Exhibit 3.1

 

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
XILIO THERAPEUTICS, INC.

 

(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)

 

Xilio Therapeutics, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”),

 

DOES HEREBY CERTIFY:

 

1.             That the name of this corporation is Xilio Therapeutics, Inc., and that this corporation was originally incorporated pursuant to the General Corporation Law on June 18, 2020.

 

2.             That the Board of Directors duly adopted resolutions proposing to amend and restate the Certificate of Incorporation of this corporation, declaring said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:

 

RESOLVED, that the Certificate of Incorporation of this corporation be amended and restated in its entirety to read as follows:

 

First: The name of this corporation is Xilio Therapeutics, Inc. (the “Corporation”).

 

Second: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle, 19801. The name of its registered agent at such address is The Corporation Trust Company.

 

Third: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law.

 

Fourth: The total number of shares of all classes of stock which the Corporation shall have authority to issue is (i) 213,000,000 shares of Common Stock, $0.0001 par value per share (“Common Stock”), and (ii) 174,808,481 shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”).

 

The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.

 

 

A.            COMMON STOCK

 

1.             General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth herein.

 

2.             Voting. The holders of the Common Stock are entitled to one vote for each share of Common Stock held at all meetings of stockholders (and written actions in lieu of meetings); provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Amended and Restated Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Amended and Restated Certificate of Incorporation or pursuant to the General Corporation Law. There shall be no cumulative voting. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or more series of Preferred Stock that may be required by the terms of this Amended and Restated Certificate of Incorporation) the affirmative vote of the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law.

 

B.            PREFERRED STOCK

 

7,525,000 shares of the authorized Preferred Stock are hereby designated “Series A Preferred Stock,” 19,565,216 shares of the authorized Preferred Stock are hereby designated “Series A-1 Preferred Stock,” 79,446,624 shares of the authorized Preferred Stock are hereby designated “Series B Preferred Stock” and 68,271,641 shares of the authorized Preferred Stock are hereby designated “Series C Preferred Stock.” The Preferred Stock shall have the following rights, preferences, powers, privileges and restrictions, qualifications and limitations. Unless otherwise indicated, references to “sections” or “subsections” in this Part B of this Article Fourth refer to sections and subsections of Part B of this Article Fourth.

 

1.             Dividends.

 

1.1           From and after the date of issuance of any shares of Preferred Stock, each holder of Preferred Stock shall be entitled to receive dividends, out of any assets legally available therefor, prior and in preference to any declaration or payment of any dividend (payable other than in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock), at the rate of $0.060 per share of Series A Preferred Stock held by such holder per annum (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock), $0.069 per share of Series A-1 Preferred Stock held by such holder per annum (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A-1 Preferred Stock), $0.0759 per share of Series B Preferred Stock held by such holder per annum (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B Preferred Stock) and $0.0835 per share of Series C Preferred Stock held by such holder per annum (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C Preferred Stock), in each case payable only when, as and if declared by the Board of Directors of the Corporation. The right to receive such dividends on the Preferred Stock shall not be cumulative and, therefore, if not declared in any year, the right to receive such dividends shall terminate and not carry forward into the next year.

 

 

1.2           The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in this Amended and Restated Certificate of Incorporation) the holders of the Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Preferred Stock in an amount at least equal to (i) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Preferred Stock as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (B) the number of shares of Common Stock issuable upon conversion of a share of Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Preferred Stock determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (B) multiplying such fraction by an amount equal to the Applicable Original Issue Price (as defined below); provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of Preferred Stock pursuant to this Subsection 1.2 shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest dividend on such series of Preferred Stock.

 

2.             Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.

 

2.1           Payments to Holders of Series B Preferred Stock and Series C Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution, winding up of the Corporation or Deemed Liquidation Event, the holders of shares of Series B Preferred Stock and Series C Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made to the holders of Series A Preferred Stock, Series A-1 Preferred Stock or Common Stock by reason of their ownership thereof, an amount per share equal to (i) in the case of the Series B Preferred Stock, the Series B Original Issue Price, plus any dividends declared but unpaid thereon, and (ii) in the case of the Series C Preferred Stock, the Series C Original Issue Price, plus any dividends declared but unpaid thereon (the amount payable to shares of Series B Preferred Stock pursuant to this sentence together with any amounts payable with respect to shares of Series B Preferred Stock pursuant to Subsection 2.3, if applicable, is hereinafter referred to as the “Series B Liquidation Amount” and the amount payable to shares of Series C Preferred Stock pursuant to this sentence together with any amounts payable with respect to shares of Series C Preferred Stock pursuant to Subsection 2.3, if applicable, is hereinafter referred to as the “Series C Liquidation Amount”). If upon any such liquidation, dissolution, winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series B Preferred Stock and Series C Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1, the holders of shares of Series B Preferred Stock and Series C Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

 

2.2          Payments to Holders of Series A Preferred Stock and Series A-1 Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution, winding up of the Corporation or Deemed Liquidation Event, after the payment in full of all amounts required to be paid pursuant to Subsection 2.1, the holders of shares of Series A Preferred Stock and Series A-1 Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to (i) in the case of the Series A Preferred Stock, the Series A Original Issue Price, plus any dividends declared but unpaid thereon, and (ii) in the case of the Series A-1 Preferred Stock, the Series A-1 Original Issue Price, plus any dividends declared but unpaid thereon (the amount payable to shares of Series A Preferred Stock pursuant to this sentence together with any amounts payable with respect to shares of Series A Preferred Stock pursuant to Subsection 2.3, if applicable, is hereinafter referred to as the “Series A Liquidation Amount” and the amount payable to shares of Series A-1 Preferred Stock pursuant to this sentence together with any amounts payable with respect to shares of Series A-1 Preferred Stock pursuant to Subsection 2.3, if applicable, is hereinafter referred to as the “Series A-1 Liquidation Amount”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series A Preferred Stock and Series A-1 Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1, the holders of shares of Series A Preferred Stock and Series A-1 Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

2.3            Distribution of Remaining Assets. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, after the payment in full of all amounts required to be paid pursuant to Subsections 2.1 and 2.2, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of the shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, Series A-1 Preferred Stock and Common Stock, in proportion to the respective number of shares held by such holder, treating solely for purposes of this Subsection 2.3 all such securities as if they had been converted to Common Stock pursuant to the terms of this Amended and Restated Certificate of Incorporation immediately prior to such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event.

 

 

2.4           Deemed Liquidation Events.

 

2.4.1        Definition. Each of the following events shall be considered a “Deemed Liquidation Event” unless the holders of at least 75% of the outstanding shares of Preferred Stock (the “Requisite Preferred Holders”) elect otherwise by written notice sent to the Corporation at least 30 days prior to the effective date of any such event:

 

(a)            a merger or consolidation in which

 

(i)

the Corporation is a constituent party or

 

(ii)

a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation,

 

except any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation; or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; or

 

(b)           (1) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or (2) the sale or disposition (whether by merger, consolidation or otherwise, and whether in a single transaction or a series of related transactions) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.

 

2.4.2        Effecting a Deemed Liquidation Event.

 

(a)           The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Subsection 2.4.1(a)(i) unless the agreement or plan of merger or consolidation for such transaction (the “Merger Agreement”) provides that the consideration payable to the stockholders of the Corporation in such Deemed Liquidation Event shall be paid to the holders of capital stock of the Corporation in accordance with Subsections 2.1, 2.2 and 2.3.

 

 

(b)           In the event of a Deemed Liquidation Event referred to in Subsection 2.4.1(a)(ii) or 2.4.1(b), if the Corporation does not effect a dissolution of the Corporation under the General Corporation Law within ninety (90) days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Preferred Stock no later than the ninetieth (90^th) day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause (ii) to require the redemption of such shares of Preferred Stock, and (ii) if the Requisite Preferred Holders so request in a written instrument delivered to the Corporation not later than one hundred twenty (120) days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Corporation), together with any other assets of the Corporation available for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the “Available Proceeds”), on the one hundred fiftieth (150^th) day after such Deemed Liquidation Event, to redeem all outstanding shares of each series of Preferred Stock at a price per share equal to the Series A Liquidation Amount, Series A-1 Liquidation Amount, Series B Liquidation Amount or Series C Liquidation Amount, as applicable. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Preferred Stock, the Corporation shall redeem a pro rata portion of each holder’s shares of Preferred Stock to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and shall redeem the remaining shares as soon as it may lawfully do so under Delaware law governing distributions to stockholders. Prior to the distribution or redemption provided for in this Subsection 2.4.2(b), the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event or in the ordinary course of business.

 

2.4.3        Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property, rights or securities to be paid or distributed to such holders pursuant to such Deemed Liquidation Event. The value of such property, rights or securities shall be determined in good faith by the Board of Directors of the Corporation, including the approval of a majority of the directors designated by certain holders of Preferred Stock pursuant to an Amended and Restated Voting Agreement to be entered into by and among the Corporation and the other parties to be named therein, as the same may be amended and/or restated from time to time (the “Preferred Directors”).

 

2.4.4        Allocation of Escrow and Contingent Consideration. In the event of a Deemed Liquidation Event pursuant to Subsection 2.4.1(a)(i), if any portion of the consideration payable to the stockholders of the Corporation is payable only upon satisfaction of contingencies (the “Additional Consideration”), the Merger Agreement shall provide that (a) the portion of such consideration that is not Additional Consideration (such portion, the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1, 2.2 and 2.3 as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event; and (b) any Additional Consideration which becomes payable to the stockholders of the Corporation upon satisfaction of such contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1, 2.2 and 2.3 after taking into account the previous payment of the Initial Consideration as part of the same transaction. For the purposes of this Subsection 2.4.4, consideration placed into escrow or retained as a holdback to be available for satisfaction of indemnification or similar obligations in connection with such Deemed Liquidation Event shall be deemed to be Additional Consideration.

 

 

2.5           Definitions. The following terms have the following meanings in this Amended and Restated Certificate of Incorporation:

 

2.5.1              “Applicable Original Issue Price” shall mean the Series A Original Issue Price, in the case of Series A Preferred Stock, the Series A-1 Original Issue Price, in the case of Series A-1 Preferred Stock, the Series B Original Issue Price, in the case of Series B Preferred Stock, and the Series C Original Issue Price, in the case of Series C Preferred Stock.

 

2.5.2              “Series A Original Issue Price” shall mean $1.00 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock.

 

2.5.3              “Series A-1 Original Issue Price” shall mean $1.15 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A-1 Preferred Stock.

 

2.5.4              “Series B Original Issue Price” shall mean $1.265 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B Preferred Stock.

 

2.5.5              “Series C Original Issue Price” shall mean $1.3915 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C Preferred Stock.

 

3.             Voting.

 

3.1           General. On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of this Amended and Restated Certificate of Incorporation, holders of Preferred Stock shall vote together with the holders of Common Stock as a single class and on an as-converted to Common Stock basis.

 

3.2           Election of Directors. The holders of record of the shares of Common Stock and of any other class or series of voting stock (including the Preferred Stock), exclusively and voting together as a single class, shall be entitled to elect the directors of the Corporation. At any meeting held for the purpose of electing a director, the presence in person or by proxy of the holders of a majority of the outstanding shares of the class or series entitled to elect such director shall constitute a quorum for the purpose of electing such director. Except as otherwise provided in this Subsection 3.2, a vacancy in any directorship filled by the holders of any class or series shall be filled only by vote or written consent in lieu of a meeting of the holders of such class or series or by any remaining director or directors elected by the holders of such class or series pursuant to this Subsection 3.2.

 

 

3.3           Preferred Stock Protective Provisions. At any time when at least 43,695,870 shares of Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock) are outstanding, the Corporation shall not, and shall not permit any subsidiary to, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or this Amended and Restated Certificate of Incorporation) the written consent or affirmative vote of the Requisite Preferred Holders given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class:

 

3.3.1        liquidate, dissolve or wind-up the affairs of the Corporation, whether voluntarily or involuntarily, or effect any merger or consolidation or any other Deemed Liquidation Event or consent or enter into any agreement to do any of the foregoing;

 

3.3.2        amend, alter or repeal any provision of this Amended and Restated Certificate of Incorporation or Bylaws of the Corporation if it would adversely alter the rights, preferences, privileges or powers of or restrictions on any series of Preferred Stock;

 

3.3.3        create or authorize the creation of, or issue, or incur any obligation to issue, any other security convertible into or exercisable for, any equity security, having rights, preferences or privileges senior to or on parity with any series of Preferred Stock, including with respect to redemption and distributions to be made on liquidation or otherwise, or increase the authorized number of shares of Preferred Stock;

 

3.3.4        reclassify, alter or amend any existing security of the Corporation that is pari passu with any series of Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to such Preferred Stock in respect of any such right, preference, or privilege or (ii) reclassify, alter or amend any existing security of the Corporation that is junior to any series of Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to or pari passu with such Preferred Stock in respect of any such right, preference or privilege;

 

3.3.5        purchase or redeem or pay or declare any dividend or make any distribution on, any shares of capital stock of the Corporation other than (i) redemptions of or dividends or distributions on the Preferred Stock as expressly authorized herein, (ii) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and (iii) repurchases of stock from employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service at the lower of the original purchase price or the then-current fair market value thereof or (iv) as approved by the Board of Directors, including the approval of a majority of the Preferred Directors;

 

 

3.3.6        create or authorize the creation of any debt security other than equipment leases in the ordinary course of business;

 

3.3.7        create or hold an equity interest in any subsidiary, including a wholly owned subsidiary, or dispose of any subsidiary equity or all or substantially all of any subsidiary assets;

 

3.3.8        increase or decrease the authorized number of directors constituting the Board of Directors; or

 

3.3.9        grant or create any lien or security interests in any of the assets of the Corporation or any subsidiary other than equipment in connection with equipment leases in the ordinary course of business and permitted encumbrances.

 

4.             Optional Conversion.

 

The holders of the Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

 

4.1           Right to Convert.

 

4.1.1        Conversion Ratio. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Applicable Original Issue Price by the Applicable Conversion Price (as defined below) in effect at the time of conversion. The “Series A Conversion Price” shall initially be equal to $1.00. Such initial Series A Conversion Price, and the rate at which shares of Series A Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below. The “Series A-1 Conversion Price” shall initially be equal to $1.15. Such initial Series A-1 Conversion Price, and the rate at which shares of Series A-1 Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below. The “Series B Conversion Price” shall initially be equal to $1.265. Such initial Series B Conversion Price, and the rate at which shares of Series B Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below. The “Series C Conversion Price” shall initially be equal to $1.3915. Such initial Series C Conversion Price, and the rate at which shares of Series C Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below. The “Applicable Conversion Price” shall mean the Series A Conversion Price, in the case of Series A Preferred Stock, the Series A-1 Conversion Price, in the case of Series A-1 Preferred Stock, the Series B Conversion Price, in the case of Series B Preferred Stock, and the Series C Conversion Price, in the case of Series C Preferred Stock.

 

4.1.2        Termination of Conversion Rights. In the event of a liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Preferred Stock.

 

 

4.2           Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors of the Corporation. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

 

4.3           Mechanics of Conversion.

 

4.3.1        Notice of Conversion. In order for a holder of Preferred Stock to voluntarily convert shares of Preferred Stock into shares of Common Stock, such holder shall (a) provide written notice to the Corporation’s transfer agent at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent) that such holder elects to convert all or any number of such holder’s shares of Preferred Stock and, if applicable, any event on which such conversion is contingent and (b), if such holder’s shares are certificated, surrender the certificate or certificates for such shares of Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent). Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the shares of Common Stock to be issued. If required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such notice and, if applicable, certificates (or lost certificate affidavit and agreement) shall be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the specified shares shall be deemed to be outstanding of record as of such date. The Corporation shall, as soon as practicable after the Conversion Time (i) issue and deliver to such holder of Preferred Stock, or to his, her or its nominees, a notice of issuance of uncertificated shares and may, upon written request, issue and deliver a certificate for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and, may, if applicable and upon written request, issue and deliver a certificate for the number (if any) of the shares of Preferred Stock represented by any surrendered certificate that were not converted into Common Stock, (ii) pay in cash such amount as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (iii) pay all declared but unpaid dividends on the shares of Preferred Stock converted.

 

 

4.3.2        Reservation of Shares. The Corporation shall at all times when the Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Amended and Restated Certificate of Incorporation. Before taking any action which would cause an adjustment reducing a Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the applicable series of Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Conversion Price.

 

4.3.3        Effect of Conversion. All shares of Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Subsection 4.2 and to receive payment of any dividends declared but unpaid thereon. Any shares of Preferred Stock so converted shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.

 

4.3.4        No Further Adjustment. Upon any such conversion, no adjustment to the Applicable Conversion Price shall be made for any declared but unpaid dividends on the applicable series of Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.

 

4.3.5        Taxes. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Preferred Stock pursuant to this Section 4. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

 

4.4           Adjustments to Applicable Conversion Price for Diluting Issues.

 

4.4.1        Special Definitions. For purposes of this Article Fourth, the following definitions shall apply:

 

(a)            “Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

 

(b)           “Series C Original Issue Date” shall mean the date on which the first share of Series C Preferred Stock was issued.

 

 

(c)           “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.

 

(d)           “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Subsection 4.4.3 below, deemed to be issued) by the Corporation after the Series C Original Issue Date, other than (1) the following shares of Common Stock and (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) and (2), collectively, “Exempted Securities”):

 

(i)

shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on Preferred Stock;

 

(ii)

shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Subsection 4.5, 4.6, 4.7 or 4.8;

 

(iii)

shares of Common Stock or Options issued to employees or directors of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Corporation, including the approval of a majority of the Preferred Directors;

 

(iv)

shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security;

 

(v)

shares of Common Stock, Options or Convertible Securities issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board of Directors of the Corporation, including the approval of a majority of the Preferred Directors; or

 

 

(vi)

shares of Common Stock, Options or Convertible Securities issued to suppliers or third party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board of Directors of the Corporation, including the approval of a majority of the Preferred Directors;

 

(vii)

shares of Common Stock, Options or Convertible Securities issued as acquisition consideration pursuant to the acquisition of another corporation by the Corporation by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided that such issuances are approved by the Board of Directors of the Corporation, including the approval of a majority of the Preferred Directors;

 

(viii)

shares of Common Stock, Options or Convertible Securities issued in connection with sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreements or strategic partnerships approved by the Board of Directors of the Corporation, including the approval of a majority of the Preferred Directors; or

 

(ix)

shares of Common Stock issued or issuable pursuant to that Warrant to Purchase Series A Preferred Stock held by Walter Greenblatt & Associates.

 

4.4.2        No Adjustment of Applicable Conversion Price. No adjustment in the Applicable Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the Requisite Preferred Holders agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.

 

 

 

4.4.3        Deemed Issue of Additional Shares of Common Stock.

 

(a)            If the Corporation at any time or from time to time after the Series C Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.

 

(b)            If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to a Conversion Price pursuant to the terms of Subsection 4.4.4, are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the Conversion Price computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to such Conversion Price as would have been obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause (b) shall have the effect of increasing the Applicable Conversion Price to an amount which exceeds the lower of (i) the Applicable Conversion Price in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (ii) such Conversion Price that would have resulted from any issuances of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.

 

(c)            If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to a Conversion Price pursuant to the terms of Subsection 4.4.4 (either because the consideration per share (determined pursuant to Subsection 4.4.5) of the Additional Shares of Common Stock subject thereto was equal to or greater than the Applicable Conversion Price then in effect, or because such Option or Convertible Security was issued before the Series C Original Issue Date), are revised after the Series C Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto (determined in the manner provided in Subsection 4.4.3(a)) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

 

 

(d)           Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to a Conversion Price pursuant to the terms of Subsection 4.4.4, such Conversion Price shall be readjusted to such Conversion Price as would have been obtained had such Option or Convertible Security (or portion thereof) never been issued.

 

(e)            If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to a Conversion Price provided for in this Subsection 4.4.3 shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this Subsection 4.4.3). If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to a Conversion Price that would result under the terms of this Subsection 4.4.3 at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to such Conversion Price that such issuance or amendment took place at the time such calculation can first be made.

 

4.4.4        Adjustment of Applicable Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the Corporation shall at any time after the Series C Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 4.4.3), without consideration or for a consideration per share less than the Applicable Conversion Price in effect immediately prior to such issuance or deemed issuance, then the Applicable Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:

 

CP₂ = CP₁* (A + B) ÷ (A + C).

 

For purposes of the foregoing formula, the following definitions shall apply:

 

(a)            “CP₂” shall mean the Applicable Conversion Price in effect immediately after such issuance or deemed issuance of Additional Shares of Common Stock

 

(b)            “CP₁” shall mean the Applicable Conversion Price in effect immediately prior to such issuance or deemed issuance of Additional Shares of Common Stock;

 

(c)            “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issuance or deemed issuance of Additional Shares of Common Stock (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issuance or deemed issuance or upon conversion or exchange of Convertible Securities (including the Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue);

 

 

(d)            “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued or deemed issued at a price per share equal to CP₁ (determined by dividing the aggregate consideration received by the Corporation in respect of such issue by CP₁); and

 

(e)            “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction.

 

4.4.5     Determination of Consideration. For purposes of this Subsection 4.4, the consideration received by the Corporation for the issuance or deemed issuance of any Additional Shares of Common Stock shall be computed as follows:

 

(a)            Cash and Property: Such consideration shall:

 

(i)

insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest;

 

(ii)

insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors of the Corporation; and

 

(iii)

in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board of Directors of the Corporation.

 

 

(b)        Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Subsection 4.4.3, relating to Options and Convertible Securities, shall be determined by dividing:

 

(i)

The total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

 

(ii)

the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

 

4.4.6        Multiple Closing Dates. In the event the Corporation shall issue on more than one date Additional Shares of Common Stock that are a part of one transaction or a series of related transactions and that would result in an adjustment to a Conversion Price pursuant to the terms of Subsection 4.4.4, and such issuance dates occur within a period of no more than ninety (90) days from the first such issuance to the final such issuance, then, upon the final such issuance, such Conversion Price shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).

 

4.5           Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Series C Original Issue Date effect a subdivision of the outstanding Common Stock, each Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after the Series C Original Issue Date combine the outstanding shares of Common Stock, each Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

 

4.6           Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to time after the Series C Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event each Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Applicable Conversion Price then in effect by a fraction:

 

(1)            the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

 

(2)            the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

 

Notwithstanding the foregoing: (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, each Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter each Conversion Price shall be adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (b) no such adjustment shall be made if the holders of Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of such event.

 

4.7           Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Series C Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of Section 1 do not apply to such dividend or distribution, then and in each such event the holders of Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of such event.

 

 

4.8           Adjustment for Merger or Reorganization, etc. Subject to the provisions of Subsection 2.4, if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 4.5, 4.6 or 4.7), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Corporation) shall be made in the application of the provisions in this Section 4 with respect to the rights and interests thereafter of the holders of the Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the Conversion Prices) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Preferred Stock.

 

4.9           Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of a Conversion Price pursuant to this Section 4, the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than ten (10) days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of the applicable series of Preferred Stock a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the applicable series of Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of Preferred Stock (but in any event not later than ten (10) days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Applicable Conversion Price then in effect, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of the applicable series of Preferred Stock.

 

4.10         Notice of Record Date. In the event:

 

(a)        the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security;

 

(b)        of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation, or any Deemed Liquidation Event; or

 

(c)        of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation,

 

then, and in each such case, the Corporation will send or cause to be sent to the holders of the Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Preferred Stock and the Common Stock. Such notice shall be sent at least ten (10) days prior to the record date or effective date for the event specified in such notice.

 

 

5.            Mandatory Conversion.

 

5.1           Trigger Events. Upon either (a) the closing of the sale of shares of Common Stock to the public at a price of at least $1.53065 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock), in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $50,000,000 of gross proceeds to the Corporation and in connection with such offering the Common Stock is listed for trading on the Nasdaq Global Market, the Nasdaq Capital Market, the New York Stock Exchange or another exchange or marketplace approved the Board of Directors or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the Requisite Preferred Holders (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “Mandatory Conversion Time”), then (i) all outstanding shares of Preferred Stock shall automatically be converted into shares of Common Stock, at the then effective conversion rate as calculated pursuant to Subsection 4.1.1. and (ii) such shares may not be reissued by the Corporation.

 

5.2           Procedural Requirements. All holders of record of shares of Preferred Stock shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Preferred Stock pursuant to this Section 5. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of such notice, each holder of shares of Preferred Stock in certificated form shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice. If so required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. All rights with respect to the Preferred Stock converted pursuant to Subsection 5.1, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender any certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Subsection 5.2. As soon as practicable after the Mandatory Conversion Time and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for Preferred Stock, the Corporation shall (a) issue and deliver to such holder, or to his, her or its nominees, a notice of issuance of uncertificated shares and may, upon written request, issue and deliver a certificate for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and (b) pay cash as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Preferred Stock converted. Such converted Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.

 

 

6.             Redemption. Except as expressly provided in this Amended and Restated Certificate of Incorporation, the shares of Preferred Stock shall not be redeemable

 

7.             Redeemed or Otherwise Acquired Shares. Any shares of Preferred Stock that are redeemed, converted or otherwise acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Preferred Stock following redemption, conversion or acquisition.

 

8.             Waiver. Any of the rights, powers, preferences and other terms of the Preferred Stock set forth herein may be waived on behalf of all holders of Preferred Stock by the affirmative written consent or vote of the Requisite Preferred Holders.

 

9.             Notices. Any notice required or permitted by the provisions of this Article Fourth to be given to a holder of shares of Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the General Corporation Law, and shall be deemed sent upon such mailing or electronic transmission.

 

Fifth: Subject to any additional vote required by this Amended and Restated Certificate of Incorporation or Bylaws, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws of the Corporation.

 

Sixth: Subject to any additional vote required by this Amended and Restated Certificate of Incorporation, the number of directors of the Corporation shall be determined in the manner set forth in the Bylaws of the Corporation.

 

Seventh: Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.

 

Eighth: Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws of the Corporation may provide. The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.

 

Ninth: To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the General Corporation Law or any other law of the State of Delaware is amended after approval by the stockholders of this Article Ninth to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law as so amended.

 

 

Any repeal or modification of the foregoing provisions of this Article Ninth by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.

 

Tenth: The following indemnification provisions shall apply to the persons enumerated below.

 

1.             Right to Indemnification of Directors and Officers. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (an “Indemnified Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that such person, or a person for whom such person is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, limited liability company, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys” fees) reasonably incurred by such Indemnified Person in such Proceeding. Notwithstanding the preceding sentence, except as otherwise provided in Section 3 of this Article Tenth the Corporation shall be required to indemnify an Indemnified Person in connection with a Proceeding (or part thereof) commenced by such Indemnified Person only if the commencement of such Proceeding (or part thereof) by the Indemnified Person was authorized in advance by the Board of Directors.

 

2.             Prepayment of Expenses of Directors and Officers. The Corporation shall pay the expenses (including attorneys’ fees) incurred by an Indemnified Person in defending any Proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the Indemnified Person to repay all amounts advanced if it should be ultimately determined that the Indemnified Person is not entitled to be indemnified under this Article Tenth or otherwise.

 

3.             Claims by Directors and Officers. If a claim for indemnification or advancement of expenses under this Article Tenth is not paid in full within thirty (30) days after a written claim therefor by the Indemnified Person has been received by the Corporation, the Indemnified Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the Indemnified Person is not entitled to the requested indemnification or advancement of expenses under applicable law.

 

 

4.             Indemnification of Employees and Agents. The Corporation may indemnify and advance expenses to any person who was or is made or is threatened to be made or is otherwise involved in any Proceeding by reason of the fact that such person, or a person for whom such person is the legal representative, is or was an employee or agent of the Corporation or, while an employee or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, limited liability company, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such person in connection with such Proceeding. The ultimate determination of entitlement to indemnification of persons who are non-director or officer employees or agents shall be made in such manner as is determined by the Board of Directors in its sole discretion. Notwithstanding the foregoing sentence, the Corporation shall not be required to indemnify a person in connection with a Proceeding initiated by such person if the Proceeding was not authorized in advance by the Board of Directors.

 

5.             Advancement of Expenses of Employees and Agents. The Corporation may pay the expenses (including attorneys’ fees) incurred by an employee or agent in defending any Proceeding in advance of its final disposition on such terms and conditions as may be determined by the Board of Directors.

 

6.             Non-Exclusivity of Rights. The rights conferred on any person by this Article Tenth shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of this Amended and Restated Certificate of Incorporation, the Bylaws of the Corporation, or any agreement, or pursuant to any vote of stockholders or disinterested directors or otherwise.

 

7.             Other Indemnification. The Corporation’s obligation, if any, to indemnify any person who was or is serving at its request as a director, officer or employee of another Corporation, partnership, limited liability company, joint venture, trust, organization or other enterprise shall be reduced by any amount such person may collect as indemnification from such other Corporation, partnership, limited liability company, joint venture, trust, organization or other enterprise.

 

8.             Insurance. The Board of Directors may, to the full extent permitted by applicable law as it presently exists, or may hereafter be amended from time to time, authorize an appropriate officer or officers to purchase and maintain at the Corporation’s expense insurance: (a) to indemnify the Corporation for any obligation which it incurs as a result of the indemnification of directors, officers and employees under the provisions of this Article Tenth; and (b) to indemnify or insure directors, officers and employees against liability in instances in which they may not otherwise be indemnified by the Corporation under the provisions of this Article Tenth.

 

9.             Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article Tenth shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. The rights provided hereunder shall inure to the benefit of any Indemnified Person and such person’s heirs, executors and administrators.

 

 

Eleventh: The Corporation renounces, to the fullest extent permitted by law, any interest or expectancy of the Corporation in, or in being offered, an opportunity to participate in, any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, (i) any director of the Corporation who is not an employee or consultant of the Corporation or any of its subsidiaries, or (ii) any holder of Preferred Stock or any partner, member, director, stockholder, officer, employee or agent of any such holder, other than someone who is an employee of the Corporation or any of its subsidiaries (collectively, the persons referred to in clauses (i) and (ii) are “Covered Persons”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person’s capacity as a director of the Corporation (an “Investor Business Opportunity”). To the fullest extent permitted by law, and solely in connection therewith, the Corporation hereby waives any claim against a Covered Person, and agrees to indemnify all Covered Persons against any claim, that is based on fiduciary duties, the corporate opportunity doctrine or any other legal theory which could limit any Covered Person from pursuing or engaging in any Investor Business Opportunity.

 

Twelfth: Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law or the Corporation’s certificate of incorporation or bylaws or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. If any provision or provisions of this Article Twelfth shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article Twelfth (including, without limitation, each portion of any sentence of this Article Twelfth containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.

 

* * *

 

3.             That the foregoing amendment and restatement was approved by the holders of the requisite number of shares of this corporation in accordance with Section 228 of the General Corporation Law.

 

4.             That this Amended and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of this Corporation’s Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on this 22^nd day of February, 2021.

 

By:

/s/ René Russo

	Name:	René Russo
	Title:	Chief Executive Officer

 

 

Exhibit 3.2

 

Bylaws

 

of

 

Xilio Therapeutics, Inc.

 

(a Delaware corporation)

 

 

Table of Contents

 

Page

 

ARTICLE I STOCKHOLDERS

1

 

1.1

Place of Meetings

1

1.2

Annual Meeting

1

1.3

Special Meetings

1

1.4

Notice of Meetings

1

1.5

Voting List

2

1.6

Quorum

2

1.7

Adjournments

2

1.8

Voting and Proxies

2

1.9

Action at Meeting

3

1.10

Conduct of Meetings

3

1.11

Action without Meeting

4

 

ARTICLE II DIRECTORS

5

 

2.1

General Powers

5

2.2

Number, Election and Qualification

5

2.3

Chairman of the Board; Vice Chairman of the Board

5

2.4

Tenure

5

2.5

Quorum

5

2.6

Action at Meeting

5

2.7

Removal

5

2.8

Vacancies

6

2.9

Resignation

6

2.10

Regular Meetings

6

2.11

Special Meetings

6

2.12

Notice of Special Meetings

6

2.13

Meetings by Conference Communications Equipment

6

2.14

Action by Consent

7

2.15

Committees

7

2.16

Compensation of Directors

7

 

ARTICLE III OFFICERS

7

 

3.1

Titles

7

3.2

Election

8

3.3

Qualification

8

3.4

Tenure

8

3.5

Resignation and Removal

8

3.6

Vacancies

8

3.7

President; Chief Executive Officer

8

3.8

Vice Presidents

8

 

 

3.9

Secretary and Assistant Secretaries

9

3.10

Treasurer and Assistant Treasurers

9

3.11

Salaries

9

3.12

Delegation of Authority

9

 

ARTICLE IV CAPITAL STOCK

10

 

4.1

Issuance of Stock

10

4.2

Stock Certificates; Uncertificated Shares

10

4.3

Transfers

11

4.4

Lost, Stolen or Destroyed Certificates

11

4.5

Record Date

11

4.6

Regulations

12

 

ARTICLE V GENERAL PROVISIONS

12

 

5.1

Fiscal Year

12

5.2

Corporate Seal

12

5.3

Waiver of Notice

12

5.4

Voting of Securities

12

5.5

Evidence of Authority

12

5.6

Certificate of Incorporation

12

5.7

Severability

13

5.8

Pronouns

13

 

ARTICLE VI AMENDMENTS

13

 

6.1

By the Board of Directors

13

6.2

By the Stockholders

13

 

 

ARTICLE I

 

STOCKHOLDERS

 

1.1            Place of Meetings. All meetings of stockholders shall be held at such place, if any, as may be designated from time to time by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President or, if not so designated, at the principal executive office of the corporation. The Board of Directors may, in its sole discretion, determine that a meeting shall not be held at any place, but shall instead be held solely by means of remote communication in a manner consistent with the General Corporation Law of the State of Delaware.

 

1.2           Annual Meeting. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting shall be held on a date and at a time designated by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President. The Board of Directors may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders.

 

1.3            Special Meetings. Special meetings of stockholders for any purpose or purposes may be called at any time only by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President, and may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. The Board of Directors may postpone, reschedule or cancel any previously scheduled special meeting of stockholders.

 

1.4          Notice of Meetings. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, notice of each meeting of stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. Without limiting the manner by which notice otherwise may be given to stockholders, any notice shall be effective if given by a form of electronic transmission consented to (in a manner consistent with the General Corporation Law of the State of Delaware) by the stockholder to whom the notice is given. The notices of all meetings shall state the place, if any, date and time of the meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called. If notice is given by mail, such notice shall be deemed given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the corporation. If notice is given by electronic transmission, such notice shall be deemed given at the time specified in Section 232 of the General Corporation Law of the State of Delaware.

 

 

1.5            Voting List. The corporation shall prepare, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least 10 days prior to the meeting: (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the corporation. If the meeting is to be held at a physical location (and not solely by means of remote communication), then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Except as otherwise provided by law, such list shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 1.5 or to vote in person or by proxy at any meeting of stockholders.

 

1.6            Quorum. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the holders of a majority in voting power of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at the meeting, present in person, present by means of remote communication in a manner, if any, authorized by the Board of Directors in its sole discretion, or represented by proxy, shall constitute a quorum for the transaction of business; provided, however, that where a separate vote by a class or classes or series of capital stock is required by law or the Certificate of Incorporation, the holders of a majority in voting power of the shares of such class or classes or series of the capital stock of the corporation issued and outstanding and entitled to vote on such matter, present in person, present by means of remote communication in a manner, if any, authorized by the Board of Directors in its sole discretion, or represented by proxy, shall constitute a quorum entitled to take action with respect to the vote on such matter. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum.

 

1.7            Adjournments. Any meeting of stockholders may be adjourned from time to time to reconvene at any other time and to any other place at which a meeting of stockholders may be held under these Bylaws by the chairman of the meeting or by the stockholders present or represented at the meeting and entitled to vote, although less than a quorum. It shall not be necessary to notify any stockholder of any adjournment of less than 30 days if the time and place, if any, of the adjourned meeting, and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned meeting, the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

1.8            Voting and Proxies. Each stockholder shall have one vote upon the matter in question for each share of stock entitled to vote held of record by such stockholder and a proportionate vote for each fractional share so held, unless otherwise provided by law or the Certificate of Incorporation. Each stockholder of record entitled to vote at a meeting of stockholders, or to express consent or dissent to corporate action without a meeting, may vote or express such consent or dissent in person (including by means of remote communications, if any, by which stockholders may be deemed to be present in person and vote at such meeting) or may authorize another person or persons to vote or act for such stockholder by a proxy executed or transmitted in a manner permitted by the General Corporation Law of the State of Delaware by the stockholder or such stockholder’s authorized agent and delivered (including by electronic transmission) to the Secretary of the corporation. No such proxy shall be voted or acted upon after three years from the date of its execution, unless the proxy expressly provides for a longer period.

 

 

1.9        Action at Meeting. When a quorum is present at any meeting, any matter other than the election of directors to be voted upon by the stockholders at such meeting shall be decided by the vote of the holders of shares of stock having a majority in voting power of the votes cast by the holders of all of the shares of stock present or represented at the meeting and voting affirmatively or negatively on such matter (or if there are two or more classes or series of stock entitled to vote as separate classes, then in the case of each such class or series, the holders of a majority in voting power of the shares of stock of that class or series present or represented at the meeting and voting affirmatively or negatively on such matter), except when a different vote is required by law, the Certificate of Incorporation or these Bylaws. When a quorum is present at any meeting, any election by stockholders of directors shall be determined by a plurality of the votes cast by the stockholders entitled to vote on the election.

 

1.10         Conduct of Meetings.

 

(a)            Chairman of Meeting. Unless otherwise provided by the Board of Directors, meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in the Chairman’s absence by the Vice Chairman of the Board, if any, or in the Vice Chairman’s absence by the Chief Executive Officer, or in the Chief Executive Officer’s absence, by the President, or in the President’s absence by a Vice President, or in the absence of all of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen by vote of the stockholders at the meeting. The Secretary shall act as secretary of the meeting, but in the Secretary’s absence the chairman of the meeting may appoint any person to act as secretary of the meeting.

 

(b)            Rules, Regulations and Procedures. The Board of Directors may adopt by resolution such rules, regulations and procedures for the conduct of any meeting of stockholders of the corporation as it shall deem appropriate including, without limitation, such guidelines and procedures as it may deem appropriate regarding the participation by means of remote communication of stockholders and proxyholders not physically present at a meeting. Except to the extent inconsistent with such rules, regulations and procedures as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting and prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as shall be determined; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

 

1.11         Action without Meeting.

 

(a)            Taking of Action by Consent. Any action required or permitted to be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on such action were present and voted. Except as otherwise provided by the Certificate of Incorporation, stockholders may act by written consent to elect directors; provided, however, that, if such consent is less than unanimous, such action by written consent may be in lieu of holding an annual meeting only if all of the directorships to which directors could be elected at an annual meeting held at the effective time of such action are vacant and are filled by such action.

 

(b)            Electronic Transmission of Consents. A telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this section, provided that any such telegram, cablegram or other electronic transmission sets forth or is delivered with information from which the corporation can determine (i) that the telegram, cablegram or other electronic transmission was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (ii) the date on which such stockholder or proxyholder or authorized person or persons transmitted such telegram, cablegram or electronic transmission. The date on which such telegram, cablegram or electronic transmission is transmitted shall be deemed to be the date on which such consent was signed. No consent given by telegram, cablegram or other electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested. Notwithstanding the foregoing limitations on delivery, consents given by telegram, cablegram or other electronic transmission may be otherwise delivered to the principal place of business of the corporation or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded if, to the extent and in the manner provided by resolution of the Board of Directors. Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing.

 

(c)            Notice of Taking of Corporate Action. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the corporation.

 

 

ARTICLE II

 

DIRECTORS

 

2.1            General Powers. The business and affairs of the corporation shall be managed by or under the direction of a Board of Directors, who may exercise all of the powers of the corporation except as otherwise provided by law or the Certificate of Incorporation.

 

2.2          Number, Election and Qualification. Subject to the rights of holders of any series of Preferred Stock to elect directors, the number of directors of the corporation shall be established from time to time by the stockholders or the Board of Directors. The directors shall be elected at the annual meeting of stockholders by such stockholders as have the right to vote on such election. Election of directors need not be by written ballot. Directors need not be stockholders of the corporation.

 

2.3            Chairman of the Board; Vice Chairman of the Board. The Board of Directors may appoint from its members a Chairman of the Board and a Vice Chairman of the Board, neither of whom need be an employee or officer of the corporation. If the Board of Directors appoints a Chairman of the Board, such Chairman shall perform such duties and possess such powers as are assigned by the Board of Directors and, if the Chairman of the Board is also designated as the corporation’s Chief Executive Officer, shall have the powers and duties of the Chief Executive Officer prescribed in Section 3.7 of these Bylaws. If the Board of Directors appoints a Vice Chairman of the Board, such Vice Chairman shall perform such duties and possess such powers as are assigned by the Board of Directors or the Chairman of the Board. Unless otherwise provided by the Board of Directors, the Chairman of the Board or, in the Chairman’s absence, the Vice Chairman of the Board, if any, shall preside at all meetings of the Board of Directors.

 

2.4            Tenure. Each director shall hold office until the next annual meeting of stockholders and until a successor is elected and qualified, or until such director’s earlier death, resignation or removal.

 

2.5           Quorum. The greater of (a) a majority of the directors at any time in office and (b) one-third of the number of directors fixed pursuant to Section 2.2 of these Bylaws shall constitute a quorum of the Board of Directors. If at any meeting of the Board of Directors there shall be less than such a quorum, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present.

 

2.6           Action at Meeting. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater number is required by law or by the Certificate of Incorporation.

 

2.7            Removal. Except as otherwise provided by the General Corporation Law of the State of Delaware, any one or more or all of the directors of the corporation may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except that the directors elected by the holders of a particular class or series of stock may be removed without cause only by vote of the holders of a majority of the outstanding shares of such class or series.

 

 

 

2.8              Vacancies. Subject to the rights of holders of any series of Preferred Stock to elect directors, unless and until filled by the stockholders, any vacancy or newly-created directorship on the Board of Directors, however occurring, may be filled by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. A director elected to fill a vacancy shall be elected for the unexpired term of such director’s predecessor in office, and a director chosen to fill a position resulting from a newly-created directorship shall hold office until the next annual meeting of stockholders and until a successor is elected and qualified, or until such director’s earlier death, resignation or removal.

 

2.9              Resignation. Any director may resign by delivering a resignation in writing or by electronic transmission to the corporation at its principal executive office or to the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some later time or upon the happening of some later event.

 

2.10            Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place as shall be determined from time to time by the Board of Directors; provided that any director who is absent when such a determination is made shall be given notice of the determination. A regular meeting of the Board of Directors may be held without notice immediately after and at the same place as the annual meeting of stockholders.

 

2.11            Special Meetings. Special meetings of the Board of Directors may be held at any time and place designated in a call by the Chairman of the Board, the Chief Executive Officer, the President, two or more directors, or by one director in the event that there is only a single director in office.

 

2.12            Notice of Special Meetings. Notice of the date, place and time of any special meeting of directors shall be given to each director by the Secretary or by the officer or one of the directors calling the meeting. Notice shall be duly given to each director (a) in person or by telephone at least 24 hours in advance of the meeting, (b) by sending an electronic transmission, or delivering written notice by hand or reputable overnight delivery service, to such director’s last known business, home or electronic transmission address at least 48 hours in advance of the meeting, or (c) by sending written notice by first-class mail to such director’s last known business or home address at least 72 hours in advance of the meeting. A notice or waiver of notice of a meeting of the Board of Directors need not specify the purposes of the meeting.

 

2.13            Meetings by Conference Communications Equipment. Directors may participate in meetings of the Board of Directors or any committee thereof by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting.

 

 

2.14            Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent to the action in writing or by electronic transmission, and the written consents or electronic transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

2.15            Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation with such lawfully delegable powers and duties as the Board of Directors thereby confers, to serve at the pleasure of the Board of Directors. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members of the committee present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors and subject to the provisions of law, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers that may require it. Each such committee shall keep minutes and make such reports as the Board of Directors may from time to time request. Except as the Board of Directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these Bylaws for the Board of Directors. Except as otherwise provided in the Certificate of Incorporation, these Bylaws, or the resolution of the Board of Directors designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.

 

2.16            Compensation of Directors. Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any director from serving the corporation or any of its parent or subsidiary entities in any other capacity and receiving compensation for such service.

 

ARTICLE III

 

OFFICERS

 

3.1              Titles. The officers of the corporation shall consist of a Chief Executive Officer, a President, a Secretary, a Treasurer and such other officers with such other titles as the Board of Directors shall determine, including one or more Vice Presidents, Assistant Treasurers and Assistant Secretaries. The Board of Directors may appoint such other officers as it may deem appropriate.

 

 

3.2              Election. The Chief Executive Officer, President, Treasurer and Secretary shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders. Other officers may be appointed by the Board of Directors at such meeting or at any other meeting.

 

3.3              Qualification. No officer need be a stockholder. Any two or more offices may be held by the same person.

 

3.4              Tenure. Except as otherwise provided by law, by the Certificate of Incorporation or by these Bylaws, each officer shall hold office until such officer’s successor is elected and qualified, unless a different term is specified in the resolution electing or appointing such officer, or until such officer’s earlier death, resignation or removal.

 

3.5              Resignation and Removal. Any officer may resign by delivering a resignation in writing or by electronic transmission to the corporation at its principal executive office or to the Chief Executive Officer, the President or the Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some later time or upon the happening of some later event. Any officer may be removed at any time, with or without cause, by vote of a majority of the directors then in office. Except as the Board of Directors may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following such officer’s resignation or removal, or any right to damages on account of such removal, whether such officer’s compensation be by the month or by the year or otherwise, unless such compensation is expressly provided for in a duly authorized written agreement with the corporation.

 

3.6              Vacancies. The Board of Directors may fill any vacancy occurring in any office for any reason and may, in its discretion, leave unfilled for such period as it may determine any offices. Each such successor shall hold office for the unexpired term of such officer’s predecessor and until a successor is elected and qualified, or until such officer’s earlier death, resignation or removal.

 

3.7              President; Chief Executive Officer. Unless the Board of Directors has designated another person as the corporation’s Chief Executive Officer, the President shall be the Chief Executive Officer of the corporation. The Chief Executive Officer shall have general charge and supervision of the business of the corporation subject to the direction of the Board of Directors, and shall perform all duties and have all powers that are commonly incident to the office of the chief executive or that are delegated to such officer by the Board of Directors. The President shall perform such other duties and shall have such other powers as the Board of Directors or the Chief Executive Officer (if the President is not the Chief Executive Officer) may from time to time prescribe. In the event of the absence, inability or refusal to act of the Chief Executive Officer or the President (if the President is not the Chief Executive Officer), the Vice President (or if there shall be more than one, the Vice Presidents in the order determined by the Board of Directors) shall perform the duties of the Chief Executive Officer and when so performing such duties shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer.

 

3.8              Vice Presidents. Each Vice President shall perform such duties and possess such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. The Board of Directors may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title selected by the Board of Directors.

 

 

3.9              Secretary and Assistant Secretaries. The Secretary shall perform such duties and shall have such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of the secretary, including without limitation the duty and power to give notices of all meetings of stockholders and special meetings of the Board of Directors, to attend all meetings of stockholders and the Board of Directors and keep a record of the proceedings, to maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents.

 

Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Secretary.

 

In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the chairman of the meeting shall designate a temporary secretary to keep a record of the meeting.

 

3.10             Treasurer and Assistant Treasurers. The Treasurer shall perform such duties and shall have such powers as may from time to time be assigned by the Board of Directors or the Chief Executive Officer. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the corporation, to deposit funds of the corporation in depositories selected in accordance with these Bylaws, to disburse such funds as ordered by the Board of Directors, to make proper accounts of such funds, and to render as required by the Board of Directors statements of all such transactions and of the financial condition of the corporation.

 

The Assistant Treasurers shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Treasurer.

 

3.11            Salaries. Officers of the corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors.

 

3.12            Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.

 

 

ARTICLE IV

 

CAPITAL STOCK

 

4.1              Issuance of Stock. Subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the corporation or the whole or any part of any shares of the authorized capital stock of the corporation held in the corporation’s treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board of Directors in such manner, for such lawful consideration and on such terms as the Board of Directors may determine.

 

4.2              Stock Certificates; Uncertificated Shares. The shares of the corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the corporation’s stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock of the corporation represented by certificates shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board of Directors, representing the number of shares held by such holder registered in certificate form. Each such certificate shall be signed in a manner that complies with Section 158 of the General Corporation Law of the State of Delaware.

 

Each certificate for shares of stock that are subject to any restriction on transfer pursuant to the Certificate of Incorporation, these Bylaws, applicable securities laws or any agreement among any number of stockholders or among such holders and the corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction.

 

If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of each certificate representing shares of such class or series of stock, provided that in lieu of the foregoing requirements there may be set forth on the face or back of each certificate representing shares of such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests a copy of the full text of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

 

Within a reasonable time after the issuance or transfer of uncertificated shares, the registered owner thereof shall be given a notice, in writing or by electronic transmission, containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General Corporation Law of the State of Delaware or, with respect to Section 151 of the General Corporation Law of the State of Delaware, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

 

 

4.3              Transfers. Shares of stock of the corporation shall be transferable in the manner prescribed by law and in these Bylaws. Transfers of shares of stock of the corporation shall be made only on the books of the corporation or by transfer agents designated to transfer shares of stock of the corporation. Subject to applicable law, shares of stock represented by certificates shall be transferred only on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the corporation or its transfer agent may reasonably require. Uncertificated shares may be transferred by delivery of a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Certificate of Incorporation or by these Bylaws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock until the shares have been transferred on the books of the corporation in accordance with the requirements of these Bylaws.

 

4.4              Lost, Stolen or Destroyed Certificates. The corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen or destroyed, upon such terms and conditions as the corporation may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity and posting of such bond as the corporation may require for the protection of the corporation or any transfer agent or registrar.

 

4.5              Record Date. The Board of Directors may fix in advance a date as a record date for the determination of the stockholders entitled to notice of or to vote at any meeting of stockholders or to express consent (or dissent) to corporate action without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action. Such record date shall not precede the date on which the resolution fixing the record date is adopted, and such record date shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 10 days after the date of adoption of a record date for a consent without a meeting, nor more than 60 days prior to any other action to which such record date relates.

 

If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day before the day on which notice is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held. If no record date is fixed, the record date for determining stockholders entitled to express consent to corporate action without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first consent is properly delivered to the corporation. If no record date is fixed, the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating to such purpose.

 

 

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

 

4.6              Regulations. The issue, transfer, conversion and registration of shares of stock of the corporation shall be governed by such other regulations as the Board of Directors may establish.

 

ARTICLE V

 

GENERAL PROVISIONS

 

5.1              Fiscal Year. Except as from time to time otherwise designated by the Board of Directors, the fiscal year of the corporation shall begin on the first day of January of each year and end on the last day of December in each year.

 

5.2              Corporate Seal. The corporate seal shall be in such form as shall be approved by the Board of Directors.

 

5.3              Waiver of Notice. Whenever notice is required to be given by law, by the Certificate of Incorporation or by these Bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether provided before, at or after the time of the event for which notice is to be given, shall be deemed equivalent to notice required to be given to such person. Neither the business nor the purpose of any meeting need be specified in any such waiver. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

 

5.4              Voting of Securities. Except as the Board of Directors may otherwise designate, the Chief Executive Officer, the President or the Treasurer may waive notice of, vote, or appoint any person or persons to vote, on behalf of the corporation at, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for this corporation (with or without power of substitution) at, any meeting of stockholders or securityholders of any other entity, the securities of which may be held by this corporation, or with respect to the execution of any written or electronic consent in the name of the corporation as a holder of such securities.

 

5.5              Evidence of Authority. A certificate by the Secretary, or an Assistant Secretary, or a temporary Secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action.

 

5.6              Certificate of Incorporation. All references in these Bylaws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the corporation, as amended and in effect from time to time.

 

 

5.7              Severability. Any determination that any provision of these Bylaws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provision of these Bylaws.

 

5.8              Pronouns. All pronouns used in these Bylaws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require.

 

ARTICLE VI

 

AMENDMENTS

 

6.1              By the Board of Directors. These Bylaws may be altered, amended or repealed, in whole or in part, or new bylaws may be adopted by the Board of Directors.

 

6.2              By the Stockholders. These Bylaws may be altered, amended or repealed, in whole or in part, or new bylaws may be adopted by the affirmative vote of the holders of a majority of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at any annual meeting of stockholders, or at any special meeting of stockholders, provided notice of such alteration, amendment, repeal or adoption of new bylaws shall have been stated in the notice of such special meeting.

 

 

Exhibit 3.3

 

RESTATED CERTIFICATE OF INCORPORATION

 

OF

 

XILIO THERAPEUTICS, INC.

 

Xilio Therapeutics, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify that the name of the Corporation is Xilio Therapeutics, Inc. and the original certificate of incorporation of the corporation was filed with the Secretary of State of the State of Delaware on June 18, 2020. This Restated Certificate of Incorporation, having been duly adopted in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware, restates, integrates and amends the certificate of incorporation of the Corporation as follows:

 

FIRST: The name of the Corporation is Xilio Therapeutics, Inc.

 

SECOND: The address of the Corporation’s registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, 19801. The name of its registered agent at that address is The Corporation Trust Company.

 

THIRD: The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

 

FOURTH: The total number of shares of all classes of stock that the Corporation shall have authority to issue is 205,000,000 shares, consisting of (i) 200,000,000 shares of common stock, $0.0001 par value per share (“Common Stock”), and (ii) 5,000,000 shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”).

 

The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.

 

A

COMMON STOCK.

 

1.            General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of the Preferred Stock of any series as may be designated by the Board of Directors upon any issuance of the Preferred Stock of any series.

 

2.            Voting. The holders of the Common Stock shall have voting rights at all meetings of stockholders, each such holder being entitled to one vote for each share thereof held by such holder; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (which, as used herein, shall mean the certificate of incorporation of the Corporation, as amended from time to time, including the terms of any certificate of designations of any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation or the General Corporation Law of the State of Delaware. There shall be no cumulative voting.

 

 

The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.

 

3.            Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor if, as and when determined by the Board of Directors and subject to any preferential dividend or other rights of any then outstanding Preferred Stock.

 

4.            Liquidation. Upon the dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive, pro rata based on the number of shares held by each such holder, all assets of the Corporation available for distribution to its stockholders, subject to any preferential or other rights of any then outstanding Preferred Stock.

 

B

PREFERRED STOCK.

 

Preferred Stock may be issued from time to time in one or more series, with each such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation as hereinafter provided. Any shares of Preferred Stock that may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law.

 

Authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by adopting a resolution or resolutions providing for the issuance of the shares thereof and by filing a certificate of designations relating thereto in accordance with the General Corporation Law of the State of Delaware, to determine and fix the number of shares of such series and such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by the General Corporation Law of the State of Delaware. Without limiting the generality of the foregoing, the resolutions providing for issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to any other series of Preferred Stock to the extent permitted by law. The powers, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding.

 

 

The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority of the voting power of the capital stock of the Corporation entitled to vote thereon, voting as a single class, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.

 

FIFTH: Except as otherwise provided herein, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute and this Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation.

 

SIXTH: In furtherance and not in limitation of the powers conferred upon it by the General Corporation Law of the State of Delaware, and subject to the terms of any series of Preferred Stock, the Board of Directors shall have the power to adopt, amend, alter or repeal the Bylaws of the Corporation by the affirmative vote of a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present. The stockholders may not adopt, amend, alter or repeal the Bylaws of the Corporation, or adopt any provision inconsistent therewith, unless such action is approved, in addition to any other vote required by this Certificate of Incorporation, by the affirmative vote of the holders of at least seventy-five percent (75%) of the votes that all the stockholders would be entitled to cast in an election of directors or class of directors. Notwithstanding any other provisions of law, this Certificate of Incorporation or the Bylaws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes that all the stockholders would be entitled to cast in an election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article SIXTH.

 

SEVENTH: Except to the extent that the General Corporation Law of the State of Delaware prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability. No amendment, repeal or elimination of this provision shall apply to or have any effect on its application with respect to any act or omission of a director occurring before such amendment, repeal or elimination. If the General Corporation Law of the State of Delaware is amended to permit further elimination or limitation of the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware as so amended.

 

 

EIGHTH: The Corporation shall provide indemnification and advancement of expenses as follows:

 

1.            Actions, Suits and Proceedings Other than by or in the Right of the Corporation. The Corporation shall indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) (all such persons being referred to hereafter as an “Indemnitee”), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees), liabilities, losses, judgments, fines (including excise taxes and penalties arising under the Employee Retirement Income Security Act of 1974), and amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding and any appeal therefrom, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

 

2.            Actions or Suits by or in the Right of the Corporation. The Corporation shall indemnify any Indemnitee who was or is a party to or threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that Indemnitee is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding and any appeal therefrom, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made under this Section 2 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Corporation, unless, and only to the extent, that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses (including attorneys’ fees) which the Court of Chancery of Delaware or such other court shall deem proper.

 

3.            Indemnification for Expenses of Successful Party. Notwithstanding any other provisions of this Article EIGHTH, to the extent that an Indemnitee has been successful on the merits or otherwise, in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article EIGHTH, or in defense of any claim, issue or matter therein, or on appeal from any such action, suit or proceeding, Indemnitee shall be indemnified against all expenses (including attorneys’ fees) actually and reasonably incurred by or on behalf of Indemnitee in connection therewith. Without limiting the foregoing, if any action, suit or proceeding is disposed of on the merits or otherwise (including a disposition without prejudice) without (i) the disposition being adverse to Indemnitee, (ii) an adjudication that Indemnitee was liable to the Corporation, (iii) a plea of guilty or nolo contendere by Indemnitee, (iv) an adjudication that Indemnitee did not act in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that Indemnitee had reasonable cause to believe his or her conduct was unlawful, Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto.

