one (1) week in advance of each JSC meeting.

 

(d)                                 Meetings. During the performance of the Research Plan by Penn, the JSC will meet at least quarterly. Following the completion of Penn’s performance of the Research Plan, the Parties may agree to meet to discuss items previously addressed by the JSC. The JSC may meet in person, by videoconference or by teleconference. Notwithstanding the foregoing, at least two (2) meetings per Calendar Year will be in person unless the Parties mutually agree in writing to waive such requirement. In-person JSC meetings will be held at locations alternately selected by Penn and by Licensee; provided, however, that Licensee shall reimburse Penn for its JSC representatives’ costs in connection with attending such in-person JSC meeting at a Licensee-selected location other than Penn. Meetings of the JSC will be effective only if at all representatives of each Party are present or participating in such meeting. The JSC shall keep accurate minutes of its deliberations which shall record all proposed decisions and all actions recommended or taken. The secretary of the JSC (as appointed by the members of the JSC) shall be responsible for the preparation of draft minutes. Draft minutes shall be sent to all members of the JSC within [*] after each meeting and shall be approved, if appropriate, at the next meeting. All records of the JSC shall at all times be available to both Penn and Licensee.

 

(e)                                  Decision-Making. The representatives from each Party on the JSC will have, collectively, one (1) vote on behalf of that Party, and all decision making will be by [*]. If the JSC is unable to reach agreement on any issue or matter for which it is responsible, such disputed matter will be escalated to Licensee’s Chief Executive Officer and Penn’s Dean of Medicine or his designee, for discussion in good faith. In the event that after escalation the Parties are unable to reach agreement with respect to the disputed matter, then (1) for disputed matters relating to submissions to [*], and (2) for all other disputed matters: (i) [*] or (ii) [*].

 

2.12.2              Alliance Managers. Each Party will appoint a representative to act as its alliance manager under this Agreement (each, an “Alliance Manager”). Alliance Managers will attend JSC meetings as non-member participants. Each Alliance Manager will be responsible for:

 

(a)                                 promoting effective communication between the Parties;

 

18

 

(b)                                 developing a mutually agreed alliance launch plan covering any activities and systems that the Parties need to implement within the first [*] after the Effective Date to support the Research Program;

 

(c)                                  supporting the members (including secretary) of the JSC with organization of meetings, information exchange, meeting minutes, and facilitating dispute resolution as necessary;

 

(d)                                 preparing status and progress reports on the above as determined necessary by the JSC; and

 

(e)                                  ensuring proper approval of publications prior to submission as required in Section 7.4.

 

ARTICLE 3
 LICENSES AND OTHER RIGHTS

 

3.1                               Grant of License

 

Subject to the terms and conditions of this Agreement, Penn hereby grants to Licensee the following (collectively, the “License”):

 

3.1.1                     an exclusive, worldwide, Royalty-bearing right and license (with the right to sublicense through multiple tiers, subject to the provisions of Section 3.4), under Penn Patent Rights A to make, have made, use, sell, offer for sale and import Licensed Products for the Indications (and, if applicable, for other indications in the CNS Field and/or, in the case of Specified Licensed Products, outside the CNS Field, to the extent provided in Section 3.1.4) in the Field of Use during the Term;

 

3.1.2                     a non-exclusive, world-wide Royalty-bearing right and license [*], under Licensed Know-How and Licensed Materials (and Penn’s intellectual property rights therein) to use and practice the same in order to make, have made, use, sell, offer for sale and import Licensed Products for the Indications (and, if applicable, for other indications in the CNS Field and/or, in the case of Specified Licensed Products, outside the CNS Field, to the extent provided in Section 3.1.4) in the Field of Use during the Term; and

 

3.1.3                     a non-exclusive (except as provided below), worldwide, Royalty-bearing right and license under Penn Patent Rights B and Manufacturing Patent Rights, [*], to make, have made, use, sell, offer for sale and import Licensed Products in the Field of Use during the Term, provided that for Penn Patent Rights B, such license applies only to Licensed Products developed under the Research Program for the Indication(s) for which Licensee has exercised an AAV Next Generation Option (and, if applicable, for other indications in the CNS Field and/or, in the case of Specified Licensed Products, outside the CNS Field, to the extent provided in Section 3.1.4), provided further, that for Manufacturing Patent Rights, such license applies only to Licensed Products developed under the Research Program for the Indications (and, if applicable, for other indications in the CNS Field and/or, in the case of Specified Licensed Products, outside the CNS Field, to the extent provided in Section 3.1.4) in the Field of Use and for which Licensee has exercised the Manufacturing Patent Rights option. Notwithstanding the foregoing, the license granted under this Section 3.1.3 under Penn Patent Rights B will be exclusive to Licensee during the applicable Next Generation Indication Exclusivity Period, and upon expiration of the

 

19

 

Next Generation Indication Exclusivity Period shall automatically convert to a non-exclusive license, except that it will remain exclusive to Licensee to the extent of any Capsid Lock for the Licensed Product for the Indication, as further described in Section 2.9.

 

3.1.4                     To the extent that Licensee desires to have the License cover one or more additional indications for a Licensed Product (other than the named Indication for such Licensed Product), within the CNS Field for the Field of Use during the Term for an existing Licensed Product that has been licensed for a named Indication, then Licensee shall provide written notice to Penn. Such additional indication will thereupon automatically be covered by the License (for such existing Licensed Product) if it is within the CNS Field and such licensing would not violate a Specified Obligation. Furthermore, to the extent that Licensee desires to have the License cover one or more additional indications [*] (“Specified Licensed Product”) (other than the named Indication for such Specified Licensed Product) outside the CNS Field for the Field of Use during the Term for an existing Specified Licensed Product that has been licensed for a named Indication, then Licensee shall provide written notice to Penn. Such additional indication will thereupon automatically be covered by the License (for such existing Specified Licensed Product) if: (i) [*], and (ii) [*]. If the condition in the preceding clause (i) is not satisfied, Penn will inform Licensee whether [*] and if so, the Parties shall, if requested by Licensee, discuss and negotiate in good faith for the inclusion of such additional indication in the License for such Specified Licensed Product on additional and/or different terms and conditions as may be appropriate in the circumstances as mutually agreed upon by the Parties.

 

3.1.5                     If, during the Research Term, additional Patent Rights Controlled by Penn arising from research solely conducted in the Wilson Laboratory are identified by either Party as necessary for the development and commercialization of Licensed Products for the Indications for the Field of Use [*].

 

3.2                               Retained Rights

 

Notwithstanding the License, Penn retains the right under Penn Patent Rights to: (a) conduct educational, research, clinical activities and patient care activities itself, including, but not limited to sponsored research, and (b) authorize non-commercial Third Parties to conduct educational, research and clinical activities and patient care activities; [*].

 

3.3                               U.S. Government Rights

 

The License is expressly subject to all applicable provisions of any license to the United States Government executed by Penn and is subject to any overriding obligations to the United States Federal Government under 35 U.S.C. §§200-212, applicable governmental implementing regulations, and the U.S. Government sponsored research agreement or other guidelines, including that products that result from intellectual property funded by the United States Federal Government that are sold in the United States be substantially manufactured in the United States.

 

3.4                               Grant of Sublicense by Licensee

 

3.4.1                     Penn grants to Licensee the right to grant sublicenses, in whole or in part, under the License (each, a “Sublicense”) subject to the terms and conditions of this Agreement and specifically this Section 3.4. The term “Sublicense” shall include any grant of rights under the License by a Sublicensee to any downstream Third Party, such downstream Third Party shall also be considered a Sublicensee for purposes of this Agreement.

 

20

 

3.4.2                     All Sublicenses will (a) be issued in writing, (b) to the extent applicable, include all of the rights of Penn and require the performance of obligations due to Penn (and, if applicable, the U.S. Government under 35 U.S.C. §§200-212) contained in this Agreement and (c) include no less than the following terms and conditions:

 

(a)                                 Reasonable record keeping, audit and reporting obligations sufficient to enable Licensee and Penn to reasonably verify the payments due to Licensee and Penn under such Sublicense and to reasonably monitor such Sublicensee’s progress in developing and/or commercializing Licensed Product, provided that such obligations shall be no less stringent that those provided in this Agreement for Licensee.

 

(b)                                 Infringement and enforcement provisions that do not conflict with the restrictions and procedural requirements imposed on Licensee and do not provide greater rights to Sublicensee than as provided in Section 6.3.

 

(c)                                  Confidentiality provisions with respect to Confidential Information of Penn consistent with the restrictions on Licensee in Article 7 of this Agreement.

 

(d)                                 Covenants by Sublicensee that are equivalent to those made by Licensee in Section 8.4.

 

(e)                                  A requirement of indemnification of Penn by Sublicensee that is equivalent to the indemnification of Penn by Licensee under Section 9.1 of this Agreement.

 

(f)                                   A requirement of obtaining and maintaining insurance by Sublicensee that is equivalent to the insurance requirements of Licensee under Section 9.2 of this Agreement, including coverage under such insurance of Penn as provided in Section 9.2.

 

(g)                                  Restriction on use of Penn’s names etc. consistent with Section 11.4 of this Agreement.

 

(h)                                 A requirement of antidiscrimination by Sublicensee no less stringent than that provided in Section 11.5 of this Agreement.

 

(i)                                     A requirement that Penn is a third party beneficiary of such Sublicense.

 

Any Sublicense that does not include all of the terms and conditions set forth in this Section 3.4.2 or which is not issued in accordance with the terms and conditions set forth in this Section 3.4, shall be considered null and void with no further notice from Penn unless separately approved by Penn in writing.

 

3.4.3                     Within [*] after of the execution of a Sublicense Document, Licensee shall provide a complete and accurate copy of such Sublicense Document to Penn, in the English Language. Penn’s receipt of a Sublicense Document, however, will constitute neither an approval nor disapproval of the Sublicense Document nor a waiver of any right of Penn or obligation of Licensee under this Agreement.

 

21

 

3.4.4                     Licensee shall provide an annual Sublicense Development Report on or before December 1 of each year during the Term (“SDR Report”) a form of which is attached hereto as Exhibit G.

 

3.5                               Delivery of Know-How

 

Upon completion of a Research Program on a Licensed Product-by Licensed Product basis, [*], Penn shall upon Licensee’s reasonable written request and Licensee’s cost and expense, disclose and deliver Licensed Know-How and/or Licensed Materials to Licensee applicable to the Licensed Product, [*] such Licensed Know-How and/or Licensed Materials for the exploitation of the License.

 

3.6                               No Implied License

 

Each Party acknowledges that the rights and licenses granted in this Agreement are limited to the scope expressly granted. Accordingly, except for the rights expressly granted under this Agreement, no right, title, or interest of any nature whatsoever is granted whether by implication, estoppel, reliance, or otherwise, by either Party to the other Party. All rights with respect to any Know-How, patent or other intellectual property right rights that are not specifically granted herein are reserved to the owner thereof.

 

ARTICLE 4
 FINANCIAL PROVISIONS

 

4.1                               Payments

 

4.1.1                     Issue Fee. In partial consideration of the rights and licenses granted to Licensee under this Agreement, upon the earlier of (a) [*], and (b) [*], Licensee will pay to Penn a one-time, non-refundable payment of Two Million Five Hundred Thousand US Dollars ($2,500,000). Such payment will be made by wire transfer of immediately available funds into the account specified in Section 4.5.

 

4.1.2                     Equity Issuance. On the Effective Date, and in partial consideration of the rights and licenses granted to Licensee under this Agreement, Licensee and Penn shall enter into an Equity Issuance Agreement in the form attached as Exhibit E. Licensee shall issue Penn shares of common stock of Licensee equal to [*] of the fully-diluted common stock of Licensee.

 

4.1.3                     AAV Next Generation Option Payments. Within [*] of Licensee’s exercise of an AAV Next Generation Option for an Indication in the Field of Use (exercisable on an Indication-by-Indication basis), Licensee will pay to Penn a non-refundable, non-creditable payment in the amount of [*] for each Indication by wire transfer of immediately available funds (“Next Generation Option Fee”). For clarity, such Next Generation Option Fee is due and payable to Penn for each Indication for which Licensee exercises an AAV Next Generation Option.

 

4.1.4                     License Maintenance Fee. Following expiration of the Research Term (including any applicable R&D Extension Term) and for each year thereafter until expiration of the Royalty Period, Licensee shall pay Penn a non-refundable, non-creditable annual maintenance fee of [*] one year after such Research Term expiration date and on each anniversary thereafter (“License Maintenance Fee”); provided, however, that

 

22

 

commencing after the First Commercial Sale of a Licensed Product, and payment of a Royalty due under 4.3.1, such License Maintenance Fee for each Calendar Year will be creditable towards Royalties due to Penn for such Calendar Year.

 

4.1.5                     New Indication Option Payment. Within [*] of Licensee’s exercise of each of up to seven (7) New Indication Options, Licensee will pay to Penn a non-refundable, non-creditable payment in the amount of [*] by wire transfer of immediately available funds (“New Indication Option Fee”); provided that if a New Indication is added prior to the generation of pre-clinical pharmacology data, then the payment will be made as follows: [*] at exercise and [*] at the generation of pre-clinical pharmacology data. For clarity, such New Indication Option Fee is due and payable to Penn for each new Indication that is added to the License.

 

4.1.6                     New Indication Multiplier. Notwithstanding anything herein, for any New Indication that is added to the License upon exercise by Licensee of a New Indication Option prior to completion of the IND-enabling studies, the milestone, sublicensing fee percentages and Royalties outlined below shall apply as set forth in this Agreement; provided, that for any New Indication that is added to the License [*], a multiplier of [*] shall be applied to each of the [*].

 

4.2                               Milestone Payments

 

4.2.1                     Development Milestones.

 

(a)                                 As additional consideration for the License, Licensee will pay Penn the following milestone payments (each, a “Development Milestone Payment”) upon the achievement of the corresponding milestone for each Licensed Product for the first Indication (each, a “Development Milestone”), whether achieved by Licensee or an Affiliate or Sublicensee. Licensee shall promptly notify Penn in writing of the achievement of any such Development Milestone and Licensee shall pay Penn in full the corresponding Development Milestone Payment within [*] of such achievement. For clarity, each Development Milestone Payment is non-refundable, is not an advance against Royalties due to Penn or any other amounts due to Penn.

 

	
Development Milestone
    	
 
    	
Milestone Payment
   (in U.S. dollars)
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    

 

(b)                                 Each time a Development Milestone is achieved for a Licensed Product for an Indication, then any other Development Milestone Payments with respect to earlier Development Milestones that have not yet been paid will be due and payable together with the Development Milestone Payment for the Development Milestone that is actually achieved.

 

(c)                                  Notwithstanding the foregoing, in the event that the Licensed Product is applicable to any indication(s) outside of the named Indication in the Research Program (and

 

23

 

Penn has the right to grant a License to such additional indication in accordance with Section 3.1), the foregoing milestones shall be due and payable by Licensee to Penn on such additional indication(s) as follows: (i) for a second indication of a Licensed Product, Licensee shall pay Penn [*] of the foregoing Development Milestones for the Licensed Product for the second indication, and (ii) for a third indication of the Licensed Product, Licensee shall pay Penn [*] of the foregoing Development Milestones for the Licensed Product for such third indication. No Development Milestones will apply to the fourth (or any later) indication of a given Licensed Product.

 

(d)                                 For clarity, Development Milestone Payments are due and payable on Licensed Product and on products that, upon Regulatory Approval, would become Licensed Product.

 

4.2.2                     Commercial Milestone Payments.

 

(a)                                 As additional consideration for the License, Licensee will pay Penn the following commercial milestone payments (each, a “Commercial Milestone Payment”) upon the achievement by Licensee or an Affiliate or Sublicensee of the corresponding milestone (each, a “Commercial Milestone”), that is, when its worldwide Net Sales of a Licensed Product in a Calendar Year first reach the respective thresholds indicated below. Licensee shall promptly notify Penn in writing of the achievement of any such Commercial Milestone and Licensee shall pay Penn in full the corresponding Commercial Milestone Payment within [*] of such achievement. For clarity, [*].

 

	
Commercial Milestone Event
   (payable once per Licensed Product)
    	
 
    	
One-Time Milestone
   Payment
   (U.S. dollars)
    	
 
    
	
Worldwide annual Net   Sales of royalty bearing Licensed Product equals or exceeds [*]
    	
 
    	
[*]
    	
 
    
	
Worldwide annual Net   Sales of royalty bearing Licensed Product equals or exceeds [*]
    	
 
    	
[*]
    	
 
    
	
Worldwide annual Net   Sales of royalty bearing Licensed Product equals or exceeds [*]
    	
 
    	
[*]
    	
 
    
	
Maximum total Sales   Milestone Payments to Penn for each Licensed Product
    	
 
    	
$55,000,000
    	
 
    

 

(b)                                 For clarity, the foregoing Commercial Milestone Payments shall be due once per Licensed Product.

 

4.3                               Royalties

 

4.3.1                     Royalty. As further consideration for the License, on a Licensed Product-by-Licensed Product and country-by-country basis during the Royalty Period Licensee shall pay to Penn a non-refundable, non-creditable royalty on all Net Sales of each Licensed Product (“Royalty”) as set forth below:

 

24

 

	
Annual Worldwide Net Sales
   (of the applicable Licensed Product)
    	
 
    	
Royalty Rate
    	
 
    
	
Less than [*]
    	
 
    	
[*]
    	
 
    
	
Greater than or equal   to [*] and less than or equal to [*]
    	
 
    	
[*]
    	
 
    
	
Greater than [*]
    	
 
    	
[*]
    	
 
    

 

For clarity, the foregoing Royalty rates are tiered such that each rate applies only to the portion of annual Net Sales that is within the corresponding tier. That is, within any given Calendar Year, the first [*] of Net Sales of a given Licensed Product will accrue Royalties at [*], the next [*] of Net Sales of such Licensed Product will accrue Royalties at [*], and any Net Sales of such Licensed Product in excess of [*] will accrue Royalties at [*].

 

4.3.2                     Royalty Term. Licensee’s obligation to pay Penn the Royalty will continue on a country-by-country and Licensed Product-by-Licensed Product basis from the date of First Commercial Sale of such Licensed Product in a country until the latest of (a) the expiration of the last Valid Claim within the Penn Patent Rights covering such Licensed Product in the country in which such Licensed Product is made, used or sold, (b) the expiration of the data exclusivity term conferred by the applicable Regulatory Authority in such country with respect to such Licensed Product (e.g., such as in the case of an orphan drug), and (c) the tenth (10th) anniversary of the First Commercial Sale of such Licensed Product in such country (such royalty period, the “Royalty Period”).

 

4.3.3                     Step-Down. On a country-by-country and Licensed Product-by-Licensed Product basis, during any portion of the Royalty Term in which the applicable Licensed Product is not covered by at least one Valid Claim in the applicable country and is not subject to data exclusivity conferred by the applicable Regulatory Authority: (a) the royalty rate under Section 4.3.1 shall be reduced to [*] of the royalty rate otherwise payable pursuant to Section 4.3.1; and (b) no Royalty at all will apply to such Licensed Product [*].

 

4.3.4                     Royalty Reductions.

 

(a)                                 Notwithstanding anything in this Section 4.3, in the event that Penn or Licensee 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: (i) Penn or Licensee (whoever has first notice) shall promptly notify the other Party; and (ii) beginning as of the date the Third Party obtained such Compulsory License in such country, the Royalty rate payable under this Section 4.3 to Penn for Net Sales in such country will be adjusted to [*].

 

(b)                                 Third Party Licenses.

 

(i)                                     If after the Effective Date Licensee determines upon the advice of outside intellectual property counsel that a license to Patent Rights from a Third Party is reasonably necessary to develop, commercialize, or manufacture a Licensed Product, Licensee may obtain such a Third Party license to such Patent Rights.

 

(ii)                                  Licensee may deduct from any Royalty payments due to Penn under Section 4.3.1 of this Agreement an amount equal to [*] (the “Anti-Stacking Percentage”) of any Royalty paid by Licensee to a Third Party on [*] of a particular Licensed Product in a particular country during a Calendar Quarter under a Third Party license obtained by Licensee pursuant to Section 4.3.4(b)(i).

 

25

 

(iii)                               In the event that one or more Generic Product(s) with respect to a particular Licensed Product enter(s) the market in a particular country, and such Generic Product(s) in the aggregate have a market share of [*] or more in that country, Licensee may reduce the Royalty payments for Sales of such Licensed Product in such country by [*]; provided that if Licensee reduced the Royalty payments under this Section 4.4.4(b)(iii), Licensee shall resume making Royalty payments without reduction under this Section 4.4.4(b)(iii) as of the earlier of (a) no Generic Product being sold for at least [*] in such country and (b) a court of competent jurisdiction determines that a Valid Claim of a Penn Patent Right is valid and infringed by such Generic Product in such country.

 

(iv)                              Notwithstanding the foregoing, in no event will the deductions under this Section 4.3.4(b) reduce the Royalty payable in respect of Net Sales of such Licensed Product in such country by more than [*] (the “Maximum Anti-Stacking Reduction”) of the Royalty as set forth in Section 4.3.1 above.

 

4.3.5                     Calculations. Licensee must pay Royalties owed to Penn on a Calendar Quarter basis on or before the following dates:

 

(a)                                 [*] for any Sales that took place in the Calendar Quarter ending December 31, of the prior year;

 

(b)                                 [*] for any Sales that took place in the Calendar Quarter ending March 31 of such Calendar Year;

 

(c)                                  [*] for any Sales that took place in the Calendar Quarter ending June 30 of such Calendar Year; and

 

(d)                                 [*] for any Sales that took place in the Calendar Quarter ending September 30 of such Calendar Year.

 

4.4                               Penn Sublicense Income

 

4.4.1                     For any given Licensed Product, Licensee will pay to Penn the following percentage of Sublicense Income (“Penn Sublicense Income”) received by Licensee from a Sublicensee (with no rights of apportionment):

 

	
Stage in Licensed Product development at
   which sublicense is granted by Licensee
    	
 
    	
% of Sublicense
   Income Payable to
   Penn
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    

 

4.4.2                     Licensee will make such payment to Penn on or before the following dates:

 

(a)                                 [*] for any Sublicense Income received by Licensee in the Calendar Quarter ending December 31, of the prior year;

 

(b)                                 [*] for any Sublicense Income received by Licensee in the Calendar Quarter ending March 31 of such Calendar Year;

 

26

 

(c)                                  [*] for any Sublicense Income received by Licensee in the Calendar Quarter ending June 30 of such Calendar Year; and

 

(d)                                 [*] for any Sublicense Income received by Licensee in the Calendar Quarter ending September 30 of such Calendar Year.

 

4.5                               Mode of Payment and Currency

 

All payments to Penn hereunder shall be made by deposit of USD in the requisite amount to the “The Trustees of the University of Pennsylvania” and will be made by delivery to any one of the following:

 

For funding of the performance of the Research Program by Penn:

 

By ACH/Wire:

[*]

SWIFT CODE: [*]

(international wires only)
 Account Number:
 [*]

Payment should include the
 necessary amount to cover
 any bank charges incurred.

 

 

For all other payments to Penn under this Agreement:

 

	
By ACH/Wire:
    	
 
    	
By Check (direct mail):
    	
 
    	
By Check (lockbox):
    
	
[*]
    	
 
    	
The Trustees of the
   University of Pennsylvania
    	
 
    	
The Trustees of the
   University of Pennsylvania
    
	
SWIFT CODE: [*]
    	
 
    	
c/o Penn Center for
   Innovation
    	
 
    	
c/o Penn Center for Innovation
    
	
(international wires   only)
   Account Number:
   [*]
    	
 
    	
Attention: Financial
   Coordinator
    	
 
    	
PO Box 785546
   Philadelphia, PA 19178-5546
    
	
Payment should include the
   necessary amount to cover
   any bank charges incurred.
    	