 

 

4.            Notification and Defense of Claim. As a condition precedent to an Indemnitee’s right to be indemnified, such Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving such Indemnitee for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to Indemnitee. After notice from the Corporation to Indemnitee of its election so to assume such defense, the Corporation shall not be liable to Indemnitee for any legal or other expenses subsequently incurred by Indemnitee in connection with such action, suit, proceeding or investigation, other than as provided below in this Section 4. Indemnitee shall have the right to employ his or her own counsel in connection with such action, suit, proceeding or investigation, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized by the Corporation, (ii) counsel to Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and Indemnitee in the conduct of the defense of such action, suit, proceeding or investigation or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, suit, proceeding or investigation, in each of which cases the fees and expenses of counsel for Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Article EIGHTH. The Corporation shall not be entitled, without the consent of Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation or as to which counsel for Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above. The Corporation shall not be required to indemnify Indemnitee under this Article EIGHTH for any amounts paid in settlement of any action, suit, proceeding or investigation effected without its written consent. The Corporation shall not settle any action, suit, proceeding or investigation in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. Neither the Corporation nor Indemnitee will unreasonably withhold or delay its consent to any proposed settlement.

 

 

5.            Advancement of Expenses. Subject to the provisions of Section 6 of this Article EIGHTH, in the event of any threatened or pending action, suit, proceeding or investigation of which the Corporation receives notice under this Article EIGHTH, any expenses (including attorneys’ fees) incurred by or on behalf of Indemnitee in defending an action, suit, proceeding or investigation or any appeal therefrom shall be paid by the Corporation in advance of the final disposition of such matter; provided, however, that the payment of such expenses incurred by or on behalf of Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined by final judicial decision from which there is no further right to appeal that Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article EIGHTH; and provided further that no such advancement of expenses shall be made under this Article EIGHTH if it is determined (in the manner described in Section 6) that (i) Indemnitee did not act in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation, or (ii) with respect to any criminal action or proceeding, Indemnitee had reasonable cause to believe his or her conduct was unlawful. Such undertaking shall be accepted without reference to the financial ability of Indemnitee to make such repayment.

 

6.            Procedure for Indemnification and Advancement of Expenses. In order to obtain indemnification or advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article EIGHTH, an Indemnitee shall submit to the Corporation a written request. Any such advancement of expenses shall be made promptly, and in any event within 60 days after receipt by the Corporation of the written request of Indemnitee, unless (i) the Corporation has assumed the defense pursuant to Section 4 of this Article EIGHTH (and none of the circumstances described in Section 4 of this Article EIGHTH that would nonetheless entitle the Indemnitee to indemnification for the fees and expenses of separate counsel have occurred) or (ii) the Corporation determines within such 60-day period that Indemnitee did not meet the applicable standard of conduct set forth in Section 1, 2 or 5 of this Article EIGHTH, as the case may be. Any such indemnification, unless ordered by a court, shall be made with respect to requests under Section 1 or 2 of this Article EIGHTH only as authorized in the specific case upon a determination by the Corporation that the indemnification of Indemnitee is proper because Indemnitee has met the applicable standard of conduct set forth in Section 1 or 2 of this Article EIGHTH, as the case may be. Such determination shall be made in each instance (a) by a majority vote of the directors of the Corporation consisting of persons who are not at that time parties to the action, suit or proceeding in question (“disinterested directors”), whether or not a quorum, (b) by a committee of disinterested directors designated by majority vote of disinterested directors, whether or not a quorum, (c) if there are no disinterested directors, or if the disinterested directors so direct, by independent legal counsel (who may, to the extent permitted by law, be regular legal counsel to the Corporation) in a written opinion, or (d) by the stockholders of the Corporation.

 

7.            Remedies. Subject to Article TWELFTH, the right to indemnification or advancement of expenses as granted by this Article EIGHTH shall be enforceable by Indemnitee in any court of competent jurisdiction. Neither the failure of the Corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation pursuant to Section 6 of this Article EIGHTH that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct. In any suit brought by Indemnitee to enforce a right to indemnification or advancement of expenses, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall have the burden of proving that Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article EIGHTH. Indemnitee’s expenses (including attorneys’ fees) reasonably incurred in connection with successfully establishing Indemnitee’s right to indemnification or advancement of expenses, in whole or in part, in any such proceeding shall also be indemnified by the Corporation to the fullest extent permitted by applicable law. Notwithstanding the foregoing, in any suit brought by Indemnitee to enforce a right to indemnification or advancement of expenses hereunder it shall be a defense that the Indemnitee has not met any applicable standard for indemnification set forth in the General Corporation Law of the State of Delaware.

 

 

8.            Limitations. Notwithstanding anything to the contrary in this Article EIGHTH, except as set forth in Section 7 of this Article EIGHTH, the Corporation shall not indemnify, or advance expenses to, an Indemnitee pursuant to this Article EIGHTH in connection with a proceeding (or part thereof) initiated by such Indemnitee unless the initiation thereof was approved by the Board of Directors. Notwithstanding anything to the contrary in this Article EIGHTH, the Corporation shall not indemnify or advance expenses to an Indemnitee to the extent such Indemnitee is reimbursed from the proceeds of insurance, and in the event the Corporation makes any indemnification or advancement payments to an Indemnitee and such Indemnitee is subsequently reimbursed from the proceeds of insurance, such Indemnitee shall promptly refund indemnification or advancement payments to the Corporation to the extent of such insurance reimbursement.

 

9.            Subsequent Amendment. No amendment, termination or repeal of this Article EIGHTH or of the relevant provisions of the General Corporation Law of the State of Delaware or any other applicable laws shall adversely affect or diminish in any way the rights of any Indemnitee to indemnification or advancement of expenses under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal.

 

10.          Other Rights. The indemnification and advancement of expenses provided by this Article EIGHTH shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to action in Indemnitee’s official capacity and as to action in any other capacity while holding office for the Corporation, and shall continue as to an Indemnitee who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of Indemnitee. Nothing contained in this Article EIGHTH shall be deemed to prohibit, and the Corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification and expense advancement rights and procedures different from those set forth in this Article EIGHTH. In addition, the Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification and expense advancement rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article EIGHTH.

 

 

11.          Partial Indemnification. If an Indemnitee is entitled under any provision of this Article EIGHTH to indemnification by the Corporation for some or a portion of the expenses (including attorneys’ fees), liabilities, losses, judgments, fines (including excise taxes and penalties arising under the Employee Retirement Income Security Act of 1974) or amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with any action, suit, proceeding or investigation and any appeal therefrom but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the portion of such expenses (including attorneys’ fees), liabilities, losses, judgments, fines (including excise taxes and penalties arising under the Employee Retirement Income Security Act of 1974) or amounts paid in settlement to which Indemnitee is entitled.

 

12.          Insurance. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) against any expense, liability or loss incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware.

 

13.          Savings Clause. If this Article EIGHTH or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys’ fees), liabilities, losses, judgments, fines (including excise taxes and penalties arising under the Employee Retirement Income Security Act of 1974) and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article EIGHTH that shall not have been invalidated and to the fullest extent permitted by applicable law.

 

14.          Definitions. Terms used herein and defined in Section 145(h) and Section 145(i) of the General Corporation Law of the State of Delaware shall have the respective meanings assigned to such terms in such Section 145(h) and Section 145(i).

 

NINTH: This Article NINTH is inserted for the management of the business and for the conduct of the affairs of the Corporation.

 

1.            General Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

 

2.            Number of Directors; Election of Directors. Subject to the rights of holders of any series of Preferred Stock to elect directors, the number of directors of the Corporation shall be established from time to time by the Board of Directors. Election of directors need not be by written ballot, except as and to the extent provided in the Bylaws of the Corporation.

 

3.            Classes of Directors. Subject to the rights of holders of any series of Preferred Stock to elect directors, the Board of Directors shall be and is divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. The Board of Directors is authorized to assign members of the Board of Directors already in office to Class I, Class II or Class III at the time such classification becomes effective.

 

 

4.            Terms of Office. Subject to the rights of holders of any series of Preferred Stock to elect directors, each director shall serve for a term ending on the date of the third annual meeting of stockholders following the annual meeting of stockholders at which such director was elected; provided that each director initially assigned to Class I shall serve for a term expiring at the Corporation’s first annual meeting of stockholders held after the effectiveness of this Restated Certificate of Incorporation; each director initially assigned to Class II shall serve for a term expiring at the Corporation’s second annual meeting of stockholders held after the effectiveness of this Restated Certificate of Incorporation; and each director initially assigned to Class III shall serve for a term expiring at the Corporation’s third annual meeting of stockholders held after the effectiveness of this Restated Certificate of Incorporation; provided further, that the term of each director shall continue until the election and qualification of his or her successor and be subject to his or her earlier death, resignation or removal.

 

5.            Quorum. The greater of (a) a majority of the directors at any time in office and (b) one-third of the number of directors fixed pursuant to Section 2 of this Article NINTH shall constitute a quorum of the Board of Directors. If at any meeting of the Board of Directors there shall be less than such a quorum, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present.

 

6.            Action at Meeting. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors unless a greater number is required by law or by this Certificate of Incorporation.

 

7.            Removal. Subject to the rights of holders of any series of Preferred Stock, directors of the Corporation may be removed only for cause and only by the affirmative vote of the holders of at least seventy-five percent (75%) of the votes that all the stockholders would be entitled to cast in an election of directors or class of directors.

 

8.            Vacancies. Subject to the rights of holders of any series of Preferred Stock, any vacancies or newly-created directorships on the Board of Directors, however occurring, shall be filled only by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director and shall not be filled by the stockholders. A director elected to fill a vacancy or to fill a position resulting from a newly-created directorship shall hold office until the next election of the class for which such director shall have been chosen, subject to the election and qualification of a successor and to such director’s earlier death, resignation or removal.

 

9.            Stockholder Nominations and Introduction of Business, Etc. Advance notice of stockholder nominations for election of directors and other business to be brought by stockholders before a meeting of stockholders shall be given in the manner provided by the Bylaws of the Corporation.

 

 

10.          Amendments to Article. Notwithstanding any other provisions of law, this Certificate of Incorporation or the Bylaws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes that all the stockholders would be entitled to cast in an election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article NINTH.

 

TENTH: Stockholders of the Corporation may not take any action by written consent in lieu of a meeting. Notwithstanding any other provisions of law, this Certificate of Incorporation or the Bylaws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes that all the stockholders would be entitled to cast in an election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article TENTH.

 

ELEVENTH: Special meetings of stockholders for any purpose or purposes may be called at any time only by the Board of Directors, and may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. Notwithstanding any other provisions of law, this Certificate of Incorporation or the Bylaws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes that all the stockholders would be entitled to cast in an election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article ELEVENTH.

 

TWELFTH: (a) Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware does not have jurisdiction, the federal district court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, other employee or stockholder of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware or as to which the General Corporation Law of the State of Delaware confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim arising pursuant to any provision of this Certificate of Incorporation or the Bylaws of the Corporation (in each case, as they may be amended from time to time) or governed by the internal affairs doctrine. This paragraph (a) of Article TWELFTH does not apply to claims arising under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or any other claim for which the federal courts have exclusive jurisdiction.

 

(b)  Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any claims arising under the Securities Act of 1933, as amended.

 

 

(c)  Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of, and to have consented to, the provisions of this Article TWELFTH.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which restates, integrates and amends the certificate of incorporation of the Corporation, and which has been duly adopted in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware, has been executed by its duly authorized officer this [●] day of [●], 2021.

 

	XILIO THERAPEUTICS, INC.
	By:
		Name: René Russo
		Title: Chief Executive Officer

 

 

 

Exhibit 3.4

 

AMENDED AND RESTATED BYLAWS

 

OF

 

XILIO THERAPEUTICS, INC.

 

 

TABLE OF CONTENTS

 

			Page
ARTICLE I	STOCKHOLDERS		1
1.1		Place of Meetings	1
1.2		Annual Meeting	1
1.3		Special Meetings	1
1.4		Record Date for Stockholder Meetings	1
1.5		Notice of Meetings	2
1.6		Voting List	2
1.7		Quorum	2
1.8		Adjournments	3
1.9		Voting and Proxies	3
1.10		Action at Meeting	3
1.11		Nomination of Directors	4
1.12		Notice of Business at Annual Meetings	6
1.13		Conduct of Meetings	9
1.14		No Action by Consent in Lieu of a Meeting	10
ARTICLE II	DIRECTORS		10
2.1		General Powers	10
2.2		Number, Election and Qualification	10
2.3		Chairman of the Board; Vice Chairman of the Board	10
2.4		Terms of Office	10
2.5		Quorum	10
2.6		Action at Meeting	10
2.7		Removal	10
2.8		Vacancies	11
2.9		Resignation	11
2.10		Regular Meetings	11
2.11		Special Meetings	11
2.12		Notice of Special Meetings	11

 

 

2.13		Meetings by Conference Communications Equipment	11
2.14		Action by Consent	11
2.15		Committees	12
2.16		Compensation of Directors	12
2.17		Emergency Bylaws	12
ARTICLE III	OFFICERS		13
3.1		Titles	13
3.2		Election	13
3.3		Qualification	13
3.4		Tenure	13
3.5		Resignation and Removal	13
3.6		Vacancies	13
3.7		President; Chief Executive Officer	14
3.8		Vice Presidents	14
3.9		Secretary and Assistant Secretaries	14
3.10		Treasurer and Assistant Treasurers	14
3.11		Salaries	15
3.12		Delegation of Authority	15
ARTICLE IV	CAPITAL STOCK		15
4.1		Issuance of Stock	15
4.2		Stock Certificates; Uncertificated Shares	15
4.3		Transfers	16
4.4		Lost, Stolen or Destroyed Certificates	16
4.5		Regulations	16
ARTICLE V	GENERAL PROVISIONS		17
5.1		Fiscal Year	17
5.2		Corporate Seal	17
5.3		Record Date for Purposes Other Than Stockholder Meetings	17
5.4		Waiver of Notice	17
5.5		Voting of Securities	17

 

 

5.6		Evidence of Authority	17
5.7		Certificate of Incorporation	18
5.8		Severability	18
5.9		Pronouns	18
ARTICLE VI	AMENDMENTS		18

 

 

ARTICLE I

 

STOCKHOLDERS

 

1.1            Place of Meetings. All meetings of stockholders shall be held at such place, if any, as may be designated from time to time by the Board of Directors, the Chairman of the Board or the Chief Executive Officer or, if not so designated, at the principal executive office of the corporation. The Board of Directors may, in its sole discretion, determine that a meeting shall not be held at any place, but shall instead be held solely by means of remote communication in a manner consistent with the General Corporation Law of the State of Delaware.

 

1.2            Annual Meeting. The annual meeting of stockholders for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly be brought before the meeting shall be held on a date and at a time designated by the Board of Directors, the Chairman of the Board or the Chief Executive Officer. The Board of Directors may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders.

 

1.3            Special Meetings. Special meetings of stockholders for any purpose or purposes may be called at any time only by the Board of Directors, and may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. The Board of Directors may postpone, reschedule or cancel any previously scheduled special meeting of stockholders.

 

1.4            Record Date for Stockholder Meetings. In order that the corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.

 

 

1.5            Notice of Meetings. Except as otherwise provided by law, the Certificate of Incorporation or these bylaws, notice of each meeting of stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting. Without limiting the manner by which notice otherwise may be given to stockholders, any notice shall be effective if given in accordance with Section 232 of the General Corporation Law of the State of Delaware. The notices of all meetings shall state the place, if any, date and time of the meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called.

 

1.6            Voting List. The corporation shall prepare, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the corporation. If the meeting is to be held at a physical location (and not solely by means of remote communication), then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Except as otherwise provided by law, such list shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 1.6 or to vote in person or by proxy at any meeting of stockholders.

 

1.7            Quorum. Except as otherwise provided by law, the Certificate of Incorporation or these bylaws, the holders of a majority in voting power of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at the meeting, present in person, present by means of remote communication in a manner, if any, authorized by the Board of Directors in its sole discretion, or represented by proxy, shall constitute a quorum for the transaction of business; provided, however, that where a separate vote by a class or classes or series of capital stock is required by law or the Certificate of Incorporation, the holders of a majority in voting power of the shares of such class or classes or series of the capital stock of the corporation issued and outstanding and entitled to vote on such matter, present in person, present by means of remote communication in a manner, if any, authorized by the Board of Directors in its sole discretion, or represented by proxy, shall constitute a quorum entitled to take action with respect to the vote on such matter. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum.

 

 

1.8            Adjournments. Any meeting of stockholders may be adjourned from time to time to reconvene at any other time and to any other place at which a meeting of stockholders may be held under these bylaws by the chairman of the meeting. It shall not be necessary to notify any stockholder of any adjournment of less than 30 days if the time and place, if any, of the adjourned meeting, and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned meeting, the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record as of the record date so fixed for notice of such adjourned meeting.

 

1.9            Voting and Proxies. Each stockholder shall have one vote upon the matter in question for each share of stock entitled to vote held of record by such stockholder and a proportionate vote for each fractional share so held, unless otherwise provided by law or the Certificate of Incorporation. Each stockholder of record entitled to vote at a meeting of stockholders may vote in person (including by means of remote communications, if any, by which stockholders may be deemed to be present in person and vote at such meeting) or may authorize another person or persons to vote for such stockholder by a proxy executed or transmitted in a manner permitted by the General Corporation Law of the State of Delaware by the stockholder or such stockholder’s authorized officer, director, employee or agent and delivered (including by electronic transmission) to the Secretary of the corporation. No such proxy shall be voted upon after three years from the date of its execution, unless the proxy expressly provides for a longer period.

 

1.10          Action at Meeting. When a quorum is present at any meeting, any matter other than the election of directors to be voted upon by the stockholders at such meeting shall be decided by the vote of the holders of shares of stock having a majority in voting power of the votes cast by the holders of all of the shares of stock present or represented at the meeting and voting affirmatively or negatively on such matter (or if there are two or more classes or series of stock entitled to vote as separate classes, then in the case of each such class or series, the holders of a majority in voting power of the shares of stock of that class or series present or represented at the meeting and voting affirmatively or negatively on such matter), except when a different vote is required by law, the Certificate of Incorporation or these bylaws. When a quorum is present at any meeting, any election by stockholders of directors shall be determined by a plurality of the votes cast by the stockholders entitled to vote on the election.

 

 

1.11          Nomination of Directors.

 

(a)            Except for (1) any directors entitled to be elected by the holders of preferred stock, (2) any directors elected in accordance with Section 2.8 hereof by the Board of Directors to fill vacancies or newly-created directorships or (3) as otherwise required by applicable law or stock exchange regulation, at any meeting of stockholders, only persons who are nominated in accordance with the procedures in this Section 1.11 shall be eligible for election as directors. Nomination for election to the Board of Directors at a meeting of stockholders may be made (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the corporation who (x) timely complies with the notice procedures in Section 1.11(b), (y) is a stockholder of record who is entitled to vote for the election of such nominee on the date of the giving of such notice and on the record date for the determination of stockholders entitled to vote at such meeting and (z) is entitled to vote at such meeting. The number of nominees a stockholder may nominate for election at a meeting (or in the case of a stockholder giving the notice on behalf of a beneficial owner, the number of nominees a stockholder may nominate for election at the annual meeting on behalf of such beneficial owner) shall not exceed the number of directors to be elected at such meeting.

 

(b)            To be timely, a stockholder’s notice must be received in writing by the Secretary at the principal executive office of the corporation as follows: (1) in the case of an election of directors at an annual meeting of stockholders, not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days, or delayed by more than 60 days, from the first anniversary of the preceding year’s annual meeting, or if no annual meeting was held in the preceding year, a stockholder’s notice must be so received not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of (A) the 90th day prior to such annual meeting and (B) the tenth day following the day on which notice of the date of such annual meeting was mailed or public disclosure of the date of such annual meeting was made, whichever first occurs; or (2) in the case of an election of directors at a special meeting of stockholders, provided that the Board of Directors has determined, in accordance with Section 1.3, that directors shall be elected at such special meeting and provided further that the nomination made by the stockholder is for one of the director positions that the Board of Directors has determined will be filled at such special meeting, not earlier than the 120th day prior to such special meeting and not later than the close of business on the later of (x) the 90th day prior to such special meeting and (y) the tenth day following the day on which notice of the date of such special meeting was mailed or public disclosure of the date of such special meeting was made, whichever first occurs. In no event shall the adjournment or postponement of a meeting (or the public disclosure thereof) commence a new time period (or extend any time period) for the giving of a stockholder’s notice.

 

 

The stockholder’s notice to the Secretary shall set forth: (A) as to each proposed nominee (1) such person’s name, age, business address and, if known, residence address, (2) such person’s principal occupation or employment, (3) the class and series and number of shares of stock of the corporation that are, directly or indirectly, owned, beneficially or of record, by such person, (4) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among (x) the stockholder, the beneficial owner, if any, on whose behalf the nomination is being made and the respective affiliates and associates of, or others acting in concert with, such stockholder and such beneficial owner, on the one hand, and (y) each proposed nominee, and his or her respective affiliates and associates, or others acting in concert with such nominee(s), on the other hand, including all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made or any affiliate or associate thereof or person acting in concert therewith were the “registrant” for purposes of such Item and the proposed nominee were a director or executive officer of such registrant, and (5) any other information concerning such person that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and (B) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is being made (1) the name and address of such stockholder, as they appear on the corporation’s books, and of such beneficial owner, (2) the class and series and number of shares of stock of the corporation that are, directly or indirectly, owned, beneficially or of record, by such stockholder and such beneficial owner, (3) a description of any agreement, arrangement or understanding between or among such stockholder and/or such beneficial owner and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are being made or who may participate in the solicitation of proxies or votes in favor of electing such nominee(s), (4) a description of any agreement, arrangement or understanding (including any derivative or short positions, swaps, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into by, or on behalf of, such stockholder or such beneficial owner, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner with respect to shares of stock of the corporation, (5) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, (6) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the person(s) named in its notice and (7) a representation whether such stockholder and/or such beneficial owner intends or is part of a group that intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation’s outstanding capital stock reasonably believed by such stockholder or such beneficial owner to be sufficient to elect the nominee (and such representation shall be included in any such proxy statement and form of proxy) and/or (y) otherwise to solicit proxies or votes from stockholders in support of such nomination (and such representation shall be included in any such solicitation materials). Not later than 10 days after the record date for the meeting, the information required by Items (A)(1)-(5) and (B)(1)-(5) of the prior sentence shall be supplemented by the stockholder giving the notice to provide updated information as of the record date. In addition, to be effective, the stockholder’s notice must be accompanied by the written consent of the proposed nominee to serve as a director if elected. The corporation may require any proposed nominee to furnish such other information as the corporation may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the corporation or whether such nominee would be independent under applicable Securities and Exchange Commission and stock exchange rules and the corporation’s publicly disclosed corporate governance guidelines. A stockholder shall not have complied with this Section 1.11(b) if the stockholder (or beneficial owner, if any, on whose behalf the nomination is made) solicits or does not solicit, as the case may be, proxies or votes in support of such stockholder’s nominee in contravention of the representations with respect thereto required by this Section 1.11.

 

 

(c)            The chairman of any meeting shall have the power and duty to determine whether a nomination was made in accordance with the provisions of this Section 1.11 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination is made solicited (or is part of a group that solicited) or did not so solicit, as the case may be, proxies or votes in support of such stockholder’s nominee in compliance with the representations with respect thereto required by this Section 1.11), and if the chairman should determine that a nomination was not made in accordance with the provisions of this Section 1.11, the chairman shall so declare to the meeting and such nomination shall not be brought before the meeting.

 

(d)            Except as otherwise required by law, nothing in this Section 1.11 shall obligate the corporation or the Board of Directors to include in any proxy statement or other stockholder communication distributed on behalf of the corporation or the Board of Directors information with respect to any nominee for director submitted by a stockholder.

 

(e)            Notwithstanding the foregoing provisions of this Section 1.11, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the meeting to present a nomination, such nomination shall not be brought before the meeting, notwithstanding that proxies in respect of such nominee may have been received by the corporation. For purposes of this Section 1.11, to be considered a “qualified representative of the stockholder”, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a written instrument executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such written instrument or electronic transmission, or a reliable reproduction of the written instrument or electronic transmission, at the meeting of stockholders.

 

(f)            For purposes of this Section 1.11, “public disclosure” shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

 

1.12          Notice of Business at Annual Meetings.

 

(a)            At any annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (1) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (2) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (3) properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, (i) if such business relates to the nomination of a person for election as a director of the corporation, the procedures in Section 1.11 must be complied with and (ii) if such business relates to any other matter, the business must constitute a proper matter under Delaware law for stockholder action and the stockholder must (x) have given timely notice thereof in writing to the Secretary in accordance with the procedures in Section 1.12(b), (y) be a stockholder of record who is entitled to vote on such business on the date of the giving of such notice and on the record date for the determination of stockholders entitled to vote at such annual meeting and (z) be entitled to vote at such annual meeting.

 

 

(b)            To be timely, a stockholder’s notice must be received in writing by the Secretary at the principal executive office of the corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days, or delayed by more than 60 days, from the first anniversary of the preceding year’s annual meeting, or if no annual meeting was held in the preceding year, a stockholder’s notice must be so received not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of (x) the 90th day prior to such annual meeting and (y) the tenth day following the day on which notice of the date of such annual meeting was mailed or public disclosure of the date of such annual meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an annual meeting (or the public disclosure thereof) commence a new time period (or extend any time period) for the giving of a stockholder’s notice.

 

The stockholder’s notice to the Secretary shall set forth: (A) as to each matter the stockholder proposes to bring before the annual meeting (1) a brief description of the business desired to be brought before the annual meeting, (2) the text of the proposal (including the exact text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend the bylaws, the exact text of the proposed amendment), and (3) the reasons for conducting such business at the annual meeting, and (B) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is being made (1) the name and address of such stockholder, as they appear on the corporation’s books, and of such beneficial owner, (2) the class and series and number of shares of stock of the corporation that are, directly or indirectly, owned, beneficially or of record, by such stockholder and such beneficial owner, (3) a description of any material interest of such stockholder or such beneficial owner and the respective affiliates and associates of, or others acting in concert with, such stockholder or such beneficial owner in such business, (4) a description of any agreement, arrangement or understanding between or among such stockholder and/or such beneficial owner and any other person or persons (including their names) in connection with the proposal of such business or who may participate in the solicitation of proxies in favor of such proposal, (5) a description of any agreement, arrangement or understanding (including any derivative or short positions, swaps, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into by, or on behalf of, such stockholder or such beneficial owner, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner with respect to shares of stock of the corporation, (6) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the business proposed pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, (7) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting and (8) a representation whether such stockholder and/or such beneficial owner intends or is part of a group that intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation’s outstanding capital stock required to approve or adopt the proposal (and such representation shall be included in any such proxy statement and form of proxy) and/or (y) otherwise to solicit proxies or votes from stockholders in support of such proposal (and such representation shall be included in any such solicitation materials). Not later than 10 days after the record date for the meeting, the information required by Items (A)(3) and (B)(1)-(6) of the prior sentence shall be supplemented by the stockholder giving the notice to provide updated information as of the record date. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at any annual meeting of stockholders except in accordance with the procedures in this Section 1.12; provided that any stockholder proposal that complies with Rule 14a-8 of the proxy rules (or any successor provision) promulgated under the Exchange Act and is to be included in the corporation’s proxy statement for an annual meeting of stockholders shall be deemed to comply with the notice requirements of this Section 1.12. A stockholder shall not have complied with this Section 1.12(b) if the stockholder (or beneficial owner, if any, on whose behalf the proposal is made) solicits or does not solicit, as the case may be, proxies or votes in support of such stockholder’s proposal in contravention of the representations with respect thereto required by this Section 1.12.

 

 

 

(c)           The chairman of any annual meeting shall have the power and duty to determine whether business was properly brought before the annual meeting in accordance with the provisions of this Section 1.12 (including whether the stockholder or beneficial owner, if any, on whose behalf the proposal is made solicited (or is part of a group that solicited) or did not so solicit, as the case may be, proxies or votes in support of such stockholder’s proposal in compliance with the representation with respect thereto required by this Section 1.12), and if the chairman should determine that business was not properly brought before the annual meeting in accordance with the provisions of this Section 1.12, the chairman shall so declare to the meeting and such business shall not be brought before the annual meeting.

 

(d)           Except as otherwise required by law, nothing in this Section 1.12 shall obligate the corporation or the Board of Directors to include in any proxy statement or other stockholder communication distributed on behalf of the corporation or the Board of Directors information with respect to any proposal submitted by a stockholder.

 

(e)           Notwithstanding the foregoing provisions of this Section 1.12, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting to present business, such business shall not be considered, notwithstanding that proxies in respect of such business may have been received by the corporation.

 

(f)            For purposes of this Section 1.12, the terms “qualified representative of the stockholder” and “public disclosure” shall have the same meaning as in Section 1.11.

 

 

1.13          Conduct of Meetings.

 

(a)            Unless otherwise provided by the Board of Directors, meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in the Chairman’s absence by the Vice Chairman of the Board, if any, or in the Vice Chairman’s absence by the Chief Executive Officer, or in the Chief Executive Officer’s absence by the President, or in the President’s absence by a Vice President, or in the absence of all of the foregoing persons by a chairman designated by the Board of Directors. The Secretary shall act as secretary of the meeting, but in the Secretary’s absence the chairman of the meeting may appoint any person to act as secretary of the meeting.

 

(b)            The Board of Directors may adopt by resolution such rules, regulations and procedures for the conduct of any meeting of stockholders of the corporation as it shall deem appropriate including, without limitation, such guidelines and procedures as it may deem appropriate regarding the participation by means of remote communication of stockholders and proxyholders not physically present at a meeting. Except to the extent inconsistent with such rules, regulations and procedures as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting and prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as shall be determined; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

(c)            The chairman of the meeting shall announce at the meeting when the polls for each matter to be voted upon at the meeting will be opened and closed. After the polls close, no ballots, proxies or votes or any revocations or changes thereto may be accepted.

 

(d)            In advance of any meeting of stockholders, the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President shall appoint one or more inspectors of election to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is present, ready and willing to act at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by law, inspectors may be officers, employees or agents of the corporation. Each inspector, before entering upon the discharge of such inspector’s duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability. The inspector shall have the duties prescribed by law and shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by law. Every vote taken by ballots shall be counted by a duly appointed inspector or duly appointed inspectors.

 

 

1.14          No Action by Consent in Lieu of a Meeting. Stockholders of the corporation may not take any action by written consent in lieu of a meeting.

 

ARTICLE II

 

DIRECTORS

 

2.1            General Powers. The business and affairs of the corporation shall be managed by or under the direction of a Board of Directors, who may exercise all of the powers of the corporation except as otherwise provided by law or the Certificate of Incorporation.

 

2.2            Number, Election and Qualification. The number of directors of the corporation shall be the number fixed by, or determined in the manner provided in, the Certificate of Incorporation. Election of directors need not be by written ballot. Directors need not be stockholders of the corporation.

 

2.3            Chairman of the Board; Vice Chairman of the Board. The Board of Directors may appoint from its members a Chairman of the Board and a Vice Chairman of the Board, neither of whom need be an employee or officer of the corporation. If the Board of Directors appoints a Chairman of the Board, such Chairman shall perform such duties and possess such powers as are assigned by the Board of Directors and, if the Chairman of the Board is also designated as the corporation’s Chief Executive Officer, shall have the powers and duties of the Chief Executive Officer prescribed in Section 3.7 of these bylaws. If the Board of Directors appoints a Vice Chairman of the Board, such Vice Chairman shall perform such duties and possess such powers as are assigned by the Board of Directors or the Chairman of the Board. Unless otherwise provided by the Board of Directors, the Chairman of the Board or, in the Chairman’s absence, the Vice Chairman of the Board, if any, shall preside at all meetings of the Board of Directors.

 

2.4            Terms of Office. Directors shall be elected for such terms and in the manner provided by the Certificate of Incorporation and applicable law. The term of each director shall continue until the election and qualification of his or her successor and be subject to his or her earlier death, resignation or removal.

 

2.5            Quorum. The greater of (a) a majority of the directors at any time in office and (b) one-third of the number of directors established by the Board of Directors pursuant to the Certificate of Incorporation shall constitute a quorum of the Board of Directors. If at any meeting of the Board of Directors there shall be less than such a quorum, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present.

 

2.6            Action at Meeting. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater number is required by law or by the Certificate of Incorporation.

 

2.7            Removal. Directors of the corporation may be removed in the manner specified by the Certificate of Incorporation and applicable law.

 

 

2.8            Vacancies. Any vacancy or newly-created directorship on the Board of Directors, however occurring, shall be filled in the manner specified by the Certificate of Incorporation and applicable law.

 

2.9            Resignation. Any director may resign by delivering a resignation in writing or by electronic transmission to the corporation at its principal executive office or to the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some later time or upon the happening of some later event.

 

2.10          Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place as shall be determined from time to time by the Board of Directors; provided that any director who is absent when such a determination is made shall be given notice of the determination. A regular meeting of the Board of Directors may be held without notice immediately after and at the same place as the annual meeting of stockholders.

 

2.11          Special Meetings. Special meetings of the Board of Directors may be held at any time and place designated in a call by the Chairman of the Board, the Chief Executive Officer, the President, two or more directors, or by one director in the event that there is only a single director in office.

 

2.12          Notice of Special Meetings. Notice of the date, place and time of any special meeting of directors shall be given to each director by the Secretary or by the officer or one of the directors calling the meeting. Notice shall be duly given to each director (a) in person, by telephone or by electronic transmission at least 24 hours in advance of the meeting, (b) by delivering written notice by hand, to such director’s last known business or home address at least 48 hours in advance of the meeting, or (c) by sending written notice by first-class mail to such director’s last known business or home address at least 72 hours in advance of the meeting. A notice or waiver of notice of a meeting of the Board of Directors need not specify the purposes of the meeting.

 

2.13          Meetings by Conference Communications Equipment. Directors may participate in meetings of the Board of Directors or any committee thereof by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting.

 

2.14          Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent to the action in writing or by electronic transmission. After an action is taken, the consent or consents relating thereto shall be filed with the minutes of proceedings of the Board of Directors or committee in the same paper or electronic form as the minutes are maintained.

 

 

2.15          Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation with such lawfully delegable powers and duties as the Board of Directors thereby confers, to serve at the pleasure of the Board of Directors. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members of the committee present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors and subject to the provisions of law, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers that may require it. Each such committee shall keep minutes and make such reports as the Board of Directors may from time to time request. Except as the Board of Directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these bylaws for the Board of Directors. Except as otherwise provided in the Certificate of Incorporation, these bylaws, or the resolution of the Board of Directors designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.

 

2.16          Compensation of Directors. Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any director from serving the corporation or any of its parent or subsidiary entities in any other capacity and receiving compensation for such service.

 

2.17          Emergency Bylaws. In the event of any emergency, disaster, catastrophe or other similar emergency condition of a type described in Section 110(a) of the General Corporation Law of the State of Delaware (an “Emergency”), notwithstanding any different or conflicting provisions in the Certificate of Incorporation or these bylaws, during such Emergency:

 

(a)          Notice. A meeting of the Board of Directors or a committee thereof may be called by any director, the Chairman of the Board, the Chief Executive Officer, the President or the Secretary by such means as, in the judgment of the person calling the meeting, may be feasible at the time, and notice of any such meeting of the Board of Directors or any committee may be given, in the judgment of the person calling the meeting, only to such directors as it may be feasible to reach at the time and by such means as may be feasible at the time. Such notice shall be given at such time in advance of the meeting as, in the judgment of the person calling the meeting, circumstances permit.

 

(b)          Quorum. The director or directors in attendance at a meeting called in accordance with Section 2.17(a) shall constitute a quorum.

 

(c)          Liability. No officer, director or employee acting in accordance with this Section 2.17 shall be liable except for willful misconduct. No amendment, repeal or change to this Section 2.17 shall modify the prior sentence with regard to actions taken prior to the time of such amendment, repeal or change.

 

 

ARTICLE III

 

OFFICERS

 

3.1            Titles. The officers of the corporation shall consist of a Chief Executive Officer, a President, a Secretary, a Treasurer and such other officers with such other titles as the Board of Directors shall determine, including one or more Vice Presidents, Assistant Treasurers and Assistant Secretaries. The Board of Directors may appoint such other officers as it may deem appropriate.

 

3.2            Election. The Chief Executive Officer, President, Treasurer and Secretary shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders. Other officers may be appointed by the Board of Directors at such meeting or at any other meeting.

 

3.3            Qualification. No officer need be a stockholder. Any two or more offices may be held by the same person.

 

3.4            Tenure. Except as otherwise provided by law, by the Certificate of Incorporation or by these bylaws, each officer shall hold office until such officer’s successor is elected and qualified, unless a different term is specified in the resolution electing or appointing such officer, or until such officer’s earlier death, resignation or removal.

 

3.5            Resignation and Removal. Any officer may resign by delivering a resignation in writing or by electronic transmission to the corporation at its principal executive office or to the Chief Executive Officer, the President or the Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some later time or upon the happening of some later event. Any officer may be removed at any time, with or without cause, by vote of a majority of the directors then in office. Except as the Board of Directors may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following such officer’s resignation or removal, or any right to damages on account of such removal, whether such officer’s compensation be by the month or by the year or otherwise, unless such compensation is expressly provided for in a duly authorized written agreement with the corporation.

 

3.6            Vacancies. The Board of Directors may fill any vacancy occurring in any office for any reason and may, in its discretion, leave unfilled for such period as it may determine any offices. Each such successor shall hold office for the unexpired term of such officer’s predecessor and until a successor is elected and qualified, or until such officer’s earlier death, resignation or removal.

 

 

3.7            President; Chief Executive Officer. Unless the Board of Directors has designated another person as the corporation’s Chief Executive Officer, the President shall be the Chief Executive Officer of the corporation. The Chief Executive Officer shall have general charge and supervision of the business of the corporation subject to the direction of the Board of Directors, and shall perform all duties and have all powers that are commonly incident to the office of the chief executive or that are delegated to such officer by the Board of Directors. The President shall perform such other duties and shall have such other powers as the Board of Directors or the Chief Executive Officer (if the President is not the Chief Executive Officer) may from time to time prescribe. In the event of the absence, inability or refusal to act of the Chief Executive Officer or the President (if the President is not the Chief Executive Officer), the Vice President (or if there shall be more than one, the Vice Presidents in the order determined by the Board of Directors) shall perform the duties of the Chief Executive Officer and when so performing such duties shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer.

 

3.8            Vice Presidents. Each Vice President shall perform such duties and possess such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. The Board of Directors may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title selected by the Board of Directors.

 

3.9            Secretary and Assistant Secretaries. The Secretary shall perform such duties and shall have such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of the secretary, including without limitation the duty and power to give notices of all meetings of stockholders and special meetings of the Board of Directors, to attend all meetings of stockholders and the Board of Directors and keep a record of the proceedings, to maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents.

 

Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Secretary.

 

In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the chairman of the meeting shall designate a temporary secretary to keep a record of the meeting.

 

3.10          Treasurer and Assistant Treasurers. The Treasurer shall perform such duties and shall have such powers as may from time to time be assigned by the Board of Directors or the Chief Executive Officer. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the corporation, to deposit funds of the corporation in depositories selected in accordance with these bylaws, to disburse such funds as ordered by the Board of Directors, to make proper accounts of such funds, and to render as required by the Board of Directors statements of all such transactions and of the financial condition of the corporation.

 

The Assistant Treasurers shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Treasurer.

 

 

3.11          Salaries. Officers of the corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors.

 

3.12          Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.

 

ARTICLE IV

 

CAPITAL STOCK

 

4.1            Issuance of Stock. Subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the corporation or the whole or any part of any shares of the authorized capital stock of the corporation held in the corporation’s treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board of Directors in such manner, for such lawful consideration and on such terms as the Board of Directors may determine.

 

4.2            Stock Certificates; Uncertificated Shares. The shares of the corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the corporation’s stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock of the corporation represented by certificates shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board of Directors, representing the number of shares held by such holder registered in certificate form. Each such certificate shall be signed in a manner that complies with Section 158 of the General Corporation Law of the State of Delaware.

 

Each certificate for shares of stock that are subject to any restriction on transfer pursuant to the Certificate of Incorporation, these bylaws, applicable securities laws or any agreement among any number of stockholders or among such holders and the corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction.

 

If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of each certificate representing shares of such class or series of stock, provided that in lieu of the foregoing requirements there may be set forth on the face or back of each certificate representing shares of such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests a copy of the full text of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

 

 

Within a reasonable time after the issuance or transfer of uncertificated shares, the registered owner thereof shall be given a notice, in writing or by electronic transmission, containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General Corporation Law of the State of Delaware or, with respect to Section 151 of the General Corporation Law of the State of Delaware, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

 

4.3            Transfers. Shares of stock of the corporation shall be transferable in the manner prescribed by law and in these bylaws. Transfers of shares of stock of the corporation shall be made only on the books of the corporation or by transfer agents designated to transfer shares of stock of the corporation. Subject to applicable law, shares of stock represented by certificates shall be transferred only on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the corporation or its transfer agent may reasonably require. Uncertificated shares may be transferred by delivery of a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Certificate of Incorporation or by these bylaws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock until the shares have been transferred on the books of the corporation in accordance with the requirements of these bylaws.

 

4.4            Lost, Stolen or Destroyed Certificates. The corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen or destroyed, upon such terms and conditions as the corporation may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity and posting of such bond as the corporation may require for the protection of the corporation or any transfer agent or registrar.

 

4.5            Regulations. The issue, transfer, conversion and registration of shares of stock of the corporation shall be governed by such other regulations as the Board of Directors may establish.

 

 

ARTICLE V

 

GENERAL PROVISIONS

 

5.1            Fiscal Year. Except as from time to time otherwise designated by the Board of Directors, the fiscal year of the corporation shall begin on the first day of January of each year and end on the last day of December in each year.

 

5.2            Corporate Seal. The corporate seal shall be in such form as shall be approved by the Board of Directors.

 

5.3            Record Date for Purposes Other Than Stockholder Meetings. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action (other than with respect to determining stockholders entitled to notice of or to vote at a meeting of stockholders, which is addressed in Section 1.4 of these bylaws), the Board of Directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall not be more than 60 days prior to such action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

 

5.4            Waiver of Notice. Whenever notice is required to be given by law, by the Certificate of Incorporation or by these bylaws, a written waiver signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether provided before, at or after the time of the event for which notice is to be given, shall be deemed equivalent to notice required to be given to such person. Neither the business nor the purpose of any meeting need be specified in any such waiver. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

 

5.5            Voting of Securities. Except as the Board of Directors may otherwise designate, the Chief Executive Officer, the President or the Treasurer may waive notice of, vote, or appoint any person or persons to vote, on behalf of the corporation at, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for this corporation (with or without power of substitution) at, any meeting of stockholders or securityholders of any other entity, the securities of which may be held by this corporation, or with respect to the execution of any written or electronic consent in the name of the corporation as a holder of such securities.

 

5.6            Evidence of Authority. A certificate by the Secretary, or an Assistant Secretary, or a temporary Secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action.

 

 

5.7            Certificate of Incorporation. All references in these bylaws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the corporation, as amended and/or restated and in effect from time to time.

 

5.8            Severability. Any determination that any provision of these bylaws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provision of these bylaws.

 

5.9            Pronouns. All pronouns used in these bylaws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require.

 

ARTICLE VI

 

AMENDMENTS

 

These bylaws may be altered, amended or repealed, in whole or in part, or new bylaws may be adopted by the Board of Directors or by the stockholders as provided in the Certificate of Incorporation.

 

Adopted:

[●], 2021

Effective:

[●], 2021

 

 

 

Exhibit 4.1

 

 

ZQ|CERT#|COY|CLS|RGSTRY|ACCT#|TRANSTYPE|RUN#|TRANS# COMMON STOCK PAR VALUE $0.0001 COMMON STOCK SEE REVERSE FOR CERTAIN DEFINITIONS Certificate Number Shares . XILIO THERAPEUTICS, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE ZQ00000000 INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE FACSIMILE SIGNATURE TO COME FACSIMILE SIGNATURE TO COME President Secretary By AUTHORIZED SIGNATURE 6/18/2020 DEL AWAR E CO R PO RATE XILIO THERAPEUTIC S, INC. Xilio Therapeutics, Inc. (hereinafter called the “Company”), transferable on the books of the Company in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby, are issued and shall be held subject to all of the provisions of the Certificate of Incorporation, as amended, and the By-Laws, as amended, of the Company (copies of which are on file with the Company and with the Transfer Agent), to all of which each holder, by acceptance hereof, assents. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar. Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers.ZQ|CERT#|COY|CLS|RGSTRY|ACCT#|TRANSTYPE|RUN#|TRANS# 98422T 10 0 DD-MMM-YYYY * * 000000* * * * * * * * * * * * * * * * * * * * * 000000* * * * * * * * * * * * * * * * * * * * * 000000* * * * * * * * * * * * * * * * * * * * * 000000* * * * * * * * * * * * * * * * * * * * * 000000* * * * * * * * * * * * * * ** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Sample **** Mr. Sample **000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares*** *000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares**** 000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****0 00000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****00 0000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000 000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****0000 00**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****00000 0**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000 **Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000* *Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000** Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**S ***ZERO HUNDRED THOUSAND ZERO HUNDRED AND ZERO*** MR. SAMPLE & MRS. SAMPLE & MR. SAMPLE & MRS. SAMPLE ZQ00000000 Certificate Numbers 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 Total Transaction Num/No. 123456 Denom. 123456 Total 1234567 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 PO BOX 505006, Louisville, KY 40233-5006 CUSIP/IDENTIFIER XXXXXX XX X Holder ID XXXXXXXXXX Insurance Value 1,000,000.00 Number of Shares 123456 DTC 12345678 123456789012345 THIS CERTIFICATE IS TRANSFERABLE IN CITIES DESIGNATED BY THE TRANSFER AGENT, AVAILABLE ONLINE AT www.computershare.com

 

 

 

XILIO THERAPEUTICS, INC. THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS, A SUMMARY OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THE COMPANY AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND RIGHTS, AND THE VARIATIONS IN RIGHTS, PREFERENCES AND LIMITATIONS DETERMINED FOR EACH SERIES, WHICH ARE FIXED BY THE CERTIFICATE OF INCORPORATION OF THE COMPANY, AS AMENDED, AND THE RESOLUTIONS OF THE BOARD OF DIRECTORS OF THE COMPANY, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO DETERMINE VARIATIONS FOR FUTURE SERIES. SUCH REQUEST MAY BE MADE TO THE OFFICE OF THE SECRETARY OF THE COMPANY OR TO THE TRANSFER AGENT. THE BOARD OF DIRECTORS MAY REQUIRE THE OWNER OF A LOST OR DESTROYED STOCK CERTIFICATE, OR HIS LEGAL REPRESENTATIVES, TO GIVE THE COMPANY A BOND TO INDEMNIFY IT AND ITS TRANSFER AGENTS AND REGISTRARS AGAINST ANY CLAIM THAT MAY BE MADE AGAINST THEM ON ACCOUNT OF THE ALLEGED LOSS OR DESTRUCTION OF ANY SUCH CERTIFICATE.

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -as tenants in common UNIF GIFT MIN ACT -............................................ Custodian................................................ (Cust) (Minor) TEN ENT -as tenants by the entireties under Uniform Gifts to Minors Act........................................................ (State) JT TEN -as joint tenants with right of survivorship UNIF TRF MIN ACT -............................................ Custodian (until age................................) and not as tenants in common (Cust) .............................under Uniform Transfers to Minors Act................... (Minor) (State) Additional abbreviations may also be used though not in the above list.

The IRS requires that the named transfer agent (“we”) report the cost basis of certain shares or units acquired after January 1, 2011. If your shares or units are covered by the legislation, and you requested to sell or transfer the shares or units using a specific cost basis calculation method, then we have processed as you requested. If you did not specify a cost basis calculation method, then we have defaulted to the first in, first out (FIFO) method. Please consult your tax advisor if you need additional information about cost basis. If you do not keep in contact with the issuer or do not have any activity in your account for the time period specified by state law, your property may become subject to state unclaimed property laws and transferred to the appropriate state. For value received,____________________________ hereby sell, assign and transfer unto ________________________________________________________________________________________________________________________________ ________________________________________________________________________________________________________________________________ ________________________________________________________________________________________________________________________________ _______________________________________________________________________________________________________________________ Shares _______________________________________________________________________________________________________________________ Attorney Dated: __________________________________________ 20__________________ Signature:____________________________________________________________ Signature:____________________________________________________________ Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE) of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint to transfer the said stock on the books of the within-named Company with full power of substitution in the premises. .

 

 

 

Exhibit 10.1

 

EXECUTION VERSION

 

XILIO THERAPEUTICS, INC.

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

FEBRUARY 23, 2021

 

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of the 23rd day of February, 2021, by and among Xilio Therapeutics, Inc., a Delaware corporation (the “Company”), each of the investors listed on Schedule A hereto, each of which is referred to in this Agreement as an “Investor,” and any person that becomes a party to this Agreement in accordance with Section 3.9 hereof.

 

RECITALS

 

WHEREAS, certain of the Investors (the “Existing Investors”) hold shares of the Company’s Preferred Stock (as defined below), and possess registration rights and other rights with respect to the Common Stock issued or issuable to the Existing Investors pursuant to a Registration Rights Agreement dated as of June 30, 2020 between the Company and such Investors (the “Prior Agreement”);

 

WHEREAS, the Existing Investors are holders of a majority of the Registrable Securities of the Company (as defined in the Prior Agreement), and desire to amend and restate the Prior Agreement in its entirety and to accept the rights created pursuant to this Agreement in lieu of the rights granted to them under the Prior Agreement;

 

WHEREAS, certain of the Investors are party to that certain Series C Preferred Stock Purchase Agreement of even date herewith between the Company and such Investors (the “Purchase Agreement”), under which the Company’s and such Investors’ obligations are conditioned upon the execution and delivery of this Agreement by the Investors party to the Purchase Agreement, Existing Investors holding a majority of the Registrable Securities, and the Company; and

 

WHEREAS, the Existing Investors hereby agree that the Prior Agreement shall be amended and restated in its entirety by this Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.            Definitions. For purposes of this Agreement:

 

1.1            “Affiliate” means a Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with the Person specified, including without limitation any general partner, limited partner, member, managing member, manager, employee, officer or director of such Person or any trust for the benefit of any of the foregoing or any Affiliate of the foregoing, and any venture capital or other investment fund now or hereafter existing that is controlled by or under common control with one or more general partners or managing members of, or shares the same management company or investment advisor with, such Person.

 

1.2            “Board of Directors” means the Board of Directors of the Company.

 

 

1.3            “Certificate of Incorporation” means the Company’s certificate of incorporation (as amended and in effect).

 

1.4            “Common Stock” means shares of the Company’s common stock, par value $0.0001 per share.

 

1.5            “Control” of a Person means the possession, direct or indirect, of the power to vote in excess of 50% of the voting power of such Person, to appoint the majority of the managers, general partners or the equivalent of such Person, or to direct or cause the direction of the management and policies of such Person (e.g., as managing member or in a similar capacity but not including an advisory or management agreement (in the case of a managed account)).

 

1.6            “Damages” means any loss, damage, claim, or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, claim, or liability (or any action in respect thereof) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.

 

1.7            “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

1.8            “Excluded Registration” means: (i) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.

 

1.9            “Form S-1” means such registration form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

 

1.10            “Form S-3” means such registration form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

 

1.11            “Holder” means any holder of Registrable Securities who is a party to this Agreement.

 

 

1.12            “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, life partner or similar statutorily recognized domestic partner, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships of a natural person referred to herein.

 

1.13            “Initiating Holders” means, collectively, Holders who properly initiate a registration request under this Agreement.

 

1.14            “IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act.

 

1.15            “Person” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, estate, unincorporated organization, governmental or regulatory body or other entity.

 

1.16            “Preferred Stock” means, collectively, shares of the Company’s Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock.

 

1.17            “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Preferred Stock; (ii) any Common Stock, or any Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the Company held by the Investors; and (iii) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clauses (i) and (ii) above; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Section 3.1, and excluding for purposes of Section 2 any securities for which registration rights have terminated pursuant to Section 2.13 of this Agreement.

 

1.18            “Registrable Securities then outstanding” means the number of shares determined by adding the number of shares of outstanding Common Stock that are Registrable Securities and the number of shares of Common Stock issuable (directly or indirectly) pursuant to then exercisable and/or convertible securities that are Registrable Securities.

 

1.19            “Restricted Securities” means the securities of the Company required to bear the legends set forth in Section 2.12(b) hereof.

 

1.20            “Sale Event” means:

 

(a)            a merger or consolidation in which

 

(i)

the Company is a constituent party; or

 

(ii)

a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger or consolidation,

 

 

except any such merger or consolidation involving the Company or a subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation (provided that, all shares of Common Stock issuable upon exercise of options outstanding immediately prior to such merger or consolidation or upon conversion of convertible securities outstanding immediately prior to such merger or consolidation shall be deemed to be outstanding immediately prior to such merger or consolidation and, if applicable, converted or exchanged in such merger or consolidation on the same terms as the actual outstanding shares of Common Stock are converted or exchanged); or

 

(b)            the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company.

 

1.21            “SEC” means the Securities and Exchange Commission.

 

1.22            “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

 

1.23            “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.

 

1.24            “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

1.25            “Selling Expenses” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel (as defined herein) borne and paid by the Company as provided in Section 2.6.

 

1.26            “Series A Preferred Stock” means the Series A Preferred Stock of the Company, par value $0.0001 per share.

 

1.27            “Series A-1 Preferred Stock” means the Series A-1 Preferred Stock of the Company, par value $0.0001 per share.

 

1.28            “Series B Preferred Stock” means the Series B Preferred Stock of the Company, par value $0.0001 per share.

 

 

1.29            “Series C Preferred Stock” means the Series C Preferred Stock of the Company, par value $0.0001 per share.

 

2.            Registration Rights. The Company covenants and agrees as follows:

 

2.1            Demand Registration.

 

(a)            Form S-1 Demand. If at any time after one hundred eighty (180) days after the effective date of the registration statement for the IPO, the Company receives a request from Holders of a majority of the Registrable Securities then outstanding that the Company file a Form S-1 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price of at least $10.0 million (prior to deduction of Selling Expenses), then the Company shall: (i) within ten (10) days after the date such request is given, give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within sixty (60) days after the date such request is given by the Initiating Holders, file a Form S-1 registration statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days after the date the Demand Notice is given, and in each case, subject to the limitations of Section 2.1(c) and Section 2.3.

 

(b)            Form S-3 Demand. If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Holders of at least twenty-five percent (25%) of the Registrable Securities then outstanding that the Company file a Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price of at least $3.0 million (prior to deduction of Selling Expenses), then the Company shall: (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within forty-five (45) days after the date such request is given by the Initiating Holders, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days after the date the Demand Notice is given, and in each case, subject to the limitations of Section 2.1(c) and Section 2.3.

 

(c)            Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Section 2.1 a certificate signed by the Company’s chief executive officer or other most senior executive officer stating that in the good faith judgment of the Board of Directors it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would: (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than sixty (60) days after the request of the Initiating Holders is given; provided, however, that the Company may not invoke this right more than twice in any twelve (12) month period; and provided, further, that the Company shall not register any securities for its own account or that of any other stockholder during such sixty (60) day period other than an Excluded Registration.

 

 

(d)            The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(a): (i) during the period that is sixty (60) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Company-initiated registration; provided, that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (ii) if the Company has effected two (2) demand registrations pursuant to Section 2.1(a); or (iii) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.1(b). The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(b): (A) during the period that is thirty (30) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective date of, a Company-initiated registration; provided, that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or (B) if the Company has effected two (2) registrations pursuant to Section 2.1(b) within the twelve (12) month period immediately preceding the date of such request. A registration shall not be counted as “effected” for purposes of this Section 2.1(d) until such time as the applicable registration statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration, elect not to pay the registration expenses therefor, and forfeit their right to one (1) demand registration statement pursuant to Section 2.6, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Section 2.1(d).

 

2.2            Company Registration. If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than the Holders) any of its securities under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give each Holder notice of such registration. Upon the request of each Holder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Section 2.3, cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Section 2.6.

 

 

2.3            Underwriting Requirements.

 

(a)            If, pursuant to Section 2.1, the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2.1, and the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by the Company and shall be reasonably acceptable to a majority in interest of the Initiating Holders. In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Section 2.4(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Section 2.3, if the managing underwriter(s) advise(s) the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided, however, that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities of the Company are first entirely excluded from the underwriting. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares.

 

(b)            In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section 2.2, the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering or (ii) the number of Registrable Securities included in the offering be reduced below thirty percent (30%) of the total number of securities included in such offering, unless such offering is the IPO, in which case the selling Holders may be excluded further if the underwriters make the determination described above and no other stockholder’s securities are included in such offering. For purposes of the provisions in this Section 2.3(b) and Section 2.3(a) concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

 

 

(c)            For purposes of Section 2.1, a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Section 2.3(a), fewer than fifty percent (50%) of the total number of Registrable Securities that Holders have requested to be included in such registration statement are actually included.