 
    	
3160 Chestnut Street, Suite
   200
   Philadelphia, PA 19104-6283
    	
 
    	
 
    

 

Payments under this Agreement shall be made in USD. All Royalties payable shall be calculated first in the currency of the jurisdiction in which payment was made, and if not in the United States, then converted into USD. The exchange rate for such conversion shall be the average of the rate quoted in The Wall Street Journal for the last business day of each month in the Calendar Quarter for such Royalty payment made.

 

4.6                               Royalty and Penn Sublicense Income Reports

 

Within [*] after the end of each Calendar Quarter, Licensee shall deliver to Penn a report (“Financial Report”) setting out all details necessary to calculate the Royalty and Penn Sublicense Income due under this Article 4 for such Calendar Quarter, including:

 

27

 

4.6.1                     [*];

 

4.6.2                     Gross sales and Net Sales of each Licensed Product made by Licensee, its Affiliates and Sublicensees;

 

4.6.3                     Royalties;

 

4.6.4                     Sublicense Income and the calculation of Penn Sublicense Income;

 

4.6.5                     The method and currency exchange rates (if any) used to calculate the Royalties and Penn Sublicense Income;

 

4.6.6                     A specification of all deductions and their dollar value that were taken to calculate Net Sales;

 

4.6.7                     A list of all countries in which Licensed Product is being manufactured (on a product by product basis); and

 

4.6.8                     Date of First Commercial Sale in the United States (this need only be reported in the first Financial Report following such First Commercial Sale in the United States).

 

Each Financial Report shall be in the form of the sample report attached hereto as Exhibit H.

 

4.7                               Late Payments

 

In addition to any other remedies available to Penn, including the right to terminate this Agreement as provided in Section 10.3, any failure by Licensee to make a payment within [*] after the date when due shall obligate Licensee to pay computed interest, the interest period commencing on the due date and ending on the actual payment date, to Penn at a rate per annum equal to [*] per month, or the highest rate allowed by Law, whichever is lower.

 

4.8                               Default Payment

 

In the event of default in payment of any payment owing to Penn under the terms of this Agreement, and if it becomes necessary for Penn to undertake legal action to collect said payment, Licensee shall pay reasonable, documented legal fees and costs incurred in connection therewith.

 

4.9                               Accounting

 

Each Party shall calculate all amounts, and perform other accounting procedures required, under this Agreement and applicable to it in accordance with GAAP.

 

4.10                        Books and Records

 

Licensee will keep accurate books and records of all Licensed Products developed, manufactured, used or sold and all Sublicenses, collaboration agreements and joint venture agreements entered into by Licensee that involved Penn Patent Rights. Licensee will preserve these books and records for at least [*] from the date of the Financial Report to which they pertain. Upon reasonable notice, key personnel, books and records will be made reasonably available and will be open to examination by representatives or agents of Penn during regular office hours to determine their accuracy and assess Licensee’s compliance with the terms of this Agreement, provided that Licensee shall not have an obligation to provide access more than once in any given [*] period.

 

28

 

4.11                        Audits

 

In addition to the right of Penn to examine the books and records and interview key personnel as provided in Section 4.10 above, Penn, at its own cost, through an independent auditor reasonably acceptable to Licensee (and who has executed an appropriate confidentiality agreement reasonably acceptable to Licensee that requires the auditor to keep any information learned by it confidential except as needed to report its audit conclusions to Penn), may inspect and audit the relevant records of Licensee pertaining to the calculation of any Development Milestone Payments, Commercial Milestone Payments, Royalties and Penn Sublicense Income due to Penn under this Agreement. Licensee shall provide such auditors with access to the records during reasonable business hours. Such access need not be given to any such set of records more often than once each year or more than [*] after the date of any report to be audited. Penn shall provide Licensee with written notice of its election to inspect and audit the records related to the Development Milestone Payments, Commercial Milestone Payments and Royalties due hereunder not less than [*] prior to the proposed date of review of Licensee’s records by Penn’s auditors. Should the auditor find any underpayment of Development Milestone Payments, Commercial Milestone Payments, Royalties or Penn Sublicense Income by Licensee, Licensee shall (a) promptly pay Penn the amount of such underpayment; (b) shall reimburse Penn for the cost of the audit, if such underpayment equals or exceeds the higher of (i) [*] or (ii) [*] of combined Development Milestone Payments, Commercial Milestone Payments, Royalties and Penn Sublicense Income paid during the time period audited; and (c) provide such auditors with an audit right exercisable within [*] after Penn receives the audit report. If the auditor finds overpayment by Licensee, then Licensee shall have the right to deduct the overpayment from any future Development Milestone Payments, Commercial Milestone Payments, Royalties or Sublicense Income due to Penn by Licensee or, if no such future Development Milestone Payments, Commercial Milestone Payments, Royalties or Sublicense Income are payable, then Penn shall refund the overpayment to Licensee within [*] after Penn receives the audit report. [*]

 

4.12                        Taxes

 

All payments made by Licensee to Penn under the Agreement shall be made free and clear of and without any deduction for or on account of any Taxes on or with respect to such payments.

 

ARTICLE 5
 CLINICAL DEVELOPMENT, REGULATORY AFFAIRS; COMMERCIALIZATION

 

5.1                               Development Plan

 

Licensee shall provide Penn with a development plan no later than [*] during the Term. The development plan shall include a timeline for detailed activities to be conducted by Licensee, its Affiliates and Sublicensees, and Licensee shall provide Penn with [*] progress reports regarding achievements and activities under such development plan. For clarity, [*].

 

5.2                               Clinical

 

Licensee shall have the first right to sponsor all clinical activities and lead regulatory interactions for the Licensed Products for each Indication under this Agreement. Without limiting the foregoing, Licensee will have the first option, but not an obligation, to conduct a FIH Clinical Study for each Licensed Product developed under the Research Program. Licensee will consider in good faith using Penn as a study site for one or more studies where Penn can reasonably demonstrate that Penn’s capabilities and costs are reasonably comparable to other potential study sites. If Penn (in

 

29

 

its sole discretion) is willing and able to conduct a Clinical Study for a Licensed Product developed under the Research Program, the Parties will negotiate a separate clinical trial agreement and a separate clinical trial budget prior to initiation of such Clinical Study. For clarity, any Clinical Study funding by Licensee shall be separate and in addition to the Research Support Amount.

 

5.3                               Commercialization

 

Licensee will have sole responsibility for and sole decision-making over all commercialization activities of the Licensed Products for the Indications in the Field of Use, and will be solely responsible for the associated costs of such commercialization activities.

 

5.4                               Manufacturing

 

Except as otherwise provided in this Agreement or in the Research Plan, Licensee will have responsibility for and decision-making authority over all manufacturing activities and associated costs for the clinical development (including GMP manufacturing for clinical trials) and commercialization of the Licensed Products in the Field of Use for the Indications post-DTP for such Licensed Product. Penn will have responsibility and decision-making authority over manufacturing activities for pre-clinical manufacturing, [*] at Licensee’s cost.

 

5.5                               Regulatory

 

5.5.1                     Subject to Section 2.12.1(b), Licensee will have responsibility for and decision-making over regulatory activities for the Licensed Products for the Indications in the Field of Use. Licensee will have the right to conduct all communications with Regulatory Authorities, including all meetings, conferences and discussions (including advisory committee meetings), with regard to Licensed Products for the Indications in the Field of Use; [*]. Licensee will lead and have control over preparing and submitting all regulatory filings related to the Licensed Products for the Indications in the Field of Use, including all applications for Regulatory Approval, provided, however, that Licensee shall provide Penn with copies of all such applications prior to submission to the extent such submission includes Research Results or any Confidential Information of Penn. Licensee will own any and all applications for Regulatory Approvals (including INDs), Regulatory Approvals, and other regulatory filings related to the Licensed Product for the Indication in the Field of Use, which will be held in the name of Licensee or its designees.

 

5.5.2                     Penn will cooperate with any reasonable request from Licensee with respect to obtaining any Regulatory Approval for a Licensed Product for the Indication in the Field of Use including, at Licensee’s cost: (a) [*], (b) responding to questions raised by Licensee, and (c) [*].

 

5.6                               General Diligence

 

Licensee will use Commercially Reasonable Efforts to actively develop, obtain Regulatory Approval and commercialize at least one Licensed Product in each Indication within the Field of Use.

 

30

 

5.7                               Financial Diligence

 

Licensee shall raise at least in the cumulative [*] in any form, including equity, debt, strategic capital investment or partnership, or licensing income no later than [*] following the Effective Date (the “Initial Financing”).

 

5.8                               Diligence Events

 

Company shall achieve each of the following Diligence Events by the corresponding Achievement Date for each Licensed Product:

 

	
Diligence Event
    	
 
    	
Achievement Date
    
	
[*]
    	
 
    	
[*] after DTP for such Licensed Product.
    
	
[*]
    	
 
    	
[*] after DTP for such Licensed Product.
    
	
[*]
    	
 
    	
[*] after DTP for such Licensed Product
    

 

Penn acknowledges that the timeline for each Achievement Date is based on the assumption that development and commercialization of a Licensed Product does not encounter material regulatory or other delays for reasons outside of Licensee’s reasonable control. Where such circumstances exist, Penn agrees to negotiate in good faith with Licensee, upon Licensee’s written request and provided such request is made at least [*] prior to the Achievement Date for a Diligence Event, an extension of the Achievement Date for a Diligence Event for such Licensed Product as reasonably requested by Licensee. If the Parties have not agreed on a requested extension within [*] of such request, [*].

 

To the extent Licensee has achieved any Diligence Event by the corresponding Achievement Date in relation to a given Licensed Product for an Indication, Licensee will be deemed to have also met its diligence obligations under Section 5.6 with respect to such Licensed Product and its associated Indication(s) through the corresponding Achievement Date.

 

5.9                               Progress Reports

 

5.9.1                     After performance of the Research Plan by Penn but prior to the First Commercial Sale of a Licensed Product in the respective Indication, Licensee on [*], but in no event later than [*], shall submit to Penn a progress report (each, a “Progress Report”) covering Licensee’s (and any Affiliates’ and Sublicensees’) activities related to the development of all Licensed Products in each Indication and the obtaining of Regulatory Approvals necessary for commercialization of Licensed Products.

 

5.9.2                     Each Progress Report must include all of the following for each annual period:

 

(a)                                 Summary of material development activities;

 

(b)                                 Summary of material commercialization activities;

 

(c)                                  Identification of filings for Regulatory Approval and other material correspondence with Regulatory Authorities;

 

(d)                                 An updated SDR Report listing of any and all Sublicenses granted by Licensee; and

 

31

 

(e)                                  The names and addresses of all Sublicensees, and a current and valid phone number and e-mail address for a principal point of contact at each such Sublicensee who is responsible for administering the Sublicensee.

 

ARTICLE 6
 INTELLECTUAL PROPERTY

 

6.1                               Patent Filing Prosecution and Maintenance

 

6.1.1                     Penn Patent Rights will be held in the name of Penn and obtained with counsel selected by Penn and reasonably acceptable to Licensee (“Patent Counsel”). Penn shall control all actions and decisions with respect to the filing, prosecution and maintenance of Penn Patent Rights. Penn will provide Licensee with advance copies of filings of the Penn Patent Rights and will consider in good faith reasonable comments and suggestions by Licensee, and [*] (collectively, the “Product Specific Patent Rights”), Penn will incorporate any reasonable comments or suggestions by Licensee with respect to same. Penn will instruct Patent Counsel to copy Licensee on all correspondence related to Penn Patent Rights A (including copies of each patent application, office action, response to office action, request for terminal disclaimer, and request for reissue or reexamination of any patent or patent application) and to interact with Licensee with respect to the preparation, filing, prosecution and maintenance of Penn Patent Rights A. Penn has the right to take action to preserve rights and minimize cost [*], and will use reasonable efforts to not allow any Penn Patent Rights A for which Licensee is licensed and is underwriting the costs to lapse or become abandoned without Licensee’s written authorization under this Agreement, [*], provided that, Penn shall have no requirement to file, prosecute, or maintain Penn Patent Rights A if Licensee is not current with the Patent Cost obligations as set forth in this Agreement. For the purposes of this Agreement, “maintenance” of the Penn Patent Rights A includes [*], provided Penn’s participation in such proceedings is undertaken in good-faith consultation with Licensee. For further clarity, [*] will be handled pursuant to the provisions of Section 6.3.

 

6.1.2                     Licensee has the right to request a country filing via a written request to Penn [*] prior to the deadline set by the patent office in the territory in which filing is to take place (“Prosecution Request”), and Penn shall in connection with Section 6.1.1 provide written notice to Licensee of filing, prosecution and maintenance with respect to the Penn Patent Rights. If Penn files a patent application, prosecutes or maintains any Penn Patent Rights in any country, Licensee shall, in connection with Section 6.2, be responsible for its pro rata share of such filing, prosecution or maintenance of the Penn Patent Right, unless Licensee provides written notice to Penn of its election to abandon such Penn Patent Right. Upon written notice to Penn of Licensee’s election to abandon any such Penn Patent Right in any such country, such Patent Rights for such country will not be part of Penn Patent Rights and therefore not subject to this Agreement, including the License, and Licensee will have no further rights or license to them in such country.

 

6.2                               Patent Costs

 

6.2.1                     Subject to Section 6.2.3, within [*] of the earlier of (a) [*] and (b) [*] after the Effective Date, Licensee will reimburse Penn for all out-of-pocket costs for the filing, prosecution and maintenance of Penn Patent Rights, including all accrued attorney fees, expenses, official and filing fees (“Patent Costs”) for Patent Rights A, incurred prior to the Effective Date that have not otherwise been reimbursed by other licensees of the Penn Patent Rights

 

32

 

A (“Historic Patent Costs”). The amount of Historic Patent Costs is approximately [*]. For clarity, [*].

 

6.2.2                     Licensee will bear all Patent Costs incurred during the Term (“Ongoing Patent Costs”), on a pro rata basis (as described below) where applicable. For Penn Patent Rights licensed to more than one licensee, Licensee shall be responsible for payment to Penn of a pro rata share of such Ongoing Patent Costs based on the number of licensees for such Penn Patent Rights (which Penn will disclose to Licensee upon Licensee’s exercise of an applicable option, and whenever such number changes, and at any other time upon Licensee’s reasonable written request).

 

6.2.3                     On [*] Licensee’s exercise of an AAV Next Generation Option, Licensee shall reimburse Penn for its pro-rata share based on the number of other licensees of Penn’s out-of-pocket expenses incurred and unreimbursed [*] for the prosecution and maintenance of the Penn Patent Rights B covering the Next Generation Capsid(s) and licensed to Licensee. Penn will provide Licensee with an estimate of such historical AAV Next Generation expenses upon reasonable request of Licensee at the time of its exercise of an AAV Next Generation Option. On [*] Licensee’s exercise of its Manufacturing Patent Rights option, Licensee shall reimburse Penn for its pro-rata share based on the number of other licensees of Penn’s out-of-pocket expenses incurred and unreimbursed [*] of the Manufacturing Patent Rights option for the prosecution and maintenance of the Manufacturing Patent Rights licensed to Licensee. Penn will provide Licensee with an estimate of such historical Manufacturing Patent Rights expenses upon reasonable request of Licensee at the time of its exercise of its option to such Manufacturing Patent Rights.

 

6.2.4                     At any time, at Penn’s request, Licensee shall pay its relevant share in advance the Patent Counsel’s estimated costs for undertaking material patent actions before Penn authorizes the Patent Counsel to proceed (“Advance Payment”). Notwithstanding whether Licensee makes an Advance Payment for any patent action, Licensee shall bear all Patent Costs incurred during the Term (on a pro rata basis as applicable) and shall pay such amounts within [*] of receipt of invoice for such patent actions. For clarity, [*].

 

6.2.5                     Licensee may, upon [*] advance written notice to Penn, elect to abandon any patent or patent application included in the Penn Patent Rights. Upon the effective date of such notice, such patent or patent application shall no longer be part of the License granted to Licensee in Section 3.1 or the Penn Patent Rights for purposes of this Agreement (including the provisions of this Section 6.2).

 

6.3                               Infringement

 

6.3.1                     If either Party believes that an infringement by a Third Party with respect to any Penn Patent Right is occurring or may potentially occur, the knowledgeable Party will provide the other Party with (a) written notice of such infringement or potential infringement and (b) evidence of such infringement or potential infringement (the “Infringement Notice”). Licensee shall [*] without first obtaining the written consent of Penn, which consent will not be unreasonably withheld. If Licensee [*], then Licensee’s right to initiate a suit under Section 6.3.2 below will terminate immediately without the obligation of Penn to provide notice to Licensee. Both Penn and Licensee will use their diligent efforts to cooperate with each other to terminate such infringement without litigation.

 

33

 

6.3.2                     If infringing activity [*] has not been abated within [*] following the date the Infringement Notice for such activity was provided, then (except as otherwise provided in Section 6.3.4) during [*], the “Exclusive Penn Patent Rights”), and the infringement is [*], Licensee may institute suit for patent infringement of an [*] against the infringer after providing Penn (a) [*] and (b) [*]. For clarity, [*].  Penn may voluntarily join such suit at Licensee’s reasonable expense, [*]. If in a suit initiated by Licensee, Penn is involuntarily joined other than by Licensee, then Licensee will [*]. Licensee shall be free to enter into a settlement, consent judgment or other voluntary disposition, provided that any settlement, consent judgment or other voluntary disposition that (i) [*] or (ii) [*]. Licensee’s request for such approval shall include complete copies of final settlement documents, a detailed summary of such settlement, and any other information material to such settlement. Penn shall provide Licensee notice of its approval or denial within [*] of any request for such approval by Licensee, provided that (x) [*] and (y) [*].

 

6.3.3                     If, within [*] following the date the Infringement Notice was provided, infringing activity of [*] has not been abated and if Licensee has not brought suit against the infringer, then Penn [*]. If Penn [*], then Licensee may [*].

 

6.3.4                     Notwithstanding Sections 6.3.2 and 6.3.3, (a) in the event that any Penn Patent Rights are infringed by a Third Party [*] or (b) if any of the infringed Penn Patent Rights are [*], the Parties shall discuss, and will mutually agree, in writing, as to how to handle such infringement by such Third Party. Furthermore, with respect to any Penn Patent Rights A that are not Product Specific Patent Rights, and/or any Penn Patent Rights B, Licensee may [*]. For clarity, [*]. Penn shall [*] right to enforce (i) Penn Patent Rights B, unless otherwise agreed in writing by the Parties (or [*]), and (ii) Manufacturing Patent Rights.

 

6.3.5                     Any recovery or settlement received in connection with any suit will first be [*] and next [*]. Any remaining recoveries shall be allocated as follows:

 

For any portion of the recovery or settlement, other than for amounts attributable and paid as enhanced damages for [*]:

 

(a)                                 for any suit that is initiated by Licensee and in which Penn was not a party in the litigation, Penn shall receive [*] of the recovery and the Licensee shall receive the remainder; and

 

(b)                                 for any suit that is initiated by the Licensee or Penn and that the other Party joins voluntarily ([*]) or involuntarily, the non-initiating Party shall receive [*] of such recovery, while the initiating Party shall receive the remainder.

 

For any portion of the recovery or settlement paid as enhanced damages for [*]:

 

(c)                                  for any suit that is initiated by Licensee or Penn and the other Party joins voluntarily ([*]) or involuntarily, Penn shall receive [*] and Licensee shall receive the remainder; and

 

(d)                                 for any suit that is initiated by Licensee and in which Penn was not a party in the litigation, Penn shall receive [*] and Licensee shall receive the remainder.

 

34

 

For any portion of the recovery or settlement received in connection with any suit that is initiated by Penn and in which Licensee was not a party in the litigation, any recovery in excess of litigation costs will belong to Penn.

 

6.3.6                     Each Party will reasonably cooperate and assist with the other in litigation proceedings instituted hereunder but at the expense of the Party who initiated the suit (unless such suit is being jointly prosecuted by the Parties). For clarity, [*]. If Penn is subjected to Third Party discovery related to the Penn Patent Rights or Licensed Products licensed to Licensee hereunder, Licensee will pay Penn’s documented out of pocket expenses with respect to same.

 

6.4                               Patent Marking

 

Licensee shall place in a conspicuous location on any Licensed Product (or its packaging where appropriate and practicable) made or sold under this Agreement a patent notice in accordance with the Laws concerning the marking of patented articles where such Licensed Product is made or sold, as applicable.

 

ARTICLE 7
 CONFIDENTIALITY& PUBLICATION

 

7.1                               Confidential Information

 

Licensee shall not disclose Confidential Information (as defined below) to Penn unless it is anticipated to be necessary or useful to the performance of the Research Program or is reasonably responsive to Licensee’s reporting obligations under this Agreement or any other request of Penn. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing, the Parties agree that, during the Term and for [*] thereafter, the receiving Party (the “Receiving Party”) and its Affiliates will keep confidential and will not publish or otherwise disclose or use for any purpose, other than as provided for in this Agreement, any confidential or proprietary information or materials, patentable or otherwise, in any form (written, oral, photographic, electronic, magnetic, or otherwise), including trade secrets, Know-How, inventions or discoveries, proprietary information, formulae, processes, techniques and information relating to the past, present and future marketing, financial, and research and development activities of any product or potential product or useful technology of the Disclosing Party or its Affiliates and the pricing thereof (collectively, “Confidential Information”), which is disclosed to it by the other Party (the “Disclosing Party”) or its Affiliates or otherwise received or accessed by a Receiving Party in the course of performing its obligations or exercising its rights under this Agreement.

 

7.2                               Exceptions to Confidentiality

 

“Confidential Information” does not include information that (a) was in the lawful knowledge and possession of the Receiving Party or its Affiliates prior to the time it was disclosed to, or learned by, the Receiving Party or its Affiliates, or was otherwise developed independently by the Receiving Party or its Affiliates, as evidenced by written records kept in the ordinary course of business, or other documentary proof of actual use by the Receiving Party or its Affiliates; (b) was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party or its Affiliates, as evidenced by written records of the Receiving Party or its Affiliates; (c) became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the Receiving Party or its Affiliates in breach of this Agreement; or (d) was disclosed to the Receiving Party or its Affiliates, other than

 

35

 

under an obligation of confidentiality, by a Third Party who had no obligation to the Disclosing Party or its Affiliates not to disclose such information to others. In the event a Receiving Party is required to make a disclosure under Law or regulation, the order of a court of competent jurisdiction, or the rules of the U.S. Securities and Exchange Commission (including by reason of any securities offering by Licensee), any stock exchange or listing entity, such disclosure will not constitute a breach of this Article 7 provided such Receiving Party shall provide [*] to the Disclosing Party and take all reasonable steps to limit the extent of the disclosure and obtain confidential treatment for any remaining required disclosure.

 

7.3                               Penn Intellectual Property

 

In order to preserve the patentability of Penn intellectual property and to preserve Penn’s publication rights, Licensee shall [*].

 

7.4                               Publications

 

Penn shall have the sole and exclusive first right to publish, publicly present or otherwise publicly disclose Research Results for any purpose, subject to the following provisions; provided, however, that if Licensee provides written request to Penn to publish, publicly present or otherwise publicly disclose the Research Results, and Penn does not publish, publicly present or otherwise publicly disclose such Research Results within [*], Licensee shall be entitled to publish, publicly present or otherwise publicly disclose such Research Results in accordance with the provisions of this Section 7.4. Penn shall furnish the Licensee with a copy of any proposed publication, presentation, or other public disclosure at least [*] in advance of the date of such presentation or public disclosure or the submission of said proposed publication in order for Licensee to review and comment on said proposed publication, presentation, or other public disclosure to (a) determine whether such contains any Licensee Confidential Information and (b) enable Licensee to identify any Penn intellectual property that it wishes Penn to file patent applications on or to seek other intellectual property protection for. If within the [*] review period (i) Licensee notifies Penn in writing that the Licensee requires deletion of Licensee Confidential Information from the publication, presentation, or other disclosure, the Parties will cooperate to modify the same to ensure Licensee Confidential Information is not disclosed or (ii) if Licensee requests in writing that publication, presentation, or other disclosure be delayed to allow for patent filings or other intellectual property protection on certain items in the proposed publication, presentation, or other disclosure, Penn shall delay the same for up to [*] to allow for the filing of patent applications or other intellectual property protection.