 

2.4            Obligations of the Company. Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

(a)            prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration of Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to sixty (60) days, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;

 

(b)            prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

 

(c)            furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

 

(d)            use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

 

(e)            in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

 

(f)            use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

 

(g)            provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

 

(h)            promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

 

(i)            notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and

 

(j)            after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

 

In addition, the Company shall ensure that, at all times after any registration statement covering a public offering of securities of the Company under the Securities Act shall have become effective, its insider trading policy shall provide that the Company’s executive officers and directors may implement a trading program under Rule 10b5-1 of the Exchange Act.

 

2.5            Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.

 

 

2.6            Expenses of Registration. All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements, not to exceed $50,000.00, of one counsel for the selling Holders (the “Selling Holder Counsel”), shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one registration pursuant to Section 2.1(a) or Section 2.1(b), as the case may be; provided, further that if, at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Section 2.1(a) or Section 2.1(b). All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.

 

2.7            Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

 

2.8            Indemnification. If any Registrable Securities are included in a registration statement under this Section 2:

 

(a)            To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, and stockholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

 

 

(b)            To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided, further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Sections 2.8(b) and 2.8(d) exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

 

(c)            Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8.

 

 

(d)            To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided, further that in no event shall a Holder’s liability pursuant to this Section 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Section 2.8(b), exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of willful misconduct or fraud by such Holder.

 

(e)            Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

(f)            Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

 

2.9            Reports Under Exchange Act. With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

 

(a)            make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by the Company for the IPO;

 

(b)            use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and

 

 

(c)            furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request: (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies); (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company; and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S-3 (at any time after the Company so qualifies to use such form).

 

2.10            Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would provide to such holder the right to include securities in any registration on other than on a subordinate basis after all Holders have had the opportunity to include in the registration and offering all shares of Registrable Securities that they wish to so include; provided that this limitation shall not apply to any additional Investor who becomes a party to this Agreement in accordance with Section 3.9.

 

2.11            “Market Stand-off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of shares of Common Stock in its IPO, and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days plus up to an additional eighteen (18) days to the extent necessary to comply with applicable regulatory requirements following the IPO), (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock held immediately before the effective date of the registration statement for the IPO or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise. The foregoing provisions of this Section 2.11 shall not apply to transactions relating to securities acquired in the IPO or securities acquired in open market or other transactions from and after the IPO, the sale of any shares to an underwriter pursuant to an underwriting agreement, or the transfer of any shares to any trust for the direct or indirect benefit of the Holder or an Immediate Family Member of the Holder, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided, further, that any such transfer shall not involve a disposition for value, and shall be applicable to the Holders only if all officers and directors are subject to the same restrictions and the Company obtains a similar agreement from all stockholders individually owning one percent (1%) or more of the Company’s outstanding Common Stock (after giving effect to conversion into Common Stock of all outstanding shares of the Preferred Stock). The underwriters in connection with the IPO are intended third party beneficiaries of this Section 2.11 and shall have the right, power, and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with the IPO that are consistent with this Section 2.11 or that are necessary to give further effect thereto. If any of the obligations described in this Section 2.11 are waived or terminated on a discretionary basis by the Company or any of the underwriters with respect to any of the securities of any such Holder, officer, director or greater than one-percent stockholder (in any such case, the “Released Securities”), the foregoing provisions shall be waived or terminated, as applicable, to the same extent and with respect to the same percentage of securities of each Holder as the percentage of Released Securities represent with respect to the securities held by the applicable Holder, officer, director or greater than one-percent stockholder that are subject to such obligations.

 

 

2.12            Restrictions on Transfer.

 

(a)            The Preferred Stock and the Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Preferred Stock and the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement. Notwithstanding the foregoing, the Company shall not require any transferee of shares pursuant to an effective registration statement or, following the IPO, SEC Rule 144, in each case, to be bound by the terms of this Agreement.

 

(b)            Each certificate, instrument or book entry representing (i) the Preferred Stock, (ii) the Registrable Securities, and (iii) any other securities issued in respect of the securities referenced in clauses (i) and (ii), upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Section 2.12(c)) be notated with legends substantially in the following forms:

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

 

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT OR AGREEMENTS BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Section 2.12.

 

 

(c)            The holder of such Restricted Securities, by acceptance of ownership thereof, agrees to comply in all respects with the provisions of this Section 2. Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction or following the IPO, the transfer is made pursuant to SEC Rule 144, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer, provided that no such notice shall be required if the intended sale, pledge or transfer complies with SEC Rule 144. Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either: (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company. The Company will not require such a notice, legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144 or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration; provided that each transferee agrees in writing to be subject to the terms of this Section 2.12. Each certificate, instrument or book entry the Restricted Securities transferred as above provided shall be notated with, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Section 2.12(b), except that such certificate, instrument or book entry shall not be notated with such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

 

2.13            Termination of Registration Rights. The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Section 2.1 or Section 2.2 shall terminate upon the earliest to occur of:

 

(a)            the closing of a Sale Event;

 

(b)            at such time following the IPO when a Holder (and its Affiliates) holds less than one percent (1%) of the Company’s outstanding Common Stock or all Registrable Securities held by such Holder (and its Affiliates) can be sold in any three (3) month period without registration and limitation in compliance with SEC Rule 144 or another similar exemption; or

 

(c)            on the fifth (5th) anniversary of the consummation of the IPO.

 

 

3.            Miscellaneous.

 

3.1            Successors and Assigns. The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate, partner, member, limited partner, retired partner, retired member, or stockholder of a Holder; or (ii ) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; or (iii) after such transfer, holds at least 6,700,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations), or, if less, all of the Registrable Securities held by such Holder; provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Section 2.11. For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate, limited partner, retired partner, member, retired member, or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided, further, that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

3.2            Governing Law. This Agreement is governed by and shall be construed in accordance with the law of the State of Delaware, exclusive of its conflict-of-laws principles.

 

3.3            Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

3.4            Titles and Subtitles. Titles or captions of Sections contained in this Agreement are inserted as a matter of convenience and for reference, and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof.

 

3.5            Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or: (a) upon personal delivery to the party to be notified; (b) when sent, if sent by electronic mail or facsimile during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their addresses as set forth on Schedule A hereto, or to the principal office of the Company and to the attention of the President or Chief Executive Officer, in the case of the Company, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Section 3.5. If notice is given to the Company, a copy (which shall not constitute notice) shall also be sent to Cynthia T. Mazareas, Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, email address: Cynthia.Mazareas@wilmerhale.com, facsimile number: 617-526-5000.

 

 

3.6            Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding; provided that the Company may in its sole discretion waive compliance with Section 2.12(c) (and the Company’s failure to object promptly in writing after notification of a proposed assignment allegedly in violation of Section 2.12(c) shall be deemed to be a waiver); and provided, further, that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. Notwithstanding the foregoing, this Agreement may not be amended, modified or terminated and the observance of any term hereof may not be waived with respect to any Holder without the written consent of such Holder, unless such amendment, modification, termination, or waiver applies to all Holders in the same fashion. The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver. Any amendment, termination, or waiver effected in accordance with this Section 3.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

 

3.7            Severability. In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

 

3.8            Aggregation of Stock. All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

 

3.9            Additional Investors. Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of Preferred Stock after the date hereof, any purchaser of such shares of Preferred Stock who is not already a party to this Agreement may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, and thereafter shall be deemed an “Investor” for all purposes hereunder. No action or consent by the Investors shall be required for such joinder to this Agreement by such additional Investor, so long as such additional Investor has agreed in writing to be bound by all of the obligations as an “Investor” hereunder.

 

3.10            Entire Agreement. This Agreement (including any Schedules hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled. Upon the effectiveness of this Agreement, the Prior Agreement shall be deemed amended and restated and superseded and replaced in its entirety by this Agreement, and shall be of no further force or effect.

 

 

3.11            Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

 

3.12            Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

3.13            Further Assurances. At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	XILIO THERAPEUTICS, INC.
	By:	/s/ René Russo

	Name:	René Russo
	Title:	Chief Executive Officer

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	ATLAS VENTURE FUND XI, L.P.
	By: Atlas Venture Associates XI, L.P., Its General Partner
	By: Atlas Venture Associates XI, LLC, Its General Partner
	By:	/s/ Ommer Chohan

	Name:	Ommer Chohan
	Title:	CFO

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	ATLAS VENTURE OPPORTUNITY FUND I, L.P.
	By: Atlas Venture Associates Opportunity I, L.P., its General Partner
	By: Atlas Venture Associates Opportunity I, LLC, its General Partner
	By:	/s/ Ommer Chohan

	Name:	Ommer Chohan
	Title:	CFO

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	F-PRIME CAPITAL PARTNERS HEALTHCARE FUND IV LP
	By: F-Prime Capital Partners Healthcare Advisors Fund IV LP, its general partner
	By: Impresa Holdings LLC, its general partner
	By: Impresa Management LLC, its managing member
	By:	/s/ Mary Bevelock Pendergast

	Name:	Mary Bevelock Pendergast
	Title:	Vice President

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	TAKEDA VENTURES, INC.
	By:	/s/ Dan Curran

Name:

Dan Curran

Title:

Head, Rare Genetics & Hematology

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	MERCK VENTURES B.V.
	By:	/s/ Jasper Bos

Name:

Jasper Bos

	Title:	Managing Director

	By:	/s/ Keno Gutierrez

Name:

Keno Gutierrez

Title:

Director

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

 

	INVESTORS:
	AJU LIFE SCIENCE 3.0 VENTURE FUND C/O AJU 18 INVESTMENT
	By:	/s/ Ji-Won Kim
	Name:	Ji-Won Kim
	Title:	CEO

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	MRL VENTURES FUND, LLC
	By:	/s/ Peter Dudek
	Name:	Peter Dudek
	Title:	Partner

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	RIVERVEST VENTURE FUND IV, L.P.
	By: RiverVest Venture Partners IV, L.P., its general partner
	By: RiverVest Venture Partners IV, LLC, its general partner
	By:	/s/ Nancy Hong
	Name:	Nancy Hong
	Title:	Authorized Person

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	SV 7 IMPACT MEDICINE FUND LP acting by its General Partner SV7 (IMF) GP LLP acting by its designated member
	By:	/s/ James Costine
	Name:	James Costine
	Title:	Member

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	BAY CITY CAPITAL GF XINDE INTERNATIONAL LIFE SCIENCES USD FUND, L.P.
	By:	Bay City Capital GF XINDE Investment Management Co.

 

 

Its:

General Partner

 

 

	By:	/s/ Fred Craves
	Name:	Fred Craves
	Title:	Director

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	ROCK SPRINGS CAPITAL MASTER FUND LP
	By: Rock Springs General Partner LLC, its general partner
	By:	/s/ Kris Jenner
	Name:	Kris Jenner
	Title:	Member
	FOUR PINES MASTER FUND LP
	By: Four Pines General Partner LLC, its general partner
	By:	/s/ Kris Jenner
	Name:	Kris Jenner
	Title:	Member

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	SOLEUS PRIVATE EQUITY FUND II, L.P.
	By: Soleus Private Equity GP II, LLC, its General Partner
	By:	/s/ Steven J. Musumeci
	Name: Steven J. Musumeci
	Title: Chief Operating Officer

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	RA Capital Healthcare Fund, L.P.
	By: RA Capital Healthcare Fund GP, LLC
	Its General Partner
	By:	/s/ Rajeev Shah
	Name:   Rajeev Shah
	Title:     Manager

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	RA Capital NEXUS Fund II, L.P.
	By: RA Capital Nexus Fund II GP, LLC
	Its: General Partner
	By:	/s/ Rajeev Shah
	Name:  Rajeev Shah
	Title:    Manager

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	BAIN CAPITAL LIFE SCIENCES FUND II, L.P.
	By: Bain Capital Life Sciences Investors II, LLC
	its general partner
	By: Bain Capital Life Sciences Investors, LLC
	its manager
	By:	/s/ Andrew Hack
	Name: Andrew Hack
	Title: Managing Director

 

	INVESTORS:
	BCIP LIFE SCIENCES ASSOCIATES, LP
	By: Boylston Coinvestors, LLC
	its general partner
	By:	/s/ Andrew Hack
	Name: Andrew Hack
	Title: Authorized Signatory

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

	INVESTORS:
	DEERFIELD PRIVATE DESIGN FUND V, L.P.
	By: Deerfield Mgmt V, L.P.
	General Partner
	By: J.E. Flynn Capital V, LLC
	General Partner
	By:	/s/ David J. Clark
	Name: David J. Clark
	Title: Authorized Signatory

 

	DEERFIELD PARTNERS, L.P.
	By: Deerfield Mgmt, L.P., General Partner
	By: J.E. Flynn Capital, LLC, General Partner
	By:	/s/ David J. Clark
	Name: David J. Clark
	Title: Authorized Signatory

 

Signature Page To Amended and Restated Registration Rights Agreement

 

 

SCHEDULE A

 

INVESTORS

 

Name, Contact Information and Address

 

Atlas Venture Fund XI, L.P.

400 Technology Square

Cambridge, MA 02139

 

Atlas Venture Opportunity Fund I, L.P.

400 Technology Square

Cambridge, MA 02139

 

F-Prime Capital Partners Healthcare Fund IV LP

1 Main Street

13th Floor

Cambridge, MA 02142

 

Four Pines Master Fund LP

650 South Exeter Street, Suite 1070

Baltimore, MD 21202

[**]

 

Takeda Ventures, Inc.

435 Tasso Street, Suite 300

Palo Alto, CA 94301

 

M Ventures B.V.

Gustav Mahlerplein 102

Toyo lto Building, 20th Floor

1082 MA Amsterdam

The Netherlands

[**]

 

Aju Life Science 3.0 Venture Fund

c/o Aju 18 Investment

201 Teheran-ro, 5th Floor

Gangham-gu, Seoul, Korea, 06141

 

Ipsen Biopharmaceuticals, Inc.

106 Allen Road, 4th Floor

Basking Ridge, NJ 07920

 

 

Alexandria V.I.

Alexandria Real Estate Equities, Inc.

1700 Owens St., Suite 590

San Francisco, CA 94158

 

Harvard Management Private Equity Corporation

600 Atlantic Avenue

Boston, MA 02210-2203

 

The Trustees of Columbia University in the City of New York

211 Low Library

535 West 116th Street

Mail Code 4324

New York, NY 10027

Mirae Asset-Celltrion New Growth Fund I

Mirae-Asset Center 1 Bldg

19F, East Tower, 26, Eulji-ro-5-gil

Jung-gu, Seoul, Korea (Postal Code 0439)

 

Mirae Asset Capital Co., Ltd.

Mirae-Asset Center 1 Bldg

19F, East Tower, 26, Eulji-ro-5-gil

Jung-gu, Seoul, Korea (Postal Code 0439)

 

Meritz NS Global Bio Fund

Suite 501, 22 Sejong-Daero 21-Gil

Junggu, Seoul, Republic of Korea 04519

 

MRL Ventures Fund, LLC

Merck Research Laboratories

320 Bent Street, 4th Floor

Cambridge, MA 02141

 

Rivervest Venture Fund IV, L.P.

101 Hanley Rd., Ste. 1850

St. Louis, MO 63105

 

Rock Springs Capital Master Fund LP

650 South Exeter Street, Suite 1070

Baltimore, MD 21202

[**]

 

SV7 Impact Medicine Fund LP

71 Kingsway

Holborn, London

WC2B 6ST

 

 

Bay City Capital GF Xinde International Life Sciences USD Fund, L.P.

750 Battery Street, Suite 400

San Francisco, CA 94111

 

Soleus Private Equity Fund II, L.P.
104 Field Point Road, Second Floor

Greenwich, CT 06830

 

RA Capital Healthcare Fund, L.P.

c/o RA Capital Management, L.P.
200 Berkeley Street, 18^th Floor
Boston, MA 02116

 

RA Capital Nexus Fund II, L.P.

c/o RA Capital Management, L.P.
200 Berkeley Street, 18^th Floor
Boston, MA 02116

 

Bain Capital Life Sciences Fund II, L.P.

BCIP Life Sciences Associates, LP

c/o Bain Capital Life Sciences, LP

200 Clarendon Street

Boston, MA 02116

[**]

 

Deerfield Private Design Fund V, L.P.

Deerfield Partners, L.P.

c/o Deerfield Management Company, L.P.
345 Park Avenue South, 12th Floor
New York, NY 10010
[**]

 

and

 

c/o Deerfield Management Company, L.P.
345 Park Avenue South, 12th Floor
New York, NY 10010
[**]

  

 

 

Exhibit 10.2

 

2020 Stock Incentive Plan

 

of

 

Xilio Therapeutics, Inc.

 

 

Table of Contents

Page

 

1.	Purpose	1
2.	Eligibility	1
3.	Administration and Delegation	1
(a)	Administration by the Board	1
(b)	Appointment of Committees	1
4.	Stock Available for Awards	2
(a)	Number of Shares	2
(b)	Substitute Awards	2
5.	Stock Options	2
(a)	General	2
(b)	Incentive Stock Options	2
(c)	Exercise Price	3
(d)	Duration of Options	3
(e)	Exercise of Options	3
(f)	Payment Upon Exercise	4
6.	Stock Appreciation Rights	4
(a)	General	4
(b)	Measurement Price	4
(c)	Duration of SARs	5
(d)	Exercise of SARs	5
7.	Restricted Stock; Restricted Stock Units	5
(a)	General	5
(b)	Terms and Conditions for All Restricted Stock Awards	5
(c)	Additional Provisions Relating to Restricted Stock	5
(d)	Additional Provisions Relating to Restricted Stock Units	6
8.	Other Stock-Based Awards	6
(a)	General	6
(b)	Terms and Conditions	6
9.	Adjustments for Changes in Common Stock and Certain Other Events	6
(a)	Changes in Capitalization	6
(b)	Reorganization Events	7
10.	General Provisions Applicable to Awards	9
(a)	Transferability of Awards	9
(b)	Documentation	9
(c)	Board Discretion	9
(d)	Termination of Status	9
(e)	Withholding	10
(f)	Amendment of Award	10
(g)	Conditions on Delivery of Stock	10
(h)	Acceleration	11
11.	Miscellaneous	11
(a)	No Right To Employment or Other Status	11

 

 

(b)	No Rights As Stockholder	11
(c)	Effective Date and Term of Plan	11
(d)	Amendment of Plan	11
(e)	Authorization of Sub-Plans (including Grants to non-U.S. Employees)	11
(f)	Compliance with Section 409A of the Code	12
(g)	Limitations on Liability	12
(h)	Governing Law	12

 

 

2020 Stock Incentive Plan

 

of

 

Xilio Therapeutics, Inc.

 

1.                  Purpose

 

The purpose of this 2020 Stock Incentive Plan (the “Plan”) of Xilio Therapeutics, Inc., a Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present and future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”); provided, however, that such other business ventures shall be limited to entities that, where required by Section 409A of the Code, are eligible issuers of service recipient stock (as defined in Treas. Reg. Section 1.409A-1(b)(5)(iii)(E), or applicable successor regulation).

 

2.                  Eligibility

 

All of the Company’s employees, officers and directors, as well as consultants and advisors to the Company (as such terms consultants and advisors are defined and interpreted for purposes of Rule 701 under the Securities Act of 1933, as amended (the “Securities Act”) (or any successor rule)) are eligible to be granted Awards under the Plan. Each person who is granted an Award under the Plan is deemed a “Participant.” “Award” means Options (as defined in Section 5), SARs (as defined in Section 6), Restricted Stock (as defined in Section 7), Restricted Stock Units (as defined in Section 7) and Other Stock-Based Awards (as defined in Section 8).

 

3.                  Administration and Delegation

 

(a)               Administration by the Board. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All actions and decisions by the Board with respect to the Plan and any Awards shall be made in the Board’s discretion and shall be final and binding on all Participants and any other persons having or claiming any interest in the Plan or in any Award.

 

(b)               Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (each, a “Committee”). All references in the Plan to the “Board” shall mean the Board or a Committee to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee.

 

 

4.                  Stock Available for Awards

 

(a)               Number of Shares. Subject to adjustment under Section 9, Awards may be made under the Plan for up to 9,414,707 shares of common stock, $0.0001 par value per share, of the Company (the “Common Stock”), any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)). If any Award expires or is terminated, surrendered or canceled without having been fully exercised, is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right), or results in any Common Stock not being issued, the unused Common Stock subject to such Award shall again be available for the grant of Awards under the Plan. Further, shares of Common Stock tendered to the Company by a Participant to exercise an Award or to satisfy tax withholding obligations arising with respect to an Award shall be added to the number of shares of Common Stock available for the grant of Awards under the Plan. However, in the case of Incentive Stock Options, the two immediately preceding sentences shall be subject to any limitations under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

 

(b)               Substitute Awards. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall share limit set forth in Section 4(a), except as may be required by reason of Section 422 and related provisions of the Code.

 

5.                  Stock Options

 

(a)               General. The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be subject to each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable.

 

(b)               Incentive Stock Options. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of Xilio Therapeutics, Inc., any of Xilio Therapeutics, Inc.’s present and future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. An Option that is not intended to be an Incentive Stock Option shall be designated non-statutory stock option (a “Nonstatutory Stock Option).” The Company shall have no liability to a Participant, or any other person, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or if the Company converts an Incentive Stock Option to a Nonstatutory Stock Option.

 

 

(c)               Exercise Price. The Board shall establish the exercise price of each Option and specify the exercise price in the applicable Option agreement. The exercise price shall be not less than 100% of the Grant Date Fair Market Value (as defined below) of the Common Stock on the date the Option is granted; provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall not be less than 100% of the Grant Date Fair Market Value on such future date. The “Grant Date Fair Market Value” of a share of Common Stock for purposes of the Plan will be determined as follows:

 

(1)               if the Common Stock is not publicly traded, the Board will determine the Fair Market Value for purposes of the Plan using any measure of value it determines to be appropriate (including, as it considers appropriate, relying on appraisals) in a manner consistent with the valuation principles under Code Section 409A, except as the Board may expressly determine otherwise;

 

(2)               if the Common Stock is listed on a national securities exchange, the closing sale price (for the primary trading session) on the date of grant; or

 

(3)               if the Common Stock is not listed on any such exchange, the average of the closing bid and asked prices as reported by an authorized OTCBB market data vendor as listed on the OTCBB website (otcbb.com) on the date of grant.

 

For any date that is not a trading day, the Grant Date Fair Market Value of a share of Common Stock for such date will be determined by using the closing sale price or average of the bid and asked prices, as appropriate, for the immediately preceding trading day and with the timing in the formulas above adjusted accordingly. The Board can substitute a particular time of day or other measure of “closing sale price” or “bid and asked prices” if appropriate because of exchange or market procedures or can, in its discretion, use weighted averages either on a daily basis or such longer period as complies with Code Section 409A.

 

The Board has discretion to determine the Grant Date Fair Market Value for purposes of the Plan, and all Awards are conditioned on the applicable Participant’s agreement that the Board’s determination is conclusive and binding even though others might make a different determination.

 

(d)               Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement; provided, however, that no Option will be granted with a term in excess of 10 years.

 

(e)               Exercise of Options. Options may be exercised by delivery to the Company of a notice of exercise in a form of notice (which may be electronic) approved by the Company, together with payment in full (in the manner specified in Section 5(f)) of the exercise price for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company as soon as practicable following exercise.

 

 

(f)                Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:

 

(1)               in cash or by check, payable to the order of the Company;

 

(2)               when the Common Stock is registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except as may otherwise be provided in the applicable Option agreement or approved by the Board, in its discretion, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

 

(3)               when the Common Stock is registered under the Exchange Act and to the extent provided for in the applicable Option agreement or approved by the Board, in its discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their fair market value (valued in the manner determined by (or in a manner approved by) the Board), provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

 

(4)               to the extent provided for in the applicable Nonstatutory Stock Option agreement or approved by the Board in its discretion, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would receive (i) the number of shares underlying the portion of the Option being exercised, less (ii) such number of shares as is equal to (A) the aggregate exercise price for the portion of the Option being exercised divided by (B) the fair market value of the Common Stock (valued in the manner determined by (or in a manner approved by) the Board) on the date of exercise;

 

(5)               to the extent permitted by applicable law and provided for in the applicable Option agreement or approved by the Board, in its discretion, by (i) delivery of a promissory note of the Participant to the Company on terms determined by the Board, or (ii) payment of such other lawful consideration as the Board may determine; or

 

(6)               by any combination of the above permitted forms of payment.

 

6.                  Stock Appreciation Rights

 

(a)               General. The Board may grant Awards consisting of stock appreciation rights (“SARs”) entitling the Participant, upon exercise, to receive an amount of Common Stock or cash or a combination thereof (such form to be determined by the Board) determined by reference to appreciation, from and after the date of grant, in the fair market value of a share of Common Stock (valued in the manner determined by (or in a manner approved by) the Board) over the measurement price established pursuant to Section 6(b). The date as of which such appreciation is determined shall be the exercise date.

 

(b)               Measurement Price. The Board shall establish the measurement price of each SAR and specify it in the applicable SAR agreement. The measurement price shall not be less than 100% of the Grant Date Fair Market Value of a share of Common Stock on the date the SAR is granted; provided, that if the Board approves the grant of an SAR effective as of a future date, the measurement price shall not be less than 100% of the Grant Date Fair Market Value on such future date.

 

 

(c)               Duration of SARs. Each SAR shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable SAR agreement; provided, however, that no SAR will be granted with a term in excess of 10 years.

 

(d)               Exercise of SARs. SARs may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with any other documents required by the Board.

 

7.                  Restricted Stock; Restricted Stock Units

 

(a)               General. The Board may grant Awards entitling Participants to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the Participant in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award. The Board may also grant Awards entitling the Participant to receive shares of Common Stock or cash to be delivered at the time such Award vests (“Restricted Stock Units”) (Restricted Stock and Restricted Stock Units are each referred to herein as a “Restricted Stock Award”).

 

(b)               Terms and Conditions for All Restricted Stock Awards. The Board shall determine the terms and conditions of a Restricted Stock Award, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.

 

(c)               Additional Provisions Relating to Restricted Stock.

 

(1)               Dividends. Unless otherwise provided in the applicable Award agreement, any dividends (whether paid in cash, stock or property) declared and paid by the Company with respect to shares of Restricted Stock (“Accrued Dividends”) shall be paid to the Participant only if and when such shares become free from the restrictions on transferability and forfeitability that apply to such shares. Each payment of Accrued Dividends will be made no later than the end of the calendar year in which the dividends are paid to stockholders of that class of stock or, if later, the 15th day of the third month following the lapsing of the restrictions on transferability and the forfeitability provisions applicable to the underlying shares of Restricted Stock.

 

(2)               Stock Certificates. The Company may require that any stock certificates issued in respect of shares of Restricted Stock, as well as dividends or distributions paid on such Restricted Stock, shall be deposited in escrow by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to Participant’s Designated Beneficiary. “Designated Beneficiary” means (i) the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death or (ii) in the absence of an effective designation by a Participant, “Designated Beneficiary” means the Participant’s estate.

 

 

(d)               Additional Provisions Relating to Restricted Stock Units.

 

(1)               Settlement. Upon the vesting of and/or lapsing of any other restrictions (i.e., settlement) with respect to each Restricted Stock Unit, the Participant shall be entitled to receive from the Company the number of shares of Common Stock specified in the Award agreement or (if so provided in the applicable Award agreement or otherwise determined by the Board) an amount of cash equal to the fair market value (valued in the manner determined by (or in a manner approved by) the Board) of such number of shares of Common Stock or a combination thereof. The Board may, in its discretion, provide that settlement of Restricted Stock Units shall be deferred, on a mandatory basis or at the election of the Participant in a manner that complies with Section 409A of the Code.

 

(2)               Voting Rights. A Participant shall have no voting rights with respect to any Restricted Stock Units.

 

(3)              Dividend Equivalents. The Award agreement for Restricted Stock Units may provide Participants with the right to receive an amount equal to any dividends or other distributions declared and paid on an equal number of outstanding shares of Common Stock (“Dividend Equivalents”). Dividend Equivalents may be paid currently or credited to an account for the Participants, may be settled in cash and/or shares of Common Stock and may be subject to the same restrictions on transfer and forfeitability as the Restricted Stock Units with respect to which paid, in each case to the extent provided in the applicable Award agreement.

 

8.                  Other Stock-Based Awards

 

(a)               General. The Board may grant other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property (“Other Stock-Based Awards”). Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board shall determine.

 

(b)               Terms and Conditions. Subject to the provisions of the Plan, the Board shall determine the terms and conditions of each Other Stock-Based Award, including any purchase price applicable thereto.

 

9.                  Adjustments for Changes in Common Stock and Certain Other Events

 

(a)               Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under the Plan, (ii) the number and class of securities and exercise price per share of each outstanding Option, (iii) the share and per-share provisions and the measurement price of each outstanding SAR, (iv) the number of shares subject to and the repurchase price per share subject to each outstanding Award of Restricted Stock and (v) the share and per-share-related provisions and the purchase price, if any, of each outstanding Award of Restricted Stock Unit and each outstanding Other Stock-Based Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

 

 

(b)               Reorganization Events.

 

(1)               Definition. A “Reorganization Event” shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (b) any transfer or disposition of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange or other transaction or (c) any liquidation or dissolution of the Company.

 

(2)               Consequences of a Reorganization Event on Awards Other than Restricted Stock.

 

(i)                 In connection with a Reorganization Event, the Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock on such terms as the Board determines (except to the extent specifically provided otherwise in an applicable Award agreement or another agreement between the Company and the Participant): (i) provide that such Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to a Participant, provide that all of the Participant’s unexercised and/or unvested Awards will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the Participant (to the extent then exercisable) within a specified period following the date of such notice, (iii) provide that outstanding Awards shall become exercisable, realizable, or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to Participants with respect to each Award held by a Participant equal to (A) the number of shares of Common Stock subject to the vested portion of the Award (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such Reorganization Event) multiplied by (B) the excess, if any, of (I) the Acquisition Price over (II) the exercise, measurement or purchase price of such Award and any applicable tax withholdings, in exchange for the termination of such Award, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise, measurement or purchase price thereof and any applicable tax withholdings) and (vi) any combination of the foregoing. In taking any of the actions permitted under this Section 9(b)(2), the Board shall not be obligated by the Plan to treat all Awards, all Awards held by a Participant, or all Awards of the same type, identically.

 

 

(ii)              Notwithstanding the terms of Section 9(b)(2)(i), in the case of outstanding Restricted Stock Units that are subject to Section 409A of the Code: (i) if the applicable Restricted Stock Unit agreement provides that the Restricted Stock Units shall be settled upon a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i), and the Reorganization Event constitutes such a “change in control event”, then no assumption or substitution shall be permitted pursuant to Section 9(b)(2)(i) and the Restricted Stock Units shall instead be settled in accordance with the terms of the applicable Restricted Stock Unit agreement; and (ii) the Board may only undertake the actions set forth in clauses (iii), (iv) or (v) of Section 9(b)(2)(i) if the Reorganization Event constitutes a “change in control event” as defined under Treasury Regulation Section 1.409A-3(i)(5)(i) and such action is permitted or required by Section 409A of the Code; if the Reorganization Event is not a “change in control event” as so defined or such action is not permitted or required by Section 409A of the Code, and the acquiring or succeeding corporation does not assume or substitute the Restricted Stock Units pursuant to clause (i) of Section 9(b)(2)(i), then the unvested Restricted Stock Units shall terminate immediately prior to the consummation of the Reorganization Event without any payment in exchange therefor.

 

(iii)            For purposes of Section 9(b)(2)(i), an Award (other than Restricted Stock) shall be considered assumed if, following consummation of the Reorganization Event, such Award confers the right to purchase or receive pursuant to the terms of such Award, for each share of Common Stock subject to the Award immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise or settlement of the Award to consist solely of such number of shares of common stock of the acquiring or succeeding corporation (or an affiliate thereof) that the Board determined to be equivalent in value (as of the date of such determination or another date specified by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

 

(3)               Consequences of a Reorganization Event on Restricted Stock. Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company with respect to outstanding Restricted Stock shall inure to the benefit of the Company’s successor and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to such Restricted Stock; provided, however, that the Board may provide for termination or deemed satisfaction of such repurchase or other rights under the instrument evidencing any Restricted Stock or any other agreement between a Participant and the Company, either initially or by amendment, or provide for forfeiture of such Restricted Stock if issued at no cost. Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock then outstanding shall automatically be deemed terminated or satisfied.

 

 

10.              General Provisions Applicable to Awards.

 

(a)              Transferability of Awards. Awards (or any interest in an Award, including, prior to exercise, any interest in shares of Common Stock issuable upon exercise of an Option or SAR) shall not be sold, assigned, transferred (including by establishing any short position, put equivalent position (as defined in Rule 16a-1 issued under the Exchange Act) or call equivalent position (as defined in Rule 16a-1 issued under the Exchange Act)), pledged, hypothecated or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, and, during the life of the Participant, shall be exercisable only by the Participant; except that Awards, other than Awards subject to Section 409A of the Code, may be transferred to family members (as defined in Rule 701(c)(3) under the Securities Act) through gifts or (other than Incentive Stock Options) domestic relations orders or to an executor or guardian upon the death or disability of the Participant. The Company shall not be required to recognize any such permitted transfer until such time as such permitted transferee shall deliver to the Company a written instrument, as a condition to such transfer, in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. For the avoidance of doubt, nothing contained in this Section 10(a) shall be deemed to restrict a transfer to the Company.

 

(b)              Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan.

 

(c)               Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly.

 

(d)              Termination of Status. The Board shall determine the effect on an Award of the disability, death, termination or other cessation of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award.

 

 

(e)               Withholding. The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may elect to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any shares on exercise, vesting or release from forfeiture of an Award or at the same time as payment of the exercise or purchase price unless the Company determines otherwise. If provided for in an Award or approved by the Board in its discretion, a Participant may satisfy such tax obligations in whole or in part by delivery (either by actual delivery or attestation) of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their fair market value (valued in the manner determined by (or in a manner approved by) the Company); provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income), except that, to the extent that the Company is able to retain shares of Common Stock having a fair market value (valued in the manner determined by (or in a manner approved by) the Company) that exceeds the statutory minimum applicable withholding tax without financial accounting implications or the Company is withholding in a jurisdiction that does not have a statutory minimum withholding tax, the Company may retain such number of shares of Common Stock (up to the number of shares having a fair market value (valued in the manner determined by (or in a manner approved by) the Company) equal to the maximum individual statutory rate of tax) as the Company shall determine in its discretion to satisfy the tax liability associated with any Award. Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

 

(f)                Amendment of Award.

 

(1)               The Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option. The Participant’s consent to such action shall be required unless (i) the Board determines that the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Plan or (ii) the change is permitted under Section 9.

 

(2)               The Board may, without stockholder approval, amend any outstanding Award granted under the Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Award. The Board may also, without stockholder approval, cancel any outstanding award (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled award.

 

(g)               Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously issued or delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and regulations and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

 

 

(h)               Acceleration. The Board may at any time provide that any Award shall become immediately exercisable in whole or in part, free of some or all restrictions or conditions, or otherwise realizable in whole or in part, as the case may be.

 

11.              Miscellaneous.

 

(a)               No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award by virtue of the adoption of the Plan, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.

 

(b)               No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares.

 

(c)               Effective Date and Term of Plan. The Plan shall become effective on the date on which it is adopted by the Board. No Awards shall be granted under the Plan after the expiration of 10 years from the earlier of (i) the date on which the Plan was adopted by the Board or (ii) the date the Plan was approved by the Company’s stockholders, but Awards previously granted may extend beyond that date.

 

(d)               Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time; provided that if at any time the approval of the Company’s stockholders is required as to any modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 11(d) shall apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment, taking into account any related action, does not materially and adversely affect the rights of Participants under the Plan.

 

(e)               Authorization of Sub-Plans (including Grants to non-U.S. Employees). The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable securities, tax or other laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to the Plan containing (i) such limitations on the Board’s discretion under the Plan as the Board deems necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Participants in any jurisdiction which is not the subject of such supplement.

 

 

(f)                Compliance with Section 409A of the Code. If and to the extent (i) any portion of any payment, compensation or other benefit provided to a Participant pursuant to the Plan in connection with Participant’s employment termination constitutes “nonqualified deferred compensation” within the meaning of Section 409A of the Code and (ii) the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, in each case as determined by the Company in accordance with its procedures, by which determinations the Participant (through accepting the Award) agrees that the Participant is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Section 409A of the Code) (the “New Payment Date”), except as Section 409A of the Code may then permit. The aggregate of any payments that otherwise would have been paid to the Participant during the period between the date of separation from service and the New Payment Date shall be paid to the Participant in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule.

 

The Company makes no representations or warranty and shall have no liability to the Participant or any other person if any provisions of or payments, compensation or other benefits under the Plan are determined to constitute nonqualified deferred compensation subject to Section 409A of the Code but do not to satisfy the conditions of that section.

 

(g)              Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, other employee, or agent of the Company will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally liable with respect to the Plan because of any contract or other instrument such individual executes in such individual’s capacity as a director, officer, other employee, or agent of the Company. The Company will indemnify and hold harmless each director, officer, other employee, or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out of any act or omission to act concerning the Plan unless arising out of such person’s own fraud or bad faith.

 

(h)              Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than the State of Delaware.

 

* * * *

 

 

Xilio Therapeutics, Inc.
2020 STOCK INCENTIVE PLAN

 

CALIFORNIA SUPPLEMENT

 

Pursuant to Section 11(e) of the Plan, the Board has adopted this supplement for purposes of satisfying the requirements of Section 25102(o) of the California Law:

 

Any Awards granted under the Plan to a Participant who is a resident of the State of California on the date of grant (a “California Participant”) shall be subject to the following additional limitations, terms and conditions:

 

1.                  Additional Limitations on Options.

 

(a)               Maximum Duration of Options. No Options granted to California Participants shall have a term in excess of 10 years measured from the Option grant date.

 

(b)              Minimum Exercise Period Following Termination. Unless a California Participant’s employment is terminated for cause (as defined by applicable law, the terms of the Plan or option grant or a contract of employment), in the event of termination of employment of such Participant, such Participant shall have the right to exercise an Option, to the extent that such Participant is entitled to exercise such Option on the date employment terminated, until the earlier of: (i) at least six months from the date of termination, if termination was caused by such Participant’s death or disability, (ii) at least 30 days from the date of termination, if termination was caused other than by such Participant’s death or disability and (iii) the Option expiration date.

 

2.                  Additional Limitations for Other Stock-Based Awards. The terms of all Awards granted to a California Participant under Section 8 of the Plan shall comply, to the extent applicable, with Section 260.140.46 of the California Code of Regulations.

 

3.                 Additional Limitations on Timing of Awards. No Award granted to a California Participant shall become exercisable, vested or realizable, as applicable to such Award, unless the Plan has been approved by the holders of a majority of the Company’s outstanding voting securities by the later of (i) within 12 months before or after the date the Plan was adopted by the Board, or (ii) prior to or within 12 months of the granting of any Award to a California Participant.

 

4.                 Additional Restriction Regarding Recapitalizations, Stock Splits, Etc. For purposes of Section 9 of the Plan, in the event of a stock split, reverse stock split, stock dividend, recapitalization, combination, reclassification or other distribution of the Company's securities underlying the Award without the receipt of consideration by the Company, the number of securities purchasable, and in the case of Options, the exercise price of such Options, shall be proportionately adjusted.

 

5.                  Additional Limitations on Transferability of Awards. Notwithstanding the provisions of Section 10(a) of the Plan, an Award granted to a California Participant may not be transferred to an executor or guardian upon the disability of the Participant.

 

* * * *

 

 

XILIO THERAPEUTICS, INC.

 

AMENDMENT NO. 1 TO 2020 STOCK INCENTIVE PLAN

 

Approved by the Board of Directors of the Corporation on January 22, 2021

Approved by the Stockholders of the Corporation on January 27, 2021

 

1.

The first sentence of Section 4(a) of the 2020 Stock Incentive Plan of Xilio Therapeutics, Inc. (the “Plan”) is hereby deleted in its entirety and the following is inserted in lieu thereof:

 

“Subject to adjustment under Section 9, Awards may be made under the Plan for up to 21,414,707 shares of common stock, $0.0001 par value per share, of the Company (the “Common Stock”), any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)), plus such additional number of shares of Common Stock (up to 3,459,146 shares) as is equal to the number of shares of Common Stock issued in respect of incentive shares in Xilio Therapeutics LLC, a Delaware limited liability company (“Xilio LLC”), that are subject to vesting immediately prior to the effective time of the Merger (as defined in that certain Agreement and Plan of Merger, dated as of June 19, 2020, by and among the Company, Xilio LLC and Xilio Merger LLC, a Delaware limited liability company) which awards are forfeited to the Company.”

 

2.

Except as expressly amended herein, the Plan and all of the provisions contained therein shall remain in full force and effect.

 

 

XILIO THERAPEUTICS, INC.

 

AMENDMENT NO. 2 TO 2020 STOCK INCENTIVE PLAN

 

Approved by the Board of Directors of the Corporation on February 21, 2021

Approved by the Stockholders of the Corporation on February 22, 2021

 

1.

The first sentence of Section 4(a) of the 2020 Stock Incentive Plan of Xilio Therapeutics, Inc. (the “Plan”) is hereby deleted in its entirety and the following is inserted in lieu thereof:

 

“Subject to adjustment under Section 9, Awards may be made under the Plan for up to 28,464,707 shares of common stock, $0.0001 par value per share, of the Company (the “Common Stock”), any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)), plus such additional number of shares of Common Stock (up to 3,459,146 shares) as is equal to the number of shares of Common Stock issued in respect of incentive shares in Xilio Therapeutics LLC, a Delaware limited liability company (“Xilio LLC”), that are subject to vesting immediately prior to the effective time of the Merger (as defined in that certain Agreement and Plan of Merger, dated as of June 19, 2020, by and among the Company, Xilio LLC and Xilio Merger LLC, a Delaware limited liability company) which awards are forfeited to the Company.”

 

2.

Except as expressly amended herein, the Plan and all of the provisions contained therein shall remain in full force and effect.

 

 

XILIO THERAPEUTICS, INC.

 

AMENDMENT NO. 3 TO 2020 STOCK INCENTIVE PLAN

 

Approved by the Board of Directors of the Corporation on May 19, 2021

Approved by the Stockholders of the Corporation on June 4, 2021

 

1.

The first sentence of Section 4(a) of the 2020 Stock Incentive Plan of Xilio Therapeutics, Inc. (the “Plan”) is hereby deleted in its entirety and the following is inserted in lieu thereof:

 

“Subject to adjustment under Section 9, Awards may be made under the Plan for up to 35,845,738 shares of common stock, $0.0001 par value per share, of the Company (the “Common Stock”), any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)), plus such additional number of shares of Common Stock (up to 3,459,146 shares) as is equal to the number of shares of Common Stock issued in respect of incentive shares in Xilio Therapeutics LLC, a Delaware limited liability company (“Xilio LLC”), that are subject to vesting immediately prior to the effective time of the Merger (as defined in that certain Agreement and Plan of Merger, dated as of June 19, 2020, by and among the Company, Xilio LLC and Xilio Merger LLC, a Delaware limited liability company) which awards are forfeited to the Company.”

 

2.

Except as expressly amended herein, the Plan and all of the provisions contained therein shall remain in full force and effect.

 

 

Exhibit 10.3 

 

Xilio Therapeutics, Inc.

 

Stock Option Agreement 

Granted Under 2020 Stock Incentive Plan

 

This Stock Option Agreement (this “Agreement”) is made between Xilio Therapeutics, Inc., a Delaware corporation (the “Company”), and the Participant pursuant to the 2020 Stock Incentive Plan (the “Plan”).

 

Notice of Grant

 

I.             Participant Information

Participant:
Participant Address:

 

II.            Grant Information

Grant Date:
Number of Shares:
Exercise Price Per Share:
Vesting Commencement Date:
Type of Option:	[Incentive Stock Option][Nonstatutory Stock Option]

 

III.           Vesting Table¹

Vesting Date	Shares that Vest(1)
[____] anniversary of the Vesting Commencement Date	[# of shares]
End of each successive [__] month period following the [____] anniversary of the Vesting Commencement Date until the [____] anniversary of the Vesting Commencement Date	[# of Shares]

⁽¹⁾  The number of shares is subject to adjustment for any changes in the Company’s capitalization as set forth in Section 9 of the Plan.

 

IV.           Final Exercise Date

5:00 pm Eastern time on Date:

[Date is ten years minus one day from Grant Date]

 

This Agreement includes this Notice of Grant and the following Exhibits, which are expressly incorporated by reference in their entirety herein:

 

Exhibit A – General Terms and Conditions

Exhibit B – Notice of Stock Option Exercise

Exhibit C – Xilio Therapeutics, Inc. 2020 Stock Incentive Plan

 

¹ Vesting Table to reflect vesting schedule approved by Board of Directors.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

 

XILIO THERAPEUTICS, INC.		PARTICIPANT		SPOUSAL CONSENT2
Name: Title:		Name:		Name:

 

² If the Participant resides in a community property state, it is desirable to have the Participant’s spouse also accept the option. The following are community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. Although Wisconsin is not formally a community property state, it has laws governing the division of marital property similar to community property states and it may be desirable to have a Wisconsin Participant’s spouse accept the option.

 

 

Exhibit A

 

General terms and Conditions

 

For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:

 

1.              Grant of Option. This Agreement evidences the grant by the Company, on the grant date (the “Grant Date”) set forth in the Notice of Grant that forms part of this Agreement (the “Notice of Grant”), to the Participant of an option to purchase, in whole or in part, on the terms provided herein and in the Company’s 2020 Stock Incentive Plan (the “Plan”), the number of shares set forth in the Notice of Grant (the “Shares”) of common stock, $0.0001 par value per share, of the Company (“Common Stock”) at the exercise price per Share set forth in the Notice of Grant (the “Exercise Price”). Unless earlier terminated, this option shall expire at the time and on the date set forth in the Notice of Grant (the “Final Exercise Date”).

 

It is intended that the option evidenced by this Agreement shall be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”) solely to the extent set forth in the Notice of Grant. To the extent not designated as an incentive stock option, or to the extent that the option does not qualify as an incentive stock option, the option shall be a nonstatutory stock option. Except as otherwise indicated by the context, the term “Participant”, as used in this option, shall be deemed to include any person who acquires the right to exercise this option validly under its terms.

 

2.             Vesting Schedule. This option will become exercisable (“vest”) in accordance with the Vesting Table set forth in the Notice of Grant.

 

The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all Shares for which it is vested until the earlier of the Final Exercise Date or the termination of this option under Section 3 hereof or the Plan.

 

3.              Exercise of Option.

 

(a)              Form of Exercise. Each election to exercise this option shall be accompanied by a completed Notice of Stock Option Exercise in the form attached hereto as Exhibit B, signed by the Participant, and received by the Company at its principal office, accompanied by this Agreement, and payment in full in the manner provided in the Plan. The Participant may purchase less than the number of Shares covered hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares (unless the number of Shares that remain subject to this option at the time of exercise is less than ten whole shares, in which case the Participant may purchase the total number of whole shares that remain subject to this option).

 

(b)              Continuous Relationship with the Company Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the Grant Date, an employee, officer or director of, or consultant or advisor to, the Company or any parent or subsidiary of the Company as defined in Section 424(e) or (f) of the Code or any other entity the employees, officers, directors, consultants, or advisors of which are eligible to receive option grants under the Plan (an “Eligible Participant”).

 

 

(c)              Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, then, except as provided in paragraphs (d) and (e) below, the right to exercise this option shall terminate three months after such cessation (but in no event after the Final Exercise Date), provided that this option shall be exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation. Notwithstanding the foregoing, if the Participant, prior to the Final Exercise Date, violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Participant and the Company, the right to exercise this option shall terminate immediately upon such violation.

 

(d)              Exercise Period Upon Death or Disability. If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date while he or she is an Eligible Participant and the Company has not terminated such service relationship for “cause” as specified in paragraph (e) below, this option shall be exercisable, within the period of one year following the date of death or disability of the Participant, by the Participant (or in the case of death by an authorized transferee), provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date of his or her death or disability, and further provided that this option shall not be exercisable after the Final Exercise Date.

 

(e)              Termination for Cause. If, prior to the Final Exercise Date, the Participant’s service relationship with the Company is terminated by the Company for Cause (as defined below), the right to exercise this option shall terminate immediately upon the effective date of such termination. If, prior to the Final Exercise Date, the Participant is given notice by the Company of the termination of his or her service relationship by the Company for Cause, and the effective date of such termination is subsequent to the date of the delivery of such notice, the right to exercise this option shall be suspended from the time of the delivery of such notice until the earlier of (i) such time as it is determined or otherwise agreed that the Participant’s service relationship shall not be terminated for Cause as provided in such notice or (ii) the effective date of such termination (in which case the right to exercise this option shall, pursuant to the preceding sentence, terminate immediately upon the effective date of such termination). If the Participant is party to an employment, consulting or severance agreement with the Company or subject to a severance plan maintained by the Company, in either case, that contains a definition of “cause” for termination of service, “Cause” shall have the meaning ascribed to such term in such agreement or plan. Otherwise, “Cause” shall mean willful misconduct by the Participant or willful failure by the Participant to perform his or her responsibilities to the Company (including, without limitation, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other similar agreement between the Participant and the Company), as determined by the Company, which determination shall be conclusive. The Participant’s service relationship shall be considered to have been terminated for “Cause” if the Company determines, within 30 days after the Participant’s termination of service, that termination for Cause was warranted.

 

 

4.              Company Right of First Refusal.

 

(a)              Notice of Proposed Transfer. If the Participant proposes to sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively, “transfer”) any Shares acquired upon exercise of this option, then the Participant shall first give written notice of the proposed transfer (the “Transfer Notice”) to the Company. The Transfer Notice shall name the proposed transferee and state the number of such Shares the Participant proposes to transfer (the “Offered Shares”), the price per share and all other material terms and conditions of the transfer.

 

(b)              Company Right to Purchase. For 30 days following its receipt of such Transfer Notice, the Company shall have the option to purchase all or part of the Offered Shares at the price and upon the terms set forth in the Transfer Notice. In the event the Company elects to purchase all or part of the Offered Shares, it shall give written notice of such election to the Participant within such 30-day period. Within 10 days after his or her receipt of such notice, the Participant shall tender to the Company at its principal offices the certificate or certificates representing the Offered Shares to be purchased by the Company, duly endorsed in blank by the Participant or with duly endorsed stock powers attached thereto, all in a form suitable for transfer of the Offered Shares to the Company. Promptly following receipt of such certificate or certificates, the Company shall deliver or mail to the Participant a check in payment of the purchase price for such Offered Shares; provided that if the terms of payment set forth in the Transfer Notice were other than cash against delivery, the Company may pay for the Offered Shares on the same terms and conditions as were set forth in the Transfer Notice; and provided further that any delay in making such payment shall not invalidate the Company’s exercise of its option to purchase the Offered Shares.

 

(c)              Shares Not Purchased By Company. If the Company does not elect to acquire all of the Offered Shares, the Participant may, within the 30-day period following the expiration of the option granted to the Company under subsection (b) above, transfer the Offered Shares which the Company has not elected to acquire to the proposed transferee, provided that such transfer shall not be on terms and conditions more favorable to the transferee than those contained in the Transfer Notice. Notwithstanding any of the above, all Offered Shares transferred pursuant to this Section 4 shall remain subject to the right of first refusal set forth in this Section 4 and such transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Section 4.

 

(d)              Consequences of Non-Delivery. After the time at which the Offered Shares are required to be delivered to the Company for transfer to the Company pursuant to subsection (b) above, the Company shall not pay any dividend to the Participant on account of such Offered Shares or permit the Participant to exercise any of the privileges or rights of a stockholder with respect to such Offered Shares, but shall, insofar as permitted by law, treat the Company as the owner of such Offered Shares.

 

(e)              Exempt Transactions. The following transactions shall be exempt from the provisions of this Section 4:

 

(1)              any transfer of Shares to or for the benefit of any spouse, child or grandchild of the Participant, or to a trust for their benefit;

 

 

(2)              any transfer pursuant to an effective registration statement filed by the Company under the Securities Act of 1933, as amended (the “Securities Act”); and

 

(3)              the sale of all or substantially all of the outstanding shares of capital stock of the Company (including pursuant to a merger or consolidation);

 

provided, however, that in the case of a transfer pursuant to clause (1) above, such Shares shall remain subject to the right of first refusal set forth in this Section 4.

 

(f)              Assignment of Company Right. The Company may assign its rights to purchase Offered Shares in any particular transaction under this Section 4 to one or more persons or entities.

 

(g)              Termination. The provisions of this Section 4 shall terminate upon the earlier of the following events:

 

(1)              the closing of the sale of shares of Common Stock in an underwritten public offering pursuant to an effective registration statement filed by the Company under the Securities Act; or

 

(2)              the sale of all or substantially all of the outstanding shares of capital stock, assets or business of the Company, by merger, consolidation, sale of assets or otherwise (other than a merger or consolidation in which all or substantially all of the individuals and entities who were beneficial owners of the Company’s voting securities immediately prior to such transaction beneficially own, directly or indirectly, more than 50% (determined on an as-converted basis) of the outstanding securities entitled to vote generally in the election of directors of the resulting, surviving or acquiring corporation in such transaction).

 

(h)              No Obligation to Recognize Invalid Transfer. The Company shall not be required (1) to transfer on its books any of the Shares which shall have been sold or transferred in violation of any of the provisions set forth in this Section 4, or (2) to treat as owner of such Shares or to pay dividends to any transferee to whom any such Shares shall have been so sold or transferred.

 

(i)              Legends. The certificate representing Shares shall bear a legend substantially in the following form (in addition to, or in combination with, any legend required by applicable federal and state securities laws and agreements relating to the transfer of the Company securities):

 

“The shares represented by this certificate are subject to a right of first refusal in favor of the Company, as provided in a certain stock option agreement with the Company.”

 

 

5.              Agreement in Connection with Initial Public Offering.

 

The Participant agrees, in connection with the initial underwritten public offering of the Common Stock pursuant to a registration statement under the Securities Act, (i) not to (a) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any other securities of the Company or (b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of shares of Common Stock or other securities of the Company, whether any transaction described in clause (a) or (b) is to be settled by delivery of securities, in cash or otherwise, during the period beginning on the date of the filing of such registration statement with the Securities and Exchange Commission and ending 180 days after the date of the final prospectus relating to the offering (plus up to an additional 34 days to the extent requested by the managing underwriters for such offering in order to address NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4) or any similar successor provision), and (ii) to execute any agreement reflecting clause (i) above as may be requested by the Company or the managing underwriters at the time of such offering. The Company may impose stop-transfer instructions with respect to the shares of Common Stock or other securities subject to the foregoing restriction until the end of the “lock-up” period.

 

6.              Tax Matters.

 

(a)              Withholding. No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option.

 

(b)              Disqualifying Disposition. If this option satisfies the requirements to be treated as an incentive stock option under the Code and the Participant disposes of Shares acquired upon exercise of this option within two years from the Grant Date or one year after such Shares were acquired pursuant to exercise of this option, the Participant shall notify the Company in writing of such disposition.

 

7.              Transfer Restrictions.

 

(a)              This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this option shall be exercisable only by the Participant.

 

(b)              The Participant agrees that he or she will not transfer any Shares issued pursuant to the exercise of this option unless the transferee, as a condition to such transfer, delivers to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of Section 4 and Section 5; provided that such a written confirmation shall not be required with respect to (1) Section 4 after such provision has terminated in accordance with Section 4(g) or (2) Section 5 after the completion of the lock-up period in connection with the Company’s initial underwritten public offering.

 

8.              Provisions of the Plan.

 

This option is subject to the provisions of the Plan (including the provisions relating to amendments to the Plan), a copy of which is attached hereto as Exhibit C.

 

[Remainder of Page Intentionally Left Blank]

 

 

Exhibit B

 

Notice of Stock Option Exercise

 

[DATE]³

 

Xilio Therapeutics, Inc.
828 Winter Street
Waltham, MA 02451 

Attention: [Treasurer]

 

Dear Sir or Madam:

 

I am the holder of [__________]⁴ Stock Option granted to me under the Xilio Therapeutics, Inc. (the “Company”) 2020 Stock Incentive Plan on [__________]⁵ for the purchase of [__________]⁶ shares of Common Stock of the Company at a purchase price of $[__________]⁷ per share.

 

I hereby exercise my option to purchase [_________]⁸ shares of Common Stock (the “Shares”), for which I have enclosed [__________]⁹ in the amount of [________]¹⁰. Please register my stock certificate as follows:

 

Name(s):	11
Address:

 

I represent, warrant and covenant as follows:

 

1.              I am purchasing the Shares for my own account for investment only, and not with a view to, or for sale in connection with, any distribution of the Shares in violation of the Securities Act of 1933 (the “Securities Act”), or any rule or regulation under the Securities Act.

 

³       Enter date of exercise.

⁴       Enter either “an Incentive” or “a Nonstatutory” or both.

⁵       Enter the date of grant.

⁶       Enter the total number of shares of Common Stock for which the option was granted.

⁷       Enter the option exercise price per share of Common Stock.

⁸       Enter the number of shares of Common Stock to be purchased upon exercise of all or part of the option.

⁹       Enter “cash”, “personal check” or if permitted by the option or Plan, “stock certificates No. XXXX and XXXX”.

¹⁰     Enter the dollar amount (price per share of Common Stock times the number of shares of Common Stock to be purchased), or the number of shares tendered. Fair market value of shares tendered, together with cash or check, must cover the purchase price of the shares issued upon exercise.