 

ARTICLE 8
 REPRESENTATIONS, WARRANTIES AND COVENANTS

 

8.1                               Mutual Representations and Warranties

 

Each Party represents and warrants to the other Party that, as of the Effective Date:

 

8.1.1                     such Party is duly organized and validly existing under the Laws of the jurisdiction of its incorporation or organization;

 

8.1.2                     such Party has taken all action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement;

 

36

 

8.1.3                     this Agreement is a legal and valid obligation of such Party, binding upon such Party and enforceable against such Party in accordance with the terms of this Agreement, except as enforcement may be limited by applicable bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights generally and by general equitable principles; and

 

8.1.4                     such Party has all right, power and authority to enter into this Agreement, to perform its obligations under this Agreement.

 

8.2                               Representation and Warranties of Penn

 

Penn hereby represents and warrants to Licensee that, as of the Effective Date:

 

8.2.1                     Penn Controls all Penn Patent Rights A;

 

8.2.2                     Penn has [*];

 

8.2.3                     Subject to the Specified Obligations, Penn has neither granted nor agreed to grant, any license to the Exclusive Penn Patent Rights in the CNS Field in the Field of Use anywhere in the world;

 

8.2.4                     Penn has not granted [*];

 

8.2.5                     all data included in the Licensed Know-How and/or which has been or will be used to support the filing, prosecution or maintenance of the Penn Patent Rights has been generated, and the Research Program will be conducted, in a thorough and professional manner; and

 

8.2.6                     based on the Research Plan attached as Exhibit B, to the knowledge of Penn, the License includes [*] that are necessary for the development and commercialization of Licensed Products for the Indications in the Field of Use.

 

8.3                               Disclaimer of Representations and Warranties

 

8.3.1                     Other than the representations and warranties provided in Sections 8.1 and 8.2 above, PENN MAKES NO REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, AND EXPLICITLY DISCLAIMS ANY REPRESENTATION AND WARRANTY, INCLUDING WITH RESPECT TO ANY ACCURACY, COMPLETENESS, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, NON-INFRINGEMENT OR TITLE FOR THE INTELLECTUAL PROPERTY, PATENT RIGHTS, LICENSE AND ANY LICENSED PRODUCT.

 

8.3.2                     Furthermore, nothing in this Agreement will be construed as:

 

(a)                                 A representation or warranty by Penn as to the validity or scope of any Penn Patent Right;

 

(b)                                 A representation or warranty that anything made, used, sold or otherwise disposed of under the License is or will be free from infringement of patents, copyrights,

 

37

 

trademarks or any other forms of intellectual property rights or tangible property rights of Third Parties;

 

(c)                                  Obligating Penn to bring or prosecute actions or suits against Third Parties for patent, copyright or trademark infringement; and

 

(d)                                 Conferring by implication, estoppel or otherwise any license or rights under any Patent Rights of Penn other than Penn Patent Rights as defined herein, regardless of whether such Patent Rights are dominant or subordinate to Penn Patent Rights.

 

8.3.3                     Licensee acknowledges and agrees that it has conducted diligence relating to the Penn Patent Rights, and has been offered the opportunity to ask representatives of Penn questions about Penn Patent Rights. Penn represents that it has provided such available information as Licensee has requested relating to such Penn Patent Rights and any additional available information that Penn knows to be material to the diligence conducted by Licensee.

 

8.4                               Covenants of Licensee

 

8.4.1                     Licensee and its Affiliates will not, directly or indirectly (including where such is done by a Third Party on behalf of Licensee or its Affiliates, at the urging of Licensee or its Affiliates or with the assistance of the Licensee or its Affiliates) institute or make any Challenge; provided, however, that if any Penn Patent Right is asserted against Licensee or its Affiliate for activities authorized under this Agreement, then Licensee or its Affiliates (or the Sublicensee or sub-Sublicensee) is entitled to all and any defenses available to it including challenging the validity or enforceability of such Patent Right.

 

8.4.2                     Licensee will comply with all Laws that apply to its activities or obligations under this Agreement. For example, Licensee will comply with applicable United States export laws and regulations. The transfer of certain technical data and commodities may require a license from the applicable agency of the United States government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of the agency.

 

8.4.3                     Licensee will not grant a security interest in any Penn Patent Rights.

 

ARTICLE 9
 INDEMNIFICATION; INSURANCE AND LIMITATION OF LIABILITY

 

9.1                               Indemnification by Licensee

 

9.1.1                     Licensee shall defend, indemnify and hold Penn and its respective trustees, officers, faculty, students, employees, contractors and agents (the “Penn Indemnitees”) harmless from and against any and all liability, damage, loss, cost or expense (including reasonable attorneys’ fees), including, without limitation, bodily injury, risk of bodily injury, death and property damage arising out of Third Party claims or suits related to:

 

(a)                                 the negligence, recklessness or wrongful intentional acts or omissions of Licensee, its Affiliates or Sublicensees and its or their respective directors, officers, employees and agents, in connection with Licensee’s performance of its obligations or exercise of its rights under this Agreement;

 

38

 

(b)                                 any breach of this Agreement by Licensee;

 

(c)                                  the development, manufacturing or commercialization (including commercial manufacturing, packaging and labeling of Products, and all product liability losses) of a Licensed Product by or on behalf of Licensee or its Affiliates or Sublicensees; or

 

(d)                                 any enforcement action or suit brought by Licensee against a Third Party for infringement of Penn Patent Rights;

 

provided that Licensee’s obligations pursuant to this Section 9.1 shall not apply to the extent such claims or suits result from the gross negligence or willful misconduct of any of Penn Indemnitees as determined by a court of law.

 

9.1.2                     As a condition to a Penn Indemnitee’s right to receive indemnification under this Section 9.1, Penn shall: (a) promptly notify Licensee as soon as it becomes aware of a claim or suit for which indemnification may be sought pursuant hereto; (b) reasonably cooperate, and cause the individual Penn Indemnitees to reasonably cooperate, with Licensee in the defense, settlement or compromise of such claim or suit; and (c) permit the Licensee to control the defense, settlement or compromise of such claim or suit, including the right to select defense counsel. In no event, however, may Licensee compromise or settle any claim or suit in a manner which (a) admits fault or negligence on the part of Penn or any other Penn Indemnitee; (b) commits Penn or any other Penn Indemnitee to take, or forbear to take, any action, without the prior written consent of Penn, or (c) grant any rights under the Penn Patent Rights except for Sublicenses permitted under Section 3.4. Penn shall reasonably cooperate with Licensee and its counsel in the course of the defense of any such suit, claim or demand, such cooperation to include without limitation using reasonable efforts to provide or make available documents, information and witnesses.

 

9.1.3                     Notwithstanding Section 9.1.2 above, in the event that Penn believes in good faith that a bona fide conflict exists between Licensee and Penn or any other Penn Indemnitee with respect to a claim or suit subject to indemnification hereunder, then Penn or any other Penn Indemnitee shall have the right to defend against any such claim or suit itself, including by selecting its own counsel, with any reasonable attorney’s fees and litigation expenses being paid for by Licensee. Licensee will pay such fees and expenses either directly or will reimburse Penn within [*] of Licensee’s receipt of invoices for such fees and expenses.

 

9.2                               Insurance

 

9.2.1                     Beginning no later than commencement of the first Clinical Study for any Licensed Product, Licensee, at its sole cost and expense, must insure its activities in connection with the exercise of its rights under this Agreement and obtain, and keep in force and maintain Commercial Form General Liability Insurance (contractual liability included) with limits as follows:

 

	
(a)
    	
Each occurrence
    	
[*];
    
	
 
    	
 
    	
 
    
	
(b)
    	
General aggregate
    	
[*]
    

 

39

 

Prior to the commencement of clinical trials, if applicable, involving Licensed Product:

 

	
(c)
    	
Clinical trials   liability insurance
    	
[*]
    

 

Prior to the First Commercial Sale of a Licensed Product:

 

	
(d)
    	
Products liability   insurance
    	
[*]
    

 

Penn may review periodically the adequacy of the minimum amounts of insurance for each coverage required by this Section 9.2.1, and has the right to require Licensee to adjust the limits in Penn’s reasonable discretion.

 

9.2.2                     If the above insurance is written on a claims-made form, it shall continue for [*] following termination or expiration of this Agreement. The insurance shall have a retroactive date of placement prior to or coinciding with the Effective Date of this Agreement.

 

9.2.3                     Licensee expressly understands, however, that the coverages and limits in Section 9.2.1 do not in any way limit Licensee’s liability or indemnification obligations. Licensee’s insurance will:

 

(a)                                 Be issued by an insurance carrier with an [*] or better;

 

(b)                                 Provide for [*] advance written notice to Penn of any modification;

 

(c)                                  State that Penn is endorsed as an additional insured with respect to the coverages in Section 9.2.1; and

 

(d)                                 Include a provision that the coverages will be primary and will not participate with nor will be excess over any valid and collective insurance or program of self insurance carried or maintained by Penn.

 

9.2.4                     Licensee must furnish to Penn with (a) valid certificate of insurance evidencing compliance with all requirements of this Agreement and (b) additional insured endorsements for Licensee’s applicable policies naming “The Trustees of the University of Pennsylvania” as an additional insured. Licensee must furnish both documents within [*] of the Effective Date, once per year thereafter and at any time there is a modification in such insurance.

 

9.3                               LIMITATION OF LIABILITY

 

EXCEPT FOR DAMAGES ARISING FROM A BREACH OF ARTICLE 7 OR DAMAGES ARISING FROM A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING LOSS OF PROFITS, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREIN OR ANY BREACH HEREOF.

 

40

 

ARTICLE 10
 TERM AND TERMINATION

 

10.1                        Term

 

The term of this Agreement (the “Term”) shall commence on the Effective Date and, unless terminated sooner as provided below, shall continue in full force and effect will continue in effect on a country-by-country and Licensed Product-by-Licensed Product basis until the later of (a) expiration of the last Valid Claim of the Penn Patent Rights in such country for such Licensed Product and (b) expiration of the Royalty Period, whereupon the License to such country for such Licensed Product will become perpetual and fully paid-up.

 

10.2                        Termination of the Agreement for Convenience

 

At any time after the Research Term, Licensee may, at its convenience, terminate this Agreement or terminate any Licensed Product for an Indication in the Field of Use, upon providing at least ninety (90) days prior written notice to Penn of such intention to terminate, provided that upon termination Licensee ceases using the License for making, using, or selling the affected Licensed Product(s) in all Fields of Use.

 

10.3                        Termination For Cause

 

10.3.1              In the event Licensee fails to achieve any Diligence Event by the corresponding Achievement Date (as the same may be extended under this Agreement in accordance with Section 5.8) and does not cure such breach within [*] written notice (or a longer period of up to [*] if the Parties mutually agree that such longer period is necessary and acceptable) to the reasonable satisfaction of Penn, Penn has the right and option to terminate this Agreement on an Indication-by-Indication basis for the Indication in which diligence has not been achieved, upon written notice, with immediate effect.

 

10.3.2              In addition to all other remedies available to it, Penn may terminate this Agreement (a) upon at least [*] written notice, upon a failure of Licensee to pay the Research Support Amount for the Research Program when due pursuant to Section 2.3, unless Licensee cures such failure within such notice period, (b) upon [*] written notice if Licensee fails to comply with any Laws that apply to its activities or obligations under this Agreement and that can be remedied and Licensee fails to remedy such lack of compliance within such [*] period, (c) upon written notice, with immediate effect, if Licensee grants a security interest in any Penn Patent Right, (d) upon written notice, with immediate effect, if Licensee fails to achieve the Initial Financing, or (e) upon written notice, with immediate effect, if Licensee breaches Section 8.4.1.