¹¹      Enter name(s) to appear on stock certificate in one of the following formats: (a) your name only (i.e., John Doe); (b) your name and other name (i.e., John Doe and Jane Doe, Joint Tenants with Right to Survivorship); or for Nonstatutory Stock Options only, (c) a child’s name, with you as custodian (i.e. Jane Doe, Custodian for Tommy Doe). Note: There may be income and/or gift tax consequences for registering shares in a child’s name.

 

 

2.              I have had such opportunity as I have deemed adequate to obtain from representatives of the Company such information as is necessary to permit me to evaluate the merits and risks of my investment in the Company.

 

3.             I have sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the Shares and to make an informed investment decision with respect to such purchase.

 

4.              I can afford a complete loss of the value of the Shares and am able to bear the economic risk of holding such Shares for an indefinite period.

 

5.              I understand that (i) the Shares have not been registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act, (ii) the Shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (iii) in any event, the exemption from registration under Rule 144 will not be available for at least six months and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and (iv) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register the Shares under the Securities Act.

 

[By the execution and delivery of this Notice of Stock Option Exercise, I shall be, and hereby agree to be, bound by the (i) Voting Agreement, dated [__________], 2020, by and among the Company and the other signatories thereto, as amended and/or restated from time to time (the “Voting Agreement”), as a “Key Holder” and “Stockholder” (each as defined in the Voting Agreement) for all purposes under the Voting Agreement and (ii) Right of First Refusal and Co-Sale Agreement, dated [__________], 2020, by and among the Company and the other signatories thereto, as amended and/or restated from time to time (the “ROFR and Co-Sale Agreement”), as a “Key Holder” (as defined in the ROFR and Co-Sale Agreement) for all purposes under the ROFR and Co-Sale Agreement. In addition to the foregoing, I shall execute and deliver to the Company (i) an Adoption Agreement in the form attached to the Voting Agreement, thereby agreeing to be bound by and subject to the terms of the Voting Agreement as a “Key Holder” and “Stockholder” (each as defined in the Voting Agreement) and (ii) a counterpart signature page to the ROFR and Co-Sale Agreement, thereby agreeing to be bound by and subject to the terms of the ROFR and Co-Sale Agreement as a “Key Holder” (as defined in the ROFR and Co-Sale Agreement). I acknowledge and agree that I have received a copy of the Voting Agreement and the ROFR and Co-Sale Agreement.]¹²

 

¹² Include this provision if the Participant is a 1% stockholder (calculated on a fully diluted basis). In addition, the Participant should receive a copy of the Voting Agreement and ROFR and Co-Sale Agreement and also execute and deliver the Adoption Agreement pursuant to the terms of the Voting Agreement and a counterpart signature page to the ROFR and Co-Sale Agreement.

 

 

Very truly yours,

 

 

Exhibit C

Xilio Therapeutics, Inc. 2020 Stock Incentive Plan

 

Exhibit 10.4

 

Xilio Therapeutics, Inc.

 

Restricted Stock Agreement
Granted Under 2020 Stock Incentive Plan

 

This Restricted Stock Agreement (the “Agreement”) is made this [____] day of [_____________], 20[ ], between Xilio Therapeutics, Inc., a Delaware corporation (the “Company”), and [________________________] (the “Participant”).

 

For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:

 

1.           Purchase of Shares.

 

The Company shall issue and sell to the Participant, and the Participant shall purchase from the Company, subject to the terms and conditions set forth in this Agreement and in the Company’s 2020 Stock Incentive Plan (the “Plan”), [______] shares (the “Shares”) of common stock, $0.0001 par value, of the Company (“Common Stock”), at a purchase price of $[_____] per share. The aggregate purchase price for the Shares shall be paid by the Participant by check payable to the order of the Company or such other method as may be acceptable to the Company. Upon receipt by the Company of payment for the Shares, the Company shall issue to the Participant one or more certificates in the name of the Participant for that number of Shares purchased by the Participant. The Participant agrees that the Shares shall be subject to the purchase options set forth in Sections 3 and 6 of this Agreement and the restrictions on transfer set forth in Section 5 of this Agreement.

 

2.            Certain Definitions.

 

(a)            [“Cause” shall exist upon (i) a good faith finding by the Board of Directors of the Company (A) of repeated and willful failure of the Participant after written notice to perform the Participant’s reasonably assigned duties for the Company, or (B) that the Participant has engaged in dishonesty, gross negligence or misconduct, which dishonesty, gross negligence or misconduct has had a material adverse effect on the business affairs of the Company; (ii) the conviction of the Participant of, or the entry of a pleading of guilty or nolo contendere by the Participant to, any crime involving moral turpitude or any felony; or (iii) a breach by the Participant of any material provision of any invention and non-disclosure agreement or non-competition and non-solicitation agreement with the Company, which breach is not cured within ten days written notice thereof.] ¹

 

(b)            “Change in Control” shall mean the sale of all or substantially all of the outstanding shares of capital stock, assets or business of the Company, by merger, consolidation, sale of assets or otherwise (other than a merger or consolidation in which all or substantially all of the individuals and entities who were beneficial owners of the Company’s voting securities immediately prior to such transaction beneficially own, directly or indirectly, more than 50% (determined on an as-converted basis) of the outstanding securities entitled to vote generally in the election of directors of the resulting, surviving or acquiring corporation in such transaction).

 

¹ Delete definition if acceleration is not being used.

 

 

(c)            [“Good Reason” shall exist upon (i) the relocation of the Company’s offices such that the Participant's daily commute is increased by at least thirty (30) miles each way without the written consent of the Participant; (ii) material reduction of the Participant’s annual base salary without the prior consent of the Participant (other than in connection with, and substantially proportionate to, reductions by the Company of the annual base salary of more than fifty percent (50%) of its employees); or (iii) material diminution in the Participant’s duties, authority or responsibilities without the prior consent of the Participant, other than changes in duties, authority or responsibilities resulting from the Participant’s misconduct; provided, however, that any reduction in duties, authority or responsibilities or reduction in the level of management to which the Participant reports resulting solely from a Change in Control which results in the Company being acquired by and made a part of a larger entity shall not constitute Good Reason; provided, further, however, that no such events or conditions shall constitute Good Reason unless (x) the Participant gives the Company a written notice of termination for Good Reason not more than ninety (90) days after the initial existence of the event or condition, (y) the grounds for termination, if susceptible to correction, are not corrected by the Company within thirty (30) days of its receipt of such notice and (z) the Participant’s termination of Service occurs within six months following the Company’s receipt of such notice.]²

 

(d)            “Service” shall mean employment by or the provision of services to the Company or a parent or subsidiary thereof as an advisor, officer, consultant or member of the Board of Directors.

 

(e)            “Vesting Commencement Date” shall mean [_________________].

 

3.            Purchase Option.

 

(a)            In the event that the Participant ceases to provide Service for any reason or no reason, with or without Cause, prior to [_________]³, the Company shall have the right and option (the “Purchase Option”) to purchase from the Participant, for a sum of $0.0001 per share (the “Option Price”), some or all of the Shares as set forth herein.

 

(b)            [________________________________________________________] ⁴.

 

(c)            [[________________________________________________________] ⁵.]

 

4.            Exercise of Purchase Option and Closing.

 

(a)            The Company may exercise the Purchase Option by delivering or mailing to the Participant (or the Participant’s estate), within 180 days after the termination of the Service of the Participant, a written notice of exercise of the Purchase Option. Such notice shall specify the number of Shares to be purchased. If and to the extent the Purchase Option is not so exercised by the giving of such a notice within such 180-day period, the Purchase Option shall automatically expire and terminate effective upon the expiration of such 180-day period.

 

² Delete definition if acceleration is not being used.

³ The end of the vesting period as established in Section 3(b).

⁴ Vesting schedule to be completed.

⁵ Acceleration terms (if applicable) to be completed.

 

 

(b)            Within ten (10) days after delivery to the Participant of the Company’s notice of the exercise of the Purchase Option pursuant to subsection (a) above, the Participant (or the Participant’s estate) shall, pursuant to the provisions of the Joint Escrow Instructions referred to in Section 8 below, tender to the Company at its principal offices the certificate or certificates representing the Shares that the Company has elected to purchase in accordance with the terms of this Agreement, duly endorsed in blank or with duly endorsed stock powers attached thereto, all in form suitable for the transfer of such Shares to the Company. Promptly following its receipt of such certificate or certificates, the Company shall pay to the Participant the aggregate Option Price for such Shares (provided that any delay in making such payment shall not invalidate the Company’s exercise of the Purchase Option with respect to such Shares).

 

(c)            After the time at which any Shares are required to be delivered to the Company for transfer to the Company pursuant to subsection (b) above, the Company shall not pay any dividend to the Participant on account of such Shares or permit the Participant to exercise any of the privileges or rights of a stockholder with respect to such Shares, but shall, in so far as permitted by law, treat the Company as the owner of such Shares.

 

(d)            The Option Price may be payable, at the option of the Company, in cancellation of all or a portion of any outstanding indebtedness of the Participant to the Company or in cash (by check) or both.

 

(e)            The Company shall not purchase any fraction of a Share upon exercise of the Purchase Option, and any fraction of a Share resulting from a computation made pursuant to Section 3 of this Agreement shall be rounded to the nearest whole Share (with any one-half Share being rounded upward).

 

(f)             The Company may assign its Purchase Option to one or more persons or entities.

 

5.            Restrictions on Transfer.

 

(a)            The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”) any Shares, or any interest therein, that are subject to the Purchase Option, except that the Participant may transfer such Shares (i) to or for the benefit of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any other relatives approved by the Board of Directors (collectively, “Approved Relatives”) or to a trust established solely for the benefit of the Participant and/or Approved Relatives, provided that such Shares shall remain subject to this Agreement (including without limitation the restrictions on transfer set forth in this Section 5, the Purchase Option and the right of first refusal set forth in Section 6) and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement or (ii) as part of the sale of all or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation), provided that, in accordance with the Plan, the securities or other property received by the Participant in connection with such transaction shall remain subject to this Agreement.

 

 

(b)            The Participant shall not transfer any Shares, or any interest therein, that are no longer subject to the Purchase Option, except in accordance with Section 6 below.

 

6.             Right of First Refusal.

 

(a)            If the Participant proposes to transfer any Shares that are no longer subject to the Purchase Option (either because they are free from the Purchase Option pursuant to Section 3 or because the Purchase Option expired unexercised pursuant to Section 4), then the Participant shall first give written notice of the proposed transfer (the “Transfer Notice”) to the Company. The Transfer Notice shall name the proposed transferee and state the number of such Shares the Participant proposes to transfer (the “Offered Shares”), the price per share and all other material terms and conditions of the transfer.

 

(b)            For 30 days following its receipt of such Transfer Notice, the Company shall have the option to purchase all or part of the Offered Shares at the price and upon the terms set forth in the Transfer Notice. In the event the Company elects to purchase all or part of the Offered Shares, it shall give written notice of such election to the Participant within such 30-day period. Within 10 days after the Participant’s receipt of such notice, the Participant shall tender to the Company at its principal offices the certificate or certificates representing the Offered Shares to be purchased by the Company, duly endorsed in blank by the Participant or with duly endorsed stock powers attached thereto, all in a form suitable for transfer of the Offered Shares to the Company. Promptly following receipt of such certificate or certificates, the Company shall deliver or mail to the Participant a check in payment of the purchase price for such Offered Shares; provided that if the terms of payment set forth in the Transfer Notice were other than cash against delivery, the Company may pay for the Offered Shares on the same terms and conditions as were set forth in the Transfer Notice; and provided further that any delay in making such payment shall not invalidate the Company’s exercise of its option to purchase the Offered Shares.

 

(c)            If the Company does not elect to acquire all of the Offered Shares, the Participant may, within the 30-day period following the expiration of the option granted to the Company under subsection (b) above, transfer the Offered Shares which the Company has not elected to acquire to the proposed transferee, provided that such transfer shall not be on terms and conditions more favorable to the transferee than those contained in the Transfer Notice. Notwithstanding any of the above, all Offered Shares transferred pursuant to this Section 6 shall remain subject to this Agreement (including without limitation the restrictions on transfer set forth in Section 5 and the right of first refusal set forth in this Section 6) and such transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement.

 

(d)            After the time at which the Offered Shares are required to be delivered to the Company for transfer to the Company pursuant to subsection (b) above, the Company shall not pay any dividend to the Participant on account of such Offered Shares or permit the Participant to exercise any of the privileges or rights of a stockholder with respect to such Offered Shares, but shall, insofar as permitted by law, treat the Company as the owner of such Offered Shares.

 

 

(e)            The following transactions shall be exempt from the provisions of this Section 6:

 

(1)            a transfer of Shares to or for the benefit of any Approved Relatives, or to a trust established solely for the benefit of the Participant and/or Approved Relatives;

 

(2)            any transfer pursuant to an effective registration statement filed by the Company under the Securities Act of 1933, as amended (the “Securities Act”); and

 

(3)             the sale of all or substantially all of the outstanding shares of capital stock of the Company (including pursuant to a merger or consolidation);

 

provided, however, that in the case of a transfer pursuant to clause (1) above, such Shares shall remain subject to this Agreement (including without limitation the restrictions on transfer set forth in Section 5 and the right of first refusal set forth in this Section 6) and such transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement.

 

(f)            The Company may assign its rights to purchase Offered Shares in any particular transaction under this Section 6 to one or more persons or entities.

 

(g)            The provisions of this Section 6 shall terminate upon the earlier of the following events:

 

(1)             the closing of the sale of shares of Common Stock in an underwritten public offering pursuant to an effective registration statement filed by the Company under the Securities Act; or

 

(2)            a Change in Control.

 

(h)            The Company shall not be required (1) to transfer on its books any of the Shares which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement, or (2) to treat as owner of such Shares or to pay dividends to any transferee to whom any such Shares shall have been so sold or transferred.

 

7.            Agreement in Connection with Initial Public Offering.

 

The Participant agrees, in connection with the initial underwritten public offering of the Common Stock pursuant to a registration statement under the Securities Act, (i) not to (a) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock or (b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of shares of Common Stock, whether any transaction described in clause (a) or (b) is to be settled by delivery of shares of Common Stock or other securities, in cash or otherwise, during the period beginning on the date of the filing of such registration statement with the Securities and Exchange Commission and ending 180 days from the date of the final prospectus relating to the offering (plus up to an additional 34 days to the extent requested by the managing underwriters for such offering in order to address NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4) or any similar successor provision), and (ii) to execute any agreement reflecting clause (i) above as may be requested by the Company or the managing underwriters at the time of such offering. The Company may impose stop-transfer instructions with respect to the shares of Common Stock or other securities subject to the foregoing restriction until the end of the “lock-up” period.

 

 

8.            Escrow.

 

The Participant shall, upon the execution of this Agreement, execute Joint Escrow Instructions in the form attached to this Agreement as Exhibit A. The Joint Escrow Instructions shall be delivered to the Secretary of the Company, as escrow agent thereunder. The Participant shall deliver to such escrow agent a stock assignment duly endorsed in blank, in the form attached to this Agreement as Exhibit B, and hereby instructs the Company to deliver to such escrow agent, on behalf of the Participant, the certificate(s) evidencing the Shares issued hereunder. Such materials shall be held by such escrow agent pursuant to the terms of such Joint Escrow Instructions.

 

9.            Restrictive Legends.

 

All certificates representing Shares shall have affixed thereto legends in substantially the following form, in addition to any other legends that may be required under federal or state securities laws:

 

“The shares of stock represented by this certificate are subject to restrictions on transfer and an option to purchase set forth in a certain Restricted Stock Agreement between the corporation and the registered owner of these shares (or such owner’s predecessor in interest), and such Agreement is available for inspection without charge at the office of the Secretary of the corporation.”

 

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be sold, transferred or otherwise disposed of in the absence of an effective registration statement under such Act or an opinion of counsel satisfactory to the corporation to the effect that such registration is not required.”

 

 

10.          Provisions of the Plan.

 

This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Agreement.

 

11.          Investment Representations.

 

The Participant represents, warrants and covenants as follows:

 

(a)            The Participant is purchasing the Shares for Participant’s own account for investment only, and not with a view to, or for sale in connection with, any distribution of the Shares in violation of the Securities Act, or any rule or regulation under the Securities Act.

 

(b)            The Participant has had such opportunity as Participant has deemed adequate to obtain from representatives of the Company such information as is necessary to permit him to evaluate the merits and risks of Participant’s investment in the Company.

 

(c)            The Participant has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the Shares and to make an informed investment decision with respect to such purchase.

 

(d)            The Participant can afford a complete loss of the value of the Shares and is able to bear the economic risk of holding such Shares for an indefinite period.

 

(e)            The Participant understands that (i) the Shares have not been registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act; (ii) the Shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (iii) in any event, the exemption from registration under Rule 144 will not be available for at least one year and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and (iv) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register the Shares under the Securities Act.

 

12.         Withholding Taxes; Section 83(b) Election.

 

(a)            The Participant acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Participant any federal, state or local taxes of any kind required by law to be withheld with respect to the purchase of the Shares by the Participant or the lapse of the Purchase Option.

 

(b)            The Participant has reviewed with the Participant’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (and not the Company) shall be responsible for the Participant’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. The Participant understands that it may be beneficial in many circumstances to elect to be taxed at the time the Shares are granted by the Company rather than when and as the Company’s Purchase Option expires by filing an election under Section 83(b) of the Internal Revenue Code of 1986 with the I.R.S. within 30 days from the date of grant by the Company.

 

 

THE PARTICIPANT ACKNOWLEDGES THAT IT IS SOLELY THE PARTICIPANT’S RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON THE PARTICIPANT’S BEHALF.

 

13.          Miscellaneous.

 

(a)            No Rights to Employment. The Participant acknowledges and agrees that the vesting of the Shares pursuant to Section 3 hereof is earned only by the Participant’s continuous Service (not through the act of being hired or purchasing the Shares hereunder). The Participant further acknowledges and agrees that the transactions contemplated hereunder and the vesting schedule set forth herein do not constitute an express or implied promise of continued engagement as an employee or consultant for the vesting period, for any period, or at all.

 

(b)            Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

 

(c)            Waiver. Any provision for the benefit of the Company contained in this Agreement may be waived, either generally or in any particular instance, by the Board of Directors of the Company.

 

(d)            Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Company and the Participant and their respective heirs, executors, administrators, legal representatives, successors and assigns, subject to the restrictions on transfer set forth in Sections 5 and 6 of this Agreement.

 

(e)            Notice. All notices required or permitted hereunder shall be in writing and deemed effectively given upon personal delivery or five days after deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party hereto at the address shown beneath his or her or its respective signature to this Agreement, or at such other address or addresses as either party shall designate to the other in accordance with this Section 13(e).

 

(f)            Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.

 

 

(g)            Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties, and supersedes all prior agreements and understandings, relating to the subject matter of this Agreement.

 

(h)            Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Participant.

 

(i)             Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the State of Delaware without regard to any applicable conflict of law principles.

 

(j)             Participant’s Acknowledgments. The Participant acknowledges that he or she: (i) has read this Agreement; (ii) has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of the Participant’s own choice or has voluntarily declined to seek such counsel; (iii) understands the terms and consequences of this Agreement; (iv) is fully aware of the legal and binding effect of this Agreement; and (v) understands that the law firm of WilmerHale is acting as counsel to the Company in connection with the transactions contemplated by the Agreement, and is not acting as counsel for the Participant.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the parties hereto have executed the Restricted Stock Agreement as of the date and year first above written. The Participant hereby agrees to the terms and conditions thereof. The Participant hereby acknowledges receipt of a copy of the Company’s 2020 Stock Incentive Plan.

 

	COMPANY:
	Xilio Therapeutics, Inc.
		By:
		Name:
		Title:

 

	Address:	[                                                                                                              ]
		[                                                                                                              ]

 

	PARTICIPANT:
	By:
		Name:

 

	Address:	[                                                                                                              ]
		[                                                                                                              ]

 

	SPOUSAL CONSENT:
	By:
		Name:

 

	Address:	[                                                                                                              ]
		[                                                                                                              ]

 

Signature Page to Restricted Stock Agreement

GRANTED UNDER STOCK INCENTIVE PLAN

 

 

Exhibit A

 

Joint Escrow Instructions

 

 

Xilio Therapeutics, Inc. Joint Escrow Instructions

 

[___________, 20__]

 

Xilio Therapeutics, Inc.
828 Winter Street

Waltham, MA 02451

 

Attention: Secretary

 

Dear Secretary:

 

As Escrow Agent for Xilio Therapeutics, Inc., a Delaware corporation (the “Company”), and its successors in interest under the Restricted Stock Agreement (the “Agreement”) of even date herewith, to which a copy of these Joint Escrow Instructions is attached, and the undersigned person (“Holder”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of the Agreement in accordance with the following instructions:

 

1.            Appointment. Holder irrevocably authorizes the Company to deposit with you any certificates evidencing Shares (as defined in the Agreement) to be held by you hereunder and any additions and substitutions to said Shares. For purposes of these Joint Escrow Instructions, “Shares” shall be deemed to include any additional or substitute property. Holder does hereby irrevocably constitute and appoint you as his or her attorney-in-fact and agent for the term of this escrow to execute with respect to such Shares all documents necessary or appropriate to make such Shares negotiable and to complete any transaction herein contemplated. Subject to the provisions of this Section 1 and the terms of the Agreement, Holder shall exercise all rights and privileges of a stockholder of the Company while the Shares are held by you.

 

2.            Closing of Purchase.

 

(a)            Upon any purchase by the Company of the Shares pursuant to the Agreement, the Company shall give to Holder and you a written notice specifying the number of Shares to be purchased, the purchase price for the Shares, as determined pursuant to the Agreement, and the time for a closing hereunder (the “Closing”) at the principal office of the Company. Holder and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice.

 

(b)            At the Closing, you are directed (i) to date the stock assignment form or forms necessary for the transfer of the Shares, (ii) to fill in on such form or forms the number of Shares being transferred, and (iii) to deliver the same, together with the certificate or certificates evidencing the Shares to be transferred, to the Company against the simultaneous delivery to you of the purchase price for the Shares being purchased pursuant to the Agreement.

 

3.            Withdrawal. The Holder shall have the right to withdraw from this escrow any Shares as to which the Purchase Option (as defined in the Agreement) has terminated or expired.

 

 

4.            Duties of Escrow Agent.

 

(a)            Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

 

(b)            You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact of Holder while acting in good faith and in the exercise of your own good judgment, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith.

 

(c)            You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or entity, excepting only orders or process of courts of law, and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. If you are uncertain of any actions to be taken or instructions to be followed, you may refuse to act in the absence of an order, judgment or decrees of a court. In case you obey or comply with any such order, judgment or decree of any court, you shall not be liable to any of the parties hereto or to any other person or entity, by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

 

(d)            You shall not be liable in any respect on account of the identity, authority or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder.

 

(e)            You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder and may rely upon the advice of such counsel.

 

(f)            Your rights and responsibilities as Escrow Agent hereunder shall terminate if (i) you cease to be Secretary of the Company or (ii) you resign by written notice to each party. In the event of a termination under clause (i), your successor as Secretary shall become Escrow Agent hereunder; in the event of a termination under clause (ii), the Company shall appoint a successor Escrow Agent hereunder.

 

(g)            If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

 

(h)            It is understood and agreed that if you believe a dispute has arisen with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such dispute shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.

 

 

(i)             These Joint Escrow Instructions set forth your sole duties with respect to any and all matters pertinent hereto and no implied duties or obligations shall be read into these Joint Escrow Instructions against you.

 

(j)            The Company shall indemnify you and hold you harmless against any and all damages, losses, liabilities, costs, and expenses, including attorneys’ fees and disbursements, (including without limitation the fees of counsel retained pursuant to Section 4(e) above, for anything done or omitted to be done by you as Escrow Agent in connection with this Agreement or the performance of your duties hereunder, except such as shall result from your gross negligence or willful misconduct.

 

5.            Notice. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by ten days’ advance written notice to each of the other parties hereto.

 

COMPANY:	Notices to the Company shall be sent to the address set forth in the salutation hereto, Attn: President
HOLDER:	Notices to Holder shall be sent to the address set forth below Holder's signature below.
ESCROW AGENT:	Notices to the Escrow Agent shall be sent to the address set forth in the salutation hereto.

 

6.            Miscellaneous.

 

(a)            By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions, and you do not become a party to the Agreement.

 

(b)            This instrument shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the parties hereto have executed these Joint Escrow Instructions as of the day and year first above written.

 

	Very truly yours,
	COMPANY:
	Xilio Therapeutics, Inc.
		By:
		Name:
		Title:

 

	HOLDER:
	By:
		Name:

 

	Address:	[                                                                                                              ]
		[                                                                                                              ]

 

	ESCROW AGENT:
	By:
		Name:
		Title:	Secretary

 

Signature Page to JOINT ESCROW INSTRUCTIONS

 

 

Exhibit B

 

Stock Assignment Separate from Certificate

 

 

Stock Assignment Separate from Certificate

 

FOR VALUE RECEIVED, I hereby sell, assign and transfer unto ____________________________________ (_________) shares of Common Stock, $0.0001 par value per share, of Xilio Therapeutics, Inc. (the “Corporation”) standing in my name on the books of the Corporation represented by Certificate(s) Number __________ herewith, and do hereby irrevocably constitute and appoint Wilmer Cutler Pickering Hale and Dorr LLP attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises.

 

Dated:                                               

 

	PARTICIPANT:
	[Name]
	Name of Spouse (if any):

 

Instructions to Participant: Please do not fill in any blanks other than the signature line(s). The purpose of the Stock Assignment Separate from Certificate is to enable the Company to acquire the Shares upon exercise of its Right of First Refusal and/or Purchase Option without requiring additional signatures on the part of the Participant or Participant’s spouse, if any. The signature(s) to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration, enlargement, or any change whatever.

 

 

Notice on 83(b) Elections

 

IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, THE FILING OF SUCH ELECTION IS YOUR RESPONSIBILITY.

 

THE FORM FOR MAKING THIS SECTION 83(B) ELECTION IS ATTACHED TO THIS AGREEMENT. YOU MUST FILE THIS FORM WITHIN 30 DAYS OF THE GRANT DATE.

 

YOU (AND NOT THE COMPANY, ANY OF ITS AGENTS OR ANY OTHER PERSON) SHALL BE SOLELY RESPONSIBLE FOR FILING SUCH FORM WITH THE IRS, EVEN IF YOU REQUEST THE COMPANY, ITS AGENTS OR ANY OTHER PERSON TO MAKE THIS FILING ON YOUR BEHALF AND EVEN IF THE COMPANY, ANY OF ITS AGENTS OR ANY OTHER PERSON HAS PREVIOUSLY MADE THIS FILING ON YOUR BEHALF.

 

The 83(b) election should be filed by mailing a signed election form by certified mail, return receipt requested to the IRS Service Center where you file your tax returns. See www.irs.gov.

 

 

Section 83(b) Election

 

The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the property described below and supplies the following information in accordance with Treas. Reg. § 1.83-2:

 

1.

The name, address, and taxpayer identification number of the undersigned are:

 

[Name]

[Address]

[City, State Zip]

 

Taxpayer Identification Number:                                               

 

2.

The property with respect to which this election is being made is [______] shares of common stock, $0.0001 par value per share, of Xilio Therapeutics, Inc., a Delaware corporation (the “Company”).

 

3.

The date on which the property was transferred or the date on which the restrictions on such property were imposed, whichever is later, is _________________, 20[__] and the taxable year for which this election is being made is the calendar year 20[__].

 

4.

The property is subject to vesting provisions and may be forfeited under the terms of a stock restriction agreement executed between the undersigned and the Company.

 

5.

The fair market value of the property at the time of the transfer or the date on which the restrictions on such property were imposed, whichever is later, (determined without regard to any lapse restriction, as defined in Treas. Reg. § 1.83-3(i)) is $[__________], equal to a fair market value of $[__________] per share.

 

6.

The amount paid for the property by the undersigned is $[__________], equal to a purchase price of $[__________] per share.

 

7.

This statement is executed on _________________, 20[__].

 

In accordance with Treas. Reg. § 1.83-2(d) & (e)(7), a copy of this statement has been furnished to the Company.

 

Signature of Taxpayer		Signature of Spouse (if any)

 

 

Section 83(b) Election

 

Background Information

 

Section 83(b) of the Internal Revenue Code permits persons who receive restricted property, such as restricted stock, in connection with the performance of services to include the value of such property in their gross income for the year the property is received. Such persons who purchase stock of the company subject to a stock restriction agreement providing for the vesting of such stock over a period of time are entitled to make this election. Any person who makes a timely Section 83(b) election will recognize compensation income on the date of grant (the date listed in item 3 of the election form) equal to the difference, if any, between the fair market value of the stock and the amount paid for the stock. A person who pays taxes in connection with an election and subsequently forfeits the stock, however, will not receive a refund or other tax benefit for the taxes previously paid.

 

Any person who does not make the election will be required to include the value of the stock in gross income in the year in which the stock vests. In particular, when the stock vests, the person will recognize compensation income in an amount equal to the difference between the fair market value of the stock on the vesting date and the amount paid for the stock. As a result, if the value of the stock increases, a person who does not make a timely Section 83(b) election will have compensation income at the time each installment of stock vests.

 

Each person should consult with his or her tax or legal advisor regarding the advisability and timing of filing the election. The original, signed and dated Section 83(b) election must be filed within 30 days of the grant date but may be filed prior to the grant date. The election should be filed by certified mail, return receipt requested, with the Internal Revenue Service at the service center where the electing person ordinarily files his or her annual tax return. A copy of the Section 83(b) election, as filed, must be returned to the company. A copy of the Section 83(b) election must also be included with the person’s federal income tax return for the year of grant (each person should check with his or her tax preparer regarding this and any state, local, foreign or other filing requirements).

 

Please also note that the certified mailing receipt for the Section 83(b) election should be retained. This receipt is essential if the Internal Revenue Service does not receive the Section 83(b) election and challenges the election.

 

 

Exhibit 10.9

 

XILIO THERAPEUTICS, INC.

 

DIRECTOR COMPENSATION POLICY

 

Effective upon the completion of the initial public offering (“IPO”) of Xilio Therapeutics, Inc. (the “Company”), the Company’s non-employee directors shall receive the following compensation for their service as members of the Board of Directors (the “Board”) of the Company.

 

Director Compensation

 

Our goal is to provide compensation for our non-employee directors in a manner that enables us to attract and retain outstanding director candidates and reflects the substantial time commitment necessary to oversee the Company’s affairs. We also seek to align the interests of our directors and our stockholders, and we have chosen to do so by compensating our non-employee directors with a mix of cash and equity-based compensation.

 

Cash Compensation

 

The annual cash retainer that will be paid to each of our non-employee directors for service on the Board, and for service on each committee of the Board on which the director is then a member, and the annual cash retainer that will be paid to the chairperson of the Board, if one is then appointed, and the chairperson of each committee of the Board will be as follows:

 

		Base				Board Chair or Committee Chair				Non-Chair Committee Members
Board of Directors		$	35,000			$	30,000				—
Audit Committee			—			$	15,000			$	7,500
Compensation Committee			—			$	10,000			$	5,000
Nominating and Corporate Governance Committee			—			$	8,000			$	4,000

 

The foregoing annual cash retainers will be payable in arrears in four equal quarterly installments on the last day of each quarter, provided that (i) the amount of such payment will be prorated for any portion of such quarter that the director is not serving on our Board or the applicable committee of the Board or, if applicable, as chairperson of the Board or the applicable committee, and (ii) no annual cash retainer shall be payable in respect of any period prior to the completion of our IPO.

 

 

Equity Compensation

 

Initial Equity Awards. Upon initial election to our Board, with respect to each non-employee director who is elected to our Board after the IPO, such non-employee director will be granted, automatically and without the need for any further action by the Board, an initial equity award of an option to purchase 250,000 shares of our common stock. The initial award shall have a term of ten years from the date of grant of the award, and shall vest and become exercisable as to 33.3333% of the shares underlying such award on each of the first, second and third anniversaries of the date of grant of the award, subject the director’s continued service to the Company or its subsidiaries through each applicable vesting date. The vesting shall accelerate as to 100% of the shares upon a director’s death or disability or a change in control of the Company (with disability and change in control each as defined in the form of Nonstatutory Stock Option Agreement for Non-Employee Directors). The exercise price shall be the closing price of our common stock on the date of grant (provided that, for any date that is not a trading day, the exercise price shall be determined in accordance with the applicable stock incentive plan then in effect).

 

Annual Equity Awards. Each non-employee director who is serving as a member of our Board will be granted, automatically and without the need for any further action by the Board, an option to purchase 125,000 shares of our common stock on the date of our first meeting of the Board held after each annual meeting of stockholders. The annual award shall have a term of ten years from the date of the award, and shall vest on the earlier of (i) the first anniversary of the date of grant of the award and (ii) the Company’s next annual meeting of stockholders following the grant date, subject to the director’s continued service to the Company or its subsidiaries through the vesting date. The vesting shall accelerate as to 100% of the shares upon a director’s death or disability or a change in control of the Company (with disability and change in control each as defined in the form of Non-Employee Director Stock Option Agreement). The exercise price shall be the closing price of our common stock on the date of grant (provided that, for any date that is not a trading day, the exercise price shall be determined in accordance with the applicable stock incentive plan then in effect).

 

Adjustments to Share Amounts. The foregoing share amounts shall be automatically adjusted in the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event affecting our common stock, or any distribution to holders of our common stock other than an ordinary cash dividend, including without limitation any reverse stock split of the common stock effected by the Company in connection with the IPO. In addition, in the case of a reverse stock split effected in connection with the IPO, the foregoing share amounts shall be rounded up to the nearest 100 shares following adjustment for such reverse stock split.

 

Other Terms and Conditions. The initial awards and the annual awards shall be subject to the terms and conditions of our 2021 Stock Incentive Plan, or any successor plan (including, but not limited to, any limits on compensation payable to non-employee directors contained in the 2021 Stock Incentive Plan or any successor plan), and the terms of the option agreements entered into with each director in connection with such awards.

 

 

Expenses

 

Upon presentation of documentation of such expenses reasonably satisfactory to the Company, each non-employee director shall be reimbursed for his or her reasonable out-of-pocket business expenses incurred in connection with attending meetings of the Board and committees thereof or in connection with other business related to the Board, and each non-employee director shall also be reimbursed for his or her reasonable out-of-pocket business expenses authorized by the Board or a committee of the Board that are incurred in connection with attendance at various conferences or meetings with management of the Company, in accordance with the Company’s travel policy, as it may be in effect from time to time.

 

Adopted:

September 10, 2021

Effective:      [●]

 

 

 

Exhibit 10.10

 

AKREVIA THERAPEUTICS INC.

 

AKREVIA CONCERTO LLC

 

LOAN AND SECURITY AGREEMENT

 

 

 

This LOAN AND SECURITY AGREEMENT (the “Agreement”) is entered into as of November 21, 2019, by and between PACIFIC WESTERN BANK, a California state chartered bank (“Bank”), and Akrevia Therapeutics Inc. and Akrevia Concerto LLC (individually and collectively referred to as “Borrower”).

 

RECITALS

 

Borrower wishes to obtain credit from time to time from Bank, and Bank desires to extend credit to Borrower. This Agreement sets forth the terms on which Bank will advance credit to Borrower, and Borrower will repay the amounts owing to Bank.

 

AGREEMENT

 

The parties agree as follows:

 

1.             DEFINITIONS AND CONSTRUCTION.

 

1.1          Definitions. As used in this Agreement, all capitalized terms shall have the definitions set forth on Exhibit A. Any term used in the Code and not defined herein shall have the meaning given to the term in the Code.

 

1.2          Accounting Terms. Any accounting term not specifically defined on Exhibit A shall be construed in accordance with GAAP and all calculations shall be made in accordance with GAAP (except for non-compliance with FAS 123R in monthly reporting). The term “financial statements” shall include the accompanying notes and schedules.

 

2.             LOAN AND TERMS OF PAYMENT.

 

2.1              Credit Extensions.

 

(a)               Promise to Pay. Borrower promises to pay to Bank, in lawful money of the United States of America, the aggregate unpaid principal amount of all Credit Extensions made by Bank to Borrower, together with interest on the unpaid principal amount of such Credit Extensions at rates in accordance with the terms hereof.

 

(b)       Term Loan.

 

(i)       Subject to and upon the terms and conditions of this Agreement, Bank agrees to make one (1) term loan to Borrower in the aggregate principal amount of Ten Million Dollars ($10,000,000) (the “Term Loan”). The proceeds of the Term Loan shall be used for general corporate purposes.

 

(ii)       Interest shall accrue from the date of the Term Loan at the rate specified in Section 2.3(a), and through the Interest-Only End Date shall be payable monthly in arrears beginning on the 21st day of the month next following the Term Loan, and continuing on the same day of each month thereafter. Any portion of the Term Loan that is outstanding on the Interest-Only End Date shall be payable in 30 equal monthly installments of principal, plus all accrued but unpaid interest, beginning on the date that is one month immediately following the Interest-Only End Date, and continuing on the same day of each month thereafter through the Term Loan Maturity Date, at which time all outstanding amounts due in connection with the Term Loan and any other outstanding amounts due under this Agreement shall be immediately due and payable. The Term Loan, once repaid, may not be reborrowed. Borrower may prepay all or any portion of the Term Loan without penalty or premium.

 

 

(iii)       Borrower hereby requests that Bank make the Term Loan on the Closing Date or as soon as practicable thereafter. To further document this request, Borrower shall notify Bank (which notice shall be irrevocable) by email to be received no later than 3:30 p.m. Eastern time on the day on which the Term Loan is to be made. Such notice shall be given by a Loan Advance Request Form in substantially the form of Exhibit C. The notice shall be signed by an Authorized Officer. Bank shall be entitled to rely on any notice given by a person whom Bank reasonably believes to be an Authorized Officer, and Borrower shall indemnify and hold Bank harmless for any damages, loss, costs, and expenses suffered by Bank as a result of such reliance.

 

(c)       Usage of Credit Card Services Under Credit Card Line.

 

(i)       Usage Period. Subject to and upon the terms and conditions of this Agreement, at any time through the Credit Card Maturity Date, Borrower may use the Credit Card Services (as defined below) in amounts and upon terms as provided in Section 2.1(c)(ii) below.

 

(ii)       Credit Card Services. Subject to and upon the terms and conditions of this Agreement, Borrower may request corporate credit cards services from Bank (the “Credit Card Services”). The aggregate limit of the corporate credit cards shall not exceed the Credit Card Line. The terms and conditions (including repayment and fees) of such Credit Card Services shall be subject to the terms and conditions of Bank’s standard forms of application and agreement for the Credit Card Services, which Borrower hereby agrees to execute.

 

(iii)       Collateralization of Obligations Extending Beyond Maturity. Borrower shall take such actions as Bank may reasonably request to cause its obligations with respect to any Credit Card Services to be secured to Bank’s reasonable satisfaction as of the Credit Card Maturity Date. If Borrower has not cash secured its obligations with respect to any Credit Card Services by the Credit Card Maturity Date, then, effective as of such date, the balance in any of Borrower’s deposit accounts held by Bank and the certificates of deposit or time deposit accounts issued by Bank in Borrower’s name (and any interest paid thereon or proceeds thereof, including any amounts payable upon the maturity or liquidation of such certificates or accounts) shall automatically secure such obligations to the extent of the then continuing or outstanding Credit Card Services. Borrower authorizes Bank to hold such balances in pledge and to decline to honor any drafts thereon or any requests by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as the applicable Credit Card Services are outstanding or continue.

 

 

2.2          [Reserved].

 

2.3          Interest Rates, Payments, and Calculations.

 

(a)               Interest Rates.

 

(i)                 Term Loan. Except as set forth in Section 2.3(b), the Term Loan shall bear interest, on the outstanding daily balance thereof, at a variable annual rate equal to the greater of: (A) 0.25% above the Prime Rate then in effect; or (B) 5.00%.

 

(b)              Late Fee; Default Rate. If any payment is not made within 15 days after the date such payment is due, at Bank’s election, Borrower shall pay Bank a late fee equal to the lesser of (i) 5% of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under applicable law. At Bank’s election, after the occurrence and during the continuance of an Event of Default, all Obligations shall bear interest, upon notice of such increase given by Bank, at a rate equal to five (5) percentage points above the interest rate applicable immediately prior to the occurrence of the Event of Default (such rate, the “Default Rate”); provided, that, from and after the occurrence of any Event of Default described in Section 8.5, such increase shall be automatic and without the requirement of any notice from Bank. In all such events, and notwithstanding the date on which application of the Default Rate is communicated to Borrower, the Default Rate may be accrued (at the election of Bank) from the initial date of any Event of Default until all existing Events of Default are waived in writing in accordance with the terms of this Agreement. 

 

(c)               Payments. Borrower authorizes Bank, at Bank’s option, to charge all interest, all Bank Expenses, all Periodic Payments, and any other amounts due and owing in accordance with the terms of this Agreement, in each case if and when due, against, first, a deposit account designated by Borrower in writing, and second, if insufficient funds remain in such account, against any of Borrower’s other deposit accounts. Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall thereafter accrue interest at the rate then applicable hereunder.

 

(d)              Computation. In the event the Prime Rate is changed from time to time hereafter, the applicable rate of interest hereunder shall be increased or decreased, effective as of the day the Prime Rate is changed, by an amount equal to such change in the Prime Rate. All interest chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed.

 

2.4          Crediting Payments. Prior to the occurrence of an Event of Default that is continuing, Bank shall credit a wire transfer of funds, check or other item of payment to such deposit account or Obligation as Borrower specifies. After the occurrence and during the continuance of an Event of Default, Bank shall have the right, in its reasonable discretion, to immediately apply any wire transfer of funds, check, or other item of payment Bank may receive to conditionally reduce Obligations, but such applications of funds shall not be considered a payment on account unless such payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Bank after 3:30 p.m. Eastern time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment to Bank under the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of such extension.

 

 

2.5          Fees. Borrower shall pay to Bank the following:

 

(a)               Bank Expenses. On the Closing Date, all Bank Expenses incurred through the Closing Date, provided that Borrower shall be responsible for no more than $25,000 of such Bank Expenses; and, after the Closing Date, all Bank Expenses, as and when they become due; and

 

(b)              Success Fee. Upon a Success Fee Event, Borrower shall pay to Bank a one-time fee of $500,000 (the “Success Fee”). This Section 2.5(b) shall survive any termination of this Agreement. If this Agreement is terminated prior to payment of the Success Fee, Borrower shall give Bank written notice of the first Success Fee Event to occur thereafter and pay the Success Fee upon the consummation of such Success Fee Event.

 

2.6              Term. This Agreement shall become effective on the Closing Date and, subject to Section 12.7, shall continue in full force and effect for so long as any Obligations (other than inchoate indemnity obligations) remain outstanding or Bank has any obligation to make Credit Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have the right to terminate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) Borrower may simultaneously with such payment terminate this agreement upon 3 Business Days written notice to Bank. Following such payment in full in cash of the Obligations (other than inchoate indemnity obligations) at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall release its Liens in the Collateral and Bank shall promptly take such action reasonably requested by Borrower, at Borrower’s sole cost and expense, in order to cause such Liens to be terminated of record (including by filing UCC-3 or similar termination statements with respect to such Liens), and all rights therein shall revert to Borrower.

 

3.             CONDITIONS OF LOANS.

 

3.1          Conditions Precedent to Closing. The agreement of Bank to enter into this Agreement on the Closing Date is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, each of the following items and completed each of the following requirements:

 

(a)               this Agreement;

 

(b)              an officer’s certificate of each Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement;

 

(c)               a financing statement (Form UCC-1);

 

 

(d)              Borrower shall have opened and funded not less than $50,000 in deposit accounts held with Bank;

 

(e)              a Loan Advance Request Form, delivered in the form and manner required by Section 2.1(b)(iii) of this Agreement, requesting that Bank make the Term Loan on or about the Closing Date;

 

(f)               current SOS Reports indicating that, except for Permitted Liens, there are no other security interests or Liens of record in the Collateral;

 

(g)              current financial statements, including Borrower-prepared statements for Borrower’s most recently ended fiscal year and Borrower-prepared consolidated and consolidating balance sheets and income statements for each of the preceding 12 months; and such other updated financial information as Bank may reasonably request;

 

(h)              a current Compliance Certificate in accordance with Section 6.2;

 

(i)               a Borrower Information Certificate for each Borrower and Parent Guarantor;

 

(j)               the Parent Guaranty, duly executed by Parent Guarantor, together with an officer’s certificate of Parent Guarantor with respect to incumbency and resolutions authorizing the execution and delivery of the Parent Guaranty; and

 

(k)               such other documents or certificates, and completion of such other matters, as Bank may have reasonably requested.

 

3.2          Conditions Precedent to all Credit Extensions. The obligation of Bank to make each Credit Extension, including the initial Credit Extension, is contingent upon Borrower’s compliance with Section 3.1 above, and is further subject to the following conditions:

 

(a)               timely receipt by Bank of the Loan Advance/Paydown Request Form as provided in Section 2.1(b)(iii);

 

(b)               in Bank’s sole but reasonable discretion, there has not been a Material Adverse Effect; and

 

(c)               the representations and warranties contained in Section 5 shall be true and correct in all material respects on and as of the date of such Loan Advance/Paydown Request Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and be continuing, or would result from such Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true and correct in all material respects as of such date, and provided further that any representation or warranty that contains a materiality qualification therein shall be true and correct in all respects). The making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2.

 

 

4.           CREATION OF SECURITY INTEREST.

 

4.1          Grant of Security Interest. Borrower grants and pledges to Bank a continuing security interest in the Collateral to secure prompt repayment of any and all Obligations and to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents. Except for Permitted Liens or as disclosed in the Schedule, such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in later-acquired Collateral. Borrower also hereby agrees not to sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its Intellectual Property, other than Permitted Liens. Notwithstanding any termination of this Agreement or of any filings undertaken related to Bank’s rights under the Code, Bank’s Lien on the Collateral shall remain in effect for so long as any Obligations (other than inchoate indemnity obligations) are outstanding. Upon request by Borrower and payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall release its liens and interests in the Collateral, and Bank shall take such actions as reasonably requested by Borrower in order to cause such Liens to be terminated of record (including filing UCC-3 or similar termination statements with respect to such Liens).

 

4.2          Perfection of Security Interest. Borrower authorizes Bank to file at any time financing statements, continuation statements, and amendments thereto that (i) either specifically describe the Collateral or describe the Collateral as all assets of Borrower of the kind pledged hereunder, and (ii) contain any other information required by the Code for the sufficiency of filing office acceptance of any financing statement, continuation statement, or amendment, including whether Borrower is an organization, the type of organization and any organizational identification number issued to Borrower, if applicable. Borrower shall have possession of the Collateral, except goods transferred in the ordinary course of business where expressly otherwise provided in this Agreement or where Bank chooses to perfect its security interest by possession in addition to the filing of a financing statement. Where Collateral is in possession of a third party bailee, Borrower shall take such steps as Bank reasonably requests for Bank to (i) subject to Section 7.11 below, obtain an acknowledgment, in form and substance reasonably satisfactory to Bank, of the bailee that the bailee holds such Collateral for the benefit of Bank, and (ii) subject to Section 6.6, obtain “control” of any Collateral consisting of investment property, deposit accounts, letter-of-credit rights or electronic chattel paper (as such items and the term “control” are defined in Revised Article 9 of the Code) by causing the securities intermediary or depositary institution or issuing bank to execute a control agreement in form and substance reasonably satisfactory to Bank. Borrower will not create any chattel paper without placing a legend on the chattel paper acceptable to Bank indicating that Bank has a security interest in the chattel paper. Borrower from time to time may deposit with Bank specific cash collateral to secure specific Obligations; Borrower authorizes Bank to hold such specific balances in pledge and to decline to honor any drafts thereon or any request by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as such specific Obligations are outstanding. Borrower shall take such other actions as Bank reasonably requests to perfect its security interests granted under this Agreement.

 

 

5.             REPRESENTATIONS AND WARRANTIES.

 

Borrower represents and warrants as follows:

 

5.1          Due Organization and Qualification. Borrower and each Subsidiary is duly existing under the laws of the state in which it is organized and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified, except where the failure to do so would not reasonably be expected to cause a Material Adverse Effect.

 

5.2          Due Authorization; No Conflict. The execution, delivery, and performance of the Loan Documents are within Borrower’s powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower’s Certificate of Incorporation or Bylaws, nor will they constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement by which it is bound, except to the extent such default would not reasonably be expected to cause a Material Adverse Effect.

 

5.3          Collateral. Borrower has rights in or the power to transfer the Collateral, and its title to the Collateral is free and clear of Liens, adverse claims, and restrictions on transfer or pledge except for Permitted Liens. Other than movable items of personal property used by Borrower’s employees in the ordinary course of business, such as laptop computers, all Collateral is located solely in the United States. All Inventory is in all material respects of good and merchantable quality, free from all material defects, except for Inventory for which adequate reserves have been made. Except as set forth in the Schedule or as permitted under Section 6.6, none of Borrower’s Cash is maintained or invested with a Person other than Bank or Bank’s affiliates.

 

5.4          Intellectual Property Collateral. Borrower is the sole owner of the intellectual property created or purchased by Borrower, except for (a) licenses permitted hereunder or granted by Borrower to its customers in the ordinary course of business, (b) over the counter software that is commercially available to the public, and (c) material intellectual property licensed to Borrower and noted on a Borrower Information Certificate. The intellectual property owned or licensed by Borrower constitutes all intellectual property material to the conduct of Borrower’s business as now conducted and as presently proposed to be conducted. To the best of Borrower’s knowledge, each of the Copyrights, Trademarks, and Patents created or purchased by Borrower is valid and enforceable, and no part of the intellectual property created or purchased by Borrower has been judged invalid or unenforceable, in whole or in part, and no claim has been made to Borrower that any part of the intellectual property created or purchased by Borrower violates the rights of any third party except, in each case, to the extent such claim would not reasonably be expected to cause a Material Adverse Effect.

 

5.5          Name; Location of Chief Executive Office. Except as disclosed in the Schedule or for which notice has been provided in accordance with Section 7.2, Borrower has not done business under any name other than that specified on the signature page hereof, and its exact legal name is as set forth in the first paragraph of this Agreement. The chief executive office of Borrower is located at the address indicated in Section 10 hereof.

 

 

5.6          Litigation. Except as set forth in the Schedule, there are no actions or proceedings pending by or against Borrower or any Subsidiary before any court or administrative agency in which a likely adverse decision would reasonably be expected to have a Material Adverse Effect.

 

5.7          No Material Adverse Change in Financial Statements. All consolidated and consolidating, if applicable, financial statements related to Borrower and any Subsidiary that are delivered by Borrower to Bank fairly present in all material respects Borrower’s consolidated and consolidating, if applicable, financial condition as of the date thereof and Borrower’s consolidated and consolidating, if applicable, results of operations for the period then ended. There has not been a material adverse change in the consolidated or in the consolidating financial condition of Borrower since the date of the most recent of such financial statements submitted to Bank.

 

5.8          Solvency, Payment of Debts. Borrower is able to pay its debts (including trade debts) as they mature; the fair saleable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; and Borrower is not left with unreasonably small capital after the transactions contemplated by this Agreement.

 

5.9          Compliance with Laws and Regulations. Borrower and each Subsidiary have met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. No event has occurred resulting from Borrower’s failure to comply with ERISA that is reasonably likely to result in Borrower’s incurring any liability that could have a Material Adverse Effect. Borrower is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has not violated any statutes, laws, ordinances or rules applicable to it, the violation of which would reasonably be expected to have a Material Adverse Effect. Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made adequate provision for the payment of, all taxes reflected therein except, in each case, those being contested in good faith with adequate reserves under GAAP or where the failure to file such returns or pay such taxes would not reasonably be expected to have a Material Adverse Effect.

 

5.10        Subsidiaries. Borrower does not own any stock, partnership interest or other equity securities of any Person, except for Permitted Investments.

 

5.11       Government Consents. Borrower and each Subsidiary have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower’s business as currently conducted, except where the failure to do so would not reasonably be expected to cause a Material Adverse Effect.

 

5.12        Inbound Licenses. Except as disclosed on the Schedule or as disclosed pursuant to Section 6.9, Borrower is not a party to, nor is bound by, any material license or other material agreement important for the conduct of Borrower’s business that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property important for the conduct of Borrower’s business, other than this Agreement or the other Loan Documents.

 

 

5.13        Full Disclosure. No representation, warranty or other statement made by Borrower in any certificate or written statement furnished to Bank taken together with all such certificates and written statements furnished to Bank contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading in light of the circumstances in which they were made, it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results.

 

6.             AFFIRMATIVE COVENANTS.

 

Borrower covenants that, until payment in full of all outstanding Obligations (other than inchoate indemnity obligations), and for so long as Bank may have any commitment to make a Credit Extension hereunder, Borrower shall do all of the following:

 

6.1          Good Standing and Government Compliance. Borrower shall maintain its and each of its Subsidiaries’ organizational existence and good standing in their respective states of formation, shall maintain qualification and good standing in each other jurisdiction in which the failure to so qualify would reasonably be expected to have a Material Adverse Effect, and shall furnish to Bank the organizational identification number issued to Borrower by the authorities of the state in which Borrower is organized, if applicable. Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and regulations to which it is subject, and shall maintain, and shall cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, in each case, the loss of which or failure to comply with which would reasonably be expected to have a Material Adverse Effect.

 

6.2          Financial Statements, Reports, Certificates, Collateral Audits.

 

(a)               Borrower shall deliver to Bank: (i) as soon as available, but in any event within 30 days after the end of each calendar month, a company prepared consolidated and consolidating, as applicable, balance sheet and income statement covering Borrower’s operations during such period, in a form reasonably acceptable to Bank and certified by a Responsible Officer; (ii) as soon as available, but in any event within 180 days after the end of Borrower’s fiscal year, audited consolidated and consolidating, as applicable, financial statements of Borrower prepared in accordance with GAAP, consistently applied, together with an opinion which is either unqualified, qualified only for going concern related solely to Borrower’s liquidity position, or otherwise consented to in writing by Bank on such financial statements from an independent certified public accounting firm reasonably acceptable to Bank; provided that, for Borrower’s 2019 fiscal year, Borrower need provide only Borrower-prepared financial statements; (iii) an annual budget approved by Borrower’s board of directors as soon as available but not later than 60 days after the beginning of each fiscal year during the term of this Agreement; (iv) if applicable, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt and all reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission; (v) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened against Borrower or any Subsidiary that could reasonably be expected to result in damages or costs to Borrower or any Subsidiary of $250,000 or more; (vi) promptly upon receipt, each management letter prepared by Borrower’s independent certified public accounting firm regarding Borrower’s management control systems; (vii) periodic informal clinical updates on any material developments as Borrower may determine appropriate or upon the request of Bank; and (viii) such budgets, sales projections, operating plans, or other financial information related to Borrower’s business as Bank may reasonably request from time to time.

 

 

(b)              Within 30 days after the last day of each month, Borrower shall deliver to Bank with the monthly financial statements described in Section 6.2(a)(i) above a Compliance Certificate certified as of the last day of the applicable month and signed by a Responsible Officer in substantially the form of Exhibit D hereto.

 

(c)               As soon as possible and in any event within 3 Business Days after becoming aware of the occurrence or existence of an Event of Default hereunder, Borrower shall deliver to Bank a written statement of a Responsible Officer setting forth details of the Event of Default, and the action which Borrower has taken or proposes to take with respect thereto.

 

(d)              Bank (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower’s usual business hours but no more than once a year (unless an Event of Default has occurred and is continuing), to inspect Borrower’s Books and to make copies thereof and to check, test, inspect, audit and appraise the Collateral at Borrower’s expense in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral.

 

Borrower may deliver to Bank on an electronic basis any certificates, reports or information required pursuant to this Section 6.2, and Bank shall be entitled to rely on the information contained in the electronic files, provided that Bank in good faith believes that the files were delivered by a Responsible Officer. Borrower shall include a submission date on any certificates and reports to be delivered electronically.

 

6.3          Inventory and Equipment; Returns. Borrower shall keep all Inventory and Equipment in good and merchantable condition, free from all material defects except for Inventory and Equipment (i) sold in the ordinary course of business, and (ii) for which adequate reserves have been made, in all cases in the United States. Returns and allowances, if any, as between Borrower and its account debtors shall be on the same basis and in accordance with the usual customary practices of Borrower, as they exist on the Closing Date, or as is standard in the industry. Borrower shall promptly notify Bank of all returns and recoveries and of all disputes and claims involving inventory having a book value of more than $100,000.

 

6.4          Taxes. Borrower shall make, and cause each Subsidiary to make, due and timely payment or deposit of all material federal, state, and local taxes, assessments, or contributions required of it by law, including, but not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability, and will execute and deliver to Bank, on demand, proof reasonably satisfactory to Bank indicating that Borrower or a Subsidiary has made such payments or deposits and any appropriate certificates attesting to the payment or deposit thereof; provided that Borrower or a Subsidiary need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower or such Subsidiary.