 

10.3.3              If either Party materially breaches any of its material obligations under this Agreement, the non-breaching Party may give to the breaching Party a written notice specifying the nature of the default, requiring it to cure such breach, and stating its intention to terminate this Agreement. If such breach is not cured within [*] of such notice (for non-payment), and [*] of such notice for all other material breaches, such termination shall become effective upon a notice of termination by the terminating Party thereafter; provided, however, [*]. In addition, [*].

 

10.3.4              Either Party may terminate this Agreement, upon written notice, with immediate effect if, at any time, the other Party is unable to pay its debts, including any debts related to

 

41

 

exclusive sublicensees, when they come due, or files in any court or agency pursuant to any statute or regulation of any state, country or jurisdiction, a petition for the appointment of a receiver or trustee of such Party or of its assets, or if such Party proposes a written agreement of composition or extension of its debts, or if such Party is served with an involuntary petition against it, filed in any insolvency proceeding, and such petition is not dismissed within [*] after the filing thereof, or if such Party is a party to any dissolution or liquidation, or if such Party makes an assignment for the benefit of its creditors of all or substantially all its assets.

 

10.4                        Effects of Termination

 

10.4.1              Notwithstanding the termination of this Agreement, the following provisions shall survive: Sections [*], [*]. Furthermore, where this Agreement is terminated in relation to fewer than all of the Indications or Licensed Products (as provided above), it will remain in effect as to the non-terminated Indication(s) or non-terminated Licensed Product(s).

 

10.4.2              Termination of this Agreement shall not relieve the Parties of any obligation or liability that, at the time of termination, has already accrued hereunder, or which is attributable to a period prior to the effective date of such termination. Termination of this Agreement shall not preclude either Party from pursuing all rights and remedies it may have hereunder or at Law or in equity with respect to any breach of this Agreement nor prejudice either Party’s right to obtain performance of any obligation.

 

10.4.3              If this Agreement is terminated for any reason, all outstanding Sublicenses (including all Sublicense Documents for each Sublicense) not in default will be assigned by Licensee to Penn, and such assignment will be accepted by Penn provided that such Sublicensee is required to comply with all obligations, including financial obligations, set forth in this Agreement of the Licensee. Each assigned Sublicense will remain in full force and effect with Penn as the licensor or sublicensor instead of Licensee, but the duties and obligations of Penn under the assigned Sublicenses will not be greater than the duties of Penn under this Agreement, and the rights of Penn under the assigned Sublicenses will not be less than the rights of Penn under this Agreement, including all financial consideration and other rights of Penn. Penn may, at its reasonable discretion, amend such outstanding Sublicenses to contain the terms and conditions found in this Agreement. If Penn requests that Licensee assign to Penn all Regulatory Approvals for the Licensed Product upon termination of this Agreement by Licensee under Section 10.2 or by Penn under Section 10.3, then Licensee agrees to negotiate the terms of such an assignment in good faith (it being understood that the foregoing will not preclude Licensee from requiring Penn to pay commercially reasonable consideration for such assignment). [*]

 

10.4.4              Within [*] of termination of this Agreement or any Indication (other than termination by Licensee pursuant to Section 10.3.3), Licensee shall pay Penn all costs through the effective termination date per the budget of the Research Plan as well as all commitments related to the performance of the Research Plan (i.e., all costs or non-cancellable commitments incurred prior to the receipt, or issuance, by Penn of the notice of termination, and the cost of each employee, student and faculty member to the extent supported under the Research Plan until the earlier of (a) [*] of termination of this Agreement and (b) reassignment of such employee, student and faculty member supported under the Research Plan; and subject to Penn’s written notification to Licensee and Licensee’s acknowledgement of all costs and non-cancellable commitments as they arise) incurred by Penn under this Agreement, or for the terminated Indication, as applicable.

 

42

 

10.4.5              Upon termination of this Agreement, the License immediately terminates and Licensee, its Affiliates and Sublicensees will promptly cease selling the Licensed Product(s) subject to such termination. Each Party will return (or destroy, as directed by the other Party) all data, files, records and other materials containing or comprising the other Party’s Confidential Information with respect to this Agreement, except to the extent such Confidential Information is necessary or useful to conduct activities in connection with surviving portions of this Agreement. Notwithstanding the foregoing, the Parties will be permitted to retain one copy of such data, files, records, and other materials for archival and legal compliance purposes.

 

10.4.6              Upon termination of this Agreement or any Licensed Product for an Indication in the Field of Use by Licensee under Section 10.2 or by Penn under Section 10.3 or 10.4, Licensee agrees [*].

 

ARTICLE 11
 ADDITIONAL PROVISIONS

 

11.1                        Relationship of the Parties

 

Nothing in this Agreement is intended or shall be deemed, for financial, tax, legal or other purposes, to constitute a partnership, agency, joint venture or employer-employee relationship between the Parties. The Parties are independent contractors and at no time will either Party make commitments or incur any charges or expenses for or on behalf of the other Party.

 

11.2                        Expenses

 

Except as otherwise provided in this Agreement, each Party shall pay its own expenses and costs incidental to the preparation of this Agreement and to the consummation of the transactions contemplated hereby

 

11.3                        Third Party Beneficiary

 

The Parties agree that each Sublicensee is a third party beneficiary of this Agreement with respect to Section 10.4.3.

 

11.4                        Use of Names

 

Licensee, its Affiliates and Sublicensees may not use the name, logo, seal, trademark, or service mark (including any adaptation of them) of Penn or any Penn school, organization, employee, student or representative, without the prior written consent of Penn. Notwithstanding the foregoing, Licensee may use the name of Penn in a non-misleading and factual manner solely in (a) executive summaries, business plans, offering memoranda and other similar documents used by Licensee for the purpose of raising financing for the operations of Licensee as related to Licensed Product, or entering into commercial contracts with Third Parties, but in such case only to the extent necessary to inform a reader that the Penn Patent Rights and/or Licensed Know-How (subject to the provisions of Article 7) has been licensed by Licensee from Penn, and/or that Licensee is collaborating with Penn on the Research Program, and to inform a reader of the identity and published credentials of inventors of intellectual property, and (b) any securities reports required to be filed with the Securities and Exchange Commission.

 

43

 

11.5                        No Discrimination

 

Neither Penn nor Licensee will discriminate against any employee or applicant for employment because of race, color, sex, sexual or affectional preference, age, religion, national or ethnic origin, handicap, or veteran status.

 

11.6                        Successors and Assignment

 

11.6.1              The terms and provisions hereof shall inure to the benefit of, and be binding upon, the Parties and their respective successors and permitted assigns.

 

11.6.2              Neither Party may assign or transfer this Agreement or any of such Party’s rights or obligations created hereunder without the prior written consent of the other Party, provided that: (a) such other Party shall not unreasonably withhold, condition or delay its consent; and (b) either Party may assign this Agreement, without the other’s consent, to an Affiliate of such Party or to a successor entity by way of merger, acquisition, or the sale of all or substantially all of such Party’s assets or business to which this Agreement relates; provided, that (i) the assignee shall expressly agree in writing to be bound by such Party’s obligations and liabilities under this Agreement, and (ii) each Party shall promptly notify the other Party of any assignment or transfer under the provisions of this Section 11.6.

 

11.6.3              Any assignment not in accordance with this Section 11.6 shall be void.

 

11.7                        Further Actions

 

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

 

11.8                        Entire Agreement of the Parties; Amendments

 

This Agreement, the Exhibits and Appendices or Schedules hereto, and the Equity Issuance Agreement constitute and contain the entire understanding and agreement of the Parties respecting the subject matter hereof and cancel and supersede any and all prior negotiations, correspondence, understandings and agreements between the Parties, whether oral or written, regarding such subject matter. No waiver, modification or amendment of any provision of this Agreement shall be valid or effective unless made in a writing referencing this Agreement and signed by a duly authorized officer of each Party.

 

11.9                        Governing Law

 

This Agreement shall be governed by and interpreted in accordance with the laws of the Commonwealth of Pennsylvania, excluding application of any conflict of laws principles that would require application of the law of a jurisdiction outside of the Commonwealth of Pennsylvania.

 

11.10                 Dispute Resolution

 

If a dispute arises between the Parties concerning this Agreement, then the Parties will confer, as soon as practicable, in an attempt to resolve the dispute (in accordance with the provisions of Section 2.12 as applicable); provided, however, that nothing in this Section 11.10 will prohibit either Party from (a) [*] or (b) [*]. In addition, in the event of a dispute regarding the interpretation of this Agreement, or whether a Party has committed and/or cured a material breach of this

 

44

 

Agreement (for purposes of the other Party’s termination rights under Section 10), if the dispute is not resolved within [*] under the first sentence of this Section 11.10, then: (i) upon either Party’s request such dispute will be escalated to Licensee’s Chief Executive Officer and Penn’s Dean of Medicine or his designee, for discussion in good faith in an effort to resolve such dispute; and (ii) if such dispute remains unresolved another [*] following such escalation, then either Party shall be free to bring any action in, the state and Federal courts located in the Eastern District of Pennsylvania.

 

11.11                 Notices and Deliveries

 

Any notice, request, approval or consent required or permitted to be given under this Agreement shall be in writing and directed to a Party at its address or facsimile number shown below or such other address or facsimile number as such Party shall have last given by notice to the other Party. A notice will be deemed received: if delivered personally, on the date of delivery; if mailed, five (5) days after deposit in the United States mail; if sent via courier, one (1) business day after deposit with the courier service; or if sent via facsimile, upon receipt of confirmation of transmission provided that a confirming copy of such notice is sent by certified mail, postage prepaid, return receipt requested.

 

	
For   Penn
    	
 
    	
with a copy to:
    
	
 
    	
 
    	
 
    
	
Penn Center for   Innovation
   University of Pennsylvania
   3160 Chestnut Street, Suite 200
   Philadelphia, PA 19104-6283
   Attention: Executive Director
    	
 
    	
University of   Pennsylvania
   Office of General Counsel
   133 South 36th Street, Suite 300
   Philadelphia, PA 19104-3246
   Attention: General Counsel
    
	
 
    	
 
    	
 
    
	
For Licensee:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Passage Bio, Inc.
   c/o Effie Toshav
   Fenwick & West LLP
   1191 Second Avenue, 10th Floor
   Seattle, WA 98101
    	
 
    	
 
    

 

11.12                 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 other term or condition hereof. Except as otherwise provided herein, 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.

 

11.13                 Severability

 

When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under Law, but if any provision of this Agreement is held to be prohibited by or invalid under Law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. The Parties shall make a good faith effort to replace the invalid or unenforceable provision with a valid one which in its economic effect is most consistent with the invalid or unenforceable provision.

 

45

 

11.14                 Interpretation

 

The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references herein to Articles, Sections, Schedules and Exhibits shall be deemed references to Articles and Sections of, Schedules and Exhibits to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time. Unless the context otherwise requires, countries shall include territories. References to any specific Law or article, section or other division thereof, shall be deemed to include the then-current amendments or any replacement Law thereto.

 

11.15                 Counterparts

 

This Agreement may be executed in counterparts, each of which will be deemed an original, and all of which together will be deemed to be one and the same instrument. A facsimile or a portable document format (PDF) copy of this Agreement, including the signature pages, will be deemed an original.

 

[SIGNATURE PAGE FOLLOWS]

 

46

 

IN WITNESS WHEREOF, duly authorized representatives of the Parties have executed this Agreement as of the Effective Date.

 

	
THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
    	
 
    	
PASSAGE BIO, INC.
    
	
 
    	
 
    	
 
    
	
By:   
    	
/s/   John S. Swartley
    	
 
    	
By:
    	
/s/   Tadataka Yamada
    
	
Name:   
    	
John   S. Swartley, PhD
    	
 
    	
Name:
    	
Tadataka   Yamada, M.D.
    
	
Title:   
    	
Associate   Vice Provost for Research and Executive Director, Penn Center for Innovation
    	
 
    	
Title:
    	
President
    

 

SIGNATURE PAGE TO RESEARCH, COLLABORATION & LICENSE AGREEMENT

 

 

Exhibit A

 

Penn Patent Rights A

 

[*]

 

 

Exhibit A-1 & A-2

 

Optioned Manufacturing Patent Rights and Penn Patent Rights B

 

[*]

 

49

 

Exhibit B

 

Research Plan

 

[*]

 

50

 

Exhibit C

 

Research Program Budget

 

[*]

 

51

 

Exhibit D

 

Excluded CNS Indications

 

[*]

 

52

 

Exhibit E

 

Equity Issuance Agreement

 

[Begins on following page.]