 

 

6.5          Insurance. Borrower, at its expense, shall (i) keep the Collateral insured against loss or damage, and (ii) maintain liability and other insurance, in each case as ordinarily insured against by other owners in businesses similar to Borrower’s. All such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Bank. All policies of property insurance shall contain a lender’s loss payable endorsement, in a form reasonably satisfactory to Bank, showing Bank as lender’s loss payee. All liability insurance policies shall show, or have endorsements showing, Bank as an additional insured. Any such insurance policies shall specify that the insurer must give at least 20 days’ notice to Bank before canceling its policy for any reason. Within 30 days of the Closing Date, Borrower shall cause to be furnished to Bank evidence that the insurance policies required by this section are in full force and effect, including a copy of its policies and appropriate evidence showing loss payable and additional insured clauses or endorsements in favor of Bank. Upon Bank’s request, Borrower shall deliver to Bank certified copies of the policies of insurance and evidence of all premium payments. Proceeds payable under any casualty policy will, at Borrower’s option, be payable to Borrower to replace the property subject to the claim, provided that any such replacement property shall be deemed Collateral in which Bank has been granted a first priority security interest, provided that if an Event of Default has occurred and is continuing, all proceeds payable under any such policy shall, at Bank’s option, be payable to Bank to be applied on account of the Obligations.

 

6.6          Primary Depository. Within 45 days after the Closing Date, Borrower shall maintain, and shall cause each Subsidiary to maintain, substantially all of its cash in depository or operating accounts with Bank. Notwithstanding the foregoing, (a) Borrower may maintain (i) when Borrower’s aggregate Cash at Bank equals or exceeds $1,000,000, up to $1,000,000, and (ii) at all other times, $250,000, in each case, in an account at Silicon Valley Bank to facilitate the payment of payroll and trade payables, provided that such account is subject to an account control agreement in favor of Bank, and (b) at any time when Borrower’s and Parent Guarantor’s aggregate Cash at Bank exceeds $50,000,000, Borrower may maintain amounts in excess of $50,000,000 in Cash or Investments with Pacific Western Asset Management. Prior to Borrower maintaining any investment accounts with Pacific Western Asset Management, Borrower, Bank, and Pacific Western Asset Management (or, if applicable, the relevant securities intermediary) shall have entered into a securities account control agreement with respect to any such investment accounts, in form and substance reasonably satisfactory to Bank.

 

6.7           Financial Covenants. Borrower shall achieve the following milestone covenant:

 

(a)               Funding Milestone. On or before January 31, 2020, Borrower shall deliver to Bank (i) a fully executed equity purchase agreement providing for an aggregate equity investment in Borrower or Parent Guarantor of at least $60,000,000, on terms and from investors reasonably acceptable to Bank; and (ii) evidence reasonably satisfactory to Bank that Borrower or Parent Guarantor has received, after the Closing Date, Cash proceeds of at least $30,000,000, less reasonable transaction expenses, from the sale or issuance of Borrower’s or Parent Guarantor’s equity securities to investors reasonably acceptable to Bank.

 

 

6.8          Protection of Intellectual Property Rights. Borrower shall use commercially reasonable efforts to (i) protect, defend and maintain the validity and enforceability of its trade secrets, Trademarks, Patents, and Copyrights material to its business, (ii) detect infringements of its Trademarks, Patents, and Copyrights and promptly advise Bank in writing of material infringements detected, and (iii) not allow any of its material Trademarks, Patents, or Copyrights to be abandoned, forfeited or dedicated to the public without the written consent of Bank, which shall not be unreasonably withheld.

 

6.9          Consent of Inbound Licensors. After entering into or becoming bound by any material inbound license or agreement, Borrower shall (i) on the next Compliance Certificate delivered to Bank after entering into such material license or agreement, provide both a copy of such license or agreement and a summary of the material terms of such license or agreement with a description of its likely impact on Borrower’s business or financial condition, and (ii) at Bank’s request, in good faith use commercially reasonable efforts to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for Borrower’s interest in such licenses or contract rights to be deemed Collateral and for Bank to have a security interest in it that might otherwise be restricted by the terms of the applicable license or agreement, whether now existing or entered into in the future, provided, however, that the failure to obtain any such consent or waiver shall not constitute a default under this Agreement.

 

6.10       Creation/Acquisition of Subsidiaries. In the event Borrower or any Subsidiary of Borrower creates or acquires any Subsidiary, Borrower or such Subsidiary shall promptly notify Bank of such creation or acquisition, and Borrower or such Subsidiary shall take all actions reasonably requested by Bank to achieve any of the following with respect to such “New Subsidiary” (defined as a Subsidiary formed after the date hereof during the term of this Agreement):  (i) to cause such New Subsidiary to become either (A) a co-borrower hereunder, if such New Subsidiary is organized under the laws of the United States, or (B) a secured guarantor with respect to the Obligations, if such New Subsidiary is not organized under the laws of the United States; and (ii) to grant and pledge to Bank a perfected security interest in 100% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such New Subsidiary.

 

6.11        Further Assurances. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Bank to effect the purposes of this Agreement.

 

7.             NEGATIVE COVENANTS.

 

Borrower covenants and agrees that, so long as any credit hereunder shall be available and until the outstanding Obligations (other than inchoate indemnity obligations) are paid in full or for so long as Bank may have any commitment to make any Credit Extensions, Borrower will not do any of the following without Bank’s prior written consent, which shall not be unreasonably withheld:

 

 

7.1         Dispositions. Convey, sell, lease, license, transfer, or otherwise dispose of (collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, or move cash balances on deposit with Bank to accounts opened at another financial institution not permitted by Section 6.6, in each case, other than Permitted Transfers.

 

7.2          Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year; Change in Control. Change its name or the state of Borrower’s formation or relocate its chief executive office without 30 days prior written notification to Bank; replace or suffer the departure of its chief executive officer or chief operating officer without delivering written notification to Bank within 10 days; fail to appoint an interim replacement or fill a vacancy in the position of chief executive officer or chief operating officer for more than 60 consecutive days; suffer a change on its board of directors which results in the failure of at least one partner of each of Atlas Venture or its Affiliate and F-Prime Capital or its Affiliate to serve as voting members without the prior written consent of Bank, which may be withheld in Bank’s sole discretion; take action to liquidate, wind up, or otherwise cease to conduct business in the ordinary course; engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or incidental to the businesses currently engaged in by Borrower; change its fiscal year end; convert to another form of incorporated or unincorporated business or entity; have a Change in Control; Divide.

 

7.3          Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations of a Subsidiary into another Subsidiary or into Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person, or a division, line of business, or business unit of another Person, in each case except where (a) each of the following conditions is applicable: (i) the consideration paid in connection with such transactions (including assumption of liabilities) does not in the aggregate exceed $250,000 during any fiscal year, (ii) no Event of Default has occurred, is continuing or would exist after giving effect to such transactions, (iii) such transactions do not result in a Change in Control, and (iv) Borrower is the surviving entity; or (b) the Obligations (other than inchoate indemnity obligations) are repaid in full and this Agreement is terminated concurrently with the closing of any merger or consolidation of Borrower in which Borrower is not the surviving entity. Borrower shall not, without Bank’s prior written consent, enter into any binding contractual arrangement with any investment banker, business broker, or similar Person to attempt to facilitate a merger or acquisition of Borrower or Borrower’s assets (any such agreement, an “Investment Banker Agreement”); unless (i) no Event of Default exists when such Investment Banker Agreement is entered into by Borrower, (ii) such Investment Banker Agreement does not give the counterparty the right, in connection with a sale of Borrower’s stock or assets pursuant to or resulting from an assignment for the benefit of creditors, an asset turnover to Borrower’s creditors (including, without limitation, Bank), foreclosure, bankruptcy or similar liquidation, to claim any fee, payment or damages from any parties, other than from Borrower or Borrower’s investors, and (iii) Borrower notifies Bank in advance of entering into such an Investment Banker Agreement (provided, the failure to give such notification shall not be deemed a material breach of this Agreement).

 

7.4           Indebtedness. Create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation to prepay any Indebtedness prior to the scheduled maturity date, except Indebtedness to Bank.

 

 

7.5          Encumbrances. Create, incur, assume or allow any Lien with respect to its property, or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens, or covenant to any other Person (other than (a) the licensors of in-licensed property with respect to such property or (b) the lessors of specific equipment or lenders financing specific equipment with respect to such leased or financed equipment) that Borrower in the future will refrain from creating, incurring, assuming or allowing any Lien with respect to any of Borrower’s property.

 

7.6          Distributions. Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any capital stock, except that Borrower may (a) repurchase the stock of former employees, consultants or directors pursuant to stock repurchase agreements in an aggregate amount not to exceed $500,000 in any fiscal year, as long as an Event of Default does not exist prior to such repurchase or would not exist after giving effect to such repurchase, and (b) repurchase the stock of former employees, consultants or directors pursuant to stock repurchase agreements by the cancellation of indebtedness owed by such former employees or directors to Borrower regardless of whether an Event of Default exists.

 

7.7          Investments. Directly or indirectly acquire or own an Investment in, or make any Investment in or to, any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments, or, except as permitted by Section 6.6, maintain or invest any of its investment property with a Person other than Bank or Bank’s affiliates or permit any Subsidiary to do so unless such Person has entered into a control agreement with Bank, in form and substance reasonably satisfactory to Bank, or suffer or permit any Subsidiary to be a party to, or be bound by, an agreement that restricts such Subsidiary from paying dividends or otherwise distributing property to Borrower.

 

7.8           Reserved.

 

7.9          Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for (a) transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person, and (b) bona fide sales or issuances of Borrower’s equity securities to Borrower’s investors that do not result in a Change in Control, and (c) customary compensation arrangements approved by Borrower’s board of directors.

 

7.10        Subordinated Debt. Make any payment in respect of any Subordinated Debt, or permit any of its Subsidiaries to make any such payment, except in compliance with the terms of such Subordinated Debt, or amend any provision affecting Bank’s rights contained in any documentation relating to the Subordinated Debt without Bank’s prior written consent.

 

7.11        Inventory and Equipment. On and after the date that is 90 days after the Closing Date, (a) Store Inventory or Equipment of a book value in excess of $250,000 with a bailee, warehouseman, collocation facility or similar third party unless such third party has been notified of Bank’s security interest and Bank has received a bailee waiver in favor of Bank, in form and substance satisfactory to Bank, duly executed by Borrower and such third party; or (b) with respect to any leased or licensed real property, store Collateral of a book value in excess of $250,000 unless the landlord has been notified of Bank’s security interest and Bank has received a landlord waiver, in form and substance satisfactory to Bank, duly executed by Borrower and such landlord.

 

 

7.12       No Investment Company; Margin Regulation. Become or be controlled by an “investment company,” within the meaning of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension for such purpose.

 

8.             EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an Event of Default by Borrower under this Agreement:

 

8.1          Payment Default. If Borrower fails to pay any of the Obligations when due;

 

8.2          Covenant Default.

 

(a)               If Borrower fails to perform any obligation under Sections 6.2 (financial reporting), 6.4 (taxes), 6.5 (insurance), 6.6 (primary accounts), or 6.7 (financial covenants), or violates any of the covenants contained in Article 7 of this Agreement; or

 

(b)              If Borrower fails or neglects to perform or observe any other material term, provision, condition, or covenant contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within 15 days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the 15 day period or cannot after diligent attempts by Borrower be cured within such 15 day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed 30 days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made;

 

8.3          Material Adverse Change. If there occurs any circumstance or any circumstances which would reasonably be expected to have a Material Adverse Effect. In determining whether a “Material Adverse Effect” has occurred or would reasonably be expected to occur, Bank recognizes that, as a pre-profit company, Borrower’s cash resources will decline over time, and Borrower will periodically require additional infusions of equity capital.  The clear intention of Borrower’s investors to continue to fund Borrower in the amounts and timeframe necessary, in Bank’s good faith judgment, to enable Borrower to satisfy the Obligations as they become due and payable is the most significant criterion Bank shall consider in making any such determination;

 

 

8.4          Attachment. If any material portion of Borrower’s assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within 10 days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any material portion of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within 10 days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower (provided that no Credit Extensions will be made during such cure period);

 

8.5         Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or stayed within 45 days (provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding);

 

8.6          Other Agreements. If (a) there is an uncured default or other uncured failure to perform in any agreement to which Borrower is a party with a third party or parties (i) resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of $500,000, (ii) in connection with any lease of real property material to the conduct of Borrower’s business, if such default or failure to perform results in the right of another party to terminate such lease, or (iii) that would reasonably be expected to have a Material Adverse Effect, or (b) any default or event of default (however designated) shall occur with respect to any Subordinated Debt that is not cured within any applicable cure period;

 

8.7          Judgments. If a final, uninsured judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least $500,000 shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of 10 days (provided that no Credit Extensions will be made prior to the satisfaction or stay of the judgment); or

 

8.8          Misrepresentations. If any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth herein or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this Agreement or any other Loan Document.

 

8.9          Guaranty. If any guaranty of all or a portion of the Obligations (including without limitation the Parent Guaranty) ceases for any reason to be in full force and effect, or any guarantor fails to perform any obligation under any such guaranty or a security agreement securing any such guaranty (collectively, the “Guaranty Documents”), or any event of default occurs and continues under any Guaranty Document or any guarantor revokes or purports to revoke such a guaranty, or any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth in any Guaranty Document or in any certificate delivered to Bank in connection with any Guaranty Document, or if any of the circumstances described in Sections 8.3 through 8.8 occur with respect to any guarantor.

 

 

9.             BANK’S RIGHTS AND REMEDIES.

 

9.1          Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following to the extent not prohibited by applicable law, all of which are authorized by Borrower:

 

(a)              Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.5 (insolvency), all Obligations shall become immediately due and payable without any action by Bank);

 

(b)               Demand that Borrower (i) deposit cash with Bank in an amount equal to the amount of any Letters of Credit remaining undrawn, as collateral security for the repayment of any future drawings under such Letters of Credit, and (ii) pay in advance all Letter of Credit fees scheduled to be paid or payable over the remaining term of the Letters of Credit, and Borrower shall promptly deposit and pay such amounts;

 

(c)               Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between Borrower and Bank;

 

(d)              Settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Bank reasonably considers advisable;

 

(e)              Make such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate at a location that is reasonably convenient to Bank and Borrower. Borrower authorizes Bank to peaceably enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank’s determination appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With respect to any of Borrower’s owned premises, Borrower hereby grants Bank a license to enter into possession of such premises and to occupy the same, without charge by Borrower, in order to exercise any of Bank’s rights or remedies provided herein, at law, in equity, or otherwise;

 

(f)               Place a “hold” on any account maintained with Bank, decline to honor presentments (including but not limited to checks, wires, and ACH drafts) against any account at Bank, and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any control agreement or similar agreements providing control of any Collateral;

 

(g)              Set off and apply to the Obligations then due any and all (i) balances and deposits of Borrower held by Bank, and (ii) indebtedness at any time owing to or for the credit or the account of Borrower held by Bank;

 

 

(h)              Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Bank is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements shall inure to Bank’s benefit;

 

(i)               Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower’s premises) as Bank determines is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Bank deems appropriate. Bank may sell the Collateral without giving any warranties as to the Collateral. Bank may specifically disclaim any warranties of title or the like. This procedure will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral. If Bank sells any of the Collateral upon credit, Borrower will be credited only with payments actually made by the purchaser, received by Bank, and applied to the indebtedness of the purchaser. If the purchaser fails to pay for the Collateral, Bank may resell the Collateral and Borrower shall be credited with the proceeds of the sale;

 

(j)               Bank may credit bid and purchase at any public sale;

 

(k)              Apply for the appointment of a receiver, trustee, liquidator or conservator of the Collateral, without notice and without regard to the adequacy of the security for the Obligations and without regard to the solvency of Borrower, any guarantor or any other Person liable for any of the Obligations; and

 

(l)               Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.

 

Bank may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral, and compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.

 

9.2          Power of Attorney. Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank’s designated officers, or employees) as Borrower’s true and lawful attorney to: (a) send requests for verification of Accounts or notify account debtors of Bank’s security interest in the Accounts; (b) endorse Borrower’s name on any checks or other forms of payment or security that may come into Bank’s possession; (c) sign Borrower’s name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims under and decisions with respect to Borrower’s policies of insurance; (f) settle and adjust disputes and claims respecting the accounts directly with account debtors, for amounts and upon terms which Bank determines to be reasonable; and (g) file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral; provided Bank may exercise such power of attorney to sign the name of Borrower on any of the documents described in clause (g) above, regardless of whether an Event of Default has occurred. The appointment of Bank as Borrower’s attorney in fact, and each and every one of Bank’s rights and powers, being coupled with an interest, is irrevocable until all of the Obligations (other than inchoate indemnity obligations) have been fully repaid and performed and Bank’s obligation to provide advances hereunder is terminated.

 

 

9.3         Accounts Collection. At any time after the occurrence and during the continuation of an Event of Default, Bank may notify any Person owing funds to Borrower of Bank’s security interest in such funds and verify the amount of such Account. Borrower shall collect all amounts owing to Borrower for Bank, receive in trust all payments as Bank’s trustee, and immediately deliver such payments to Bank in their original form as received from the account debtor, with proper endorsements for deposit.

 

9.4         Bank Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower: (a) make payment of the same or any part thereof; and/or (b) obtain and maintain insurance policies of the type discussed in Section 6.5 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement.

 

9.5         Bank’s Liability for Collateral. Bank has no obligation to clean up or otherwise prepare the Collateral for sale. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.

 

9.6         No Obligation to Pursue Others. Bank has no obligation to attempt to satisfy the Obligations by collecting them from any other person liable for them and Bank may release, modify or waive any collateral provided by any other Person to secure any of the Obligations, all without affecting Bank’s rights against Borrower. Borrower waives any right it may have to require Bank to pursue any other Person for any of the Obligations.

 

9.7         Remedies Cumulative. Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on Borrower’s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written document signed on behalf of Bank and then shall be effective only in the specific instance and for the specific purpose for which it was given. Borrower expressly agrees that this Section 9.7 may not be waived or modified by Bank by course of performance, conduct, estoppel or otherwise.

 

 

9.8              Demand; Protest. Except as otherwise provided in this Agreement, Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment and any other notices relating to the Obligations.

 

10.           NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other reporting required pursuant to Section 6.2 of this Agreement, which shall be sent as directed in the monthly reporting forms provided by Bank) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by electronic mail to Borrower or to Bank, as the case may be, at its addresses set forth below:

 

	If to Borrower:	Akrevia Therapeutics Inc., on behalf of each Borrower
		LabCentral 610
		610 Main Street
		Cambridge, MA 02139
		Attn: Joseph Farmer
		[**]

 

	with a copy to:	Goodwin Procter LLP
		100 Northern Avenue
		Boston, MA 02210
		Attn: Mark D. Smith
		[**]

 

	If to Bank:	Pacific Western Bank
		406 Blackwell Street, Suite 240
		Durham, North Carolina 27701
		Attn: Loan Operations Manager
		[**]

 

	with a copy to:	Pacific Western Bank
		131 Oliver Street, 2nd Floor
		Boston, MA 02110
		Attn: Scott Hansen

 

The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.

 

 

11.              CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

 

This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of North Carolina, without regard to principles of conflicts of law. Jurisdiction shall lie in the State of North Carolina. All disputes, controversies, claims, actions and similar proceedings arising with respect to Borrower’s account or any related agreement or transaction shall be brought in the General Court of Justice of North Carolina sitting in Durham County, North Carolina or the United States District Court for the Middle District of North Carolina, except as provided below with respect to arbitration of such matters. BANK AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM. If the jury waiver set forth in this Section 11 is not enforceable, then any dispute, controversy, claim, action or similar proceeding arising out of or relating to this Agreement, the Loan Documents or any of the transactions contemplated therein shall be settled by final and binding arbitration held in Durham County, North Carolina in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with those rules. The arbitrator shall apply North Carolina law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration. Judgment upon any award resulting from arbitration may be entered into and enforced by any state or federal court having jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this Section. The costs and expenses of the arbitration, including without limitation, the arbitrator’s fees and expert witness fees, and reasonable attorneys’ fees, incurred by the parties to the arbitration may be awarded to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator. Unless and until the arbitrator decides that one party is to pay for all (or a share) of such costs and expenses, both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator.

 

12.              GENERAL PROVISIONS.

 

12.1          Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties and shall bind all persons who become bound as a debtor to this Agreement; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Bank’s prior written consent, which consent may be granted or withheld in Bank’s sole discretion. Bank shall have the right without the consent of or notice to Borrower to sell, assign, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits hereunder. Notwithstanding the foregoing, provided that no Event of Default has occurred and is continuing hereunder, Bank shall not assign its interest in the Term Loans or the Loan Documents to any Person who in Bank’s reasonable discretion is (i) a direct competitor of Borrower, or (ii) a vulture or distressed debt fund.

 

 

12.2        Indemnification. Borrower shall defend, indemnify and hold harmless Bank and its officers, directors, employees, affiliates, advisors and agents (an “Indemnified Person”) against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank, its officers, employees and agents as a result of or in any way arising out of, following, or consequential to transactions between Bank and Borrower whether under this Agreement, or otherwise (including without limitation reasonable attorneys’ fees and expenses), except for losses caused by an Indemnified Person’s gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable order.

 

12.3       Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement.

 

12.4       Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

12.5       Amendments in Writing, Integration. All amendments to or terminations of this Agreement or the other Loan Documents must be in writing. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the other Loan Documents, if any, are merged into this Agreement and the Loan Documents.

 

12.6       Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Executed copies of the signature pages of this Agreement sent by facsimile or transmitted electronically in Portable Document Format (“PDF”), or any similar format, shall be treated as originals, fully binding and with full legal force and effect, and the parties waive any rights they may have to object to such treatment.

 

12.7       Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations remain outstanding or Bank has any obligation to make any Credit Extension to Borrower. The obligations of Borrower to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have run.

 

12.8       Confidentiality and Publicity.

 

(a)               Borrower shall not, and shall not permit any of its Affiliates to: (i) publish or disclose any materials containing Bank’s name, including in any press release or otherwise in connection with any advertising or marketing, without first obtaining Bank’s prior written consent, or (ii) use Bank’s name (or the name of any of its Affiliates) in connection with its operations or business.

 

 

(b)              In handling any confidential information, Bank shall exercise the same degree of care that Bank exercises with respect to its own proprietary information to maintain in confidence, in accordance with its customary procedures for handling confidential information, all non-public information furnished to Bank (“Confidential Information”) other than any such Confidential Information that becomes generally available to the public or becomes available to Bank from a source other than Borrower and that is not known to Bank to be subject to confidentiality obligations; provided, that Bank shall have the right to disclose Confidential Information to: (i) Bank’s Affiliates in connection with their present or prospective business relations with Borrower as long as such entities are subject to similar confidentiality provisions; (ii) such Person or such Person’s Affiliates’ lenders, funding sources, or financing sources; (iii) such Person’s or such Person’s Affiliates’ directors, officers, trustees, partners, members, managers, employees, agents, advisors, representatives, attorneys, equity owners, professional consultants, portfolio management services and rating agencies; (iv) any successor or assign of Bank; (v) any Person to whom Bank offers to sell, assign or transfer any Credit Extension or any part thereof or any interest or participation therein, provided that such Person subject to similar confidentiality provisions; (vi) any Person that provides statistical analysis and/or information services to Bank or its Affiliates; and (vii) any Person (A) to the extent required by it by law, (B) as required in connection with the examination, audit, or similar investigation of Bank by appropriate authorities, (C) in response to any subpoena or other legal process or governmental investigative demand, (D) in connection with any litigation, or € in connection with the actual or potential exercise or enforcement of any right or remedy under any Loan Document. The obligations of Bank and its Affiliates under this Section 12.8 shall supersede and replace any other confidentiality obligations agreed to by Bank or its Affiliates.

 

13.              CO-BORROWER PROVISIONS.

 

13.1           Primary Obligation. This Agreement is a primary and original obligation of each Borrower and shall remain in effect notwithstanding future changes in conditions, including any change of law or any invalidity or irregularity in the creation or acquisition of any Obligations or in the execution or delivery of any agreement between Bank and any Borrower. Each Borrower shall be liable for existing and future Obligations as fully as if all Credit Extensions were advanced to such Borrower. Bank may rely on any certificate or representation made by any Borrower as made on behalf of, and binding on, such Borrower and each other Borrower, including without limitation Loan Advance / Paydown Request Forms and Compliance Certificates.

 

13.2           Enforcement of Rights. Each Borrower is jointly and severally liable for the Obligations, and Bank may proceed against any Borrower to enforce the Obligations without waiving its right to proceed against any other Borrower.

 

13.3           Borrowers as Agents. Each Borrower appoints each other Borrower as its agent with all necessary power and authority to give and receive notices, certificates or demands for and on behalf of each Borrower, to act as disbursing agent for receipt of any Credit Extensions on behalf of each Borrower and to apply to Bank on behalf of each Borrower for Credit Extensions, any waivers and any consents. This authorization cannot be revoked, and Bank need not inquire as to each Borrower’s authority to act for or on behalf of a Borrower.

 

 

13.4           Subrogation and Similar Rights. Notwithstanding any other provision of this Agreement or any other Loan Document, each Borrower irrevocably waives all rights that it may have at law or in equity (including, without limitation, any law subrogating such Borrower to the rights of Bank under the Loan Documents) to seek contribution, indemnification, or any other form of reimbursement from any other Borrower, or any other Person now or hereafter primarily or secondarily liable for any of the Obligations, for any payment made by such Borrower with respect to the Obligations in connection with the Loan Documents or otherwise and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result of any payment made by the Borrower with respect to the Obligations in connection with the Loan Documents or otherwise. Any agreement providing for indemnification, reimbursement or any other arrangement prohibited under this Section 13.4 shall be null and void. If any payment is made to a Borrower in contravention of this Section 13.4, such Borrower shall hold such payment in trust for Bank and such payment shall be promptly delivered to Bank for application to the Obligations, whether matured or unmatured.

 

13.5           Waivers of Notice. Except as otherwise provided in this Agreement, each Borrower waives notice of acceptance hereof; notice of the existence, creation or acquisition of any of the Obligations; notice of an Event of Default; notice of the amount of the Obligations outstanding at any time; notice of intent to accelerate; notice of acceleration; notice of any adverse change in the financial condition of any other Borrower or of any other fact that might increase the Borrower’s risk; presentment for payment; demand; protest and notice thereof as to any instrument; default; and all other notices and demands to which the Borrower would otherwise be entitled. Each Borrower waives any defense arising from any defense of any other Borrower, or by reason of the cessation from any cause whatsoever of the liability of any other Borrower. Bank’s failure at any time to require strict performance by any Borrower of any provision of the Loan Documents shall not waive, alter or diminish any right of Bank thereafter to demand strict compliance and performance therewith. Nothing contained herein shall prevent Bank from foreclosing on the Lien of any deed of trust, mortgage or other security instrument, or exercising any rights available thereunder, and the exercise of any such rights shall not constitute a legal or equitable discharge of any Borrower. Each Borrower also waives any defense arising from any act or omission of Bank that changes the scope of such Borrower’s risks hereunder.

 

13.6           Subrogation Defenses. Each Borrower hereby waives any defense based on impairment or destruction of its subrogation or other rights against any other Borrower and waives all benefits which might otherwise be available to it under any statutory or common law suretyship defenses or marshalling rights, now or hereafter in effect.

 

13.7           Right to Settle, Release.

 

(a)               The liability of each Borrower hereunder shall not be diminished by (i) any agreement, understanding or representation that any of the Obligations is or was to be guaranteed by another Person or secured by other property, or (ii) any release or unenforceability, whether partial or total, of rights, if any, which Bank may now or hereafter have against any other Person, including another Borrower, or property with respect to any of the Obligations.

 

 

(b)              Without affecting the liability of any Borrower hereunder, Bank may (i) compromise, settle, renew, extend the time for payment, change the manner or terms of payment, discharge the performance of, decline to enforce, or release all or any of the Obligations with respect to a Borrower, (ii) grant other indulgences to a Borrower in respect of the Obligations, (iii) modify in any manner any documents relating to the Obligations with respect to a Borrower, (iv) release, surrender or exchange any deposits or other property securing the Obligations, whether pledged by a Borrower or any other Person, or (v) compromise, settle, renew, or extend the time for payment, discharge the performance of, decline to enforce, or release all or any obligations of any guarantor, endorser or other Person who is now or may hereafter be liable with respect to any of the Obligations.

 

13.8           Subordination. All indebtedness of a Borrower now or hereafter arising held by another Borrower is subordinated to the Obligations and the Borrower holding the indebtedness shall take all actions reasonably requested by Bank to effect, to enforce and to give notice of such subordination.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

 

 

	AKREVIA THERAPEUTICS INC.
	By:	/s/ Joseph Farmer
	Name: Joseph Farmer
	Title: Chief Operating Officer

 

	AKREVIA CONCERTO LLC
	By:	/s/ Joseph Farmer
	Name: Joseph Farmer
	Title: Chief Operating Officer

 

	PACIFIC WESTERN BANK
	By:	/s/ Scott Hansen
	Name: Scott Hansen
	Title: Managing Director

 

 

EXHIBIT A

 

DEFINITIONS

 

“Accounts” means all presently existing and hereafter arising accounts, contract rights, payment intangibles and all other forms of obligations owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other technology) or the rendering of services by Borrower and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s Books relating to any of the foregoing.

 

“Affiliate” means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common control with such Person, and each of such Person’s senior executive officers, directors, and general partners.

 

“Authorized Officer” means someone designated as such in the corporate resolution provided by Borrower to Bank in which this Agreement and the transactions contemplated hereunder are authorized by Borrower’s board of directors. If Borrower provides subsequent corporate resolutions to Bank after the Closing Date, the individual(s) designated as “Authorized Officer(s)” in the most recently provided resolution shall be the only “Authorized Officers” for purposes of this Agreement.

 

“Bank Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees and expenses, whether generated by in-house or by outside counsel) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable Collateral audit fees; and Bank’s reasonable attorneys’ fees and expenses (whether generated in-house or by outside counsel) incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought.

 

“Borrower’s Books” means all of Borrower’s books and records including: ledgers; records concerning Borrower’s assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such information.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in the State of North Carolina are authorized or required to close.

 

“Cash” means unrestricted cash and cash equivalents.

 

“Change in Control” means a transaction (other than (i) an IPO or (ii) a bona fide equity financing or series of financings on terms and from investors reasonably acceptable to Bank) in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect a majority of the board of directors of Borrower, who did not have such power before such transaction.

 

 

“Closing Date” means the date of this Agreement.

 

“Code” means the North Carolina Uniform Commercial Code as amended or supplemented from time to time.

 

“Collateral” means the property described on Exhibit B attached hereto and all Negotiable Collateral to the extent not described on Exhibit B, except to the extent any such property (i) is non-assignable by its terms without the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, §25-9-406 and §25-9-408 of the Code), (ii) is property for which the granting of a security interest therein is contrary to applicable law, provided that upon the cessation of any such restriction or prohibition, such property shall automatically become part of the Collateral, (iii) constitutes the capital stock of a controlled foreign corporation (as defined in the IRC), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporations entitled to vote, or any Subsidiary which sole purpose is to hold the stock of such controlled foreign corporation, if the grant of a security interest in such capital stock pursuant to this Agreement would result in material adverse “deemed dividend” tax consequences to Borrower due to the application of IRC §956, or (iv) is property (including any attachments, accessions or replacements) that is subject to a Lien that is permitted pursuant to clause (c) of the definition of Permitted Liens, if the grant of a security interest with respect to such property pursuant to this Agreement would be prohibited by the agreement creating such Permitted Lien or would otherwise constitute a default thereunder, provided, that such property will be deemed “Collateral” hereunder upon the termination and release of such Permitted Lien.

 

“Compliance Certificate” means a compliance certificate, in substantially the form of Exhibit D attached hereto, executed by a Responsible Officer of Borrower.

 

“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.

 

 

“Copyrights” means any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held.

 

“Credit Card Line” means a Credit Extension of up to $250,000, to be used exclusively for the provision of Credit Card Services.

 

“Credit Card Maturity Date” means November 21, 2023.

 

“Credit Extension” means the Term Loan, the Credit Card Services provided under the Credit Card Line, or any other extension of credit, by Bank to or for the benefit of Borrower hereunder.

 

“Divide” means, with respect to any Person that is an entity, the dividing of such Person into two or more separate Persons, with the dividing Person either continuing or terminating its existence as part of such division, including as contemplated under Section 18-217 of the Delaware Limited Liability Company Act for limited liability companies formed under Delaware law, or any analogous action taken pursuant to any other statute with respect to any corporation, limited liability company, partnership, or other entity.

 

“Equipment” means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.

 

“Event of Default” has the meaning assigned in Article 8.

 

“GAAP” means generally accepted accounting principles, consistently applied, as in effect from time to time in the United States.

 

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred purchase price of property or services, including without limitation reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations, including but not limited to any sublimit contained herein.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

 

“Intellectual Property” means all of Borrower’s right, title, and interest in and to the following, whether now existing, or hereafter acquired or created, in any medium, of any kind or nature whatsoever:

 

 

(a)               Copyrights, Trademarks, and Patents;

 

(b)              Any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or hereafter existing, created, acquired or held;

 

(c)               Any and all design rights which may be available to Borrower now or hereafter existing, created, acquired or held;

 

(d)              Any and all claims for damages by way of past, present and future infringement of any of the rights included above, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above;

 

(e)               All licenses or other rights to use any of the Copyrights, Patents or Trademarks, and all license fees and royalties arising from such use to the extent permitted by such license or rights;

 

(f)                All amendments, renewals, and extensions of any Copyrights, Trademarks, and Patents; and

 

(g)               All proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity or warranty payable in respect of any of the foregoing.

 

“Interest-Only End Date” means May 21, 2021.

 

“Inventory” means all present and future inventory in which Borrower has any interest.

 

“Investment” means any beneficial ownership of (including stock, partnership or limited liability company interest or other securities) any Person, or any loan, advance or capital contribution to any Person.

 

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

 

“Letter of Credit” means a commercial or standby letter of credit or similar undertaking issued by Bank (or any of its correspondent banks) at Borrower’s request.

 

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.

 

“Loan Documents” means, collectively, this Agreement, any note or notes executed by Borrower, and any other document, instrument or agreement entered into in connection with this Agreement, all as amended or extended from time to time.

 

“Material Adverse Effect” means a material adverse effect on (i) the operations, business or financial condition of Borrower and its Subsidiaries taken as a whole, (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents, or (iii) Borrower’s interest in, or the value, perfection or priority of Bank’s security interest in the Collateral.

 

“Negotiable Collateral” means all of Borrower’s present and future letters of credit of which it is a beneficiary, drafts, instruments (including promissory notes), securities, documents of title, and chattel paper, and Borrower’s Books relating to any of the foregoing.

 

 

“Obligations” means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement or any other agreement, whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing from Borrower to others that Bank may have obtained by assignment or otherwise. Notwithstanding the foregoing, “Obligations” shall not include any warrant or equity related investments.

 

“Parent Guarantor” means Akrevia Therapeutics LLC, a Delaware limited liability company.

 

“Parent Guaranty” means that certain Unconditional Guaranty, dated on or about the Closing Date, by Parent Guarantor in favor of Bank, as amended, restated, supplemented, or otherwise modified from time to time.

 

“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

 

“Periodic Payments” means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Bank pursuant to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrower and Bank.

 

“Permitted Indebtedness” means:

 

(a)               Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan Document;

 

(b)              Indebtedness existing on the Closing Date and disclosed in the Schedule;

 

(c)               Indebtedness not to exceed $800,000 in the aggregate at any time secured by a lien described in clause (c) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed at the time it is incurred the lesser of the cost or fair market value of the property financed with such Indebtedness;

 

(d)              Subordinated Debt;

 

(e)               Indebtedness to trade creditors incurred in the ordinary course of business;

 

(f)                Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;

 

(g)               Interest rate hedging arrangements with financial institutions other than Bank in an aggregate amount not to exceed $250,000 at any time;

 

(h)              Additional unsecured Indebtedness not to exceed $250,000 in the aggregate at any time; and

 

(i)                 Extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased or the terms modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.

 

 

“Permitted Investment” means:

 

(a)               Investments existing on the Closing Date disclosed in the Schedule;

 

(b)              (i) Marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (iii) Bank’s certificates of deposit maturing no more than one year from the date of investment therein, (iv) money market accounts, (v) Investments in regular deposit or checking accounts held with Bank or as otherwise permitted by, and subject to the terms and conditions of, Section 6.6 of this Agreement, and (vi) Investments consistent with any investment policy adopted by Borrower’s board of directors;

 

(c)               Investments accepted in connection with Permitted Transfers;

 

(d)              Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by Borrower in Subsidiaries not to exceed $500,000 in the aggregate in any fiscal year;

 

(e)               Investments not to exceed $500,000 outstanding in the aggregate at any time consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plan agreements approved by Borrower’s board of directors;

 

(f)                Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business;

 

(g)               Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business, provided that this subparagraph (g) shall not apply to Investments of Borrower in any Subsidiary;

 

(h)              Joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by Borrower do not exceed $500,000 in the aggregate in any fiscal year;

 

(i)                 Investments permitted under Sections 7.3, 7.6, and 7.7; and

 

(j)                Additional Investments, other than Investments in Subsidiaries, by Borrower that do not exceed $300,000 in the aggregate during the term of this Agreement.

 

 

“Permitted Liens” means the following:

 

(a)               Any Liens existing on the Closing Date and disclosed in the Schedule (excluding Liens to be satisfied with the proceeds of the Credit Extensions) or arising under this Agreement, the other Loan Documents, or any other agreement in favor of Bank;

 

(b)              Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings and for which Borrower maintains adequate reserves;

 

(c)               Liens not to exceed $800,000 in the aggregate at any time (i) upon or in any Equipment (other than Equipment financed by a Credit Extension) acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such Equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such Equipment, or (ii) existing on such Equipment at the time of its acquisition, in each case provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such Equipment;

 

(d)              Liens incurred in connection with licenses or sublicenses permitted hereunder;

 

(e)               Statutory Liens securing claims or demands of materialmen, mechanics, carriers, repairmen, or other like Liens imposed without the action of such parties arising in the ordinary course of business;

 

(f)                Liens to secure payment for workers’ compensation, employment insurance, old age pensions, social security or other like obligations incurred in the ordinary course of business;

 

(g)               Non-exclusive licenses of Intellectual Property granted to third parties in the ordinary course of business, and licenses of Intellectual Property that could not result in a legal transfer of title of the licensed property that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discrete geographical areas outside of the United States;

 

(h)              Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (a) through (c) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase;

 

(i)                 Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Sections 8.4 (attachment) or 8.7 (judgments);

 

(j)                Leases or subleases of real property granted in the ordinary course of Borrower’s business (or, if referring to another Person, in the ordinary course of such Person’s business);

 

(k)              Liens in favor of other financial institutions arising in connection with Borrower’s deposit accounts held at such institutions to secure standard fees for deposit services charged by, but not financing made available by, such institutions, provided that Bank has a perfected security interest in the amounts held in such deposit accounts to the extent required by Section 6.6; and

 

(l)                 Liens securing Subordinated Debt, provided that such Liens do not encumber assets beyond those assets comprising the Collateral.

 

 

“Permitted Transfer” means the conveyance, sale, lease, transfer or disposition by Borrower or any Subsidiary of:

 

(a)               Inventory in the ordinary course of business;

 

(b)              licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business;

 

(c)               worn-out, surplus or obsolete Equipment;

 

(d)              grants of security interests and other Liens that constitute Permitted Liens;

 

(e)               Transfers that constitute Permitted Investments;

 

(f)                Cash in the ordinary course of business, unless otherwise prohibited by the terms of this Agreement; and

 

(g)               other assets of Borrower or its Subsidiaries that do not in the aggregate exceed $500,000 during any fiscal year.

 

“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency.

 

“Prime Rate” means the variable rate of interest, per annum, most recently announced by Bank, as its “prime rate,” whether or not such announced rate is the lowest rate available from Bank.

 

“Responsible Officer” means each of the President, Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, Vice President of Finance and the Controller of Borrower, as well as any other officer or employee identified as an Authorized Officer in the corporate resolution delivered by Borrower to Bank in connection with this Agreement.

 

“Schedule” means the schedule of exceptions attached hereto and approved by Bank, if any.

 

“SOS Reports” means the official reports from the Secretaries of State of the state where Borrower’s chief executive office is located, the state of Borrower’s formation and other applicable federal, state or local government offices identifying all current security interests filed in the Collateral and Liens of record as of the date of such report.

 

“Subordinated Debt” means any debt incurred by Borrower that is subordinated in writing to the debt owing by Borrower to Bank on terms reasonably acceptable to Bank (and identified as being such by Borrower and Bank).

 

“Subsidiary” means any corporation, partnership or limited liability company or joint venture in which (i) any general partnership interest or (ii) more than 50% of the stock, limited liability company interest or joint venture of which by the terms thereof ordinary voting power to elect the board of directors, managers or trustees of the entity, at the time as of which any determination is being made, is owned by Borrower, either directly or through an Affiliate.

 

 

“Success Fee Event” means (a) any sale, license, or other disposition of all or substantially all of the assets (including intellectual property) of a Borrower or Parent Guarantor and its subsidiaries taken as a whole, (b) any reorganization, consolidation, merger or sale of the voting securities of a Borrower or Parent Guarantor or any other transaction where the holders of a Borrower’s or Parent Guarantor’s securities before the transaction beneficially own (directly or indirectly) less than 50% of the outstanding voting securities of the surviving entity after the transaction, or (c) the sale or issuance of a Borrower’s, Parent Guarantor’s, or its affiliate’s equity securities in connection with an initial public offering, an alternative public offering, a reverse merger, or any similar transaction in which Borrower, Parent Guarantor, or such affiliate receives cash proceeds from such sale or issuance and Borrower’s, Parent Guarantor’s, or such affiliate’s equity securities may thereafter be traded in a public market.

 

“Term Loan Maturity Date” means November 21, 2023.

 

“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.

 

 

EXHIBIT B

 

DEBTOR:	AKREVIA THERAPEUTICS INC.
SECURED PARTY:	PACIFIC WESTERN BANK

 

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

 

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:

 

(a)               all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), financial assets, general intangibles (including patents, trademarks, copyrights, goodwill, payment intangibles, domain names and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records;

 

(b)              any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment.

 

All terms above have the meanings given to them in the North Carolina Uniform Commercial Code, as amended or supplemented from time to time, including revised Article 9 of the Uniform Commercial Code-Secured Transactions.

 

Notwithstanding the foregoing, the Collateral shall not include any of the intellectual property, in any medium, of any kind or nature whatsoever, now or hereafter owned or acquired or received by Borrower, or in which Borrower now holds or hereafter acquires or receives any right or interest (collectively, the “Intellectual Property”); provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the “Rights to Payment”).

 

Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of November 21, 2019, include the Intellectual Property to the extent and only to the extent necessary to permit perfection of Bank’s security interest in the Rights to Payment, and further provided, however, that Bank’s enforcement rights with respect to any security interest in the Intellectual Property shall be absolutely limited to the Rights to Payment only, and Bank shall have no recourse whatsoever with respect to the underlying Intellectual Property.

 

 

EXHIBIT B

 

DEBTOR:	AKREVIA CONCERTO LLC
SECURED PARTY:	PACIFIC WESTERN BANK

 

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

 

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:

 

(a)               all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), financial assets, general intangibles (including patents, trademarks, copyrights, goodwill, payment intangibles, domain names and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records;

 

(b)              any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment.

 

All terms above have the meanings given to them in the North Carolina Uniform Commercial Code, as amended or supplemented from time to time, including revised Article 9 of the Uniform Commercial Code-Secured Transactions.

 

Notwithstanding the foregoing, the Collateral shall not include any of the intellectual property, in any medium, of any kind or nature whatsoever, now or hereafter owned or acquired or received by Borrower, or in which Borrower now holds or hereafter acquires or receives any right or interest (collectively, the “Intellectual Property”); provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the “Rights to Payment”).

 

Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of November 21, 2019, include the Intellectual Property to the extent and only to the extent necessary to permit perfection of Bank’s security interest in the Rights to Payment, and further provided, however, that Bank’s enforcement rights with respect to any security interest in the Intellectual Property shall be absolutely limited to the Rights to Payment only, and Bank shall have no recourse whatsoever with respect to the underlying Intellectual Property.

 

 

EXHIBIT C

 

LOAN ADVANCE/PAYDOWN REQUEST FORM

 

[Please refer to New Borrower Kit]

 

EXHIBIT D

COMPLIANCE CERTIFICATE

 

[Please refer to New Borrower Kit]

 

 

FIRST AMENDMENT
TO
LOAN AND SECURITY AGREEMENT

 

This First Amendment to Loan and Security Agreement (this “Amendment”) is made and entered into as of March 12, 2021, by and between PACIFIC WESTERN BANK, a California state chartered bank (“Bank”), and XILIO DEVELOPMENT, INC. and XILIO CONCERTO LLC (individually and collectively referred to as “Borrower”).

 

RECITALS

 

Borrower and Bank are parties to that certain Loan and Security Agreement dated as of November 21, 2019 (as amended from time to time, the “Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.

 

NOW, THEREFORE, the parties agree as follows:

 

1)	Borrower Akrevia Therapeutics Inc. has changed its name to Xilio Development, Inc. Bank and Borrower hereby agree that the Agreement and each other Loan Document are hereby amended wherever necessary to reflect this change.

 

2)	Borrower Akrevia Concerto LLC has changed its name to Xilio Concerto LLC. Bank and Borrower hereby agree that the Agreement and each other Loan Document are hereby amended wherever necessary to reflect this change.

 

3)

Borrower has informed Bank that Borrower may in the future create an MSC Subsidiary. Bank and Borrower hereby agree that, so long as the MSC Investment Conditions continue to be met, (a) any MSC Subsidiary will not be required to become a co-borrower or secured guarantor with respect to the Obligations, notwithstanding Section 6.10 of the Agreement, and (b) Investments by Borrower in the MSC Subsidiary will constitute Permitted Investments. If, at any time after the formation of an MSC Subsidiary, the MSC Investment Conditions are not met, then (x) Borrower may not make Investments in any MSC Subsidiary, and (y) within two (2) Business Days after the first date on which the MSC Investment Conditions are not met, Borrower shall cause each MSC Subsidiary to (i) order the liquidation of any of its Investments into cash, (ii) transfer cash to Borrower’s accounts with Bank, and (iii) thereafter transfer any cash that it possesses to Borrower’s accounts with Bank, in each case until the MSC Investment Conditions are again being met. Borrower shall not permit any MSC Subsidiary to make any Investments or hold any assets that would cause that MSC Subsidiary to fail to qualify as a “security corporation” under 830 CMR 63.38B.1 of the Massachusetts tax code and applicable regulations (as the same may be amended, modified, or replaced from time to time).

 

4)	Section 6.6 of the Agreement is hereby amended and restated, as follows:

 

6.6       Primary Depository. Borrower shall maintain, and shall cause each Subsidiary to maintain, substantially all of its cash in depository or operating accounts with Bank. Notwithstanding the foregoing, (a) Borrower may maintain (i) when Borrower’s aggregate Cash at Bank equals or exceeds $1,000,000, up to $1,000,000, and (ii) at all other times, $250,000, in each case, in an account at Silicon Valley Bank to facilitate the payment of payroll and trade payables, provided that such account is subject to an account control agreement in favor of Bank, and (b) at any time when Borrower’s, Parent Guarantor’s, and Ultimate Parent Guarantor’s aggregate Cash at Bank exceeds $50,000,000, Borrower may maintain amounts in excess of $50,000,000 in Cash or Investments with Pacific Western Asset Management. Prior to Borrower maintaining any investment accounts with Pacific Western Asset Management, Borrower, Bank, and Pacific Western Asset Management (or, if applicable, the relevant securities intermediary) shall have entered into a securities account control agreement with respect to any such investment accounts, in form and substance reasonably satisfactory to Bank.

 

 

5)	Section 7.2 of the Agreement is hereby amended and restated, as follows:

 

7.2       Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year; Change in Control. Change its name or the state of Borrower’s formation or relocate its chief executive office without 30 days’ prior written notification to Bank; replace or suffer the departure of its chief executive officer or chief operating officer without delivering written notification to Bank within 10 days; fail to appoint an interim replacement or fill a vacancy in the position of chief executive officer or chief operating officer for more than 60 consecutive days; suffer a change on its board of directors which results in the failure of at least one partner of Atlas Venture or its Affiliate to serve as a voting member without the prior written consent of Bank, which may be withheld in Bank’s sole discretion; take action to liquidate, wind up, or otherwise cease to conduct business in the ordinary course; engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or incidental to the businesses currently engaged in by Borrower; change its fiscal year end; convert to another form of incorporated or unincorporated business or entity; have a Change in Control; Divide.

 

6)	The following defined terms are hereby added in Exhibit A to the Agreement, as follows:

 

“MSC Investment Conditions” means that

 

(a)       Borrower, Parent Guarantor, and Ultimate Parent Guarantor collectively maintain on deposit with Bank unrestricted cash or cash equivalents in an aggregate amount greater than or equal to 105% of the then outstanding principal and accrued interest on all Credit Extensions; and

 

(b)       each MSC Subsidiary qualifies as a “security corporation” under 830 CMR 63.38B.1 of the Massachusetts tax code and applicable regulations (as the same may be amended, modified, or replaced from time to time).

 

“MSC Subsidiary” means any Subsidiary that is intended to qualify as a “security corporation” under 830 CMR 63.38B.1 of the Massachusetts tax code and applicable regulations (as the same may be amended, modified, or replaced from time to time).

 

“Ultimate Parent Guarantor” means Xilio Therapeutics, Inc., a Delaware corporation.

 

7)	The following defined term in Exhibit A to the Agreement is hereby amended and restated, as follows:

 

“Parent Guaranty” means that certain Amended and Restated Unconditional Guaranty, dated on or about March 12, 2021, by Parent Guarantor and Ultimate Parent Guarantor in favor of Bank, as amended, restated, supplemented, or otherwise modified from time to time.

 

8)

Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof. Each Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in connection with the Agreement.

 

 

9)	Each Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct as of the date of this Amendment.

 

10)	This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

11)	As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:

 

a)

this Amendment, duly executed by each Borrower;

 

b)

the Parent Guaranty, duly executed by each of Parent Guarantor and Ultimate Parent Guarantor, together with an officer’s certificate of each of Parent Guarantor and Ultimate Parent Guarantor with respect to incumbency and resolutions authorizing the execution and delivery of the Parent Guaranty;

 

c)

payment of a $1,000 facility fee, which may be debited from any Borrower’s accounts;

 

d)

payment for all Bank Expenses incurred through the date of this Amendment, including Bank’s expenses for the documentation of this Amendment and any UCC, good standing or intellectual property search or filing fees, which may be debited from any Borrower’s accounts; and

 

e)

such other documents and completion of such other matters, as Bank may reasonably request.

 

[Signature Page Follows]
 

 

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.

 

XILIO DEVELOPMENT, INC.			PACIFIC WESTERN BANK
By:	/S/ Edward English		By:	/s/ Katherine Meeks
Name: Edward English			Name: Katherine Meeks
Title: Vice President of Finance			Title: Vice President
XILIO CONCERTO LLC
By:	/S/ Edward English
Name: Edward English
Title: Vice President of Finance

 

 

SECOND AMENDMENT
TO
LOAN AND SECURITY AGREEMENT

 

This Second Amendment to Loan and Security Agreement (this “Amendment”) is made and entered into as of May 10, 2021, by and between PACIFIC WESTERN BANK, a California state chartered bank (“Bank”), and XILIO DEVELOPMENT, INC. and XILIO CONCERTO LLC (individually and collectively referred to as “Borrower”).

 

RECITALS

 

Borrower and Bank are parties to that certain Loan and Security Agreement dated as of November 21, 2019 (as amended from time to time, the “Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.

 

NOW, THEREFORE, the parties agree as follows:

 

12)	Section 7.2 of the Agreement is hereby amended and restated, as follows:

 

7.2       Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year; Change in Control. Change its name or the state of Borrower’s formation or relocate its chief executive office without 30 days’ prior written notification to Bank; replace or suffer the departure of its chief executive officer without delivering written notification to Bank within 10 days; fail to appoint an interim replacement or fill a vacancy in the position of chief executive officer for more than 60 consecutive days; suffer a change on its board of directors which results in the failure of at least one partner of Atlas Venture or its Affiliate to serve as a voting member without the prior written consent of Bank, which may be withheld in Bank’s sole discretion; take action to liquidate, wind up, or otherwise cease to conduct business in the ordinary course; engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or incidental to the businesses currently engaged in by Borrower; change its fiscal year end; convert to another form of incorporated or unincorporated business or entity; have a Change in Control; Divide.

 

13)

Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof. Each Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in connection with the Agreement.

 

14)	Each Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct as of the date of this Amendment.

 

15)	This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

16)	As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:

 

a)      this Amendment, duly executed by each Borrower;

 

 

b)

payment for all Bank Expenses incurred through the date of this Amendment, including Bank’s expenses for the documentation of this Amendment and any UCC, good standing or intellectual property search or filing fees, which may be debited from any Borrower’s accounts; and

 

c)

such other documents and completion of such other matters, as Bank may reasonably request.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.

 

XILIO DEVELOPMENT, INC.			PACIFIC WESTERN BANK
By:	/S/Edward C. English		By:	/s/ Katherine Meeks
Name: Edward C. English			Name: Katherine Meeks
Title: VP Finance			Title: Vice President
XILIO CONCERTO LLC
By:	/S/Edward C. English
Name: Edward C. English
Title: VP Finance

 

[Signature Page to Second Amendment to Loan and Security Agreement]

 

 

  

THIRD AMENDMENT TO
LOAN AND SECURITY AGREEMENT

 

This Third Amendment to Loan and Security Agreement (this “Amendment”) is entered into as of September 17, 2021, by and between PACIFIC WESTERN BANK, a California state chartered bank (“Bank”), XILIO DEVELOPMENT, INC., and XILIO CONCERTO LLC (individually and collectively referred to as “Borrower”).

 

RECITALS

 

Borrower and Bank are parties to that certain Loan and Security Agreement dated as of November 21, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement.

 

NOW, THEREFORE, the parties agree as follows:

 

1)

Amendments.

 

a)

Section 2.1(b)(i) of the Agreement is amended and restated to read as follows:

 

(i)       As of the Third Amendment Date, Borrower owes Bank a principal amount of $9,000,000.01 on account of an outstanding term loan (the “Initial Term Loan”). Subject to and upon the terms and conditions of this Agreement, on the Third Amendment Date, Bank shall make new term loans available to Borrower in two tranches, referred to herein as Tranche I and Tranche II. Borrower shall request, and Bank shall make, the Tranche I term loan on the Third Amendment Date in the principal amount of Ten Million Dollars ($10,000,000) (the “Tranche I Term Loan”), which immediately shall be used to repay the outstanding principal amount and all accrued interest of the Initial Term Loan made under the Agreement prior to the Third Amendment Date. In addition, following the Third Amendment Date, Borrower may request, and Bank shall make, one or more additional term loans in an aggregate principal amount of up to Ten Million Dollars ($10,000,000) at any time through the Interest-Only End Date (the “Tranche II Term Loan”), the proceeds of which shall be used for working capital and general corporate purposes. For purposes of this Agreement, “Term Loan(s)” means the Tranche I Term Loan, and if requested by Borrower and made by Bank, the Tranche II Term Loan, as applicable.

 

b)

Section 2.1(b)(ii) of the Agreement is amended and restated to read as follows:

 

(ii)       Interest shall accrue from the date a Term Loan is made at the rate specified in Section 2.3(a), through the Interest-Only End Date, and shall be payable monthly in arrears beginning on the 21st day of the month next following the applicable Term Loan, and continuing on the same calendar day of each month thereafter. Any portion of the applicable Term Loan that is outstanding on the Interest-Only End Date shall be payable in 18 equal monthly installments of principal, plus all accrued but unpaid interest, beginning on the date that is one month immediately following the Interest-Only End Date and continuing on the same calendar day of each month thereafter through the Term Loan Maturity Date, at which time all amounts due in connection with the Term Loan and any other amounts due under this Agreement shall be immediately due and payable. Borrower may prepay all or any portion of the Term Loans without penalty or premium (other than the Prepayment Fee set forth in Section 2.5(c)), provided that Borrower may not reborrow any Term Loan, once repaid. In connection with any prepayment, including a prepayment due to acceleration by Bank hereunder of the Term Loans upon the occurrence and during the continuance of an Event of Default, Borrower shall pay, in addition to the outstanding principal and accrued interest, the Prepayment Fee.

 

 

 

c)

Section 2.3(a)(i) of the Agreement is amended and restated to read as follows:

 

(i)       Term Loan. Except as set forth in Section 2.3(b), the Term Loan(s) shall bear interest, on the outstanding daily balance thereof, at a variable annual rate equal to the greater of: (A) 0.25% above the Prime Rate then in effect; and (B) 4.75%.

 

d)

Section 2.5(b) of the Agreement is amended to read as follows:

 

(b)       Success Fee. Upon a Success Fee Event, Borrower shall pay to Bank a one-time fee equal to (i) $750,000 if such Success Fee Event occurs by December 31, 2021, (ii) $875,000 if such Success Fee Event occurs after December 31, 2021 but before March 31, 2022, or (iii) $1,000,000 if such Success Fee Event occurs after March 31, 2022 (“Success Fee”). If this Agreement is terminated prior to payment of the Success Fee, Borrower shall give Bank written notice of the first Success Fee Event to occur thereafter and pay the Success Fee upon the consummation of such Success Fee. This Section 2.5(b) shall survive any termination of this Agreement.

 

e)

A new Section 2.5(c) is added to the Agreement to read as follows:

 

(c)       Prepayment Fee. The Prepayment Fee as and when due pursuant to Section 2.1(b)(ii).

 

f)

Section 6.7(a) of the Agreement is amended to read as follows:

 

(a)       Funding Milestone. On or before December 31, 2023, Borrower shall deliver to Bank evidence reasonably satisfactory to Bank that Borrower or Parent Guarantor has received, after the Third Amendment Date, gross Cash proceeds of at least $50,000,000, less reasonable transaction expenses (including, without limitation, underwriters discounts and commissions and legal and accounting fees and expenses) from the sale or issuance of Borrower’s or Parent Guarantor’s equity securities to investors.

 

g)

Section 7.2 of the Agreement is amended to read as follows:

 

7.2       Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year; Change in Control. Change its name or the state of Borrower's formation or incorporation or relocate its chief executive office without 30 days prior written notification to Bank; replace or suffer the departure of its chief executive officer without delivering written notification to Bank within 10 days; fail to appoint an interim replacement or fill a vacancy in the position of chief executive officer for more than 60 consecutive days; suffer a change on its board of directors which results in the failure of at least one partner of Atlas Venture or its Affiliate to serve as voting members, other than in connection with the initial public offering, without the prior written consent of Bank, which may be withheld in Bank's sole discretion; take action to liquidate, wind up, or otherwise cease to conduct business in the ordinary course; engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or incidental to the businesses currently engaged in by Borrower; change its fiscal year end; convert to another form of incorporated or unincorporated business or entity; have a Change in Control; Divide.

 

h)

Section 10 of the Agreement is amended to update Borrower’s notice address to read as follows:

 

If to Borrower:		Xilio Therapeutics, Inc., on behalf of each Borrower
		828 Winter Street, Suite 300
		Waltham, MA 02451
		Attention: Legal Department
		With copies to (which shall not constitute notice):
		Xilio Therapeutics, Inc., Legal Department: [***]
		Goodwin Procter LLP
		100 Northern A venue
		Boston, MA 02210
		Attention: Mark D. Smith
		[***]

 

 

i)

Exhibit A to the Agreement is amended by amending or restating, or adding, in appropriate alphabetical order, as applicable, the following defined terms to read as follows:

 

“Credit Card Maturity Date” means June 30, 2024.

 

“Interest-Only End Date” means December 31, 2022.

 

“Term Loan Maturity Date” means June 30, 2024.

 

“Third Amendment Date” means September , 2021.

 

“Prepayment Fee” means an amount equal to the principal amount of the Term Loan(s) then outstanding multiplied by 1.00% if the prepayment occurs on or before the one year anniversary of the Third Amendment Date.

 

2)

Bank acknowledges that, following the Third Amendment Date, Borrower anticipates effecting a corporate reorganization pursuant to which (i) XILIO CONCERTO LLC will merge with and into XILIO DEVELOPMENT, INC., and (ii) XILIO THERAPEUTICS LLC will merge with and into XILIO DEVELOPMENT, INC., in each case (clauses (i) and (ii)) with XILIO DEVELOPMENT, INC. as the surviving entity. Borrower agrees to provide to Bank notice and copies of the certificate of merger, merger agreement, board resolutions and stockholder approvals (if any) executed in connection with the foregoing mergers and execute additional documents in connection with this Agreement as reasonably requested by Bank within 45 days following such reorganization.

 

3)

The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its terms. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof. Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in connection with the Agreement and the security interest as granted as of the Closing Date continues without novation.

 

4)

Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct in all material respects as of the date of this Amendment (provided, that those representations and warranties expressly referring to another date shall be true and correct in all material respects as of such date, and provided further that any representation or warranty that contains a materiality qualification therein shall be true and correct in all respects). No Event of Default exists, or would exist with notice or lapse of time or both under the Agreement or any other Loan Document. A true and correct copy of the certificate of incorporation and bylaws, as in effect as of the Third Amendment Date have been delivered to Bank.

 

5)

This Amendment and any documents executed in connection herewith or pursuant hereto contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, offers and negotiations, oral or written, with respect thereto and no extrinsic evidence whatsoever may be introduced in any judicial or arbitration proceeding, if any, involving this Amendment; except that any financing statements or other agreements or instruments filed by Bank with respect to Borrower shall remain in full force and effect.

 

6)

This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

7)

The terms of Section 11 of the Agreement are incorporated by reference herein, mutatis mutandis.

 

8)

As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance reasonably satisfactory to Bank, the following:

 

a)

this Amendment, duly executed by Borrower;

 

b)

an officer’s certificate of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Amendment;

 

c)

payment of the fee of $25,000 and all Bank Expenses, which may be debited from any of Borrower’s deposit account maintained with Bank;

 

d)

a duly completed Loan Advance/Paydown Request Form with respect to the Term Loan to be made on the Third Amendment Date; and

 

e)

such other documents and completion of such other matters, as Bank may reasonably request.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.

 

XILIO DEVELOPMENT, INC.			XILIO CONCERTO LLC
By:	/s/ René Russo		By:	/s/ René Russo
Name:	René Russo		Name:	René Russo
Title:	President and Chief Executive Officer		Title:	President and Chief Executive Officer

 

 

PACIFIC WESTERN BANK
By:	/s/ Ashley N. Pittman
Name:	Ashley N. Pittman
Title:	SVP

 

  

CORPORATE RESOLUTION

 

The undersigned duly elected and qualified Secretary of XILIO DEVELOPMENT, INC. (the “Company”), solely in his or her capacity as an officer of the company, and not in his or her individual capacity, does hereby certify that the following is a true and correct copy of certain resolutions adopted by the Company’s Board of Directors in accordance with applicable law and the Company’s bylaws, and that such resolutions are now unmodified and in full force and effect:

 

BE IT RESOLVED, that:

 

1)

Any one (1) of the following, duly elected officers of the Company (each, an “Authorized Officer”) whose genuine original signature appears next to his or her name is authorized to act for, on behalf of, and in the name of the Company in connection with the resolutions below:

 

Title			Name		Authorized Signature

 

2)

Any Authorized Officer may:

 

a)

Borrow money from time to time from Pacific Western Bank (the “Bank”), and may negotiate and procure loans, letters of credit, foreign exchange contracts and other financial accommodations from Bank, including without limitation, pursuant to that certain Loan and Security Agreement dated as of November 21, 2019, as amended by that certain Third Amendment to Loan and Security Agreement, dated as of September , 2021, and also to execute and deliver to Bank one or more renewals, extensions, or modifications thereof;

 

b)

Give security for any liabilities of the Company to Bank by grant, security interest, assignment, lien, deed of trust or mortgage upon any real or personal property, tangible or intangible of the Company;

 

c)

Purchase, sell, exchange, assign, endorse for transfer and/or deliver certificates and/or instruments representing stocks, bonds, evidences of Indebtedness or other securities owned by the Company, whether or not registered in the name of the Company;

 

d)

Discount with the Bank, commercial or other business paper belonging to the Company made or drawn by or upon third parties, without limit as to amount;

 

e)

Authorize and direct the Bank to pay the proceeds of any such loans or discounts as directed by the persons so authorized to sign;

 

f)

Execute and deliver in form and content as may be required by the Bank any and all notes, evidences of indebtedness, applications for letters of credit, guaranties, subordination agreements, loan and security agreements, financing statements, assignments, liens, deeds of trust, mortgages, trust receipts and other agreements, instruments or documents to carry out the purposes of these Resolutions, any or all of which may relate to all or to substantially all of the Company’s property and assets;

 

 

3)

The Authorized Officers may designate additional or alternate individuals as being authorized to request loan advances, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as he or she may in his or her discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions.

 

4)

Any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved, and the authority conferred herein may be exercised singly by any such officer, and these resolutions shall continue in full force and effect until written notice of modification or revocation is received and accepted by Bank (such notice to have no effect on any action previously taken by the Bank in reliance on these Resolutions). Bank may rely upon any form of notice, which it in good faith believes to be genuine or what it purports to be.

 

5)

The Resolutions are in full force and effect as of the date of this Certificate and are intended to replace, as of this date, any Resolutions previously given by the Company to Bank in connection with the matters described herein; these Resolutions and any borrowings or financial accommodations under these Resolutions have been properly noted in the corporate books and records, and have not been rescinded, revoked or modified; neither the foregoing Resolutions nor any actions to be taken pursuant to them are or will be in contravention of any provision of the articles of incorporation or bylaws of the Company or of any agreement, indenture or other instrument to which the Company is a party or by which it is bound; and to the extent the articles of incorporation or bylaws of the Company or any agreement, indenture or other instrument to which the Company is a party or by which it is bound require the vote or consent of shareholders of the Company to authorize any act, matter or thing described in the foregoing Resolutions, such vote or consent has been obtained.

 

In Witness Whereof, I have affixed my name as Secretary and have caused the corporate seal (where available) of said Company to be affixed on September , 2021.

 

		Secretary*

 

*If the certifying officer is designated as the only signer in these resolutions then another corporate officer must also sign.

 

 

 

COMPANY RESOLUTION

 

The undersigned duly elected and qualified Secretary of XILIO CONCERTO LLC (the “Company”), solely in his or her capacity as an officer of the company, and not in his or her individual capacity, does hereby certify that the following is a true and correct copy of certain resolutions adopted by the Company’s Board of Directors in accordance with applicable law and the Company’s organizational documents, and that such resolutions are now unmodified and in full force and effect:

 

BE IT RESOLVED, that:

 

Any one (1) of the following, duly elected officers of the Company (each, an “Authorized Officer”) whose genuine original signature appears next to his or her name is authorized to act for, on behalf of, and in the name of the Company in connection with the resolutions below:

 

Title			Name		Authorized Signature

 

Any Authorized Officer may:

 

Borrow money from time to time from Pacific Western Bank (the “Bank”), and may negotiate and procure loans, letters of credit, foreign exchange contracts and other financial accommodations from Bank, including without limitation, pursuant to that certain Loan and Security Agreement dated as of November 21, 2019, as amended by that certain Third Amendment to Loan and Security Agreement, dated as of September , 2021, and also to execute and deliver to Bank one or more renewals, extensions, or modifications thereof;

 

Give security for any liabilities of the Company to Bank by grant, security interest, assignment, lien, deed of trust or mortgage upon any real or personal property, tangible or intangible of the Company;

 

Purchase, sell, exchange, assign, endorse for transfer and/or deliver certificates and/or instruments representing stocks, bonds, evidences of Indebtedness or other securities owned by the Company, whether or not registered in the name of the Company;

 

Discount with the Bank, commercial or other business paper belonging to the Company made or drawn by or upon third parties, without limit as to amount;

 

Authorize and direct the Bank to pay the proceeds of any such loans or discounts as directed by the persons so authorized to sign;

 

Execute and deliver in form and content as may be required by the Bank any and all notes, evidences of indebtedness, applications for letters of credit, guaranties, subordination agreements, loan and security agreements, financing statements, assignments, liens, deeds of trust, mortgages, trust receipts and other agreements, instruments or documents to carry out the purposes of these Resolutions, any or all of which may relate to all or to substantially all of the Company’s property and assets;

 

 

The Authorized Officers may designate additional or alternate individuals as being authorized to request loan advances, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as he or she may in his or her discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions.

 

Any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved, and the authority conferred herein may be exercised singly by any such officer, and these resolutions shall continue in full force and effect until written notice of modification or revocation is received and accepted by Bank (such notice to have no effect on any action previously taken by the Bank in reliance on these Resolutions). Bank may rely upon any form of notice, which it in good faith believes to be genuine or what it purports to be.

 

The Resolutions are in full force and effect as of the date of this Certificate and are intended to replace, as of this date, any Resolutions previously given by the Company to Bank in connection with the matters described herein; these Resolutions and any borrowings or financial accommodations under these Resolutions have been properly noted in the corporate books and records, and have not been rescinded, revoked or modified; neither the foregoing Resolutions nor any actions to be taken pursuant to them are or will be in contravention of any provision of the articles of incorporation or bylaws of the Company or of any agreement, indenture or other instrument to which the Company is a party or by which it is bound; and to the extent certificate of formation or operating agreement of the Company or any agreement, indenture or other instrument to which the Company is a party or by which it is bound require the vote or consent of shareholders of the Company to authorize any act, matter or thing described in the foregoing Resolutions, such vote or consent has been obtained.

 

In Witness Whereof, I have affixed my name as Secretary on September , 2021.

 

		Secretary*

 

*If the certifying officer is designated as the only signer in these resolutions then another officer must also sign.

 

 

 

Exhibit 10.11

 

Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) is the type of information that the registrant treats as private or confidential. Double asterisks denote omissions.

  

CROSS-LICENSE AGREEMENT

 

This Cross-License Agreement (“Agreement”), effective as of December 16, 2020 (the “Effective Date”) and executed on February 11, 2021 (the “Execution Date”), is by and among Xilio Development, Inc., a Delaware corporation with an address at 828 Winter Street, Waltham, MA 02451 (“Xilio”), AskGene Pharma, Inc., a Delaware corporation with an address at 5217 Verdugo Way, Suite A, Camarillo, CA 93012 (“AskGene”) and, solely for purposes of Section 12.8, Xilio Therapeutics, Inc., a Delaware corporation with an address at 828 Winter Street, Waltham, MA 02451 (“Parent”). Xilio and AskGene are referred to herein collectively as the “Parties” and each individually as a “Party.”

 

RECITALS

 

WHEREAS, each Party owns or controls certain patent rights to which the other Party wishes to obtain certain licenses or options with respect to Non-Antigen Binding Products and Antigen-Binding Products (each as defined below);

 

WHEREAS, Parent and AskGene have entered into a Binding Term Sheet, dated December 16, 2020 (the “Binding Term Sheet”), pursuant to which: (a) each party granted to the other party certain licenses and options to obtain licenses to certain patent rights in relation to Non-Antigen Binding Products and Antigen-Binding Products, and (b) the parties agreed to negotiate a definitive agreement based on the Binding Term Sheet to more fully embody the terms and conditions of the arrangement;

 

WHEREAS, Parent has instructed and authorized its subsidiary Xilio to enter into this Agreement; and

 

WHEREAS, the Parties wish to enter into this Agreement as the definitive agreement contemplated by the Binding Term Sheet to provide further clarity to the arrangement of the Parties as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants, terms, and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

AGREEMENT

 

1.            DEFINITIONS. For purposes of this Agreement, the following terms have the following meanings:

 

1.1              “Action” has the meaning set forth in Section 10.1.

 

1.2             “Affiliate” means, with respect to any Person, any entity that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Party, but for only so long as such control exists. As used in this definition, “control” means (a) to possess, directly or indirectly, the power to direct the management or policies of a Person, whether through ownership of voting securities, by contract, or otherwise; or (b) direct or indirect beneficial ownership of more than fifty percent (50%) (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) of the voting securities or other equity interest in such Person.

 

 

For the avoidance of doubt, any Person that is not an Affiliate of a Party as of the Effective Date, but later becomes an Affiliate of such Party through any transaction or series of related transactions will be deemed to be an Affiliate of such Party for purposes of this Agreement. Furthermore, if an Affiliate of a Party ceases to be an Affiliate of such Party after the Effective Date, any rights granted to such Affiliate under this Agreement shall continue to apply to such Affiliate with respect to any activity conducted by such Affiliate during the period it was an Affiliate.

 

1.3              “All Fields” means all uses and indications.

 

1.4              “Antigen-Binding Products” means Licensed Antigen-Binding Products and, as to Xilio only in the event that Xilio has exercised the Xilio Option, Option Antigen-Binding Products.

 

1.5              “AskGene Indemnitee” has the meaning set forth in Section 10.1.

 

1.6              “AskGene Opt-In Right Period” means, with respect to each Xilio Licensed Product, the period beginning on [**] and ending [**] with respect to such Xilio Licensed Product.

 

1.7              “AskGene Option” has the meaning set forth in Section 2.4(a).

 

1.8              “AskGene Patent Rights” means (a) the Patent Rights set forth in Part I of Exhibit A, attached hereto, as amended from time to time, and (b) all Patent Rights that claim priority to, share common priority with or issue from such Patent Rights. The Parties shall update Exhibit A from time to time to reflect additional AskGene Patent Rights. Notwithstanding anything to the contrary, the failure of the Parties to include in Exhibit A, whether at the Effective Date or at any other time during the Term, any particular item described in clause (a) or (b) shall not, in itself, be determinative of whether such item constitutes an AskGene Patent Right.

 

1.9              “AskGene Territory” means Singapore, Thailand, Malaysia, Vietnam, Greater China (the People’s Republic of China, Taiwan, Macau, and Hong Kong), Korea, and India.

 

1.10            “Auditor” has the meaning set forth in Section 5.3(a).

 

1.11            “Bankruptcy Code” has the meaning set forth in Section 12.1.

 

 

1.12          “Biosimilar Product” means, with respect to a Licensed Product that is being sold in a country, a product (including a “biogeneric,” or “biosimilar product”) sold by a third party in such country that (a) within the United States, is “biosimilar” or “interchangeable,” with respect to such Licensed Product as evaluated by the FDA or otherwise determined by Law; (b) in any territory outside of the United States, has been given an equivalent designation by the applicable Regulatory Authority pursuant to Law; or (c) through reference to the Regulatory Approval of the Licensed Product, is eligible for and has achieved Regulatory Approval in such country pursuant to an abbreviated follow-on biological approval pathway established by the Regulatory Authority in such country pursuant to applicable Law, or otherwise is approved for marketing and sale in such country by an abridged procedure in reliance, in whole or in part, on the prior Regulatory Approval of the Licensed Product or on the safety and efficacy data generated for the prior Regulatory Approval (in such country) of the Licensed Product. For clarity, with respect to a Licensed Product that is being sold in a country, a biological medicine or biological product for human use which: (i) is highly similar to such Licensed Product that has marketing approval in such country; (ii) has no clinically meaningful differences from such Licensed Product as determined by Laws or any applicable Regulatory Authority; and (iii) is approved for use (A) in the United States, as a biosimilar biologic product (as defined in the Patient Protection and Affordable Care Act) pursuant to an abbreviated regulatory approval process established under the Patient Protection and Affordable Care Act, (B) in the European Union, as a similar biological medicine pursuant to Directive 2001/83/EC or Regulation (EC) No. 726/2004 (as applicable), or (C) in any other country, pursuant to an equivalent regime in such country, shall constitute a Biosimilar Product.

 

1.13          “Calendar Quarter” means each respective period of three (3) consecutive months ending on March 31, June 30, September 30 and December 31.

 

1.14          “Co-Exclusive IL-2 Rights” has the meaning set forth in Section 2.1(b)(i).

 

1.15          “Co-Exclusive IL-15 Rights” has the meaning set forth in Section 2.2(b)(ii).

 

1.16          “Combination Product” means any product containing a Licensed Product [**] in combination with one or more other [**].

 

1.17          “Commercially Reasonable Efforts” means, with respect to a Party and its objectives or obligations concerning a Licensed Product under this Agreement, such efforts and resources consistent with those commonly used by a biopharmaceutical or biotechnology company of similar size and profile and with similar resources as such Party to achieve a similar objective or fulfill a similar obligation concerning a product of similar market potential at a similar stage in product life as such Licensed Product, taking into account [**], in each case as prevailing at the time the objectives must be met or obligations must be carried out.

 

1.18          “Confidential Information” means all non-public, confidential, or proprietary information of the Disclosing Party, whether received by Receiving Party prior to, on or after the Effective Date, whether in oral, written, electronic, or other form or media, whether or not such information is marked, designated, or otherwise identified as “confidential”, including any information that, due to the nature of its subject matter or circumstances surrounding its disclosure, would reasonably be understood to be confidential or proprietary. The existence and terms of this Agreement, and the Binding Term Sheet, shall be deemed Confidential Information of each Party.

 

Confidential Information does not include information that the Receiving Party can demonstrate by documentation: (a) was already known to the Receiving Party without restriction on use or disclosure prior to receipt of such information directly or indirectly from or on behalf of the Disclosing Party; (b) was or is independently developed by the Receiving Party without reference to or use of any Confidential Information; (c) was or becomes generally known by the public other than by breach of this Agreement by, or other wrongful act of, the Receiving Party; or (d) was received by the Receiving Party from a third party who was not, at the time of receipt, under any obligation to the Disclosing Party or any other Person to maintain the confidentiality of such information.

 

 

1.19          “Controlled” or “Controls” means, when used in reference to any Patent Rights or other intellectual property, ownership or other legal authority or right of a Person (whether by license, other than pursuant to this Agreement, or otherwise) to grant the right to use such item, to grant a license or sublicense to such compound or to grant rights under such Patent Rights or intellectual property to any other Person, without breaching the terms of any agreement with a third party that is separate and distinct from the other Person under which rights were granted to either party of such agreement to such Patent Rights or other intellectual property.

 

1.20          “Cover”, “Covering” or “Covered” means, with reference to a Patent Right, that the manufacture, use, offer for sale, sale, importation or exportation of a product or practice of a method would infringe such Patent Right in the country in which such activity occurs absent a license thereto (or ownership thereof).

 

1.21          “Disclosing Party” has the meaning set forth in Section 8.1.

 

1.22          “EMA” means the European Medicines Agency, and any successor agency or authority thereto having substantially the same function.

 

1.23          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

1.24          “Excluded AskGene ECD” means any extracellular domain of a IL-2 or IL-15 cytokine receptor that: (a) contains one or more mutations other than (i) those mutations specifically described in [**], and (ii) mutations at the same amino acid position(s) as those described in clause (i); and (b) is specifically described and claimed in any issued or pending claim of any New AskGene Patent Rights.

 

1.25          “Excluded Xilio ECD” means any extracellular domain of an IL-2 or IL-15 cytokine receptor that: (a) contains one or more mutations other than (i) those mutations specifically described in [**], and (ii) mutations at the same amino acid position(s) as those in clause (i); and (b) is specifically described and claimed in any issued or pending claim of any New Xilio Patent Rights.

 

1.26          “Exclusive Immunology License” has the meaning set forth in Section 2.4(a).

 

1.27          “FDA” means the U.S. Food and Drug Administration, or any successor agency or authority thereto having substantially the same function.

 

1.28          “First Commercial Sale” means (a) with respect to any Licensed Product in a given country, the first sale to a third party of such Licensed Product in such country following Regulatory Approval of such Licensed Product in such country, which results in Net Sales from the sale of such Licensed Product, and (b) with respect to any Biosimilar Product in a given country, the first sale to a third party of such Biosimilar Product in such country following Regulatory Approval of such Biosimilar Product in such country.

 

 

1.29          “Governmental Authority” means any federal, state, national, supranational, local, or other government, whether domestic or foreign, including any subdivision, department, agency, instrumentality, authority (including any regulatory authority), commission, board, or bureau thereof, or any court, tribunal, arbitrator or arbitral body.

 

1.30          “Immunology Field” means all uses and indications associated with the treatment of inflammation and autoimmune disease.

 

1.31          “IND” means an Investigational New Drug Application to the FDA as described within 21 C.F.R. § 312.20 or a similar filing for the approval of a Regulatory Authority outside of the United States to initiate clinical trials in humans.

 

1.32          “Law” means any applicable statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any federal, state, local, or foreign government or political subdivision thereof, or any arbitrator, court, or tribunal of competent jurisdiction.

 

1.33          “Licensed Antigen-Binding Products” means a cytokine [**], comprising (a) an IL-2 cytokine, including mutein forms of said cytokine, (b) an antigen-binding carrier moiety, such as [**], and (c) a masking domain [**], excluding (i) as to Xilio and its rights hereunder, [**] and (ii) as to AskGene and its rights hereunder[**].

 

1.34          “Licensed IL-2 Products” means a Licensed Non-Antigen Binding Product or a Licensed Antigen-Binding Product.

 

1.35          “Licensed Non-Antigen Binding Products” means a cytokine [**], comprising (a) an IL-2 cytokine, including mutein forms of said cytokine, (b) a non-antigen-binding carrier moiety selected from an [**], and (c) a masking domain [**], excluding (i) as to Xilio and its rights hereunder, [**], and (ii) as to AskGene and its rights hereunder, [**].

 

1.36          “Licensed Patent Rights” means the Xilio Patent Rights, New Xilio Patent Rights, AskGene Patent Rights and New AskGene Patent Rights. Where a provision hereof specifies a right or obligation of Licensee hereunder with respect to Licensed Patent Rights, such Licensed Patent Rights shall be deemed to refer to those Licensed Patent Rights to which such Party is granted rights under this Agreement. Where a provision hereof specifies a right or obligation of Licensor under this Agreement with respect to Licensed Patent Rights, such Licensed Patent Rights shall be deemed to refer to those Licensed Patent Rights to which such Party grants rights to the other Party under this Agreement.

 

1.37          “Licensed Products” means Licensed IL-2 Products and, as to Xilio only in the event that Xilio has exercised the Xilio Option, Option IL-15 Products.

 

1.38          “Licensee” means, in relation to any Licensed Patent Rights, the Party to which a license under such Licensed Patent Rights is granted by the other Party hereunder.

 

1.39          “Licensor” means, in relation to any Licensed Patent Rights, the Party granting a license under such Licensed Patent Rights to the other Party hereunder.

 

 

1.40          “Losses” means all losses, damages, liabilities, costs, and expenses, including any product liability, personal injury, or property damage, including reasonable attorneys’ fees and other litigation costs.

 

1.41          “MAA” means the marketing authorization application required in the European Union or Japan, as applicable, for the marketing and commercialization of a Licensed Product in such jurisdiction.

 

1.42          “MAA Approval” means, with respect to the European Union, approval by the EMA of a MAA filed with the EMA for the applicable Licensed Product under the centralized European procedure or, with respect to Japan, approval by the PMDA of a MAA filed with the PMDA for the applicable Licensed Product in Japan.

 

1.43          “Major Market” means [**].

 

1.44          “Milestone Event” has the meaning set forth in Section 4.3.

 

1.45          “Milestone Payment” has the meaning set forth in Section 4.3.

 

1.46          “NDA/BLA Approval” means the approval by the FDA of a Biological License Application or New Drug Application (each as defined by the FDA) for the commercialization of the applicable Licensed Product in the United States.

 

1.47          “Net Sales” means the gross revenues invoiced by Xilio, its Affiliates, or its Sublicensees (each, a “Selling Party”) for the commercial sale or other commercial transfer for value of Licensed Products to a third party after (but including) the First Commercial Sale of any Licensed Product, less the following deductions for:

 

[**].

 

In the event a Licensed Product is sold in the form of a combination product containing one or more active ingredients in addition to a Licensed Product (a “Combination Product”), Net Sales for such Licensed Product sold as part of such Combination Product in a country will be adjusted by multiplying the actual Net Sales of such Combination Product in such country by the fraction A/(A+B) where A is the average invoice price of the Licensed Product if sold separately in such country in the same formulation and dosage for a comparable indication, and B is the average invoice price of any other products in the Combination Product if sold separately in such country in the same formulation and dosage for a comparable indication. If the other products in the Combination Product are not sold separately in such country, Net Sales shall be calculated by multiplying actual Net Sales of such Combination Product by the fraction A/C where A is the average invoice price of the Licensed Product if sold separately in such country, and C is the invoice price of the Combination Product. If neither the Licensed Product nor the other products contained in the Combination Product is sold separately in such country, Net Sales shall be determined according to a reasonable method or proxy selected in good faith by Xilio to apportion the relative value of the Licensed Product portion of the Combination Product and the other active components in accordance with GAAP, provided that, if AskGene disagrees in good faith with such determination, the Parties shall confer to resolve such disagreement within [**] and, if it remains unresolved after such period, may refer the matter for further dispute resolution between the Parties.

 

 

Upon the sale or other transfer of a Licensed Product in a country in a manner such that the pricing for such sale or transfer of the Licensed Product is dependent upon the sale or transfer of another product or service, such as a multi-product discount transaction, then for purposes of determining the gross selling price for the Licensed Product by the Selling Party, for purposes of determining Net Sales for royalty calculation purposes under this Agreement, the gross selling price shall be the greater of (i) the gross selling price actually invoiced in the transaction for the Licensed Product; or (ii) the average invoice price for the Licensed Product in such country if the sale is at a discount.

 

The transfer of Licensed Product by a Selling Party to another Selling Party shall not be considered (or give rise to) Net Sales. Disposition or use of a Licensed Product in the following cases shall not be considered (or give rise to) Net Sales: (a) in clinical trials or other scientific testing, (b) as free samples in an amount that would be considered customary in a similar situation, (c) under an expanded access program for individual named patients recognized by the FDA under 21 C.F.R. § 312.310, or substantially similar program recognized by a Regulatory Authority, or otherwise at or below cost or with a de minimis mark-up on the fully burdened manufacturing cost of the Licensed Product, (d) pursuant to a compulsory license by a Governmental Authority in a country that does not result in the payment of any compensation of any form to the licensor, or (e) in test marketing programs or other similar programs or studies to the extent no compensation is received and the amounts of Licensed Product provided are reasonable considering the situation.

 

1.48          “New AskGene Patent Rights” means, other than the AskGene Patent Rights (as set forth in Part I of Exhibit A), the Patent Rights Controlled by AskGene at any time during the Term which claim or Cover any IL-2 or IL-15 [**], or the making or using thereof, wherein said [**] comprises an IL-2 or IL-15 [**] thereof, [**]. The New AskGene Patent Rights as of the Effective Date are set forth in Part II of Exhibit A, attached to this Agreement. Notwithstanding anything to the contrary, the failure of the Parties to include in Exhibit A, whether at the Effective Date or at any other time during the Term, any particular item described in the foregoing sentence shall not, in itself, be determinative of whether such item constitutes a New AskGene Patent Right.

 

1.49          “New Xilio Patent Rights” means, other than the Xilio Patent Rights (as set forth in Part I of Exhibit B), the Patent Rights Controlled by Xilio at any time during the Term which claim or Cover any IL-2 or IL15 [**], or the making or using thereof, wherein said [**] comprises an IL-2 or IL-15 [**] thereof, [**]. As of the Effective Date, the New Xilio Patent Rights are set forth in Part II of Exhibit B, attached to this Agreement. Notwithstanding anything to the contrary, the failure of the Parties to include in Exhibit B, whether at the Effective Date or at any other time during the Term, any particular item described in the foregoing sentence shall not, in itself, be determinative of whether such item constitutes a New Xilio Patent Right.

 

 

1.50          “Non-Antigen Binding Products” means Licensed Non-Antigen Binding Products and, as to Xilio only in the event that Xilio has exercised the Xilio Option, Option Non-Antigen Binding Products.

 

1.51          “Oncology Field” means all uses and indications associated with the treatment of cancer.

 

1.52          “Option Antigen-Binding Product” means a cytokine prodrug, a fusion molecule, or a chimeric molecule, comprising (a) an IL-15 cytokine, including mutein forms of said cytokine, (b) an antigen-binding carrier moiety, [**], and (c) a masking domain consisting of [**], excluding (i) as to Xilio and its rights hereunder, [**] and (ii) as to AskGene and its rights hereunder, [**].

 

1.53          “Option IL-15 Product” means an Option Non-Antigen Binding Product or an Option Antigen-Binding Product.

 

1.54          “Option Non-Antigen Binding Product” means a cytokine prodrug, a fusion molecule, or a chimeric molecule, comprising (a) an IL-15 cytokine, including mutein forms of said cytokine, (b) a non-antigen binding carrier moiety selected from an [**], and (c) a masking domain consisting of [**], excluding (i) as to Xilio and its rights hereunder, [**] and (ii) as to AskGene and its rights hereunder, [**].

 

1.55          “Option Period” means the period commencing upon the Effective Date and continuing until the earlier of (a) [**] and (b) [**].

 

1.56          “Patent Rights” means any of the following, whether existing now or in the future anywhere in the world: (a) any national, regional and international patents and patent applications, including provisional patent applications and PCT applications; (b) any patent applications filed from such patents, patent applications or provisional applications or from an application claiming priority from either of these, including divisionals, continuations, continuations-in-part (with respect to claims of such continuations-in-part that claim priority to, and are directed to subject matter specifically disclosed in the foregoing parent patents or patent applications described in clause (a)), substitutions, provisionals, converted provisionals, and continued prosecution applications; (c) any patents that have issued or in the future issue from the foregoing patent applications described in clauses (a) and (b), including utility models, petty patents and design patents and certificates of invention; and (d) any extensions or restorations by existing or future patent term extension or restoration mechanisms, including revalidations, reissues, reexaminations and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications described in clauses (a), (b), and (c)).

 

1.57          “Person(s)” means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association, or other entity.

 

1.58          “Phase II Clinical Trial” means a human clinical trial of a product designed to satisfy the requirements of 21 C.F.R. § 312.21(b) and intended to explore a variety of doses, dose response, and duration of effect, and to generate data on side effects and clinical efficacy for a particular indication or indications in a target patient population, or any comparable trial in any other jurisdiction.

 

 

1.59          “PMDA” means the Japanese Pharmaceutical and Medical Device Agency or its successor, or the Ministry of Health, Labour and Welfare of Japan.

 

1.60          “Quarterly Report” has the meaning set forth in Section 5.2.

 

1.61          “Receiving Party” has the meaning set forth in Section 8.1.

 

1.62          “Regulatory Approval” means, with respect to a country or jurisdiction, any and all approvals, licenses, registrations, permits, notifications and authorizations (or waivers) of any Regulatory Authority that are necessary for the manufacture, use, storage, import, transport, promotion, marketing, distribution, offer for sale, sale, or other commercialization of a pharmaceutical product in such country or jurisdiction.

 

1.63          “Regulatory Authority” means the FDA, EMA, and any other Governmental Authority that has responsibility in its applicable jurisdiction over the testing, development, manufacture, use, storage, import, transport, promotion, marketing, distribution, offer for sale, sale, or other commercialization of pharmaceutical products in a given jurisdiction.

 

1.64          “Regulatory Exclusivity” means any marketing exclusivity or data exclusivity conferred by the applicable Regulatory Authority in a country or jurisdiction that confers exclusive rights to Xilio, its Affiliates or its Sublicensees to market such Licensed Product in such country or jurisdiction.

 

1.65          “Representatives” means, with respect to a Party, its Affiliates and its and their officers, directors, employees, consultants, agents, and legal advisors.

 

1.66          “Royalty” has the meaning set forth in Section 4.4(a).

 

1.67          “Royalty Term” means, with respect to a given Licensed Product in a given country, the period commencing upon the First Commercial Sale of such Licensed Product in such country and ending upon the latest of (a) the expiration of the last Valid Claim of any AskGene Patent Right in such country that covers such Licensed Product, including, but not limited to, its composition of matter or method of making or using such Licensed Product; (b) the expiration of Regulatory Exclusivity (if any) for such Licensed Product in such country; and (c) [**] after the First Commercial Sale of such Licensed Product in such country.

 

1.68          “Securities Act” means the Securities Act of 1933, as amended.

 

1.69          “Selling Party” has the meaning set forth in Section 1.47.

 

1.70          “Sublicensee” means any Person (other than a Party) that is granted (a) a sublicense by Licensee under any Licensed Patent Rights that includes any right to commercialize any Licensed Products or (b) in the case of the Co-Exclusive IL-2 Rights or Co-Exclusive IL-15 Rights, a license by Licensor under the applicable Licensed Patent Rights that includes any right to commercialize any Licensed Products.

 

 

1.71          “Tax” (including with correlative meaning, the term “Taxes”) means all taxes and duties and similar governmental charges, levies, imposts or withholdings (including net income, gross income, gross receipts, sales, use, consumption, value-added, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, import, export, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes) in the nature of a tax whenever and by whatever Governmental Authority levied or imposed, and whether of the United States or a foreign, state or local jurisdiction, together with, in any such case, any interest, fines, penalties, surcharges and any additions to tax or additional amounts with respect thereto.

 

1.72          “Term” has the meaning set forth in Section 11.1.

 

1.73         “Valid Claim” means, on a country-by-country basis, a claim of an unexpired issued or granted Licensed Patent Right, as long as such claim has not been revoked or held unenforceable, unpatentable, or invalid by a decision of a court or other Governmental Authority of competent jurisdiction that is not appealable or has not been appealed within the time allowed for appeal, and that has not been abandoned, disclaimed, denied or admitted by Licensor or otherwise caused to be invalid or unenforceable through reissue, re-examination, or disclaimer or otherwise.

 

1.74          “Xilio Indemnitees” has the meaning set forth in Section 10.2.

 

1.75          “Xilio Licensed Product” means any Licensed Product developed by or on behalf of Xilio.

 

1.76          “Xilio Option” has the meaning set forth in Section 2.2(a).

 

1.77          “Xilio Option Exercise Date” has the meaning set forth in Section 2.2(a).

 

1.78          “Xilio Patent Rights” means (a) the Patent Rights set forth in Part I of Exhibit B, attached hereto, as amended from time to time, and (b) all Patent Rights that claim priority to, share common priority with or issue from such Patent Rights. The Parties shall update Exhibit B from time to time to reflect additional Xilio Patent Rights. Notwithstanding anything to the contrary, the failure of the Parties to include in Exhibit B, whether at the Effective Date or at any other time during the Term, any particular item described in clause (a) or (b) shall not, in itself, be determinative of whether such item constitutes a Xilio Patent Right.

 

1.79          “Xilio Territory” means worldwide, excluding the AskGene Territory.

 

2.            GRANT OF RIGHTS.

 

2.1              AskGene License Grants to Xilio for Licensed IL-2 Products.

 

(a)               Exclusive License for Licensed Non-Antigen Binding Products. Subject to the terms and conditions of this Agreement, AskGene hereby grants to Xilio an exclusive (even as to AskGene), nontransferable (except as permitted under Section 12.9 (Assignment)), royalty-bearing license, with the right to grant sublicenses through multiple tiers, under the AskGene Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Licensed Non-Antigen Binding Products in the Oncology Field in the Xilio Territory during the Term.

 

 

 

(b)               Co-Exclusive License for Licensed Antigen-Binding Products.

 

(i)                 Subject to the terms and conditions of this Agreement, AskGene hereby grants to Xilio a co-exclusive (with AskGene), nontransferable (except as permitted under Section 12.9 (Assignment)), royalty-bearing license, with the limited right to sublicense in accordance with Section 2.1(b)(iii), under the AskGene Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Licensed Antigen-Binding Products in All Fields in the Xilio Territory during the Term (the foregoing license grant in this Section 2.1(b)(i) and the retained rights of AskGene in Section 2.1(b)(ii), collectively, the “Co-Exclusive IL-2 Rights”).

 

(ii)              Subject to the terms and conditions of this Agreement, AskGene hereby retains for itself a co-exclusive (with Xilio), nontransferable (except as permitted under Section 12.9 (Assignment)) right and license, with the limited right to license or sublicense in accordance with Section 2.1(b)(iii), under the AskGene Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Licensed Antigen-Binding Products in All Fields worldwide during the Term.

 

(iii)            Each Party hereby acknowledges and agrees that the term “coexclusive” as used in this Section 2.1(b) shall operate to exclude all other Persons, except for Xilio and AskGene. Except as expressly permitted in this Agreement, no rights under the Co-Exclusive IL-2 Rights shall be licensed or sublicensed by Xilio or AskGene to any Person. Notwithstanding the foregoing in this Section 2.1(b)(iii), Xilio may sublicense its rights under the Co-Exclusive IL-2 Rights, and AskGene may license or sublicense its rights under the Co-Exclusive IL-2 Rights, as follows:

 

(A)             only for a specific Licensed Antigen-Binding Product developed by such Party (and not, for clarity, for any Person to develop new Licensed Antigen-Binding Products), provided that the rights granted to the applicable Sublicensee must (1) only include rights under the AskGene Patent Rights as necessary to research, develop, manufacture, commercialize, and otherwise exploit such specific Licensed Antigen-Binding Product, and (2) include rights under other intellectual property Controlled by such Party with respect to such specific Licensed Antigen-Binding Product; or

 

(B)               to service providers and agents of such Party to perform activities on behalf of such Party.

 

 

(c)               Non-Exclusive License to New AskGene Patent Rights. Subject to the terms and conditions of this Agreement, to the extent a Licensed Product developed by or on behalf of Xilio [**], AskGene hereby grants to Xilio during the Term a non-exclusive, nontransferable (except as permitted under Section 12.9 (Assignment), royalty-free, fully paid up right and license, with the right to grant sublicenses through multiple tiers, for Licensed Non-Antigen Binding Products and, if Xilio exercises the Xilio Option within the Option Period, Option Antigen-Binding Products, under the New AskGene Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Licensed Products as follows:

 

(i)              Licensed Non-Antigen Binding Products in the Oncology Field in the Xilio Territory;

 

(ii)             Licensed Antigen-Binding Products in All Fields in the Xilio Territory;

 

(iii)            To the extent Xilio exercises the Xilio Option, Option Non-Antigen Binding Products in the Oncology Field in the Xilio Territory; and

 

(iv)            To the extent Xilio exercises the Xilio Option, Option Antigen-Binding Products in All Fields in the Xilio Territory.

 

(d)               Non-Exclusive License for Option IL-15 Products. Subject to the terms and conditions of this Agreement, AskGene hereby grants to Xilio a non-exclusive, nontransferable (except as permitted under Section 12.9 (Assignment)), royalty-free, fully paid up license under the AskGene Patent Rights to research (but not to engage in clinical development or to commercialize) Option IL-15 Products, including the right to manufacture Option IL-15 Products for research purposes, in the Xilio Territory during the period commencing upon the Effective Date and continuing until the second anniversary of the Effective Date. Xilio may sublicense its rights under the foregoing sentence to service providers and agents of Xilio to perform activities on its behalf.

 

2.2              Option Grant and Conditional License Grant to Xilio for Option IL-15 Products.

 

(a)               Exclusive Option for Option IL-15 Products. AskGene hereby grants to Xilio an exclusive option, exercisable during the Option Period, to obtain the license set forth in Section 2.2(b) under the AskGene Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Option IL-15 Products in the Xilio Territory (the “Xilio Option”). Xilio may exercise the Xilio Option by delivering written notice to AskGene thereof at any time during the Option Period. The date of delivery of such written notice (if any) shall be referred to herein as the “Xilio Option Exercise Date.” During the Option Period, AskGene will not, directly or indirectly, grant, purport to grant or agree to grant any license, option or other right to any Person under the AskGene Patent Rights to research, develop, manufacture, commercialize, or otherwise exploit any Option IL-15 Products anywhere in the Xilio Territory in a manner that would overlap or otherwise conflict with the Xilio Option or the license granted to Xilio upon its exercise of the Xilio Option.

 

(b)               Conditional License Grant to Xilio for Option IL-15 Products. Subject to the terms and conditions of this Agreement, effective only as of and after the Xilio Option Exercise Date:

 

(i)                 AskGene hereby grants to Xilio an exclusive (even as to AskGene), non-transferable (except as permitted under Section 12.9 (Assignment)), royalty-bearing license, with the right to grant sublicenses through multiple tiers, under the AskGene Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Option Non-Antigen Binding Products in the Oncology Field in the Xilio Territory during the Term.

 

 

(ii)              AskGene hereby grants to Xilio a co-exclusive (with AskGene), non-transferable (except as permitted under Section 12.9 (Assignment)), royalty-bearing right and license, with the limited right to grant sublicenses in accordance with Section 2.2(b)(iv), under the AskGene Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Option Antigen-Binding Products in All Fields in the Xilio Territory during the Term (the foregoing license grant in this Section 2.2(b)(ii) and the retained rights of AskGene in Section 2.2(b)(iii), collectively, the “Co-Exclusive IL-15 Rights”).

 

(iii)            AskGene hereby retains for itself a co-exclusive (with Xilio), nontransferable (except as permitted under Section 12.9 (Assignment)) right and license, with the limited right to license or sublicense in accordance with Section 2.2(b)(iv), under the AskGene Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Option Antigen-Binding Products in All Fields worldwide during the Term.

 

(iv)             Each Party hereby acknowledges and agrees that the term “coexclusive” as used in this Section 2.2(b) shall operate to exclude all other Persons, except for Xilio and AskGene. Except as expressly permitted in this Agreement, no rights under the Co-Exclusive IL-15 Rights shall be licensed or sublicensed by Xilio or AskGene to any Person. Notwithstanding the foregoing in this Section 2.2(b)(iv), Xilio may sublicense its rights under the Co-Exclusive IL-15 Rights, and AskGene may license or sublicense its rights under the Co-Exclusive IL-15 Rights, as follows:

 

(A)              only for a specific Option Antigen-Binding Product developed by such Party (and not, for clarity, for any Person to develop new Option Antigen-Binding Products), provided that the rights granted to the applicable Sublicensee must (1) only include rights under the AskGene Patent Rights as necessary to research, develop, manufacture, commercialize, and otherwise exploit such specific Option Antigen-Binding Product, and (2) include rights under other intellectual property Controlled by such Party with respect to such specific Option Antigen-Binding Product; or

 

(B)               to service providers and agents of such Party to perform activities on behalf of such Party.

 

2.3              Xilio License Grants to AskGene.

 

(a)               Non-Exclusive License to Xilio Patent Rights. Subject to the terms and conditions of this Agreement, Xilio hereby grants to AskGene during the Term a non-exclusive, worldwide, non-transferable (except as permitted under Section 12.9 (Assignment)), royalty-free, fully paid up license, with a limited right to grant sublicenses in accordance with Section 2.3(c), under the Xilio Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit (i) Non-Antigen Binding Products developed by AskGene in the Immunology Field and (ii) Antigen-Binding Products developed by AskGene in All Fields.

 

 

(b)               Non-Exclusive License to New Xilio Patent Rights. Subject to the terms and conditions of this Agreement, to the extent a Licensed Product developed by AskGene [**], Xilio hereby grants to AskGene a non-exclusive, worldwide, nontransferable (except as permitted under Section 12.9 (Assignment)), royalty-free, fully paid up license, with the limited right to sublicense in accordance with Section 2.3(c), under the New Xilio Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Licensed Products as follows:

 

(i)              Licensed Non-Antigen Binding Products in the Immunology Field;

 

(ii)             Licensed Antigen-Binding Products in All Fields;

 

(iii)            Option Non-Antigen Binding Products in the Immunology Field; and

 

(iv)            Option Antigen-Binding Products in All Fields.

 

(c)               Sublicensing. Except as expressly permitted in this Agreement, no rights under Section 2.3(a) or 2.3(b) shall be sublicensed by AskGene to any Person. AskGene may sublicense its rights under Section 2.3(a) or 2.3(b) as follows:

 

(i)                 unless AskGene has exercised the AskGene Option and the Parties have entered into an agreement embodying the Exclusive Immunology License, only for specific Licensed Products developed by AskGene (and not, for clarity, for any Person to develop new Licensed Products), provided that the rights granted to the applicable Sublicensee must (A) only include rights under the Xilio Patent Rights or New Xilio Patent Rights, as applicable, as necessary to research, develop, manufacture, commercialize, and otherwise exploit such specific Licensed Product, and (B) include rights under other intellectual property Controlled by Xilio respect to such specific Licensed Product;

 

(ii)              if AskGene has exercised the AskGene Option and the Parties have entered into an agreement embodying the Exclusive Immunology License, AskGene may sublicense its rights under Section 2.3(b) through multiple tiers for Licensed Products in the Immunology Field; or

 

(iii)            to service providers and agents of AskGene to perform activities on its behalf.

 

2.4              Option Grant to AskGene for Exclusive Immunology License.

 

(a)               Subject to the terms and conditions of this Agreement, Xilio hereby grants to AskGene an option, exercisable during the Option Period, to obtain the Exclusive Immunology License (the “AskGene Option”) in accordance with this Section 2.4. The “Exclusive Immunology License” means, collectively, the following rights:

 

(i)              an exclusive (even as to Xilio), worldwide, non-transferable, royalty-bearing license, with the right to grant sublicenses through multiple tiers, under the Xilio Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Non-Antigen Binding Products developed by AskGene in the Immunology Field during the Term; and

 

(ii)             a co-exclusive (with Xilio), worldwide, non-transferable, royalty-bearing license, with a limited right to grant sublicenses as necessary to research, develop, manufacture, commercialize, and otherwise exploit such Antigen-Binding Products, under the Xilio Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Antigen-Binding Products developed by AskGene in All Fields during the Term.

 

 

(b)               AskGene may exercise the AskGene Option by delivering written notice to Xilio thereof at any time during the Option Period. If AskGene exercises the AskGene Option as set forth herein, the Parties shall negotiate in good faith the terms of a license agreement providing for the Exclusive Immunology License, which shall include those set forth on Exhibit C and other commercially reasonable terms.

 

(c)               During the Option Period, Xilio will not, directly or indirectly, grant, purport to grant or agree to grant any license, option or other right to any Person under the Xilio Patent Rights to research, develop, manufacture, commercialize, or otherwise exploit applicable Licensed Products in a manner that would overlap or otherwise conflict with the AskGene Option or the Exclusive Immunology License.

 

2.5              Sublicenses. To the extent Licensee sublicenses (or, in the case of the Co-Exclusive IL-2 Rights or Co-Exclusive IL-15 Rights, Licensor licenses) any of its rights under Sections 2.1−2.4, (a) the applicable sublicense (or license) agreements shall be in writing, (b) such Party shall incorporate into the applicable sublicense agreements (i) terms and conditions sufficient to enable such Party to comply with this Agreement, (ii) the requirements under Section 5.1 as if the applicable sublicensee were a Party hereunder, and (iii) a restriction on the sublicensee (or licensee) from granting a further sublicense, unless sublicensing the applicable rights through multiple tiers is expressly permitted under this Agreement, and (c) to the extent such rights include any rights to commercialize any Licensed Product covered by such rights, such Party shall provide written notice and a copy of such sublicense (or license) agreement to the other Party.

 

2.6              No Implied Licenses. Except as expressly set forth in this Article 2, nothing in this Agreement shall be construed to confer any right or license upon either Party by implication, estoppel, or otherwise as to any Patent Rights, technology or other intellectual property of the other Party.

 

3.                  COMMERCIAL TERMS.

 

3.1              Rights and Responsibility for Development and Commercialization. Except to the extent otherwise agreed by the Parties with respect to manufacturing pursuant to Section 3.3(c), each Party shall have sole control of and decision-making authority for the research, development, manufacture, and commercialization of its own Licensed Products in its applicable territory at its sole cost and expense.

 

3.2              Diligence.

 

(a)           During the Term, Xilio shall use Commercially Reasonable Efforts to [**].

 

(b)           In the event Xilio exercises the Xilio Option, from and after the Xilio Option Exercise Date and continuing during the Term, Xilio shall use Commercially Reasonable Efforts to [**].

 

 

3.3              AskGene Opt-In Right in AskGene Territory.

 

(a)               Subject to the terms and conditions of this Agreement, Xilio hereby grants to AskGene an option, exercisable during the AskGene Opt-In Right Period (defined below), to obtain a license for the development and commercialization of each Xilio Licensed Product in the AskGene Territory as set forth in this Section 3.3 (such option, the “AskGene Opt-In Right”). AskGene may exercise the AskGene Opt-In Right with respect to a given Xilio Licensed Product by delivering written notice to Xilio thereof at any time during the AskGene Opt-In Right Period for such Xilio Licensed Product. The date of delivery of such written notice (if any) shall be referred to herein as the “AskGene Opt-In Right Exercise Date.”

 

(b)               If AskGene exercises the AskGene Opt-In Right with respect to a given Xilio Licensed Product, the Parties shall [**] following the AskGene Opt-In Right Exercise Date [**] to agree upon the terms of a regional license and collaboration agreement (each, a “Regional License Agreement”), which would include the key terms set forth on Exhibit D and other mutually agreeable legal and economic terms.

 

(c)               If AskGene exercises the AskGene Opt-In Right for a Licensed Product in the AskGene Territory, within [**] of the AskGene Opt-In Right Exercise Date, the Parties shall form a committee to be known as the Development and Production Committee to serve as the Parties’ forum to discuss and determine in good faith the applicable manufacturing and supply terms of the Regional License Agreement or a related Manufacturing and Supply Agreement between the Parties, as applicable, under which AskGene shall receive the supply of the applicable Xilio Licensed Product within the AskGene Territory. Such terms shall include, at a minimum (but subject to negotiation and refinement in such Regional License Agreement or related Manufacturing and Supply Agreement, as applicable) the terms set forth on Exhibit E. The Parties acknowledge and agree that they reserve further discussions of a detailed arrangement on manufacturing of any Xilio Licensed Product for the AskGene Territory for such negotiations in connection with the Regional License Agreement [**].

 

(d)               If AskGene does not exercise the AskGene Opt-In Right with respect to a given Xilio Licensed Product, effective from and after the expiration of the AskGene Opt-In Right Period for such Xilio Licensed Product, (i) AskGene hereby grants to Xilio an exclusive, nontransferable (except as permitted under Section 12.9 (Assignment)), royalty-free, fully paid up license, with the right to sublicense through multiple tiers, under the AskGene Patent Rights, itself or through Affiliates, licensees or Sublicensees, to research, develop, manufacture, commercialize, and otherwise exploit such Xilio Licensed Product in the AskGene Territory during the Term with no financial obligations to AskGene and (ii) the license granted under Section 2.1(c) with respect to such Xilio Licensed Product shall be deemed to include the AskGene Territory.

 

3.4              AskGene Non-Compete. During the Term, AskGene agrees that it will not, and it will ensure that its Affiliates do not, directly or indirectly, conduct, participate in or fund any development, manufacturing, commercialization or other exploitation of any Licensed Non-Antigen Binding Product or, during the Option Period and, if Xilio exercises the Xilio Option within the Option Period, thereafter, any Option Non-Antigen Binding Product in the Oncology Field in the Xilio Territory, or facilitate any of the foregoing (including, without limitation, through the grant of any right or license to any Person). If AskGene wishes to research, develop or manufacture for research and development purposes only any Non-Antigen Binding Product in the Oncology Field in the Xilio Territory, AskGene shall notify Xilio in writing, discuss with Xilio in advance and obtain Xilio’s prior written consent to such activities. For the avoidance of doubt, this Section 3.4 does not restrict AskGene’s express rights under this Agreement to commercialize and otherwise exploit Non-Antigen Binding Products developed by AskGene in All Fields in the AskGene Territory.

 

 

3.5              Right of First Negotiation for Excluded AskGene ECDs.

 

(a)               AskGene will notify Xilio in writing if, at any time during the Term, AskGene decides it wishes to grant a license to any Person under any New AskGene Patent Right that claims or Covers any Excluded AskGene ECD for the exploitation of:

 

(i)            any Licensed Non-Antigen Binding Products in any portion of the Oncology Field in any portion of the Xilio Territory;

 

(ii)           any Licensed Antigen-Binding Products in any portion of All Fields in any portion of the Xilio Territory;

 

(iii)          during the Option Period or, if Xilio exercises the Xilio Option, thereafter, any Option Non-Antigen Binding Products in the Oncology Field in any portion of the Xilio Territory; or

 

(iv)          during the Option Period or, if Xilio exercises the Xilio Option, thereafter, any Option Antigen-Binding Products in any portion of All Fields in any portion of the Xilio Territory.

 

(b)               If, within [**] of Xilio’s receipt of notice under Section 3.5(a), Xilio notifies AskGene in writing of its interest in obtaining such a license from AskGene. AskGene shall [**] with respect to the grant by AskGene to Xilio of a royalty-bearing license to such New AskGene Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Licensed Products, expressly including Excluded AskGene ECDs. In the event the Parties have not reached an agreement with respect thereto during the exclusive negotiation period set forth in the foregoing sentence, AskGene may negotiate with third parties regarding the grant of such a license and grant such a license to a third party; provided, however, that, for the avoidance of doubt, the process set forth in this Section 3.5 shall apply each time that AskGene decides it wishes to grant such a license.

 

(c)               AskGene will not, directly or indirectly, grant a license, option to license or other rights under any New AskGene Patent Right (other than to service providers and agents of AskGene to perform activities on its behalf), or negotiate with any Person with respect to the foregoing, without first complying with this Section 3.5.

 

 

3.6              Right of First Negotiation for Excluded Xilio ECDs.

 

(a)               Xilio will notify AskGene in writing if, at any time during the Term, Xilio decides it wishes to grant a license to any Person under any New Xilio Patent Right that claims or Covers any Excluded Xilio ECD for the exploitation of:

 

(i)                 any Non-Antigen Binding Products in any portion of the Immunology Field; or

 

(ii)              any Antigen-Binding Products in any portion of All Fields.

 

(b)               If, within [**] of AskGene’s receipt of notice under Section 3.6(a), AskGene notifies Xilio in writing of its interest in obtaining such a license from Xilio, Xilio shall [**] with respect to the grant by Xilio to AskGene of a royalty-bearing license to such New Xilio Patent Rights to research, develop, manufacture, commercialize, and otherwise exploit Licensed Products, expressly including Excluded Xilio ECDs. In the event the Parties have not reached an agreement with respect thereto during the exclusive negotiation period set forth in the foregoing sentence, Xilio may negotiate with third parties regarding the grant of such a license and grant such a license to a third party; provided, however, that, for the avoidance of doubt, the process set forth in this Section 3.6 shall apply each time that Xilio decides it wishes to grant such a license.

 

(c)               [**].

 

3.7              Limited Purpose Expansion of Licensed Product Definitions. The Parties acknowledge and agree that (a) the meanings of Licensed Product, Licensed Non-Antigen Binding Product, Option Non-Antigen Binding Product, Licensed Antigen-Binding Product and Option Antigen-Binding Products are expressly defined in Article 1, and (b) notwithstanding the definitions therein, solely for purposes of Section 3.4 (AskGene Non-Compete), Section 3.5 (Right of First Negotiation for Excluded AskGene ECDs) and Section 3.6 (Right of First Negotiation for Excluded Xilio ECDs), the meanings of Licensed Product, Licensed Non-Antigen Binding Product, Option Non-Antigen Binding Product, Licensed Antigen-Binding Product and Option Antigen-Binding Product shall expressly include Excluded AskGene ECDs and Excluded Xilio ECDs that are otherwise excluded from such definitions.