 

53

 

EQUITY ISSUANCE AGREEMENT

 

THIS EQUITY ISSUANCE AGREEMENT (this “Agreement”) is made as of September [    ], 2018, by and between Passage BIO, Inc., a Delaware corporation (the “Company”), and The Trustees of the University of Pennsylvania, a Pennsylvania nonprofit corporation (the “Subscriber”).

 

For this and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.                                      Issuance of Shares. Reference is made to that certain Research, Collaboration and License Agreement (the “License Agreement”), dated as of September [    ], 2018, by and between the Company and the Subscriber. Pursuant to the terms of the License Agreement and subject to the terms and conditions set forth in this Agreement, on the date hereof, the Company shall issue and sell to the Subscriber, and the Subscriber shall purchase from the Company, three hundred seventy-two (372) shares (the “Shares”) of the Company’s Common Stock, par value $0.0001 per share (the “Common Stock”), at a purchase price of $0.01 per Share. The Subscriber acknowledges and agrees that the issuance of the Shares hereunder satisfies in full the Company’s obligation to issue securities to the Subscriber under Section 4.1.2 of the License Agreement.

 

2.                                      Company Representations and Warranties. The Company hereby represents, warrants, acknowledges, and agrees as follows:

 

(a)                                 Organization and Corporate Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as presently conducted.

 

(b)                                 Authorization. All corporate action required to be taken by the Company’s Board of Directors and stockholders in order to authorize the Company to enter into this Agreement, and to issue the Shares hereunder, has been taken. All action on the part of the officers of the Company necessary for the execution and delivery of this Agreement, the performance of all obligations of the Company under this Agreement, and the issuance and delivery of the Shares has been taken. This Agreement, when executed and delivered by the Company, shall constitute a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, or (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

 

(c)                                  Capitalization. The authorized capital of the Company consists, as of the date hereof and immediately prior to the issuance of the Shares, of 10,000 shares of Common Stock, 1,488 shares of which are issued and outstanding. All of the outstanding shares of Common Stock have been duly authorized, are validly issued, fully paid, and nonassessable and were issued in compliance with all applicable federal and state securities laws.

 

(d)                                 Valid Issuance of Shares. The Shares, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be validly issued, fully paid, and nonassessable and free of restrictions on transfer other than applicable state and federal securities laws and liens or encumbrances created by or imposed by the Subscriber. Assuming the accuracy of the representations of the Subscriber in Section 4 of this Agreement and subject to required federal and state securities filings, the Shares will be issued in compliance with all applicable federal and state securities laws.

 

 

(e)                                  Company Documents. The Company has furnished to the Subscriber a true, correct and complete copy of the Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware on July 26, 2017, which remains in full force and effect as of the date hereof.

 

3.                                      Subscriber Representations and Warranties. The Subscriber hereby represents, warrants, acknowledges, and agrees as follows:

 

(a)                                 Authorization. The Subscriber has full power and authority to enter into this Agreement. This Agreement, when executed and delivered by the Subscriber, will constitute a valid and legally binding obligation of the Subscriber, enforceable against the Subscriber in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or any other laws of general application affecting enforcement of creditors’ rights generally, or (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

 

(b)                                 Purchase Entirely for Own Account. This Agreement is made with the Subscriber in reliance upon the Subscriber’s representation to the Company, which by the Subscriber’s execution of this Agreement, the Subscriber hereby confirms, that the Shares will be acquired for investment for the Subscriber’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Subscriber has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Subscriber further represents that the Subscriber does not presently have any contract, undertaking, agreement, or arrangement with any person or entity to sell, transfer, or grant participations to such person or entity or to any third person or entity, with respect to any of the Shares. The Subscriber has not been formed for the specific purpose of acquiring the Shares.

 

(c)                                  Disclosure of Information. The Subscriber has had such opportunity as it has deemed adequate to obtain from representatives of the Company such information as is necessary to permit it to evaluate this Agreement and the issuance of the Shares hereunder.

 

(d)                                 Restricted Securities. The Subscriber understands that the Shares have not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”), by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Subscriber’s representations as expressed herein. The Subscriber understands that the Shares are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Subscriber must hold the Shares indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Subscriber acknowledges that the Company has no obligation to register or qualify the Shares for resale. The Subscriber further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Shares, delivery of a legal opinion, and on requirements relating to the Company which are outside of the Subscriber’s control, and which the Company is under no obligation and may not be able to satisfy.

 

(e)                                  No Public Market. The Subscriber understands that no public market now exists for the Shares, and that the Company has made no assurances that a public market will ever exist for the Shares.

 

(f)                                   Legends. The Subscriber understands that the Shares and any securities issued in respect of or exchange for the Shares, may be notated with one or all of the following legends:

 

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR STATE SECURITIES LAWS AND CANNOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND REGULATIONS PROMULGATED THEREUNDER AND APPLICABLE STATE SECURITIES LAWS.”; and

 

Any legend required by the securities laws of any state to the extent such laws are applicable to the Shares represented by the certificate, instrument or book entry so legended.

 

(g)                                  Accredited Investor. The Subscriber is an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act.

 

(h)                                 No General Solicitation. Neither the Subscriber, nor any of its officers, directors, employees, or representatives, has either directly or indirectly, including through a broker or finder (i) engaged in any general solicitation, or (ii) published any advertisement in connection with the offer and sale of the Shares.

 

(i)                                     Residence. The Subscriber’s principal place of business is located at the address set forth on its signature page to this Agreement.

 

4.                                      Other Agreements. The Subscriber agrees, as a condition of the Shares granted under this Agreement, that the Subscriber will execute such document(s) as necessary to become a party to any shareholders’ agreement, investors’ rights agreement, voting agreement or trust, right of first refusal and co-sale agreement, or other similar agreement as the Company may require of holders of Common Stock.

 

5.                                      Miscellaneous.

 

(a)                                 Entire Agreement; Governing Law. This Agreement constitutes the entire understanding between the Subscriber and the Company with respect to the subject matter hereof and supersedes any prior understanding and/or written or oral agreements between them with respect to such subject matter. For the purpose of clarity, this Agreement shall have no effect on the terms of the License Agreement. This Agreement shall be governed by the laws of the State of Delaware, without regard to the principles of conflicts of laws of Delaware or any other jurisdiction that would result in the application of the laws of any jurisdiction other than Delaware.

 

(b)                                 Severability. In case any provision of this Agreement shall be invalid, illegal, or unenforceable, it shall, to the extent practicable, be modified so as to make it valid, legal, and enforceable and to retain as nearly as practicable the intent of the parties, and the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

(c)                                  Amendment; Waiver. Any provision of this Agreement and the obligations of the Company or rights of the Subscriber hereunder may be amended or waived if, but only if, such amendment or waiver is in writing and is approved in writing by the Company and the Subscriber, whereupon such amendment or waiver shall be binding on the Company and the Subscriber.

 

(d)                                 Counterparts; Execution by Electronic Means. This Agreement may be executed in any number of counterparts, and any party may execute any such counterpart, each of which when executed and delivered by facsimile or by electronic scanned copy (including .pdf) exchanged by electronic

 

 

transmission, shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument.

 

[Signature pages omitted from exhibit.]

 

 

Exhibit F

 

Specified Obligations

 

[*]

 

 

Exhibit G

 

Form of SDR Report

 

[*]

 

 

Exhibit H

 

Form of Financial Report

 

[*]

 

 

CONFIDENTIAL

PassageBio | University of Pennsylvania

04 March 2019

 

FIRST AMENDMENT TO RESEARCH COLLABORATION OPTION AND LICENSE AGREEMENT

 

THIS FIRST AMENDMENT to the Research Collaboration Option and License Agreement (“First Amendment”), entered into as of October 1, 2018 (the “First Amendment Effective Date”), is made by and between Passage Bio, Inc. (“Passage”), a corporation organized and existing under the laws of Delaware (“Passage”), and The Trustees of the University of Pennsylvania, a Pennsylvania nonprofit corporation, with offices located at Penn Center for Innovation, 3160 Chestnut Street, Suite 200, Philadelphia, PA 19104-6228 (“Penn”) and amends the Research Collaboration, Option and License Agreement between the parties dated September 18, 2018 (the “Agreement”). Passage and Penn are sometimes hereinafter referred to collectively as the “Parties” and individually as a “Party.”

 

WHEREAS, the Parties wish to amend the Agreement; and

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained in the Agreement and herein, and intending to be legally bound hereby, the Parties amend the Agreement and otherwise agree as follows:

 

1.                            The Research Program contained in Exhibit B of the Agreement is hereby amended to include the additional work outlined in Schedule B to this First Amendment.

 

2.                            The Research Program Budget contained in Exhibit C of the Agreement is hereby amended to include the new Research Program Budget contained in Schedule C to this First Amendment. The payment schedule contained in Exhibit C of the Agreement is amended and restated in its entirety as set forth in Schedule C to this First Amendment.

 

3.                            The following Sections 2.3.4 and 2.3.5 shall be added to the Agreement,

 

2.3.4 Penn shall maintain records of the use of the funds provided by Licensee for performance of the Research Program by Penn and shall provide Licensee with quarterly financial reports within [*] after the end of each Calendar Quarter.

 

2.3.5 Reconciliation of Research Program Funding.

 

2.3.5.1 Reconciliation during the Research Term. Within [*] after the end of each Calendar Year during the Research Term and any Research Extension Term beginning after the 2019 Calendar Year, Penn (through its Gene Therapy Program finance group) will submit to Licensee a reconciliation of all payments made by Licensee and all expenses actually incurred by Penn in the performance of the Research Program for the previous Calendar Year. Any overpayment by Licensee shall be applied as a credit to the next quarterly payment owed by Licensee. Any underpayment by Licensee shall be added as an additional amount to the next quarterly payment owed by Licensee. If no further quarterly payments are owed, (i) any underpayment shall be paid to Penn within [*] after receipt by Licensee of such reconciliation report, or (ii) any overpayment shall be returned to Licensee within [*] after receipt by Licensee of such reconciliation report.

 

2.3.5.2 Final Research Program Reconciliation. Within [*] after the conclusion or early termination of the Research Program in its entirety, Penn (through its Gene Therapy Program finance group) will submit to Licensee a final reconciliation of all payments made by Licensee and all expenses actually incurred by Penn in the

 

1

 

performance of the Research Program as well as any non-cancellable and Research Program wind-down costs in accordance with Section 10.4.4. Any overpayment by Licensee shall be refunded to Licensee within [*] after the final reconciliation report is provided to Licensee by Penn. Any underpayment by Licensee shall be promptly paid to Penn.

 

4.                            This First Amendment and the Agreement contains the entire understanding between the Parties and supersedes any and all prior agreements, understandings and arrangements whether written or oral between the Parties with respect to the matters contained in the Agreement and this First Amendment. No amendments, changes, modifications or alterations of the terms and conditions of this First Amendment shall be binding upon any Party, unless in writing and signed by an authorized representative of each Party.

 

5.                            All terms and conditions of the Agreement not changed by this First Amendment shall remain in full force and effect.

 

6.                            Signatures on this First Amendment may be communicated by facsimile or e-mail transmission and shall be binding upon the Parties upon receipt by transmitting the same by facsimile or e-mail, which signatures shall be deemed originals. If executed in counterparts, the Amendment shall be effective as if simultaneously executed.

 

(Signature page follows.)

 

2

 

IN WITNESS WHEREOF the Parties hereto have caused this First Amendment to be executed and delivered by their duly authorized representatives as set forth below.

 

 

	
AGREED ON BEHALF OF:
    	
 
    	
AGREED ON BEHALF OF:
    
	
 
    	
 
    	
 
    
	
PASSAGE   BIO, INC.
    	