 

4.                  PAYMENTS.

 

4.1              Upfront Payment. Within [**] after the Execution Date, Xilio shall pay to AskGene six million U.S. dollars ($6,000,000) as a non-refundable up-front license fee, less any amounts paid by Xilio to AskGene under paragraph 10 of the Binding Term Sheet which are creditable against such up-front license fee. The Parties acknowledge and agree that, as of the Execution Date, Xilio has paid $[**] in creditable amounts under paragraph 10 of the Binding Term Sheet and, therefore, Xilio is obligated to pay $[**] under the foregoing sentence.

 

4.2              Xilio Option Exercise Payment. In the event Xilio exercises the Xilio Option, within [**] after the Xilio Option Exercise Date, Xilio shall pay to AskGene an option exercise license fee of four million U.S. dollars ($4,000,000).

 

 

4.3              Regulatory Milestone Payments. Following achievement of a milestone event set forth in this Section 4.3 by each distinct Xilio Licensed Product that would [**] (each, a “Milestone Event”), Xilio shall pay to AskGene the corresponding milestone payment set forth in the table below in this Section 4.3 (each, a “Milestone Payment”) in accordance with Section 4.6. Notwithstanding anything to the contrary, each Milestone Payment shall be payable only once for the achievement of the applicable Milestone Event for each distinct Xilio Licensed Product. For the avoidance of doubt, two Xilio Licensed Products shall only be distinct Xilio Licensed Products eligible for a subsequent Milestone Payment under this Section 4.3 if the Xilio Licensed Products each require a separate NDA/BLA Approval or MAA Approval, unless such separate NDA/BLA Approval or MAA Approval is (a) [**], or (b) [**].

 

Milestone Event Milestone			Payment
[**]		$	[**]
[**]		$	[**]
[**]		$	[**]

 

4.4              Royalty Payments.

 

(a)               Royalties. Subject to the terms and conditions of this Agreement (including applicable reductions under this Section 4.4), during the Royalty Term, on a Licensed Product-by-Licensed Product and country-by-country basis, Xilio shall pay to AskGene a royalty based on Net Sales by Xilio, its Affiliates, or its Sublicensees of Licensed IL-2 Products or, if Xilio exercises the Xilio Option, Option IL-15 Products, as applicable, that would[**] in the applicable country of sale in the Xilio Territory at the royalty rate set forth in the table below in this Section 4.4(a) (as adjusted by the other terms of this Section 4.4, each, a “Royalty”), in accordance with Section 4.6.

 

Licensed Product			Royalty Rate
(i) Licensed IL-2 Products			[**]	%
(ii) Option IL-15 Products			[**]	%

 

(b)               Royalty Reductions.

 

(i)                 Reduction for Biosimilar Competition. On a Licensed Product-by-Licensed Product and country-by-country basis, any royalty due pursuant to Section 4.4(a) (Royalties) will be automatically reduced by [**] percent ([**]%) upon the First Commercial Sale of a Biosimilar Product with respect to such Licensed Product in such country and thereafter.

 

(ii)              Reduction for Third Party Patent Rights. If, during the Term, Xilio receives a license under Patent Rights Controlled by a third party that would, but for such license, be infringed by the making, using, or selling of a Licensed Product, then Xilio will be entitled to offset [**] percent ([**]%) of the amounts paid to such third party in consideration of such license under such third party Patent Rights (and related know-how, if applicable) against any royalty due pursuant to Section 4.4(a) (Royalties) with respect to such Licensed Product.

 

(iii)            Aggregate Royalty Floor. Notwithstanding the royalty reductions set forth above in this Section 4.4(b) (Royalty Reductions), in no event shall any (or all) of the permitted reductions to royalties provided in this Section 4.4(b) (Royalty Reductions) in the aggregate reduce the royalties owed by Xilio under this Section 4.4 by more than [**] percent ([**]%) of the royalty otherwise payable to AskGene for a given Licensed Product in a given country.

 

 

(c)               [**] will be due because any Licensed Product is covered by more than one Valid Claim of the AskGene Patent Rights. In such case, Licensee shall pay [**] at the applicable rate pursuant to Section 4.4(a), as adjusted pursuant to Section 4.4(b), as applicable.

 

(d)               No Valid Claim. For any period of time during the Term in which there is no Valid Claim covering a given Licensed Product in a given country, no Royalty shall be payable under Section 4.4(a) (Royalties) with respect to Net Sales of such Licensed Product in such country.

 

4.5              Taxes. If Xilio is required by Law to withhold Taxes in connection with any sums payable to AskGene under this Agreement, Xilio shall be entitled to deduct and withhold that amount from the payment it otherwise would have made to AskGene under this Agreement. Any such amounts that are properly withheld and paid over to the applicable taxing authority will be treated for all purposes of this Agreement as having been paid to AskGene.

 

4.6              Payment Terms.

 

(a)           Quarterly Payments. Unless otherwise specified in this Article 4, all amounts which become payable by Xilio to AskGene hereunder in a given Calendar Quarter shall be paid within [**] following each Calendar Quarter.

 

(b)           Method of Payment. All payments under this Agreement by Xilio to AskGene shall be made by wire transfer or as the Parties otherwise agree in writing.

 

(c)           Payment in U.S. Dollars; Currency Exchange. Xilio shall make all payments hereunder in U.S. dollars. For the purpose of converting the local currency in which any Net Sales arise in a given month into U.S. dollars, the rate of exchange shall be the exchange rate between each currency of origin and U.S. dollars as reported by The Wall Street Journal, Western Edition, under the heading “Currency Trading,” on the last business day of such month.

 

(d)           Setoff. Notwithstanding anything to the contrary in this Agreement, and without prejudice to any other right or remedy it has or may have, Xilio is hereby authorized at any time and from time to time, to the fullest extent permitted by Law, to set off, apply or recoup any liability it owes to AskGene (including, without limitation, any payment obligation under this Article 4) against any liability for which Xilio determines in good faith AskGene is liable to Xilio (including, without limitation, any payment obligation under the agreement embodying the Exclusive Immunology License, any Regional License Agreement or related Manufacturing and Supply Agreement), whether such liability is liquidated or unliquidated. Xilio agrees to promptly notify AskGene after any such setoff, application or recoupment, provided, however, that the failure to give such notice shall not affect the validity of such setoff, application or recoupment.

 

5.                  RECORDS AND AUDIT.

 

5.1              Records. Each Party shall maintain complete and accurate records as reasonably necessary to make any reports required hereunder, to confirm such Party’s compliance with the terms hereof and, in the case of Xilio, for the calculation of payments based on Net Sales to be made to AskGene hereunder, to prepare the Quarterly Reports to be provided to AskGene hereunder, and to verify the determination of all amounts payable hereunder, and such Party shall retain such records for at least [**] following the creation thereof or such minimum time as required by Law or a taxing or regulatory Governmental Authority.

 

 

 

5.2         Contents of Quarterly Reports. Xilio shall notify AskGene in writing promptly upon the First Commercial Sale of each Xilio Licensed Product in each country in which Xilio elects to pursue commercialization. Commencing upon the First Commercial Sale of any Xilio Licensed Product, within [**] after each subsequent Calendar Quarter during the Term, Xilio shall provide AskGene with a written report for such Calendar Quarter (each such report, a “Quarterly Report”) showing, on a country-by-country and Licensed Product-by-Licensed Product basis, according to the volume of units of such Licensed Product sold in each such country (by SKU) during the relevant reporting period:

 

[**].

 

5.3          Audit.

 

(a)               At the reasonable request, and sole expense, of AskGene within [**] after the applicable Calendar Quarter with respect to which a Quarterly Report is delivered hereunder, Xilio shall permit a qualified independent certified public accountant designated by AskGene and reasonably acceptable to Licensee (the “Auditor”) to access Xilio’s applicable records maintained pursuant to Section 5.1 upon reasonable (but not less than [**]) prior written notice to Xilio, solely for the purpose of verifying the information in such Quarterly Report in relation to Royalty payments. The Auditor must conduct such audit during Xilio’s normal business hours in a manner designed to minimize disruption of Xilio’s normal business operations and complete such audit within a reasonable period of time after commencing such audit. All information and materials made available to or otherwise obtained or prepared by or for the Auditor in connection with such audit will be deemed Xilio’s Confidential Information and will be subject to the Auditor’s entry, prior to conducting the audit, into a written agreement with Xilio containing confidentiality and restricted use obligations at least as restrictive as those set out in Article 8. AskGene may not exercise this right more than [**] period (except that AskGene may conduct a [**] audit in such [**] period if AskGene has reasonable grounds to suspect a material breach of this Agreement by Xilio of its reporting and payment obligations), and the Auditor may only disclose to AskGene information limited to the accuracy of the audited Quarterly Report and any deficiency in the Royalty payment made, or any overpayment, and no other information or materials made available to or otherwise obtained or prepared by or for the Auditor in connection with such audit. AskGene shall not compensate the Auditor (in whole or in part) contingent on the outcome of the audit.

 

(b)               AskGene shall provide to Xilio a copy of the Auditor’s audit report within [**] of AskGene’s receipt of the final report. If such report shows that payments made by Xilio are deficient, subject to Section 4.5 and Section 4.6, Xilio shall pay AskGene the deficient amount within [**] after Xilio’s receipt of the audit report, except to the extent that Xilio disputes such deficiency in good faith (in which event Xilio may withhold payment of such disputed amount subject to resolution of such dispute). If the report shows that payments made by Xilio were in excess of the required payment, AskGene shall promptly pay to Xilio the excess amount at the time it provides the copy of the Auditor’s audit report to Xilio. If the Auditor’s audit report shows that payments made by Xilio are deficient by more than [**] percent ([**]%) of the amount due for the audited period, Xilio shall promptly reimburse AskGene for its reasonable, documented out-of-pocket costs of such audit.

 

 

(c)               The failure of AskGene to request an audit or verification of any Quarterly Report during the [**] period after its receipt of such Quarterly Report is deemed acceptance by AskGene of the accuracy of such Quarterly Report and the payments made by Xilio in accordance with such Quarterly Report and, thereafter, AskGene’s audit rights under this Section 5.3 shall no longer apply with respect to such Quarterly Report, the payments made by Xilio in accordance with such Quarterly Report and any facts or circumstances to which such Quarterly Report and payments relate.

 

6.                  PATENT PROSECUTION AND MAINTENANCE.

 

6.1          AskGene Patent Rights.

 

(a)               IP Committee. The Parties will form a committee comprised of representatives of each Party with the requisite expertise in matters involving Patent Rights (the “IP Committee”), which will meet at least [**] (or such other frequency as the Parties mutually agree in writing) to discuss the strategy for, review, and oversee the prosecution, maintenance and enforcement of the AskGene Patent Rights.

 

(b)               Responsibility. AskGene shall (i) be solely responsible for the preparation, filing, prosecution, and maintenance of the AskGene Patent Rights at its sole cost and expense; (ii) keep Xilio reasonably informed of the preparation, filing, prosecution, maintenance, and defense of the AskGene Patent Rights and provide Xilio with a meaningful opportunity to review and comment thereon; (iii) furnish Xilio with copies of draft documents relating to prosecution and maintenance of any AskGene Patent Rights at least [**] prior to filing with any patent office or such lesser time as may be required and as agreed upon by the Parties, and to the extent reasonably practicable without missing a deadline for filing with such patent office; and (iv) consider in good faith any comments from Xilio regarding such proposed filings.

 

(c)               Abandonment. In the event AskGene desires to abandon any of the AskGene Patent Rights, AskGene shall provide Xilio with prior written notice at least [**] in advance of the due date of any payment or other action that is required to prosecute and maintain such AskGene Patent Right. Following delivery of such notice, Xilio shall have the right, but not the obligation, to assume prosecution or maintenance of such AskGene Patent Right at its own expense by delivering written notice to AskGene within [**] of Xilio’s receipt of notice pursuant to the foregoing sentence or such lesser time based on the date an AskGene Patent Right would become abandoned. In the event Xilio so elects to assume such patent prosecution or maintenance, (i) AskGene shall promptly and reasonably cooperate to enable Xilio to assume (in advance of the due date of any payment or other action that is required to prosecute and maintain such AskGene Patent Right) and maintain control of such patent prosecution or maintenance and to prepare, file, prosecute, and maintain the relevant AskGene Patent Rights in AskGene’s name and (ii) [**] shall be due and owing by Xilio to AskGene under Article 4 with respect to any Licensed Product in any country that is solely covered by such AskGene Patent Right.

 

 

6.2          New AskGene Patent Rights. AskGene shall be solely responsible for, and make all decisions concerning, the preparation, filing, prosecution, and maintenance of New AskGene Patent Rights.

 

6.3          Xilio Patent Rights and New Xilio Patent Rights. Xilio shall be solely responsible for, and make all decisions concerning, the preparation, filing, prosecution, and maintenance of Xilio Patent Rights and New Xilio Patent Rights, except to the extent otherwise set forth in an agreement embodying the Exclusive Immunology License as set forth in this Section 6.3, if and when AskGene exercises the AskGene Option. In the event that AskGene exercises the AskGene Option, the terms negotiated by the Parties with respect to the Exclusive Immunology License shall include the following terms: Xilio would: (i) [**] for the preparation, filing, prosecution, and maintenance of the Xilio Patent Rights at its sole cost and expense; (ii) keep AskGene reasonably informed of the preparation, filing, prosecution, maintenance, and defense of the Xilio Patent Rights and provide AskGene with a meaningful opportunity to review and comment thereon; (iii) furnish AskGene with copies of draft documents relating to prosecution and maintenance of any Xilio Patent Rights at least [**] prior to filing with any patent office or such lesser time as may be required and as agreed upon by the Parties, and to the extent reasonably practicable without missing a deadline for filing with such patent office; and (iv) consider in good faith any comments from AskGene regarding such proposed filings.

 

7.                  ENFORCEMENT OF LICENSED PATENT RIGHTS.

 

7.1          Notice of Infringement or Third Party Claims. If either Party becomes aware of (a) any suspected infringement by any third party of any AskGene Patent Right as a result of the research, development, manufacture, commercialization, or other exploitation of any product (“Competitive Infringement”); or (b) any claim by any third party that any AskGene Patent Right is invalid or unenforceable, such Party shall promptly notify the other Party in writing and provide it with all details of such infringement or claim, as applicable, that are known by such Party.

 

7.2          Xilio’s First Right to Bring Competitive Infringement Action. Xilio shall have the first right, but not the obligation, to initiate an infringement, misappropriation or other appropriate lawful action against any third party (a “Competitive Infringement Action”) as to any Competitive Infringement in the Oncology Field in the Xilio Territory related to Licensed Non-Antigen Binding Products or, if Xilio has exercised the Xilio Option, Option Non-Antigen Binding Products. AskGene will have the right, but not the obligation, to initiate a Competitive Infringement Action against such Competitive Infringement, if Xilio does not initiate a Competitive Infringement Action within [**] of becoming aware of such Competitive Infringement or such shorter period as may be necessary to bring and maintain such action without loss of rights.

 

7.3          Right to Bring Action or Defend. Except as set forth in Section 7.2, AskGene shall have the exclusive right to bring an infringement action to enforce any AskGene Patent Rights, defend any declaratory judgment action concerning any AskGene Patent Rights, and take any other lawful action reasonably necessary to protect, enforce, or defend any AskGene Patent Rights, and control the conduct thereof. Without limiting the foregoing, AskGene shall initiate a Competitive Infringement Action as to any suspected infringement by any third party of any AskGene Patent Right as a result of the research, development, manufacture, commercialization, or other exploitation of any product, unless Xilio has the first right to initiate such a Competitive Infringement Action under Section 7.2. In the event that (a) AskGene does not initiate such a Competitive Infringement Action within [**] of becoming aware of such suspected infringement or such shorter period as may be necessary to bring and maintain such action without loss of rights, and (b) such suspected infringement relates to a product in the Oncology Field that, but for the exclusion of Excluded Xilio ECDs from the definition thereof, would otherwise constitute a Licensed Non-Antigen Binding Product or, if Xilio has exercised the Xilio Option, a Option Non-Antigen Binding Product, then Xilio shall have the right, but not the obligation, to initiate a Competitive Infringement Action as to such infringement.

 

 

7.4          Cooperation, Recovery, and Settlement. In the event a Party brings and controls the enforcement or defense of any AskGene Patent Rights in accordance with Section 7.2 or Section 7.3:

 

(a)               such Party shall keep the other Party reasonably informed of the status of such enforcement or defense and such other Party shall be entitled to be represented by counsel in connection with such action at its own expense;

 

(b)               the other Party shall provide all reasonable cooperation and assistance, at the enforcing Party’s expense, including providing access to relevant documents and other evidence, making its employees available at reasonable business hours, and being joined as a party to such action as necessary to establish standing, if a court of competent jurisdiction determines such Party is an indispensable party or as otherwise reasonably requested by the initiating Party;

 

(c)               Xilio shall have the [**] to grant a license or sublicense under the Licensed Patent Rights to any alleged infringer in the Oncology Field in the Xilio Territory, with the understanding that such license shall comply with and incorporate the material terms of this Agreement to the extent set forth in Section 2.5;

 

(d)               any recovery, damages, or settlement derived from such suit, action, or other proceeding will be applied first in satisfaction of any costs and expenses, including attorneys’ fees, of the Parties incurred in connection with such suit, action or other proceeding, [**] and, if applicable, the Party receiving such proceeds shall pay the other Party such royalties that would be owed if such remaining amounts of such proceeds were obtained from the sale of a Licensed Product; and

 

(e)               such Party may settle any such suit, action, or other proceeding, whether by consent order, settlement, or other voluntary final disposition, following receipt of the prior written approval of the other Party, which shall not be unreasonably withheld or delayed, and no settlement shall be entered into that adversely affects the rights of the other Party without the other Party’s prior written consent.

 

7.5         AskGene Option. In the event that AskGene exercises the AskGene Option, the terms related to the enforcement and defense of Xilio Patent Rights with respect to the Exclusive Immunology License shall include those set forth on Exhibit C.

 

 

8.                  CONFIDENTIALITY.

 

8.1        Confidentiality Obligations. Each Party (the “Receiving Party”) acknowledges that in connection with this Agreement and the activities contemplated hereby (including activities in connection with the Binding Term Sheet and negotiation thereof), it may gain or may have gained access to Confidential Information of the other Party (the “Disclosing Party”). The Receiving Party shall:

 

(a)         use reasonable efforts, at least as protective as the efforts it uses with respect to its own confidential information of similar nature and sensitivity, to safeguard the Disclosing Party’s Confidential Information from use or disclosure other than as permitted hereby;

 

(b)         not use the Disclosing Party’s Confidential Information other than as strictly necessary to exercise its rights and perform its obligations under this Agreement;

 

(c)        not reverse engineer any Confidential Information disclosed to the Receiving Party, nor may the Receiving Party remove any labels related to confidentiality, patents, trademarks or copyrights from any Confidential Information that is received from Disclosing Party; and

 

(d)        maintain the Disclosing Party’s Confidential Information in strict confidence and, subject to Section 8.2, not disclose the Disclosing Party’s Confidential Information without the Disclosing Party’s prior written consent, provided, however, the Receiving Party may disclose the Confidential Information to its Representatives who:

 

(i)        have a need to know the Confidential Information for purposes of the Receiving Party’s performance, or exercise of its rights with respect to such Confidential Information, under this Agreement;

 

(ii)       have been apprised of this restriction; and

 

(iii)     are themselves bound by written nondisclosure agreements at least as restrictive as those set out in this Article 8, provided further that the Receiving Party will be responsible for ensuring its Representatives’ compliance with, and will be liable for any breach by its Representatives of, this Article 8.

 

8.2          Exceptions.

 

(a)         If the Receiving Party is required by Law, legal process, any Governmental Authority or the rules of a securities exchange to disclose any Confidential Information, the Receiving Party shall:

 

(i)       provide prompt written notice to the Disclosing Party so the Disclosing Party may seek a protective order, narrow the scope of disclosure or pursue another appropriate remedy or waive its rights under this Article 8;

 

(ii)       reasonably cooperate as reasonably requested by the Disclosing Party to seek a protective order, narrow the scope of disclosure or pursue another appropriate remedy; and

 

(iii)      disclose only the portion of Confidential Information it is legally required to furnish.

 

 

If a protective order or other remedy is not obtained, or the Disclosing Party waives compliance under this Article 8, the Receiving Party shall, at the Disclosing Party’s expense, use reasonable efforts to obtain assurance that the Confidential Information will be afforded confidential treatment.

 

(b)             Nothing contained in this Agreement shall restrict either Party or any of its Affiliates with respect to any disclosure of, or with respect to, this Agreement (i) in compliance with any securities laws (including the Securities Act and the Exchange Act), the rules and regulations of the Securities and Exchange Commission, the rules of any securities exchange on which any securities of such Party or any of its Affiliates are listed, or the Law of any state or other jurisdiction applicable to such Party or any of its Affiliates, provided that Receiving Party has complied with the terms of Section 8.2(a) to the extent permitted by Law or (ii) pursuant to the terms of a commercially reasonable, written non-disclosure agreement, to any Sublicensee, source of debt or equity financing, acquiror, or joint venturer of such Party, in each case, whether actual or prospective.

 

8.3          No Public Statements. Neither Party may issue or release any announcement, statement, press release, or other publicity or marketing materials relating to this Agreement or, unless expressly permitted under this Agreement, otherwise use the other Party’s trademarks, service marks, trade names, logos, domain names, or other indicia of source, association, or sponsorship, in each case, without the prior written approval of the other Party, which shall not be unreasonably withheld or delayed. The foregoing in this Section 8.3 shall not restrict either Party or any of its Affiliates from (a) complying with any securities laws (including the Securities Act and the Exchange Act), the rules and regulations of the Securities and Exchange Commission, the rules of any securities exchange on which any securities of any Party or any of its Affiliates are listed, or the Law of any state or other jurisdiction applicable to any Party or any of its Affiliates, or (b) making any factual disclosure of or with respect to this Agreement, pursuant to the terms of a commercially reasonable, written non-disclosure agreement, to any Sublicensee, source of debt or equity financing, acquiror, or joint venturer of such Party, in each case, whether actual or potential or prospective.

 

8.4          Publications. During the Term, Licensee shall provide Licensor with a copy of any article, abstract or presentation that Licensee wishes to publish or present publicly relating to Licensed Products Covered by Patent Rights of Licensor no less than [**] before the intended submission for publication of an article and no less than [**] before the intended submission for publication of an abstract or presentation. Licensor shall have [**] from receipt of any publication or [**] from receipt of any abstract or presentation in which to notify Licensee in writing of any objections to the publication or presentation thereof, including any request to remove Confidential Information of Licensor, block publication or public disclosure of trade secrets, or delay publication based upon the need to seek patent protection. If Licensor makes any such request or objection in writing within the period set forth in the foregoing sentence, Licensee shall reasonably and in good faith consider such requests or objections, and, in any case, shall (a) delete from the proposed publication or presentation any Confidential Information of Licensor, and (b) if requested by Licensor based on its reasonable determination that such disclosure will result in a loss or reduction of patent protection, delay the date of submission for such publication or the date of such presentation for a reasonable period of time as agreed by the Parties, and in no event for less than [**], to permit the applicable Party to seek appropriate patent protection for the material disclosed in such publication or presentation.

 

 

9.                  REPRESENTATIONS AND WARRANTIES.

 

9.1          Mutual Representations and Warranties. Each Party represents and warrants to the other Party that, as of the Effective Date:

 

(a)            it is duly organized, validly existing, and in good standing as a corporation or other entity as represented herein under the laws and regulations of its jurisdiction of incorporation, organization, or chartering;

 

(b)            it has, and throughout the Term will retain, the full right, power, and authority to enter into this Agreement, to grant the rights it grants or purports to grant hereunder and to perform its obligations hereunder;

 

(c)            the execution, delivery and performance of this Agreement by such Party does not conflict with, or create a breach or default under, any agreement, instrument, understanding, or internal governance document, oral or written, to which it is a party or by which it is bound, nor violate any applicable Laws;

 

(d)            the execution of this Agreement by its representative whose signature is set forth on the signature pages hereof has been duly authorized by all necessary corporate or organizational action of the Party and no authorization, consent, approval, license, exemption of or filing or registration with any Governmental Authority, under any applicable Laws in effect as of the Effective Date, is necessary in connection with the execution and delivery of this Agreement, or for the performance by such Party of its obligations under this Agreement, except for any such consent or approval obtained prior to the Effective Date; and

 

(e)            when executed and delivered by such Party, this Agreement will constitute the legal, valid, and binding obligation of that Party, enforceable against that Party in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium and other similar Law, now or hereafter in effect, affecting or relating to creditors’ rights and remedies generally and (ii) the remedies of specific performance and injunctive and other forms of equitable relief (regardless of whether enforceability is considered in a proceeding in equity or at Law).

 

9.2          AskGene’s Representations and Warranties. AskGene represents and warrants to Xilio that, as of the Effective Date:

 

(a)              it is the sole and exclusive owner of the entire right, title, and interest in and to the AskGene Patent Rights and such sole and exclusive ownership is supported by all applicable inventor assignments duly executed and recorded with the United States Patent and Trademark Office or applicable foreign patent office;

 

 

(b)           it has the lawful right to grant the license under the AskGene Patent Rights granted to Xilio hereunder, and it has not granted, and is not under any obligation to grant, to any third party any license, lien, option, encumbrance, or other contingent or non-contingent right, title, or interest in or to the AskGene Patent Rights that conflicts with the rights and licenses granted to Xilio hereunder; and

 

(c)           there is no settled, pending, or to its knowledge threatened litigation, claim, or proceeding alleging that any AskGene Patent Right is invalid or unenforceable (including any interference, nullity, opposition, inter partes, or post-grant review or similar invalidity or patentability proceedings before the United States Patent and Trademark Office or any foreign patent office) and it has no knowledge of any factual, legal, or other reasonable basis for any such litigation, claim, or proceeding.

 

9.3          Xilio’s Representations and Warranties. Xilio represents and warrants to AskGene that, as of the Effective Date:

 

(a)           it is the sole and exclusive owner of the entire right, title, and interest in and to the Xilio Patent Rights and such sole and exclusive ownership is supported by all applicable inventor assignments duly executed and recorded with the United States Patent and Trademark Office or applicable foreign patent office;

 

(b)           it has the lawful right to grant the license under the Xilio Patent Rights granted to AskGene hereunder, and it has not granted, and is not under any obligation to grant, to any third party any license, lien, option, encumbrance, or other contingent or non-contingent right, title, or interest in or to the Xilio Patent Rights that conflicts with the rights and licenses granted to AskGene hereunder; and

 

(c)           there is no settled, pending, or to its knowledge threatened litigation, claim, or proceeding alleging that any Xilio Patent Right is invalid or unenforceable (including any interference, nullity, opposition, inter partes, or post-grant review or similar invalidity or patentability proceedings before the United States Patent and Trademark Office or any foreign patent office) and it has no knowledge of any factual, legal, or other reasonable basis for any such litigation, claim, or proceeding.

 

9.4         Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN SECTIONS 9.1, 9.2 AND 9.3, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OR VALIDITY OR ENFORCEABILITY OF ANY PATENT RIGHTS ISSUED OR PENDING, OR WITH RESPECT TO THE OUTCOME OR RESULTS OF ANY ACTIVITIES TO BE PERFORMED UNDER THIS AGREEMENT, AND ALL SUCH REPRESENTATIONS AND WARRANTIES ARE EXPRESSLY DISCLAIMED.

 

 

9.5          Exclusion of Consequential Damages. TO THE FULLEST EXTENT PERMITTED BY LAW, EXCEPT TO THE EXTENT ARISING OUT OF SUCH PARTY’S OBLIGATIONS UNDER ARTICLE 10, WILLFUL MISCONDUCT OR BREACH OF ARTICLE 8, IN NO EVENT SHALL EITHER PARTY OR ITS DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES OR AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL, PUNITIVE, ENHANCED OR CONSEQUENTIAL DAMAGES OF ANY KIND, WHETHER ARISING OUT OF BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, PRODUCT LIABILITY, OR OTHERWISE (INCLUDING THE ENTRY INTO, PERFORMANCE, OR BREACH OF THIS AGREEMENT), INCLUDING BASED ON ECONOMIC DAMAGES OR LOST PROFITS, REGARDLESS OF WHETHER SUCH LOSS OR DAMAGE WAS FORESEEABLE OR SUCH PARTY SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

 

10.              INDEMNIFICATION; LIABILITIES.

 

10.1         Indemnification by Xilio. Xilio shall indemnify, defend, and hold harmless AskGene and its Representatives and subcontractors (each, an “AskGene Indemnitee”) against all Losses arising out of or resulting from any third party claim, suit, action, or proceeding (each an “Action”) arising out of or resulting from (a) any breach by Xilio of any representation, warranty, covenant, or obligation under this Agreement or, prior to the Execution Date, the Binding Term Sheet, (b) gross negligence, willful omission, or willful misconduct of any Xilio Indemnitee, (c) any violation of Law by Xilio in performing its obligations under this Agreement or, prior to the Execution Date, the Binding Term Sheet, or (d) any development, manufacture, or commercialization of any Licensed Product by or on behalf of Xilio or its Affiliates, licensees, and Sublicensees (excluding AskGene), including product liability claims, except, in each case, to the extent such Action arises out of or results from a circumstance or event described in Section 10.2(a)-(d).

 

10.2         Indemnification by AskGene. AskGene shall indemnify, defend, and hold harmless Xilio and its Representatives and subcontractors (each, an “Xilio Indemnitee”) against all Losses arising out of or resulting from any Action arising out of or resulting from (a) any breach by AskGene of any representation, warranty, covenant, or obligation under this Agreement or, prior to the Execution Date, the Binding Term Sheet, (b) gross negligence, willful omission, or willful misconduct of any AskGene Indemnitee, (c) any violation of Law by AskGene in performing its obligations under this Agreement or, prior to the Execution Date, the Binding Term Sheet, or (d) any development, manufacture, or commercialization of any Licensed Product by or on behalf of AskGene or its Affiliates, licensees, and Sublicensees (excluding Xilio), including product liability claims, except, in each case, to the extent such Action arises out of or results from a circumstance or event described in Section 10.1(a)-(d).

 

10.3         Indemnification Procedure. A Person seeking indemnification under this Article 10 shall promptly notify the indemnifying Party in writing of the applicable Action and cooperate, at indemnifying Party’s sole cost and expense, as reasonably requested by the indemnifying Party in relation thereto. The indemnifying Party shall immediately take control of the defense and investigation of such Action and shall employ counsel reasonably acceptable to the indemnified Person to handle and defend the same, at the indemnifying Party’s sole cost and expense. The indemnifying Party shall not settle any such Action without the indemnified Person’s prior written consent, which consent may not be unreasonably withheld, conditioned or delayed. The indemnified Person’s failure to perform any obligations under this Section 10.3 shall not relieve the indemnifying Party of its obligations under this Article 10, except to the extent the indemnifying Party can demonstrate that it has been materially prejudiced as a result of the failure. The indemnified Person may participate in and observe the proceedings at its own cost and expense with counsel of its own choosing.

 

 

10.4         Insurance. Licensee shall, beginning with the initiation of any clinical development by or on behalf of Licensee or its Affiliates of a Licensed Product Covered by a Licensed Patent Right and continuing thereafter during the Term, maintain a products liability insurance policy, with a per occurrence limit of at least [**] dollars ($[**]) and an aggregate limit of at least [**] dollars ($[**]). Upon either Party’s request, the other Party shall furnish to the requesting Party certificates for all insurance obtained as required under this Section 10.4. Licensee shall provide the other Party with [**] prior written notice of all cancellation, non-renewal or material changes to the insurance policy required under this Section 10.4; provided, that, for clarity, at all times each Party must comply with the foregoing insurance minimums. The minimum level of insurance set forth herein shall not be construed to create a limit on a Party’s liability hereunder.

 

11.              TERM AND TERMINATION.

 

11.1        Term. This Agreement is effective as of the Effective Date and, unless terminated earlier in accordance with Section 11.2, will continue in full force and effect on a Licensed Product-by-Licensed Product and country-by-country basis until the expiration of the Royalty Term for such Licensed Product in such country (the “Term”).

 

11.2        Termination.

 

(a)               Termination for Material Breach. Either Party may terminate this Agreement upon written notice to the other Party if the other Party materially breaches this Agreement and fails to cure such material breach within [**] after receiving written notice thereof. If, during such cure period, either Party initiates a dispute resolution procedure in accordance with Section 12.14 regarding the material breach for which termination is being sought, then such cure period will be tolled during the pendency of such dispute resolution procedure.

 

(b)               Termination for Bankruptcy. Either Party may terminate this Agreement, effective immediately upon written notice to the other Party, if the other Party: (i) is dissolved or liquidated or takes any corporate action for such purpose; (ii) becomes insolvent or is generally unable to pay, or fails to pay, its debts as they become due; (iii) files or has filed against it a petition for voluntary or involuntary bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency Law; (iv) makes or seeks to make a general assignment for the benefit of its creditors; or (v) applies for or has a receiver, trustee, custodian, or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business.

 

11.3        Effects of Expiration or Termination.

 

(a)               In the event of termination or expiration in its entirety of this Agreement, all rights and obligations of the Parties shall terminate, except as expressly provided in Section 11.4. Without limiting the generality of the foregoing, upon termination of this Agreement by either Party, all rights and licenses granted to Licensee under this Agreement (including Article 2 (Grant of Rights)) shall terminate, all rights in, to and under the applicable Licensed Patent Rights will revert to Licensor, and Licensee shall not have any right under this Agreement (including Article 2 (Grant of Rights)) to practice the applicable Licensed Patent Rights.

 

 

 

(b)              Upon expiration of the Term with respect to a Licensed Product in a given country, all licenses granted to Licensee under Article 2 (Grant of Rights) with respect to such Licensed Product in such country shall become perpetual, irrevocable, fully paid up and royalty-free.

 

(c)              On any termination or expiration in its entirety of this Agreement, the Receiving Party shall (i) return to the Disclosing Party all documents and tangible materials (and any copies) containing the Disclosing Party’s Confidential Information; (ii) permanently erase the Disclosing Party’s Confidential Information from its computer systems; and (iii) certify in writing to the Disclosing Party that it has complied with the requirements of this Section 11.3(c). Notwithstanding the foregoing, the Receiving Party may retain (x) one copy of the Disclosing Party’s Confidential Information to the extent reasonably necessary for compliance with the terms of this Agreement or applicable Laws, provided such copy is maintained in a secure location and remains subject to the terms of Article 8, and (y) data or records in electronic form containing Confidential Information for the purposes of backup, recovery, contingency planning, or business continuity planning, so long as such data or records, to the extent not permanently deleted or overwritten in the ordinary course of business, are not accessible in the ordinary course of business and are not accessed except as required for backup, recovery, contingency planning, or business continuity purposes.

 

11.4         Survival. The rights and obligations of the Parties set forth in this Section 11.4 and Article 1 (Definitions); Article 8 (Confidentiality); Article 9 (Representations And Warranties); Article 10 (Indemnification; Liabilities), other than Section 10.4 (Insurance); with respect to any payment obligation accruing prior to expiration or termination of this Agreement, Section 4.5 (Taxes) and Section 4.6 (Payment Terms); Section 11.3 (Effects of Expiration or Termination); and Article 12 (Miscellaneous), other than Section 12.10 (Marking of Licensed Products); and any right, obligation, or required performance of the Parties in this Agreement which, by its express terms or nature and context, is intended to survive termination or expiration of this Agreement, will survive any such termination or expiration. Termination or expiration of this Agreement shall not relieve the Parties of any liability or obligation that accrued hereunder prior to the effective date of termination or expiration of this Agreement, nor 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.

 

12.           MISCELLANEOUS.

 

12.1         Bankruptcy. All rights and licenses granted by Licensor under this Agreement are and will be deemed to be rights and licenses to “intellectual property” as such term is used in, and interpreted under, Section 365(n) of the United States Bankruptcy Code (11 U.S.C. § 365(n)) (the “Bankruptcy Code”). Licensee has all rights, elections, and protections under the Bankruptcy Code and all other bankruptcy, insolvency, and similar laws with respect to this Agreement, and the subject matter hereof. Without limiting the generality of the foregoing, Licensor acknowledges and agrees that, if Licensor or its estate shall become subject to any bankruptcy or similar proceeding:

 

 

(a)             subject to Licensee’s rights of election under Section 365(n), all rights, licenses, and privileges granted to Licensee under this Agreement will continue subject to the respective terms and conditions hereof, and will not be affected, even by Licensor’s rejection of this Agreement; and

 

(b)             Licensee shall be entitled to a complete duplicate of, or complete access to, as appropriate, all such intellectual property and embodiments of intellectual property, which, if not already in Licensee’s possession, shall be promptly delivered to Licensee or its designee, unless Licensor elects to and does in fact continue to perform all of its obligations under this Agreement.

 

12.2         Further Assurances. Each Party shall, and shall cause their respective Representatives to, upon the reasonable request of the other Party, promptly execute such documents and take such further actions as may be necessary to give full effect to the terms of this Agreement.

 

12.3         Recordation of License. If recordation of this Agreement or any part of it with a Governmental Authority is necessary for Licensee to fully enjoy the rights, privileges, and benefits of this Agreement, Licensor shall, promptly upon becoming aware of such requirement and at its own expense, record this Agreement or all such parts of this Agreement and information concerning the license granted hereunder with each such Governmental Authority.

 

12.4        Parties’ Relationship. Nothing contained in this Agreement is to be construed to constitute the Parties as partners or joint venturers of each other, or to constitute the employees, agents or representatives of either Party as the employees, agents or representatives of the other Party, it being intended that the relationship between the Parties shall at all times be that of independent contractors. Neither Party shall have any express or implied right or authority to assume or create any obligations on behalf of, or in the name of, the other Party; or to bind the other Party to any contract, agreement or undertaking with any third party.

 

12.5         Notices. All notices, requests, consents, claims, demands, waivers, and other communications (other than routine communications having no legal effect) must be in writing and sent to the respective Party at the addresses indicated below (or such other address for a Party as may be specified in a notice given in accordance with this Section 12.5):

 

If to AskGene:                     AskGene Pharma, Inc.
5217 Verdugo Way, Suite A
Camarillo, CA 93012
Attention: Jian-Feng (Jeff) Lu

 

If to Xilio:                           Xilio Development, Inc.
828 Winter Street
Waltham, MA 02451
Attention: Legal Department

 

with copies (which shall not constitute notice) to:

 

Proskauer Rose LLP
One International Place
Boston, MA 02110-2600
Attention: Fangli Chen Ph.D.

 

 

Notices sent in accordance with this Section 12.5 will be deemed effective: (a) when received or delivered by hand (with written confirmation of receipt); (b) when received according to such courier’s tracking systems, if sent by a nationally recognized overnight courier (receipt requested); or (c) on the fourth (4th) business day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.

 

12.6         Interpretation. For purposes of this Agreement, (a) the words “include,” “includes,” and “including” will be deemed to be followed by the words “without limitation”; (b) the word “or” has the inclusive meaning represented by the phrase “and/or”; (c) the words “herein,” “hereof,” “hereby,” “hereto,” and “hereunder” refer to this Agreement as a whole; and (a) “U.S. dollars,” “dollars” or “$” shall each mean the lawful currency of the United States. Unless the context otherwise requires, references herein to: (x) Sections and Exhibits refer to the Sections of and Exhibits attached to this Agreement; (y) an agreement, instrument, or other document means such agreement, instrument, or other document as amended, supplemented, and modified from time to time to the extent permitted by the provisions thereof; and (z) a Law means such Law as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement will be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted.

 

12.7         Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

12.8         Entire Agreement. This Agreement, together with all Exhibits and any other documents incorporated herein by reference, constitutes the sole and entire agreement of Xilio, Parent and AskGene with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements between or among Xilio, Parent and AskGene, both written and oral, with respect to such subject matter, including the Binding Term Sheet and the Confidential Disclosure Agreement, dated as of [**], by and between the Parties. In the event of any conflict between the terms and provisions of this Agreement and those of any Exhibit or other document, the following order of precedence will govern: (a) first, this Agreement, excluding its Exhibits; (b) second, the Exhibits to this Agreement as of the Effective Date; and (c) third, any other documents incorporated herein by reference.

 

12.9         Assignment. Except as otherwise expressly provided in this Agreement, neither Party may assign or otherwise transfer all or any of its rights, or delegate or otherwise transfer all or any of its obligations, hereunder without the prior written consent of the other Party (which consent may not be unreasonably withheld, conditioned, or delayed); provided, however, that a Party may assign this Agreement in its entirety, without the other Party’s consent but with written notice to the other Party, within [**] thereafter to its Affiliate or a third party that, in either case, acquires all of the Patent Rights of such Party to which this Agreement relates, whether by assignment, merger, change of control, sale of assets or otherwise. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding on the Parties’ successors and permitted assigns.

 

 

12.10       Marking of Licensed Products. Licensee shall comply with the patent marking provisions of 35 U.S.C. § 287(a) to the extent applicable to its exercise of rights hereunder, which may include marking all Licensed Products that are manufactured or sold under this Agreement with the word “patent” or the abbreviation “pat.” and either the relevant Licensed Patent Rights or a web address that is freely accessible to the public and that lists the relevant Licensed Patent Rights.

 

12.11       No Third Party Beneficiaries. This Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or will confer upon any other Person any legal or equitable right, benefit, or remedy of any nature whatsoever, under, or by reason of this Agreement, except for applicable rights to indemnification of the Xilio Indemnitees and AskGene Indemnitees under Article 10.

 

12.12       Amendment; Modification; Waiver. This Agreement may only be amended, modified, or supplemented by an agreement in writing signed by each Party. No waiver by any Party of any of the provisions hereof will be effective unless explicitly set forth in writing and signed by the waiving Party. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power, or privilege arising from this Agreement will operate or be construed as a waiver thereof; nor will any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.

 

12.13       Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability will not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon a determination that any term or other provision is invalid, illegal, or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

12.14       Dispute Resolution.

 

(a)              Dispute Resolution Procedures. In the event of any dispute, controversy or claim arising out of or relating to this Agreement, including, without limitation, the breach, termination, or enforceability thereof, or any non-contractual issues relating to this Agreement or any rights or obligations hereunder (each, a “Dispute”), the Dispute shall be resolved in accordance with this Section 12.14. Any Dispute shall first be referred to the Chief Executive Officer (or their designee), in the case of Xilio, and the Chief Executive Officer (or their designee), in the case of AskGene (collectively, the “Executive Officers”), who shall confer in good faith on the resolution of the Dispute. If the Executive Officers are not able to agree on the resolution of a Dispute in writing within [**] (or such other period of time as mutually agreed by the Executive Officers) after such Dispute was first referred to them, the following shall apply:

 

 

(i)              If such Dispute is with respect to the validity, scope, enforceability, inventorship or ownership of any Patent Right or other intellectual property right (“IP Dispute”), then, if a Party wishes to pursue further resolution of such IP Dispute, an action, claim, or proceeding to resolve such IP Dispute may be brought by either Party in any court of competent jurisdiction or before any appropriate Governmental Authority (including any applicable patent office) in any country or jurisdiction in which such intellectual property rights apply.

 

(ii)             If such Dispute is not an IP Dispute, then, a suit, action, claim, or proceeding to resolve such Dispute may be brought by either Party in accordance with Section 12.15(b).

 

(b)              Equitable Relief. Notwithstanding anything herein to the contrary, each Party acknowledges that a breach by the other Party of this Agreement may cause the non-breaching Party irreparable harm, for which an award of damages may not be adequate compensation, and agrees that, in the event of such a breach or threatened breach, the non-breaching Party may seek equitable relief, including in the form of a temporary restraining order, orders for preliminary or permanent injunction, specific performance, and any other relief that may be available from any court of competent jurisdiction before or after the initiation of dispute resolution as otherwise set forth in Section 12.14(a), and the Parties hereby waive any requirement for the securing or posting of any bond or the showing of actual monetary damages in connection with such relief. These remedies are not exclusive but are in addition to all other remedies available under this Agreement at law or in equity, subject to any express exclusions or limitations in this Agreement to the contrary. This Section 12.14(b) shall be specifically enforceable.

 

(c)              Statute of Limitations. Except as otherwise determined by a court or other Governmental Authority of competent jurisdiction, any statute of limitations applicable to a claim comprising part of a Dispute will be tolled upon initiation of the dispute resolution procedures under this Section 12.14 and will remain tolled until the Dispute is resolved in accordance herewith; provided, however, that tolling will cease if the Party against which the statute of limitations would be applied fails to observe the procedures set forth in this Section 12.14, except for the seeking of temporary restraining orders or injunctions.

 

12.15       Governing Law; Submission to Jurisdiction.

 

(a)              Governing Law. This Agreement and all related documents, and all matters arising out of or relating to this Agreement, are governed by, and construed in accordance with, the laws of the State of Delaware, United States of America, without regard to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Delaware.

 

(b)              Submission to Jurisdiction. Subject to Section 12.14 (including with respect to IP Disputes), any legal suit, action, claim or proceeding with respect to any Dispute must be instituted exclusively in the federal courts of the United States with jurisdiction over the State of Delaware or the courts of the State of Delaware, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action, or proceeding. Service of process, summons, notice, or other document by mail to such Party’s notice address in accordance with Section 12.5 will be effective service of process for any suit, action, or other proceeding brought in any such court.

 

 

(c)              Waiver of Jury Trial. Each Party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to a Dispute.

 

12.16       Affiliates. Each Party may exercise its rights (including its rights and licenses under Article 2 (Grant of Rights)) or perform its obligations under this Agreement itself or through one or more Affiliates of such Party.

 

12.17       Force Majeure. No Party shall be held liable or responsible to the other Party or be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any obligation under this Agreement to the extent, and for so long as, such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, including but not limited to fires, earthquakes, floods, embargoes, wars, acts of war (whether war is declared or not), acts of terrorism, insurrections, riots, civil disturbances, strikes, lockouts or other labor disturbances, acts of God, epidemics, pandemics or any acts, omissions, or delays in acting by any Governmental Authority or the other Party.

 

12.18       Counterparts. This Agreement may be executed in counterparts, and by either Party on separate counterpart, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signatures, electronic or handwritten, to this Agreement may be transmitted via electronic mail, including Adobe Portable Document Format (PDF) or any electronic signature complying with the U.S. Federal ESIGN Act of 2000, and any counterpart so delivered will be deemed to be original signatures, will be valid and binding upon the Parties, and, upon delivery will constitute due execution of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, the Parties have caused this Cross-License Agreement to be executed as of the Effective Date by their respective officers thereunto duly authorized.

 

	AskGene Pharma, Inc.
	By:	/s/ Jian-Feng (Jeff) Lu
	Name:	Jian-Feng (Jeff) Lu
	Title:	Chief Executive Officer

 

	Xilio Development, Inc.
	By:	/s/ René Russo
	Name:	René Russo
	Title:	Chief Executive Officer

 

	Solely for purposes of Section 12.8:
	Xilio Development, Inc.
	By:	/s/ René Russo
	Name:	René Russo
	Title:	Chief Executive Officer

 

[Signature Page to Cross-License Agreement]

 

Exhibit 10.12

 

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Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) is the type of information that the registrant treats as private or confidential. Double asterisks denote omissions.

 

AMENDED AND RESTATED EXCLUSIVE LICENSE AGREEMENT

 

THIS AMENDED AND RESTATED EXCLUSIVE LICENSE AGREEMENT (this “Agreement”) is made and entered into as of the 16th day of August, 2016 (the “Effective Date”) by and between Akriveia Therapeutics Inc., a for-profit company with a registered address at 615 South DuPont Highway, Dover, DE 19901 (“Licensee”) and City of Hope, a California nonprofit public benefit corporation located at 1500 East Duarte Road, Duarte, California 91010 (“City of Hope” or “COH”). Licensee and COH are each sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

 

WHEREAS:

 

A.            COH operates an academic research and medical center that encourages the use of its inventions, discoveries and intellectual property for the benefit of the public and COH owns or Controls (as defined below) certain Patent Rights (as defined below) useful in the Field (as defined below);

 

B.             Licensee is a company to be dedicated to the commercial development and exploitation in the Field of products and services that incorporate one or more of the technologies described in the Patent Rights;

 

C.             On May 24, 2016 (the “Original Effective Date”), the Parties entered into (i) an Exclusive License Agreement (the “Original Agreement”), pursuant to which COH granted Licensee an exclusive license under the Patent Rights to make, have made, use, offer for sale, sell and import Licensed Products (as defined below) and to perform Licensed Services (as defined below), in the Field, in the Territory (as defined below) and (ii) a side letter agreement, pursuant to which the Parties agreed to amend and restate the Original Agreement following Licensee’s restructuring transaction; and

 

D.            On May 25, 2016, Licensee entered into a restructuring transaction pursuant to which it became a wholly-owned subsidiary of Akriveia Therapeutics, LLC (the “Parent”).

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the amount and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE 1: DEFINITIONS

 

1.1            “Act” means the Securities Act of 1933, as amended.

 

1.2            “Affiliate” of a Party means a Person that, directly or indirectly (through one or more intermediaries) controls, is controlled by, or is under common control with such Party. For purposes of this Section 1.2, “control” means (i) the direct or indirect ownership of 50 percent or more of the voting stock or other voting interests or interests in profits, or (ii) the ability to otherwise control or direct the decisions of board of directors or equivalent governing body thereof.

 

 

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1.3            “Business Day” means any day, other than a Saturday, Sunday or day on which commercial banks located in Los Angeles, California, are authorized or required by law or regulation to close.

 

1.4            “Change of Control” means (i) any transaction or series of related transactions following which the holders of Parent’s or Licensee’s capital stock or membership or equity interests immediately prior to such transaction or series of related transactions collectively hold less than 50% of such outstanding equity interests of Parent or Licensee, as applicable, entitled to (a) vote with respect to the election of directors (or positions having a similar function) or (b) receive the proceeds upon any sale, liquidation or dissolution of Licensee or Parent, as applicable (but in each case other than in connection with a bona fide Equity Financing of Licensee or Parent, as applicable); (ii) a sale, transfer or other disposition to a Third Party, in a single transaction or series of related transactions, of all or a material portion of Licensee’s or Parent’s interest in the Licensed Product; (iii) a sale, transfer or other disposition to a Third Party, in a single transaction or series of related transactions, of all or a material portion of Licensee’s or Parent’s, as applicable, right, title, or interest in its assets taken as a whole (but in each case of the foregoing (ii) and (iii) other than by grant of sublicense(s) or in connection with reorganization of Licensee); (iv) an initial public offering of the stock of Licensee or Parent; (v) the merger of Licensee or Parent, as applicable with a Third Party by operation of law or otherwise; or (vi) any assignment of this Agreement by Licensee to a Third Party.

 

1.5            “Commercially Reasonable Efforts” means the exercise of such efforts and commitment of such resources by Licensee, directly or through one or more Sublicensees, in a diligent manner consistent with organizations of comparable size and resources in the pharmaceutical industry for a comparable development or commercialization program at a similar stage of development or commercialization. [**].

 

1.6            “COH Confidential Information” means Confidential Information disclosed or provided by, or on behalf of, COH to Licensee or its designees.

 

1.7            “COH Shares” means the shares of Common Stock of Licensee issued to COH in accordance with Section 4.4.

 

1.8            “Common Stock” means Common Stock, par value $0.00001 per share, of Licensee.

 

1.9            “Confidential Information” means: (i) all information and materials (of whatever kind and in whatever form or medium) disclosed by or on behalf of a Party to the other Party (or its designee) in connection with this Agreement, whether prior to or during the term of this Agreement and whether provided orally, electronically, visually, or in writing; provided that all such information and materials initially disclosed in writing or electronically shall be clearly marked as “CONFIDENTIAL” and all such materials and information initially disclosed orally shall be reduced to writing and marked as “CONFIDENTIAL” within [**] following the date of initial oral disclosure; (ii) all copies of the information and materials described in (i) above; and (iii) the existence and each of the terms and conditions of this Agreement; provided further that Confidential Information shall not include information and materials to the extent a Party can demonstrate through its contemporaneous written records that such information and materials are or have been:

 

 

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(a)            known to the receiving Party, or in the public domain, at the time of its receipt by a Party, or which thereafter becomes part of the public domain other than by virtue of a breach of this Agreement or the obligations of confidentiality under this Agreement;

 

(b)            received without an obligation of confidentiality from a Third Party having the right to disclose without restrictions such information;

 

(c)            independently developed by the receiving Party without use of or reference to Confidential Information disclosed by the other Party; or

 

(d)            released from the restrictions set forth in this Agreement by the express prior written consent of the disclosing Party.

 

1.10          “Control(s)” or “Controlled” means the possession by a Party, as of the Effective Date, of rights sufficient to effect the grant of rights set forth in this Agreement without violating the terms of any agreement with any Third Party.

 

1.11          “Covers” or “Covered by,” with reference to a particular Licensed Product or Licensed Service that the manufacture, use, sale, offering for sale, or importation of such Licensed Product or performance of such Licensed Service would, but for ownership of, or a license granted under this Agreement to, the relevant Patent Right, infringe a Valid Claim in the country in which the activity occurs.

 

1.12          “Designated Affiliate” shall mean any wholly-owned subsidiary of Parent or any Affiliate of Licensee that is designated as a “Designated Affiliate” by Licensee in a notice to COH and which, in connection with such designation, enters into a Designated Affiliate Agreement with COH.

 

1.13          “Designated Affiliate Agreement” shall mean an exclusive license agreement granting a Designated Affiliate a license within a part of the Field, in the form attached hereto as Exhibit C, to be entered into by COH and each Designated Affiliate in accordance with Section 3.5 hereof.

 

1.14          “Dispute” means any controversy, claim or legal proceeding arising out of or relating to this Agreement, or the interpretation, breach, termination, or invalidity thereof.

 

1.15          “Equity Financing” means the issuance of capital stock of Licensee or Parent, as applicable, in one or more transactions, including any such capital stock issuable (assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability) upon the exercise, conversion or exchange of all evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for capital stock of Licensee or Parent, as applicable, including all rights, options or warrants to subscribe for, purchase or otherwise acquire capital stock of Licensee or Parent, as applicable.

 

 

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1.16          “Field” subject to Section 3.5.2, means the prevention, treatment and diagnosis of all human diseases and disorders.

 

1.17          “First Commercial Sale” means, with respect to a particular Licensed Product or Licensed Service in a given country, the first arm’s-length commercial sale of such Licensed Product or the first performance of such Licensed Service following Marketing Approval in such country by or under authority of Licensee or any Sublicensee to a Third Party who is not a Sublicensee.

 

1.18          “GAAP” means generally accepted accounting principles, consistently applied, as promulgated from time to time by the Financial Accounting Standards Board.

 

1.19          “IND” means an Investigational New Drug application accepted by the FDA.

 

1.20          “Lead Candidate” means a molecule that has been identified by Licensee in its reasonable business and scientific judgment, as a potential clinical development candidate and has been selected by Licensee for evaluation as a clinical development candidate.

 

1.21          “License Year” means each calendar year during the term of this Agreement; except that the first License Year shall commence on the Effective Date and end on December 31 of the calendar year in which the Effective Date occurs.

 

1.22          “Licensed Product” means a product [**] that: (i) is Covered by a Valid Claim of the Patent Rights, (ii) is manufactured by a process or used in a method Covered by a Valid Claim of the Patent Rights, or (iii) contains, as an active ingredient, any substance the manufacture, use, offer for sale or sale of which is Covered by a Valid Claim of the Patent Rights. By way of clarification, “Licensed Product” shall include a product manufactured in a country in which such manufacture is Covered by a Valid Claim and thereafter exported to and sold in a country in which no Valid Claim exists.

 

1.23          “Licensed Service” means any service the performance of which would, but for the license granted herein, infringe a Valid Claim of the Patent Rights.

 

1.24          “Licensee Confidential Information” means Confidential Information disclosed or provided by, or on behalf of, Licensee to COH or its designees.

 

1.25          “Marketing Approval” means all approvals, licenses, registrations or authorizations of any federal, state or local regulatory agency, department, bureau or other governmental entity, including, without limitation, pricing and reimbursement approvals, necessary for the manufacturing, use, storage, import, transport, distribution, marketing and sale of the applicable Licensed Products or performance of the applicable Licensed Services in a country or regulatory jurisdiction.

 

1.26          “NPA” means a New Drug Application to be filed with the FDA, or any equivalent application in jurisdictions outside the United States.

 

 

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1.27          “Net Proceeds” means the net proceeds actually received by Licensee after deduction of all transaction expenses, finder’s fees, advisory fees, legal fees, sales commissions or similar amounts paid to brokers or dealers and other costs and expenses incurred by Licensee or its Affiliates in connection therewith. In the event such net proceeds are not paid to Licensee in cash, the value of such net proceeds will be the fair market value of the assets constituting such net proceeds.

 

1.28          “Net Sales” means the total gross amount invoiced by Licensee, its Affiliates (excluding Designated Affiliates) and Sublicensees (regardless of whether and when such invoices are actually paid) on the sale of the applicable Licensed Products and applicable Licensed Services to Third Parties (including, without limitation, the provision of any product by Licensee, its Affiliates (excluding Designated Affiliates) or Sublicensees that incorporates a Licensed Product or Licensed Service but for clarity excluding documented sponsored research and/or development activities, valued at the actual direct cost of such activities on a fully burdened basis (including reasonable margin for overhead)), less the following items, as determined from the books and records of Licensee, its Affiliates (excluding Designated Affiliates) or Sublicensees:

 

[**].