 
    	
THE   TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   STEPHEN SQUINTO
    	
 
    	
By:
    	
/s/   John S. Swartley
    
	
(Signature)
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
STEPHEN   SQUINTO
    	
 
    	
Name:
    	
John   S. Swartley
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
INTERIM   CEO & DIRECTOR
    	
 
    	
Title:
    	
Managing   Director, Penn Center for Innovation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
ACKNOWLEDGED   AS READ AND UNDERSTOOD BY INSTITUTION PRINCIPAL INVESTIGATOR
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Dr. James Wilson
    	
 
    	
 
    
	
(Signature)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Dr. James   Wilson
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

3

 

Schedule B

 

Passage Bio SRA – Amendment 1

Scope of Work for Additional Research Program Activities

 

[*]

 

4

 

Schedule C

 

Additional Research Budget and Payment Schedule

 

[*]

 

5

 

CONFIDENTIAL

PassageBio | University of Pennsylvania

24 Apr 2019

 

SECOND AMENDMENT TO RESEARCH, COLLABORATION AND LICENSE AGREEMENT

 

This SECOND AMENDMENT (“Second Amendment”) is entered into as of May 23, 2019 (the “Second Amendment Effective Date”) by and between Passage Bio Inc., a corporation organized under the laws of Delaware (“Passage”) with offices at 2001 Market St, 28th Floor, Philadelphia, PA 19103, and The Trustees of the University of Pennsylvania, a Pennsylvania nonprofit corporation, with offices located at Penn Center for Innovation, 3600 Civic Center Blvd., 9th Floor, Philadelphia, PA 19104 (“Penn”) and amends the Research, Collaboration and License Agreement having an effective date of September 18, 2018 and which subsequently was amended on October 1, 2018 (the “First Amendment”) (collectively, the “Agreement”). Passage and Penn are referred to collectively as the “Parties” and individually as a “Party.”

 

WHEREAS, the Parties wish to amend the Agreement; and

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained in the Agreement and herein, and intending to be legally bound hereby, the Parties amend the Agreement and otherwise agree as follows:

 

1.                            The Research Program contained in Exhibit B of the Agreement is hereby amended to include the additional work outlined in Schedule A to this Second Amendment.

 

2.                            The budget for the Second Amendment studies is included in Schedule B to this Second Amendment, and this budget is intended to be in addition to those previously included under the Agreement.

 

3.                            A complete amended and restated payment schedule is set forth as Schedule C to this Second Amendment. The payment schedule denotes payments for the Research Program that have already been made to Penn as well as future payments owed to Penn.

 

4.                            This Second Amendment and the Agreement contain the entire understanding between the Parties and supersede any and all prior agreements, understandings and arrangements whether written or oral between the Parties with respect to the matters contained in the Agreement and this Second Amendment. No amendments, changes, modifications or alterations of the terms and conditions of this Second Amendment shall be binding upon any Party, unless provided in writing and signed by an authorized representative of each Party.

 

5.                            All terms and conditions of the Agreement not changed by this Second Amendment shall remain in full force and effect.

 

6.                            Signatures on this Second Amendment may be communicated by e-mail transmission and shall be binding upon the Parties upon receipt by transmitting the same by e-mail, which signatures shall be deemed originals. If executed in counterparts, the Second Amendment shall be effective as if simultaneously executed.

 

(Signature page follows.)

 

1

 

IN WITNESS WHEREOF the Parties hereto have caused this Second Amendment to be executed and delivered by their duly authorized representatives as set forth below.

 

 

	
AGREED ON BEHALF OF:
    	
 
    	
AGREED ON BEHALF OF:
    
	
 
    	
 
    	
 
    
	
PASSAGE   BIO INC.
    	
 
    	
THE   TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   Jill Quigley
    	
 
    	
By:
    	
/s/   John S. Swartley
    
	
(Signature)
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Jill   Quigley
    	
 
    	
Name:
    	
John   S. Swartley
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
COO &   GC
    	
 
    	
Title:
    	
Managing   Director, Penn Center for Innovation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
ACKNOWLEDGED   AS READ AND UNDERSTOOD
   BY INSTITUTION PRINCIPAL INVESTIGATOR
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Dr. James Wilson
    	
 
    	
 
    
	
(Signature)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Dr. James   Wilson
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

2

 

Schedule A

 

SECOND AMENDMENT TO RESEARCH, COLLABORATION AND LICENSE AGREEMENT

 

Passage-Penn Scientific Workplan

 

[*]

 

 

Schedule B

 

Budget for Second Amendment Studies

 

[*]

 

 

Schedule C

 

Complete Payment Schedule

 

[*]

 

 

THIRD AMENDMENT TO RESEARCH, COLLABORATION AND LICENSE AGREEMENT

 

This THIRD AMENDMENT (“Third Amendment”) is entered into as of May 29, 2019 (the “Third Amendment Effective Date”) by and between Passage Bio Inc., a corporation organized under the laws of Delaware (“Passage”) with offices at 2001 Market St, 28th Floor, Philadelphia, PA 19103, and The Trustees of the University of Pennsylvania, a Pennsylvania nonprofit corporation, with offices located at Penn Center for Innovation, 3600 Civic Center Blvd., 9th Floor, Philadelphia, PA 19104 (“Penn”) and amends the Research, Collaboration and License Agreement having an effective date of September 18, 2018 and which subsequently was amended on October 1, 2018 (the “First Amendment”) and May 23, 2019 (the “Second Amendment”) (collectively, the “Agreement”). Passage and Penn are referred to collectively as the “Parties” and individually as a “Party.”

 

WHEREAS, the Parties wish to amend the Agreement; and

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained in the Agreement and herein, and intending to be legally bound hereby, the Parties agree as follows:

 

1.                            The definition of Next Generation Program in the Agreement is hereby amended and restated in its entirety as follows:

 

“Next Generation Program” means the next generation AAV capsid discovery, development and engineering program controlled by Penn and developed or conducted by the Wilson Laboratory from [*] through December 31, 2021, which program: (a) between [*] and May 28, 2019 was solely funded by Penn (including NIH grant funding to Penn) and (b) between May 29, 2019 and December 31, 2021 may be funded by Penn and/or any Third Party (or Third Parties). The Next Generation Program is limited to the following research activities [*].

 

2.                            The following provision is hereby added to the end of Section 2.9.2 of the Agreement:

 

“Provided that the Wilson Laboratory has funding to continue activities of the kind described in the definition of Next Generation Program beyond December 31, 2021, Licensee may request that the term of the Next Generation Program be extended, and if Licensee makes such request on or before [*], the Parties will in good faith negotiate the terms and conditions of such extension and memorialize the same in an amendment to this Agreement.”

 

3.                            This Third Amendment and the Agreement contain the entire understanding between the Parties and supersede any and all prior agreements, understandings and arrangements whether written or oral between the Parties with respect to the matters contained in the Agreement and this Third Amendment. No amendments, changes, modifications or alterations of the terms and conditions of this Third Amendment shall be binding upon any Party, unless provided in writing and signed by an authorized representative of each Party.

 

4.                            All terms and conditions of the Agreement not changed by this Third Amendment shall remain in full force and effect.

 

5.                            Signatures on this Third Amendment may be communicated by e-mail transmission and shall be binding upon the Parties upon receipt by transmitting the same by e-mail, which signatures shall be deemed originals. If executed in counterparts, the Third Amendment shall be effective as if simultaneously executed.

 

 

University of Pennsylvania

 

IN WITNESS WHEREOF the Parties hereto have caused this Third Amendment to be executed and delivered by their duly authorized representatives as set forth below.

 

 

	
AGREED ON BEHALF OF:
    	
 
    	
AGREED ON BEHALF OF:
    
	
 
    	
 
    	
 
    
	
PASSAGE   BIO INC.
    	
 
    	
THE   TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   Jill Quigley
    	
 
    	
By:
    	
/s/   John S. Swartley
    
	
(Signature)
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Jill   Quigley
    	
 
    	
Name:
    	
John   S. Swartley
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
COO &   GC
    	
 
    	
Title:
    	
Managing   Director, Penn Center for Innovation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
ACKNOWLEDGED   AS READ AND UNDERSTOOD
   BY INSTITUTION PRINCIPAL INVESTIGATOR
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Dr. James Wilson
    	
 
    	
 
    
	
(Signature)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Dr. James   Wilson
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

2

 

CONFIDENTIAL — Execution Copy

University of Pennsylvania

 

FOURTH AMENDMENT TO RESEARCH, COLLABORATION AND LICENSE AGREEMENT

 

This FOURTH AMENDMENT (“Fourth Amendment”) is entered into as of September 4, 2019 (the “Fourth Amendment Effective Date”) by and between Passage Bio Inc., a corporation organized under the laws of Delaware (“Passage”) with offices at 2001 Market St, 28th Floor, Philadelphia, PA 19103, and The Trustees of the University of Pennsylvania, a Pennsylvania nonprofit corporation, with offices located at Penn Center for Innovation, 3600 Civic Center Blvd., 9th Floor, Philadelphia, PA 19104 (“Penn”) and amends the Research, Collaboration and License Agreement having an effective date of September 18, 2018 and which subsequently was amended on October 1, 2018 (the “First Amendment”) and May 23, 2019 (the “Second Amendment”) and on May 29, 2019 (the “Third Amendment) (collectively, the “Agreement”). Passage and Penn are referred to collectively as the “Parties” and individually as a “Party.”

 

WHEREAS, the Parties wish to amend the Agreement; and

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained in the Agreement and herein, and intending to be legally bound hereby, the Parties amend the Agreement and otherwise agree as follows:

 

1.                            The Research Program contained in Exhibit B of the Agreement is hereby amended to include the additional work outlined in Schedule A to this Fourth Amendment.

 

2.                            The budget for the Fourth Amendment studies is included in Schedule B to this Fourth Amendment, and this budget is intended to be in addition to those previously included under the Agreement.

 

3.                            A complete amended and restated payment schedule is set forth as Schedule C to this Fourth Amendment. The payment schedule denotes payments for the Research Program that have already been made to Penn as well as future payments owed to Penn.

 

4.                            This Fourth Amendment and the Agreement contain the entire understanding between the Parties and supersede any and all prior agreements, understandings and arrangements whether written or oral between the Parties with respect to the matters contained in the Agreement and this Fourth Amendment. No amendments, changes, modifications or alterations of the terms and conditions of this Fourth Amendment shall be binding upon any Party, unless provided in writing and signed by an authorized representative of each Party.

 

5.                            All terms and conditions of the Agreement not changed by this Fourth Amendment shall remain in full force and effect.

 

6.                            Signatures on this Fourth Amendment may be communicated by e-mail transmission and shall be binding upon the Parties upon receipt by transmitting the same by e-mail, which signatures shall be deemed originals. If executed in counterparts, the Fourth Amendment shall be effective as if simultaneously executed.

 

(Signature page follows.)

 

1

 

IN WITNESS WHEREOF the Parties hereto have caused this Fourth Amendment to be executed and delivered by their duly authorized representatives as set forth below.

 

 

	
AGREED ON BEHALF OF:
    	
 
    	
AGREED ON BEHALF OF:
    
	
 
    	
 
    	
 
    
	
PASSAGE   BIO INC.
    	
 
    	
THE   TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   Jill Quigley
    	
 
    	
By:
    	
/s/   John S. Swartley
    
	
(Signature)
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Jill   Quigley
    	
 
    	
Name:
    	
John   S. Swartley
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
COO
    	
 
    	
Title:
    	
Associate Vice Provost for Research and   Managing Director, Penn Center for Innovation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
ACKNOWLEDGED   AS READ AND UNDERSTOOD
   BY INSTITUTION PRINCIPAL INVESTIGATOR
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Dr. James Wilson
    	
 
    	
 
    
	
(Signature)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Dr. James   Wilson
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

2

 

Schedule A

 

FOURTH AMENDMENT TO RESEARCH, COLLABORATION AND LICENSE AGREEMENT

 

Passage-Penn Scientific Workplan

 

[*]

 

3

 

Schedule B

 

Budget for Fourth Amendment Studies

 

[*]

 

4

 

Schedule C

 

Complete Outstanding Payment Schedule

 

[*]

 

5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00303-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00303-of-00352.parquet"}]]