 

In the event that a Licensed Product is a Combination Product (defined below), Net Sales, for the purposes of determining royalty payments on the Combination Product, shall mean the gross amount invoiced for the Combination Product less the deductions set forth in clauses (a) – (e) above, multiplied by a proration factor that shall be determined by the formula [A / (A+B)], where A is the average gross sales price in the relevant country of a Licensed Product during such period (or similar Licensed Product with the same dosage and route of administration) when sold separately from the other active component(s) in finished form, and B is the average gross sales price in such country of the other active component(s) during such period (or similar Licensed Product with the same dosage and route of administration) when sold separately from the Licensed Product in finished form. For purposes of this Agreement, “Combination Product” means any Licensed Product sold in combination with one or more other active components which are not Licensed Products and where both the Licensed Product and other active components are each sold separately in the same dosage and route of administration. For clarity, if no such separate sales exist, the proration factor shall not be applied.

 

Sales of Licensed Products between or among Licensee, its Affiliates, or its Sublicensees shall be excluded from the computation of Net Sales, except in those instances in which the purchaser is also the end-user of the Licensed Product sold. Further, transfers of reasonable quantities of Licensed Product by Licensee, any of its Affiliates or of its Sublicensee to a Third Party that is not a Sublicensee for use in the development of such Licensed Product (and not for resale) and transfers of industry standard quantities of Licensed Product for promotional purposes shall not be deemed a sale of such Licensed Product that gives rise to Net Sales for purposes of this Section 1.28.

 

1.29          “Patent Rights” means (i) all United States and foreign patents, patent applications, continuations and divisional applications that claim the patentable inventions disclosed in the COH internal invention disclosures set forth in Exhibit A, including [**], or the Subject Inventions as defined in the Research Agreement (as defined below) set forth in Exhibit B; (ii) continuation-in-part applications that repeat a substantial portion of any of the foregoing that are Controlled by COH, (iii) any patents or patent applications that claim the same invention(s) or claim priority, directly or indirectly, to any of the foregoing, that are Controlled by COH, (iv) letters patent or the equivalent issued on any of the foregoing throughout the world, and (v) amendments, extensions, renewals, reissues, and re-examinations of any of the foregoing. Notwithstanding the foregoing, excepting all Subject Inventions as defined in the Research Agreement, “Patent Rights” shall only include any continuation-in-part application to the extent that claims in such continuation-in-part application are supported in the specification of the parent application, unless otherwise mutually agreed to in writing by the parties to this Agreement.

 

 

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1.30          “Person” means any person or entity, including any individual, trustee, corporation, partnership, trust, unincorporated organization, limited liability company, business association, firm, joint venture or governmental agency or authority.

 

1.31          “Phase 1 Clinical Trial” means, as to a specific Licensed Product or Licensed Service, a study as described in 21 C.F.R. § 312.21(a) or a comparable clinical study in a country other than the United States.

 

1.32          “Phase 2 Clinical Trial” means, as to a specific Licensed Product or Licensed Service, a study in humans designed with the principal purpose of determining initial efficacy and dosing of such Licensed Product in patients for the indication(s) being studied as described in 21 C.F.R. § 312.21(b); or a similar clinical study in a country other than the United States.

 

1.33          “Phase 3 Clinical Trial” means, as to a specific Licensed Product or Licensed Service, a lawful study in humans of the efficacy and safety of such Licensed Product or Licensed Service, which is prospectively designed to demonstrate statistically whether such Licensed Product is effective and safe for use in a particular indication in a manner sufficient to file an application to obtain Marketing Approval to market and sell that Licensed Product or Licensed Service in the United States or another country for the indication being investigated by the study, as described in 21 C.F.R. § 312.21(c); or similar clinical study in a country other than the United States.

 

1.34          “Research Agreement” has the meaning set forth in Section 4.13 of this Agreement.

 

1.35          “Research Expenses” means those direct research and development expenses directly applicable to personnel, supplies and materials and contracted and outside services, in each case, exclusively related to the development and commercialization of Licensed Products and Licensed Services; provided that to the extent that any specific personnel, supplies or materials or contracted or outside services are related to both the development and commercialization of Licensed Products and Licensed Services as well as other activities of Licensee that are not related to the development and commercialization of Licensed Products and Licensed Services, only that portion of the related expense that can reasonably be allocated solely to the development and commercialization of Licensed Products and Licensed Services, as substantiated by the contemporaneous business records of Licensee, may be included in Research Expenses. Research Expenses will be permitted to include an additional [**]%) percent of the foregoing direct research and development expenses as overhead but otherwise do not include any indirect costs, overhead, utilities, equipment or facility-related expenses, any general and administrative expenses or other similar costs. All Research Expenses shall be determined, and all calculations shall be made, in accordance with GAAP.

 

 

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1.36          “Sublicensee” means any Third Party which enters into an agreement with Licensee or an Affiliate (excluding Designated Affiliates) of Licensee involving the grant to such Third Party of any rights under the license granted to Licensee pursuant to this Agreement to offer for sale and sell Licensed Products in a given country or territory. For clarity, the recipient of a sublicense from Licensee as part of any agreement with a contract research organization acting strictly on behalf of Licensee, contract manufacturing organization or other like organization acting strictly on behalf of Licensee where such sublicense does not include the right to sell Licensed Products shall be deemed not to be a Sublicensee for purposes of this Agreement. For the avoidance of doubt, Designated Affiliate Agreements shall not constitute “Sublicensees” for purposes of this Agreement.

 

1.37          “Sublicense Revenues” means all consideration, in whatever form, due from a Sublicensee in return for the grant of a sublicense of Licensee’s rights hereunder, excluding consideration in the form of: (i) royalties received by Licensee and calculated wholly as a function of sales of Licensed Products or Licensed Services, (ii) payments received by Licensee at or around the milestone event for which milestone payments are already due to COH according to the schedule listed in Section 4.5, (ii) payments or reimbursement for documented sponsored research and/or development activities, valued at the actual direct cost of such activities on a fully burdened basis (including reasonable margin for overhead), (iii) payment or reimbursement of reasonable patent expenses actually incurred or paid by Licensee and not otherwise reimbursed, or payment of patent expenses required to by paid by Licensee hereunder, (iv) payments for the purchase of equity in Licensee at the fair market value of such equity, and (v) payments recognized as Net Sales under this Agreement for which a royalty is payable to COH. By way of clarification, the principal amount of any loan or other extension of credit provided to Licensee or an Affiliate (excluding a Designated Affiliate) of Licensee in connection with the grant of a sublicense by Licensee that is other than an arm’s-length credit relationship shall be deemed to constitute “Sublicense Revenues.”

 

1.38          “Territory” means the entire world.

 

1.39          “Third Party” means a Person that is neither a Party to this Agreement nor an Affiliate of a Party.

 

1.40          “Valid Claim” means a claim of a pending patent application or an issued and unexpired patent included in the Patent Rights, which claim has not, in such jurisdiction been finally rejected or been declared invalid or cancelled by the patent office or a court of competent jurisdiction in a decision that is no longer subject to appeal as a matter of right.

 

ARTICLE 2: DEVELOPMENT AND COMMERCIALIZATION EFFORTS

 

2.1            Development and Commercialization Responsibilities. Licensee and its Sublicensees shall have the sole right and responsibility for, and control over, all development, manufacturing and commercialization activities (including all regulatory activities) with respect to Licensed Products and Licensed Services in the Field.

 

 

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2.2            Licensee Diligence. Licensee shall use Commercially Reasonable Efforts to develop and commercialize Licensed Products and Licensed Services in the Field, directly or through one or more Sublicensees. Without limiting the foregoing, if Licensee, directly or through one or more Sublicensees, fails to accomplish any one of “Diligence Milestones” set forth in this Section 2.2 by the date specified (each a “Deadline Date”) corresponding to such Diligence Milestone, COH shall have the right, on notice to Licensee, to terminate this Agreement or convert the grant of rights hereunder from exclusive to non-exclusive, without any change in the other terms and conditions of this Agreement. [**]. Conversion of the license to non-exclusive pursuant to this Section 2.2 shall not constitute a waiver of COH’s right to terminate the license thereafter if Licensee’s obligations under this Section 2.2 continue to be unmet. [**]. Licensee shall provide COH with prompt written notice upon reaching each Diligence Milestone, which notice shall be accompanied by written documentation substantiating the achievement of any such Diligence Milestone. Upon written request by COH, Licensee shall supply additional written documentation reasonably requested by COH to confirm the achievement of any such Diligence Milestone.

 

“Deadline Date”	“Diligence Milestone”
1. [**] from the Original Effective Date	Licensee or Parent to receive aggregate Net Proceeds of not less than $[**] through any combination of: [**].
2. [**] from the Original Effective Date	Unless Licensee or Parent [**], Licensee or Parent to receive aggregate Net Proceeds of not less than $[**] in total (i.e., including the $[**] in 1 above) through any combination of: [**].
3. [**] from the Original Effective Date	[**].
4. [**] from the Original Effective Date	[**],
	or
	[**].
5. [**] from the Original Effective Date	[**],
	or
	[**].
6. [**] from the Original Effective Date	[**],
	or
	[**].
7. [**] from the Original Effective Date	[**],   or
	[**].

 

 

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For avoidance of doubt, the efforts and achievements of all Designated Affiliates acting under Designated Affiliate Agreements shall be included in determining whether Licensee has satisfied its obligations under this Section 2.2.

 

2.3            Governance. COH and Licensee shall each designate one individual to serve as the main point of contact for communications related to development and commercialization of Licensed Products and Licensed Services under this Agreement (each a “Designated Representative”). The initial Designated Representative of COH shall be [**] and the initial Designated Representative of Licensee shall be [**]. Each Party may replace its Designated Representative at any time upon prior notice to the other Party. Licensee shall keep COH reasonably informed as to progress in the development and commercialization of Licensed Products and Licensed Services. Without limiting the foregoing, on or before [**] and [**] of each year during the term of this Agreement, Licensee shall provide to COH a written report setting forth, in reasonable detail, its activities and achievements with respect to the development and commercialization of Licensed Products and Licensed Services during the preceding [**], including activities relating to the achievement of the Diligence Milestones (the “[**] Report”). The Designated Representatives shall meet in person [**] to present and discuss the current [**] Report at such location and date as mutually agreed. Each Party shall be responsible for all expenses incurred by its Designated Representative in the participation in such annual meetings.

 

ARTICLE 3: LICENSE GRANTS

 

3.1            Grant of Rights. COH hereby grants to Licensee an exclusive royalty-bearing right and license under the Patent Rights to make, have made, use, offer for sale, sell and import Licensed Products and to perform Licensed Services, in the Field, in the Territory. The foregoing grant of rights shall be subject to: [**].

 

3.2            No Implied Licenses. Licensee acknowledges that the licenses granted in this Agreement are limited to the scope expressly granted and that, subject to the terms and conditions of this Agreement, all other rights under all Patent Rights and other intellectual property rights Controlled by COH are expressly reserved to COH.

 

3.3            Sublicensing. Licensee shall have the right to sublicense its rights hereunder without the consent of COH [**]. The terms and conditions of each sublicense of Licensee’s rights hereunder shall be consistent with this Agreement. A true and complete copy of each sublicense of Licensee’s rights hereunder, as well as any amendment thereto, shall be delivered to COH within [**] of the effective date of each such sublicense or amendment, provided that COH shall treat the contents of each such sublicense agreement and amendment as Licensee Confidential Information. Sublicensees shall also have the right to further sublicense their rights, and so on through multiple sub-license levels.

 

 

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3.4            Documentation of Licensed Services. Licensee and its Sublicensees shall provide Licensed Services only pursuant to one or more written agreements which set forth, in reasonable detail, all consideration due to Licensee for the provision of such services. Licensee shall provide a true and complete copy of each such agreement to COH promptly following the effective date of such agreement, provided that COH shall treat the contents of each such agreement as Licensee Confidential Information.

 

3.5            Designated Affiliates.

 

3.5.1        Notice of Designated Affiliate. Licensee shall have the right, from time-to-time during the Term, to designate any of its Affiliates as “Designated Affiliates” by written notice to COH. Such notice shall be accompanied by a Designated Affiliate Agreement that has been completed, duly executed by such Designated Affiliate and executed as acknowledged by Licensee. COH shall execute and deliver such Designated Affiliate Agreement promptly after receipt and a reasonable opportunity to review the agreement for conformity with the form attached hereto as Exhibit C and the other requirements of this Agreement. Such designation shall become effective upon the execution of the Designated Affiliate Agreement and the payment of the fee described in Section 4.2.2.

 

3.5.2        Field. Licensee and COH hereby acknowledge and agree that certain rights and licenses to activities and uses that are included within the field will be conveyed to each Designated Affiliate as and to the extent provided for in, and during the term of, the relevant Designated Affiliate Agreement (the “Designated Affiliate Field”) and that the Field and the scope of rights granted hereunder to Licensee shall both automatically be amended and restated in their entirety to exclude such Designated Affiliate Field.

 

ARTICLE 4: PAYMENTS

 

4.1            Up-Front Payment. In consideration for the license to the Patent Rights, COH acknowledges that Licensee satisfied its obligation to pay to COH a one-time non-refundable license fee of $[**] within [**] after the Original Effective Date.

 

4.2            License Maintenance Fee; Designated Affiliate Fee.

 

4.2.1        License Maintenance Fee. Within [**] in consideration for the license to the Patent Rights. The license maintenance fees paid in a given License Year shall be applied as credit against royalties otherwise due to COH pursuant to Section 4.6, below, during the License Year in which payment was made but may not be carried over and applied as credit against royalties due in subsequent years.

 

4.2.2        Designated Affiliate Fee. Licensee shall pay to COH a fee of [**] dollars ($[**]) within [**] after providing notice to COH under Section 3.5.1 that Licensee is designating a Designated Affiliate. Such fee shall be payable each time that Licensee provides a notice of designation under Section 3.5.1.

 

4.3            Sale of Licensee Business. Upon the first Change of Control of Licensee or Parent, Licensee shall pay COH a non-refundable fee of $500,000. Notwithstanding the foregoing, the foregoing payment shall [**].

 

 

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4.4            Stock Grant. COH acknowledges that it received 228,184 common units of Parent in exchange for [**] shares of Licensee’s Common Stock that had been issued to COH in connection with execution of the Original Agreement.

 

4.5            Diligence Milestone Payments. Within [**] of the occurrence of each “Diligence Milestone Event” set forth below, for each of the first three Licensed Products or Licensed Services to reach the applicable Diligence Milestone Event, whether achieved by Licensee, its Affiliate (excluding Designated Affiliates) or a Sublicensee, Licensee shall pay COH or its designee the amount indicated below for each Licensed Product or Licensed Service reaching the applicable Diligence Milestone Event.

 

Diligence Milestone Event	Amount Due
[**]	[**]
[**]	[**]
[**]	[**]
[**]	[**]
[**]	[**]

 

In the event that any Diligence Milestone Event is met with respect to any of the first three Licensed Products or Licensed Services prior to the satisfaction of any prior Diligence Milestone Event with respect to the same Licensed Product or Licensed Service, then Licensee shall also pay the amount due for occurrence of all prior Diligence Milestone Events not previously paid upon meeting the applicable Diligence Milestone Event [**].

 

For the sake of clarity, Diligence Milestone Payments made to COH by all Designated Affiliates acting under Designated Affiliate Agreements shall be taken into account in determining whether Licensee has satisfied its obligation to make Diligence Milestone Payments to COH for the first three Licensed Products or Licensed Services to reach the applicable Diligence Milestone Event.

 

Notwithstanding anything to the contrary in this Agreement, each Diligence Milestone Payment set forth in the table above shall not be due more than once per biological target (hence Diligence Milestone Payments are not due on back-up molecules advanced by Licensee or Sublicensee until such back-up molecule has advanced to a Diligence Milestone Event not previously attained by a molecule previously being developed by Licensee or its Sublicensees acting at the same biological target and for which the applicable Diligence Milestone Payment has already been paid).

 

4.6            Royalties. Licensee shall pay to COH or its designee royalties in an amount equal to:

 

 

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4.6.1         [**]%) percent of annual Net Sales of Licensed Products and Licensed Services up to and including $[**] in annual aggregate Net Sales;

 

4.6.2         [**]%) percent of annual Net Sales of Licensed Products and Licensed Services that exceed $[**] in annual aggregate Net Sales;

 

Royalties shall be paid on a Licensed Product-by-Licensed Product, Licensed Service-by-Licensed Service and country-by-country basis until the expiration in each country of the last to expire of the Valid Claims in such country Covering Licensed Products or Licensed Services, as the case may be.

 

4.7            Sublicense Revenues. Licensee shall pay to COH:

 

4.7.1         The applicable percentage share of all Sublicense Revenues given in Section 4.7.2 below in connection with the grant of a sublicense of the Patent Rights to a Sublicensee, in each case, within [**] after payment is received from the relevant Sublicensee.

 

4.7.2         If the sublicense grant to the Sublicensee occurs [**], then [**]%. If the sublicense grant to the Sublicensee occurs [**], then [**]%. If the sublicense grant to the Sublicensee occurs [**], then [**]%. If the sublicense grant to the Sublicensee occurs [**], then [**]%.

 

4.7.3         If Sublicense Revenues are not in cash or cash equivalents, the percentage share payable to COH pursuant to this Section 4.7 shall be due, in the form received by Licensee, unless otherwise agreed by the Parties. In the event that COH requests to be paid the applicable percentage share of Sublicense Revenues in the form of a cash equivalent, Licensee shall reasonably consider such request, taking into consideration its ability to pay such amounts at such time.

 

4.8            Royalty Offsets. If, [**] it is necessary to pay to a Third Party other than a Sublicensee consideration (whether in the form of a royalty or otherwise) for the right to make, have made, use, sell, offer for sale or import a specific Licensed Product or specific Licensed Service in a given jurisdiction, and if the aggregate royalty rates of any and all royalties payable to such Third Party licensors when combined with the royalty rate payable to COH exceeds [**] percent ([**]%) in the case of Net Sales of the specific Licensed Product or specific Licensed Service, then Licensee shall have the right with respect to any period for which royalties are due (i.e., a calendar quarter or calendar year) to set off [**]%) percent of the aggregate royalties otherwise payable with respect to such period and such jurisdiction to such Third Party licensors against royalties that would otherwise be due to COH hereunder with respect to such period and jurisdiction; provided, however, that under no circumstances shall the royalty offsets permitted in this Section 4.8 result in the reduction of the effective adjusted royalty rate in any period for which payment is due and in any jurisdiction pursuant to Section 4.6, above, be less than [**]%) percent of Net Sales).

 

4.9            Timing of Royalty Payments. Royalty payments due under Section 4.6, above, shall be paid [**] within [**] in which aggregate Net Sales across all Licensed Products and Licensed Services reach $[**]. Thereafter, all royalty payments due under Section 4.6 shall be paid [**], within [**].

 

 

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4.10          No Deductions from Payments. Subject to Section 4.7 above, Licensee is solely responsible for payment of any fee, royalty or other payment due to any Third Party not a Sublicensee in connection with the research, development, manufacture, distribution, use, sale, import or export of a Licensed Product or Licensed Service and except as set forth in Section 4.8 above, Licensee shall not have the right to set off any amounts paid to such a Third Party, including fee, royalty or other payment, against any amount payable to COH hereunder.

 

4.11          Single Royalty. Only a single royalty payment shall be due and payable on Net Sales of a Licensed Product or performance of a Licensed Service, regardless if such Licensed Product or Licensed Service is Covered by more than one Valid Claim.

 

4.12          Payments Under Single License Only. Notwithstanding any provision in this Agreement or in the other license agreement of even date herewith between the Parties to the contrary, (i) Research Expenses shall be aggregated across both such license agreements and include expense within the defined parameters incurred by Licensee, Sublicensees and their respective Affiliates, (ii) diligence milestone payments and royalties for a given Licensed Product or Licensed Services shall be payable only once across both such license agreements, and (iii) the sublicense revenue share (under Section 4.7) shall be payable only once if a sublicense is granted under each such license agreement to a single Sublicensee.

 

4.13          Research Funding. On the Original Effective Date, Licensee and COH with Dr. Williams, as the principal investigator, entered into the sponsored research agreement (the “Research Agreement”) attached hereto as Exhibit B.

 

ARTICLE 5: REPORTS, AUDITS AND FINANCIAL TERMS

 

5.1            Royalty Reports. Within [**] after [**] in which a royalty payment under Article 4 is required to be made, Licensee shall send to COH a report of Net Sales of the Licensed Products and Licensed Services for which a royalty is due, which report sets forth for such [**] the following information, on a Licensed Product-by-Licensed Product, Licensed Service-by-Licensed Service and country-by-country basis: (i) total Net Sales, (ii) total gross sales of Licensed Products and Licensed Services, (iii) the quantity of each Licensed Products sold and Licensed Services performed, (iv) the exchange rate used to convert Net Sales from the currency in which they are earned to United States dollars; and (v) the total royalty payments due.

 

5.2            Additional Financial Terms.

 

5.2.1         Currency. All payments to be made under this Agreement shall be made in United States dollars, unless expressly specified to the contrary herein. Net Sales outside of the United States shall be first determined in the currency in which they are earned and shall then be converted into an amount in United States dollars. All currency conversions shall use the conversion rate reported by Reuters, Ltd. on the last Business Day of the calendar quarter for which such payment is being determined.

 

5.2.2         Payment Method. Amounts due under this Agreement shall be paid in immediately available funds, by means of wire transfer to an account identified by COH.

 

 

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5.2.3         Withholding of Taxes. Licensee may withhold from payments due to COH amounts for payment of any withholding tax that is required by law to be paid to any taxing authority with respect to such payments. Licensee shall provide to COH all relevant documents and correspondence, and shall also provide to COH any other cooperation or assistance on a reasonable basis as may be necessary to enable COH to claim exemption from such withholding taxes and to receive a full refund of such withholding tax or claim a foreign tax credit. Licensee shall give COH proper evidence from time to time as to the payment of such tax. The Parties shall cooperate with each other in seeking deductions under federal and state tax laws and any double taxation or other similar treaty or agreement from time to time in force.

 

5.2.4         Late Payments. Any amounts not paid on or before the date due under this Agreement are subject to interest from the date due through and including the date upon which payment is received. Interest is calculated, over the period between the date due and the date paid, at a rate equal to [**] percentage point ([**]%) over the “bank prime loan” rate, as such rate is published in the U.S. Federal Reserve Bulletin H.15 or successor thereto on the last Business Day of the applicable calendar quarter prior to the date on which such payment is due.

 

5.2.5         Blocked Currency. If, at any time, legal restrictions prevent the prompt remittance of part or all royalties with respect to any country where a Licensed Product is sold or Licensed Service provided, payment shall be made through such lawful means or methods as Licensee may determine. When in any country, the law or regulations prohibit both the transmittal and deposit of royalties or other payments, Licensee shall continue to report all such amounts, but may suspend payment for as long as such prohibition is in effect. As soon as such prohibition ceases to be in effect, all amounts that would have been obligated to be transmitted or deposited but for the prohibition, together with accrued interested thereon, shall promptly be transmitted to COH.

 

5.3            Accounts and Audit.

 

5.3.1         Records. Licensee shall keep, and shall require that each Sublicensee keep, full, true and accurate books of account containing the particulars of, as the case may be, its Research Expenses, Net Sales and the calculation of royalties. Licensee and its Sublicensees shall each keep such books of account and the supporting data and other records at its principal place of business. Such books and records must be maintained available for examination in accordance with this Section 5.3.1 for [**] after the end of the calendar year to which they pertain, and otherwise as reasonably required to comply with GAAP.

 

5.3.2         Appointment of Auditor. COH may appoint an internationally-recognized independent accounting firm reasonably acceptable to Licensee to inspect the relevant books of account of Licensee and its Sublicensees to verify any Research Expenses, to the extent relied upon by Licensee to achieve a Diligence Milestone, reports or statements provided, or amounts paid or invoiced (as appropriate), by Licensee or its Sublicensees.

 

5.3.3         Procedures for Audit. COH may exercise its right to have Licensee’s and its Sublicensees’ relevant records examined only during the [**] period during which Licensee is required to maintain records, no more than [**]. Licensee and its Sublicensees are required to make records available for inspection only during regular business hours, only at such place or places where such records are customarily kept, and only upon receipt of at least [**] advance notice from COH.

 

 

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5.3.4         Audit Report. The independent accountant will be instructed to provide to COH an audit report containing only its conclusions and methodology regarding the audit, and specifying whether the amounts paid were correct or the Research Expenses incurred were correctly reported in connection with the achievement of a Diligence Milestone, and, if incorrect, the amount of any underpayment, any overpayment or any Research Expenses incorrectly reported.

 

5.3.5         Underpayment and Overpayment. After review of the auditor’s report: (i) if there is an uncontested underpayment by Licensee for all of the periods covered by such auditor’s report, then Licensee shall pay to COH the full amount of that uncontested underpayment, and (ii) if there is an uncontested overpayment for such periods, then COH shall provide to Licensee a credit against future payments (such credit equal to the full amount of that overpayment), or, if Licensee is not obligated to make any future payments, then COH shall pay to Licensee the full amount of that overpayment. Contested amounts are subject to dispute resolution under Article 12. If the total amount of any such underpayment (as agreed to by Licensee or as determined under Article 12) exceeds [**]%) percent of the amount previously paid by Licensee for the period subject to audit, then Licensee shall pay the reasonable costs for the audit. Otherwise, all costs of the audit shall be paid by COH.

 

ARTICLE 6: LICENSEE COVENANTS

 

6.1            Licensee covenants and agrees that in conducting activities contemplated under this Agreement, it shall comply in all material respects with all applicable laws and regulations including, without limitation, those related to the manufacture, use, labeling importation and marketing of Licensed Products and Licensed Services.

 

ARTICLE 7: INTELLECTUAL PROPERTY; PATENT PROSECUTION, MAINTENANCE AND ENFORCEMENT.

 

7.1            Patent Prosecution, Maintenance and Enforcement.

 

(a)            As of the Original Effective Date, Licensee assumed and became responsible for the preparation, filing, prosecution, and maintenance of all Patent Rights in the name of COH at Licensee’s own expense, using Licensee counsel reasonably acceptable to COH. Licensee will timely provide COH with copies of all relevant documentation relating to such prosecution and COH shall keep such information confidential. Licensee’s counsel shall take instructions only from Licensee and COH’s counsel shall take instructions only from COH.

 

 

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(b)            Promptly following the end of each [**] or upon request of COH, Licensee will provide COH with an update and details regarding the filing, prosecution and maintenance status of the Patent Rights. Licensee shall provide COH with drafts of all proposed filings (including, without limitation, the initial application as well as any material correspondence related to any filings) in a manner that allows COH a reasonable opportunity to review and comment before any such filing is made or due but in no event, except when impossible, less than [**] prior to any filing deadline. Licensee will consider all of, and incorporate to the extent commercially reasonable for Licensee’s conduct of its business, COH’s suggestions, recommendations and instructions concerning the preparation, filing, prosecution, defense and maintenance of the Patent Rights (including without limitation any suggestion or recommendation to alter or expand or limit the scope, content and/or claims of any such application), and, to the extent otherwise possible, will undertake the preparation, filing, prosecution and defense of the Patent Rights in a way that is intended to reasonably optimize the scope and enforceability of the Patent Rights. COH shall cooperate with Licensee in the preparation, filing, prosecution, and maintenance of the Patent Rights by disclosing such information as may be necessary and by promptly executing such documents as Licensee may request to effect such efforts. COH shall secure, and upon request provide to Licensee, assignments from all employees and other individuals necessary to grant the rights, licenses and privileges granted in this Agreement. The aforementioned provisions of this subparagraph are collectively the “Cooperation Provisions”. For clarity, (i) Licensee may not use cost or expense as a basis to deem any proposed COH claim or application commercially unreasonable, provided COH is willing to bear any increased cost or expense, in which case Licensee shall not be entitled to the benefits of any such claim or application unless COH’s costs are reimbursed and (ii) if Licensee deems any COH claim or application commercially unreasonable due to cost or expense, COH shall be entitled to require Licensee to file continuation, divisional or other independent applications to be prosecuted and maintained by COH at its cost and expense independent of Licensee and which shall be outside the scope of the rights licensed pursuant to this Agreement.

 

(c)            Licensee will not unreasonably refuse to amend any patent application in the Patent Rights to include claims reasonably requested by COH to protect the products contemplated to be sold by Licensee under this Agreement.

 

(d)            Each Party shall promptly provide written notice to the other in the event it becomes aware of any actual or probable infringement of any of the Patent Rights in or relevant to the Field or of any Third Party claim regarding the enforceability or validity of any Patent Rights (“Infringement Notice”). Licensee shall, in cooperation with COH, use reasonable efforts to terminate infringement without litigation.

 

(e)            If infringing activity has not been abated within [**] following the date the Infringement Notice takes effect, then Licensee may, following consultation with COH, in its sole discretion and at its sole expense, take action against any alleged infringer or in defense of such any claim, provided, that, Licensee has exclusive rights under this Agreement. Any recovery obtained by Licensee as the result of legal proceedings initiated and paid for by Licensee pursuant to this subsection (e), after deduction of Licensee’s reasonable out-of-pocket expenses incurred in securing such recovery, shall be deemed to be Net Sales of Licensed Products and/or Licensed Services in the calendar quarter in which such recovery was received and royalties shall be due and payable thereon accordingly.

 

(f)             If COH is involuntarily joined in a suit initiated by Licensee, then the Licensee will pay any out-of-pocket costs reasonably incurred by COH arising out of such suit, including but not limited to, reasonable legal fees of counsel that COH selects and retains to represent it in the suit.

 

 

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(g)            In the event that Licensee declines either to cause such infringement to cease (e.g., by settlement or injunction) or to initiate and thereafter diligently maintain legal proceedings against the infringer other than as part of a mutually agreed upon bona fide strategy, developed with the guidance of outside patent counsel, to preserve the Patent Rights, COH may, in its sole discretion and at its sole expense, take action against such alleged infringer or in defense of any Third Party claim. Any recovery obtained by COH as the result of any such legal proceedings shall be for the benefit of COH only. Failure on the part of Licensee to prosecute any such infringement for which it has standing to prosecute, absent a settlement between Licensee and such infringing Third Party, shall be grounds for conversion of the exclusive licenses granted to Licensee hereunder to co-exclusive licenses with Licensee and with such infringing Third Party(ies), with respect to the country in which such infringement occurs, at the option of COH, provided, however, that COH may only subsequently enter into subsequent license agreements with such infringing Third Party(ies) (i.e., not any other Third Party) and, provided further, that such license(s) shall not contain running royalty rates lower than the rates specified in this Agreement nor grant such third parties the right to sublicense. Licensee agrees to execute any and all necessary documents and perform such acts as are reasonably requested by COH in order to effect such grant to such Third Party. All fees, royalties, payments and any other consideration to be paid by that Third Party under the co-exclusive license shall be paid to COH.

 

7.2            Trademarks. Licensee shall be responsible for the selection, registration, maintenance, and defense of all trademarks for use in connection with the sale or marketing of Licensed Products and Licensed Services in the Field in the Territory (the “Marks”), as well as all expenses associated therewith. All uses of the Marks by Licensee or a Sublicensee shall comply in all material respects with all applicable laws and regulations (including those laws and regulations particularly applying to the proper use and designation of trademarks in the applicable countries). Licensee shall not, without COH’s prior written consent, use any trademarks or house marks of COH (including the COH corporate name), or marks confusingly similar thereto, in connection with Licensee commercialization of Licensed Products or Licensed Services under this Agreement in any promotional materials or applications or in any manner implying an endorsement by COH of Licensee or the Licensed Products or Licensed Services. Licensee shall own all Marks.

 

7.3            Challenge to the Patent Rights by Licensee.

 

(a)            COH may terminate this Agreement and, notwithstanding Section 3.3, above, all Sublicenses issued hereunder, upon written notice to Licensee in the event that Licensee or any of its Affiliates (excluding Designated Affiliates) or Sublicensees directly or indirectly asserts a Patent Challenge. “Patent Challenge” means any challenge in a legal or administrative proceeding to the patentability, validity or enforceability of any of the Patent Rights (or any claim thereof), including by: (a) filing or pursuing a declaratory judgment action in which any of the Patent Rights is alleged to be invalid or unenforceable; (b) citing prior art against any of the Patent Rights, filing a request for or pursuing a re-examination of any of the Patent Rights (other than with COH’s written agreement), or becoming a party to or pursuing an interference; or (c) filing or pursuing any re-examination, opposition, cancellation, nullity or other like proceedings against any of the Patent Rights; but excluding any challenge raised as a defense against a claim, action or proceeding asserted by COH against Licensee, its Affiliates (excluding Designated Affiliates) or Sublicensees. In lieu of exercising its rights to terminate under this Section 7.3(a) COH may elect upon written notice to increase the payments due under all of Article 4 by [**] percent ([**]%), which election will be effective retroactively to the date of the commencement of the Patent Challenge. Licensee acknowledges and agrees that this Section 7.3(a) is reasonable, valid and necessary for the adequate protection of COH’s interest in and to the Patent Rights, and that would not have granted to Licensee the licenses under those Patent Rights, without this Section 7.3(a). COH will have right at any time in its sole discretion to strike this Section 7.3(a) (or any portion thereof) from this Agreement, and COH will have no liability whatsoever as a result of the presence or absence of this Section 7.3(a) (or any struck portion thereof).

 

 

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(b)            If COH obtains a final non-appealable judgment upholding the validity and enforceability of the challenged Patent Rights and finding at least one claim of such Patent Rights to be infringed by Licensee or any one of its Affiliates (excluding Designated Affiliates) or Sublicensees, Licensee shall reimburse COH all of its attorneys’ fees and expenses expended in connection with defending such lawsuit or other proceeding.

 

7.4            Payment of COH Patent Expenses.

 

(a)            The Parties acknowledge that, prior to the Original Effective Date, COH incurred [**] with respect to [**] of the Patent Rights. In consideration of such [**] by COH, Licensee shall [**].

 

(b)            In the event that COH, in its reasonable judgment, makes an initial filing to maintain the patentability of a Subject Invention as defined in the Research Agreement set forth in Exhibit B, Licensee shall reimburse COH for all reasonable costs incurred by COH in connection therewith.

 

7.5            Marking. Licensee and its Sublicensees shall mark all Licensed Products and all materials related to Licensed Services in such a matter as to conform with the patent laws of the country to which such Licensed Products are shipped or in which such products are sold and such Licensed Services performed.

 

ARTICLE 8: TERM AND TERMINATION

 

8.1            Term and Expiration of Term. The term of this Agreement (the “Term”) shall commence on the Effective Date and, notwithstanding any other provision of this Agreement, unless sooner terminated by mutual agreement or pursuant to any other provision of this Agreement, this Agreement shall expire on a country-by-country basis and on a Patent Right-by-Patent Right basis on the later to occur of: (a) the expiration of the last to expire of any of the Patent Rights in such country (or if no patent issues, until the last patent application in Patent Rights is abandoned), and (b) the date on which the last of the remaining obligations under this Agreement between the Parties with respect to the payment of milestones or royalties with respect to Licensed Products and Licensed Services have been satisfied (such expiry of the Term hereinafter referred to as “Expiration”).

 

8.2            Termination.

 

8.2.1         Material Breach. Either Party may terminate this Agreement prior to its Expiration for any material breach by the other Party, provided that the Party seeking to terminate shall have first given the breaching Party notice of such material breach with reasonable particulars of the material breach, and the Party receiving the notice of the material breach shall have failed to cure that material breach within [**] after the date of receipt of such notice.

 

 

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8.2.2         Bankruptcy. COH shall have the right to terminate this Agreement prior to its Expiration upon notice to Licensee, in the event that: (i) Licensee seeks protection of any bankruptcy or insolvency law other than with the prior consent of City of Hope, or (ii) a proceeding in bankruptcy or insolvency is filed by or against Licensee and not withdrawn, removed or vacated within [**] of such filing, or there is adjudication by a court of competent jurisdiction that Licensee is bankrupt or insolvent.

 

8.2.3         Termination at Will by Licensee. Licensee shall have the right to terminate this Agreement prior to its Expiration upon notice to COH without cause, effective no fewer than 30 days following the date of such notice.

 

8.2.4         Termination bv COH for Breach-Based Termination of the Research Agreement. COH shall have the right to terminate this Agreement following COH’s termination of the Research Agreement (i) pursuant to Section 11.2 of the Research Agreement for Licensee’s failure to pay amounts due thereunder or (ii) pursuant to Section 11.3 of the Research Agreement for Licensee’s uncured material breach thereof; provided that, in the event of any such termination of the Research Agreement by COH, Licensee shall provide written notice to COH of such termination, and COH may terminate this Agreement at any time after such termination of the Research Agreement, but in no event later than [**] after the receipt of such notice from Licensee.

 

8.3            Effect of Termination.

 

8.3.1         Upon any termination of this Agreement pursuant to Section 8.2 (but for clarity, not in the case of its Expiration), all rights and licenses granted to Licensee under Article 3 and all sublicenses granted by Licensee except as provided below shall immediately terminate on and as of the effective date of termination as provided in Section 8.2, except that (a) Licensee and its Sublicensees shall have the right to continue to sell Licensed Products manufactured prior to the effective date of such termination until the sooner of: (i) [**] after the effective date of termination, or (ii) the exhaustion of Licensee’s or Sublicensees’ inventory of Licensed Products; and (b) each sublicense granted in compliance with this Agreement, provided that the Sublicensee is not then in material default of its obligations under the sublicense, will remain in effect, and each Sublicensee thereafter will be deemed a direct licensee of COH, and each such sublicense agreement will be considered to be a direct license agreement between COH and the Sublicensee, mutatis mutandis, provided that COH will not be bound to: (1) perform any obligations set forth in any such sublicense agreement that extend beyond the obligations of COH set forth in this Agreement, or (2) accept compensation under any such sublicense agreement that taken as a whole in COH’s reasonable discretion would be less than the compensation payable to COH in respect of such Sublicensee’s activities pursuant to this Agreement.

 

 

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8.3.2         Upon termination of this Agreement pursuant to Section 8.2 (but for clarity, not in the case of its Expiration):

 

(a)            Each Party shall promptly return to the other Party all relevant records and materials in its possession or control containing or comprising the other Party’s Confidential Information and to which the Party does not retain rights hereunder.

 

(b)            Licensee shall discontinue making any representation regarding its status as a licensee of COH for Licensed Products and Licensed Services. Subject to Section 8.3.1, above, Licensee shall cease conducting any activities with respect to the marketing, promotion, sale or distribution of Licensed Products and Licensed Services.

 

8.3.3         Termination of this Agreement through any means and for any reason pursuant to Section 8.2 (but for clarity, not in the case of its Expiration), shall not relieve the Parties of any obligation accruing prior thereto, including the payment of all sums due and payable, and shall be without prejudice to the rights and remedies of either Party with respect to any antecedent breach of any of the provisions of this Agreement.

 

8.4            Designated Affiliate Agreements. The termination or expiration of this Agreement shall have no effect on the continued effectiveness of any Designated Affiliate Agreements. The termination of any Designated Affiliate Agreement shall cause the reversion of the rights granted thereunder to Licensee under this Agreement as if such Designated Affiliate Agreement had never been entered into provided that Licensee assumes in writing any unfulfilled obligations or liabilities of the relevant Designated Affiliate under such Designated Affiliate Agreement.

 

8.5            Survival. Sections 4.9, 5.1, 5.2, 5.3, 8.3, 8.4, 8.5, Article 10, Article 11, Article 12, Sections 14.1-14.11 and Sections 14.14-14.15 shall survive termination of this Agreement for any reason pursuant to Section 8.2 and Expiration pursuant to Section 8.1.

 

ARTICLE 9: REPRESENTATIONS AND WARRANTIES

 

9.1            Mutual Representations and Warranties. COH and Licensee each represents and warrants as follows:

 

9.1.1         It has the right and authority to enter into this Agreement and all action required to be taken on its behalf, its officers, directors, partners and stockholders necessary for the authorization, execution, and delivery of this Agreement and, the performance of all of its obligations hereunder, and this Agreement, when executed and delivered, will constitute valid and legally binding obligations of such Party, enforceable in accordance with its terms, subject to: (i) laws limiting the availability of specific performance, injunctive relief, and other equitable remedies; and (ii) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect generally relating to or affecting creditors’ rights generally;

 

9.1.2         Entry into this Agreement will not constitute a breach of any other agreement to which it is party;

 

9.1.3         It has read this Agreement, with assistance from its counsel of choice. It understands all of this Agreement’s terms. It has been given a reasonable amount of time to consider the contents of this Agreement before each Party executed it. It agrees that it is executing this Agreement voluntarily with full knowledge of this Agreement’s legal significance; and

 

 

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9.1.4         It has made such investigation of all matters pertaining to this Agreement that it deems necessary, and does not rely on any statement, promise, or representation, whether oral or written, with respect to such matters other than those expressly set forth herein. It agrees that it is not relying in any manner on any statement, promise, representation or understanding, whether oral, written or implied, made by any Party, not specifically set forth in this Agreement. It acknowledges that, after execution of this Agreement, it may discover facts different from or in addition to those which it now knows or believes to be true. Nevertheless, it agrees that this Agreement shall be and remain in full force and effect in all respects, notwithstanding such different or additional facts.

 

9.2            Representations and Warranties of Licensee. Licensee represents and warrants that as of the Original Effective Date:

 

9.2.1         All authorizations necessary for the issuance of the COH Shares issuable to COH pursuant to Section 4.4(a) of the Original Agreement, were obtained;

 

9.2.2         no consent, approval, order, or authorization of, or registration, qualification, designation, declaration, or filing with, any federal, state, or local governmental authority on the part of Licensee was required in connection with the offer, sale, or issuance of the COH Shares or the consummation of any other transaction contemplated hereby, except for the following: (i) the filing of a notice of exemption pursuant to Section 25102(f) of the California Corporate Securities Law of 1968, as amended, which was filed by Licensee promptly following the Original Effective Date; and (ii) the compliance with other applicable state securities laws, which compliance will have occurred within the appropriate time periods therefor. The offer, sale, and issuance of the COH Shares in conformity with the terms of the Original Agreement are exempt from the registration requirements of Section 5 of the Act, and from the qualification requirements of Section 25110 of the California Securities Law, and Licensee, nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemptions;

 

9.2.3         The sale of the COH Shares was not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with;

 

9.2.4         The COH Shares, when issued, sold and delivered in accordance with the terms of the Original Agreement for the consideration expressed therein, were duly and validly issued, fully paid and nonassessable and free of restrictions on transfer, other than restrictions on transfer under applicable state and federal securities laws;

 

9.2.5         As of the Original Effective Date, the authorized capital stock of Licensee consisted of 10,000,000 shares of Common Stock, [**]. As such the [**] shares issued to COH pursuant to the Original Agreement and the [**] shares issued to COH (or its designees) pursuant to a second license agreement between the parties executed on or about even date to the Original Agreement together [**] on the date such shares were issued. As of the Original Effective Date, Licensee had not reserved any equity securities for issuance pursuant to Licensee’s equity incentive compensation plans. All issued and outstanding shares of Licensee were duly authorized and validly issued and were fully paid and nonassessable. Other than the outstanding Common Stock, including the COH Shares, there were no other outstanding rights, options, warrants, preemptive rights, rights of first refusal, or similar rights for the purchase or acquisition from Licensee of any securities of Licensee nor any commitments to issue or execute any such rights, options, warrants, preemptive rights or rights of first refusal. The respective rights, preferences, privileges, and restrictions of the Common Stock were solely as stated in Licensee’s certificate of incorporation, a true and correct copy of which was delivered to COH prior to the Original Effective Date;

 

 

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9.2.6         Licensee was not in violation or default of any provision of its certificate of incorporation or bylaws on the Original Effective Date or on the date of issuance of the COH Shares, and;

 

9.2.7         Prior to the Original Effective Date, Licensee had not entered into any agreements pursuant to which the Patent Rights had been sublicensed.

 

9.3            Representations and Warranties of COH. COH represents and warrants that, as of the Original Effective Date, to the actual knowledge of the Director of its Office of Technology Transfer without independent inquiry, COH has the full power and authority to grant the rights, licenses and privileges granted herein.

 

9.4            Exclusions. Nothing in this Agreement is or shall be construed as:

 

9.4.1         A warranty or representation by COH as to the validity or scope of any claim or patent or patent application within the Patent Rights;

 

9.4.2         A warranty or representation by COH that anything made, used, sold, or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of any patent rights or other intellectual property right of any Third Party;

 

9.4.3         A grant by COH, whether by implication, estoppel, or otherwise, of any licenses or rights under any patents other than Patent Rights as defined herein, regardless of whether such patents are dominant or subordinate to Patent Rights;

 

9.4.4         An obligation on COH to bring or prosecute any suit or action against a Third Party for infringement of any of the Patent Rights;

 

9.4.5         An obligation to furnish any know-how not provided in Patent Rights; or

 

9.4.6         A representation or warranty of the ownership of the Patent Rights other than as set forth in Section 9.3, above.

 

9.5            DISCLAIMER. EXCEPT AS EXPRESSLY STATED IN SECTIONS 9.1 AND 9.3 OF THIS AGREEMENT, NO WARRANTY IS GIVEN WITH RESPECT TO THE PATENT RIGHTS, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND HIE PARTIES SPECIFICALLY DISCLAIM ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF THE PATENT RIGHTS OR NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY OR OTHER RIGHTS OF ANY THIRD PARTY. THE WARRANTIES SET FORTH IN SECTIONS 9.1 AND 9.3 ABOVE ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, VALIDITY, NON-INFRINGEMENT AND ALL SUCH OTHER WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

 

 

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ARTICLE 10: INDEMNIFICATION

 

10.1          Indemnification by Licensee. Licensee shall defend, indemnify and hold harmless COH, its Affiliates, and their respective officers, directors, shareholders, employees and agents (“COH Indemnitees”) from and against any and all Third Party liabilities, claims, suits, and expenses, including reasonable attorneys’ fees (collectively, “Losses”), arising out of or are in any way attributable to: (i) the material breach of any representation or warranty made by Licensee under this Agreement, (ii) the research, development, marketing, approval, manufacture, packaging, labeling, handling, storage, transportation, use, distribution, promotion, marketing or sale of Licensed Products or Licensed Services by or on behalf of Licensee, any of its Affiliates (excluding Designated Affiliates) or a Sublicensee or any other exercise of rights under this Agreement or pursuant to any sublicense, or (iii) the negligence, willful misconduct or failure to comply with applicable law by a Licensee Indemnitee or Sublicensee.

 

10.2          Procedure. The indemnities set forth in Section 10.1 are subject to the condition that COH shall forthwith notify Licensee of a liability, claim, suit, action or expense and that Licensee defend and control any proceedings with COH being permitted to participate at its own expense (unless there shall be a conflict of interest which would prevent representation by joint counsel, in which event Licensee shall pay for COH’s counsel): provided, that, Licensee may not settle the liability, claim, suit, action or expense, or otherwise admit fault of COH or consent to any judgment, without the written consent of COH (such consent not to be unreasonably withheld). Notwithstanding the foregoing, no delay in the notification of the existence of any claim of Loss shall cause a failure to comply with this Section 10.2 as long as such delay shall not have materially impaired the rights of Licensee.

 

10.3          Insurance.

 

(a)            Within [**] following the first equity or debt financing with net proceeds to Licensee or Parent of greater than $[**], Licensee shall procure at its sole expense (or shall be covered under a policy maintained by an Affiliate) and provide to COH evidence of comprehensive or commercial general liability insurance (contractual liability included) with limits of at least: (i) each occurrence, $[**]; (ii) products/completed operations aggregate, $[**]; (iii) personal and advertising injury, $[**]; and general aggregate (commercial form only), $[**].

 

(b)            The foregoing policies will provide primary coverage to COH and shall name the COH Indemnitees as additional insureds, and shall remain in effect during the term of this Agreement and for [**] following the termination or expiration of the term of this Agreement. The COH Indemnitees shall be notified in writing by Licensee not less than [**] prior to any material modification, cancellation or non-renewal of such policy. Licensee’s insurance must 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 the COH Indemnitees. Such insurance coverage shall be maintained with an insurance company or companies having an A.M. Best’s rating (or its equivalent) of A-XII or better.

 

 

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(c)            Licensee expressly understands that the coverage limits in Section 10.3(a) do not in any way limit the Licensee’s liability.

 

10.4            LIMITATION ON DAMAGES. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY: (I) IN NO EVENT SHALL COH BE LIABLE TO LICENSEE FOR ANY SPECIAL, PUNITIVE, CONSEQUENTIAL, INDIRECT, OR INCIDENTAL DAMAGES (INCLUDING LOSS OF PROFITS, COSTS OF PROCURING SUBSTITUTE GOODS, LOST BUSINESS OR ENHANCED DAMAGES FOR INTELLECTUAL PROPERTY INFRINGEMENT) WHETHER BASED UPON BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE, STRICT LIABILITY IN TORT OR ANY OTHER LEGAL THEORY, AND (II) IN NO EVENT SHALL COH BE LIABLE TO LICENSEE FOR AN AGGREGATE AMOUNT IN EXCESS OF ONE-HALF OF THE TOTAL CONSIDERATION PAID TO COH HEREUNDER.

 

ARTICLE 11: CONFIDENTIALITY

 

11.1            Confidential Information. During the term of this Agreement and for [**] thereafter without regard to the means of termination: (i) COH shall not use, for any purpose other than the purpose contemplated by this Agreement, or reveal or disclose to any Third Party any Licensee Confidential Information; and (ii) Licensee shall not use, for any purpose other than the purpose contemplated by this Agreement, or reveal or disclose any COH Confidential Information to any Third Party. The Parties shall take reasonable measures to assure that no unauthorized use or disclosure is made by others to whom access to such other Party’s Confidential Information is granted.

 

11.2            Exceptions. Notwithstanding the foregoing, a Party may use and disclose Confidential Information of the other Party as follows:

 

(a)            if required by applicable law, rule, regulation, government requirement and/or court order, provided, that, the disclosing Party promptly notifies the other Party of its notice of any such requirement and provides the other Party a reasonable opportunity to seek a protective order or other appropriate remedy and/or to waive compliance with the provisions of this Agreement;

 

(b)            to the extent such use and disclosure occurs in the filing or publication of any patent application or patent on inventions;

 

(c)            as necessary or desirable for securing any regulatory approvals, including pricing approvals, for any Licensed Products or Licensed Services, provided, that, the disclosing Party shall take all reasonable steps to limit disclosure of the Confidential Information outside such regulatory agency and to otherwise maintain the confidentiality of the Confidential Information;

 

 

(d)            to take any lawful action that it deems necessary to protect its interest under, or to enforce compliance with the terms and conditions of, this Agreement;

 

(e)            to the extent necessary, to its Affiliates, directors, officers, employees, consultants, vendors and clinicians under written agreements of confidentiality at least as restrictive as those set forth in this Agreement, who have a need to know such information in connection with such Party performing its obligations or exercising its rights under this Agreement; and

 

(f)             by Licensee, to actual and potential investors, licensees, Sublicensees, consultants, vendors and suppliers, and academic and commercial collaborators, under written agreements of confidentiality at least as restrictive as those set forth in this Agreement.

 

11.3          Certain Obligations. During the Term and for a period of [**] thereafter and subject to the exceptions set forth in Section 11.2, Licensee, with respect to COH Confidential Information, and COH, with respect to Licensee Confidential Information, agree:

 

(a)            to use such Confidential Information only for the purposes contemplated under this Agreement,

 

(b)            to treat such Confidential Information as it would its own proprietary information which in no event shall be less than a reasonable standard of care,

 

(c)            to take reasonable precautions to prevent the disclosure of such Confidential Information to a Third Party without written consent of the other Party, and

 

(d)            to only disclose such Confidential Information to those employees, agents and Third Parties who have a need to know such Confidential Information for the purposes set forth herein and who are subject to obligations of confidentiality no less restrictive than those set forth herein.

 

11.4          Termination. Upon termination, of this Agreement pursuant to Section 8.2 (but for clarity, not in the case of its Expiration), and upon the request of the disclosing Party, the receiving Party shall promptly return to the disclosing Party or destroy all copies of Confidential Information received from such Party, and shall return or destroy, and document the destruction of, all summaries, abstracts, extracts, or other documents which contain any Confidential Information of the other Party in any form, except that each Party shall be permitted to retain a copy (or copies, as necessary’) of such Confidential Information for archival purposes or to enforce or verify compliance with this Agreement, or as required by any applicable law or regulation.

 

ARTICLE 12: DISPUTE RESOLUTION

 

All Disputes shall be first referred to [**] of COH (the “COH [**]”) and the [**] of Licensee for resolution, prior to proceeding under the other provisions of this Article 12. A Dispute shall be referred to such executives upon one Party (the “Initiating Party”) providing the other Party (the “Responding Party”) with notice that such Dispute exists, together with a written statement describing the Dispute with reasonable specificity and proposing a resolution to such Dispute that the Initialing Party is willing to accept, if any. Within [**] after having received such statement and proposed resolution, if any, the Responding Party shall respond with a written statement that provides additional information, if any, regarding such Dispute, and proposes a resolution to such Dispute that the Responding Party is willing to accept, if any. In the event that such Dispute is not resolved within [**] after the Responding Party’s receipt of the Initiating Party’s notice, either Party may bring and thereafter maintain suit against the other with respect to such Dispute; provided, however, that the exclusive jurisdiction of any such suit shall be the state and federal courts located in Los Angeles County, California, and the Parties hereby consent to the exclusive jurisdiction and venue of such courts.

 

 

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ARTICLE 13: GOVERNMENTAL MATTERS

 

13.1          Governmental Approval or Registration. If this Agreement or any associated transaction is required by the law of any nation to be either approved or registered with any governmental agency, Licensee shall assume all legal obligations to do so. Licensee shall notify COH if it becomes aware that this Agreement is subject to a U.S. or foreign government reporting or approval requirement. Licensee shall make all necessary filings and pay all costs including fees, penalties and all other out-of-pocket costs associated with such reporting or approval process.

 

13.2          Export Control Laws. Licensee shall observe all applicable U.S. and foreign laws with respect to the transfer of Licensed Products and related technical data to foreign countries, including, without limitation, the International Traffic in Arms Regulations and the Export Administration Regulations.

 

ARTICLE 14: MISCELLANEOUS

 

14.1          Assignment and Delegation. Except as expressly provided in this Section 14.1, neither this Agreement nor any right or obligation hereunder shall be assignable in whole or in part, whether by operation of law, or otherwise by Licensee without the prior written consent of COH. Notwithstanding the foregoing, Licensee or COH, may assign or transfer its rights and obligations under this Agreement to (a) an Affiliate or (b) a Person that succeeds to all or substantially all of such assignor’s business or assets, whether by sale, merger, operation of law or otherwise and provided that such Person agrees, in form and substance reasonably acceptable to the non-assigning Party, to be bound as a direct party to this Agreement in addition to Licensee. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the Parties hereto and their respective successors and permitted assignees. Any transfer or assignment of this Agreement in violation of this Section 14.1 shall be null and void.

 

14.2          Entire Agreement. This Agreement contains the entire agreement between the Parties relating to the subject matter hereof, and all prior understandings, representations and warranties between the Parties are superseded by this Agreement. For clarity, the Original Agreement shall be deemed amended and restated in its entirety by and replaced by this Agreement.

 

14.3          Amendments. Changes and additional provisions to this Agreement shall be binding on the Parties only if agreed upon in writing and signed by the Parties.

 

 

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14.4          Applicable Law. This Agreement shall be construed and interpreted in accordance with the laws of the State of California and all rights and remedies shall be governed by such laws without regard to principles of conflicts of law.

 

14.5          Force Majeure. If the performance of this Agreement or any obligations hereunder is prevented, restricted or interfered with by reason of earthquake, fire, flood or other casualty or due to strikes, riot, storms, explosions, acts of God, war, terrorism, or a similar occurrence or condition beyond the reasonable control of the Parties, the Party so affected shall, upon giving prompt notice to the other Parties, be excused from such performance during such prevention, restriction or interference, and any failure or delay resulting therefrom shall not be considered a breach of this Agreement.

 

14.6          Severability. The Parties do not intend to violate any public policy or statutory common law. However, if any sentence, paragraph, clause or combination of this Agreement is in violation of any law or is found to be otherwise unenforceable, such sentence, paragraph, clause or combination of the same shall be deleted and the remainder of this Agreement shall remain binding, provided that such deletion does not alter the basic purpose and structure of this Agreement.

 

14.7          Notices. All notices, requests, demands, and other communications relating to this Agreement shall be in writing in the English language and shall be delivered in person or by mail, international courier or facsimile transmission (with a confirmation copy forwarded by courier or mail). Notices sent by mail shall be sent by first class mail or the equivalent, registered or certified, postage prepaid, and shall be deemed to have been given on the date actually received. Notices sent by international courier shall be sent using a service which provides traceability of packages. Notices shall be sent as follows:

 

Notices to COH:	with a copy to:
Office of Technology Licensing City of Hope 1500 East Duarte Road Duarte, CA 91010 Attn: VP, Center for Applied Technology Development Fax [**]	Office of General Counsel City of Hope 1500 East Duarte Road Duarte, CA 91010 Attn: General Counsel Fax [**]
Notices to Licensee:	with a copy to:
Akriveia Therapeutics Inc. 23 Southern Hills Drive, Skillman, New Jersey 08558	Morrison & Foerster LLP 12531 High Bluff Drive, Suite 100 San Diego, CA 92130

 

Either Party may change its address, or the addition or deletion of “copied” persons or entities for notices or facsimile number at any time by sending notice to the other Party.

 

14.8          Independent Contractor. Nothing herein shall create any association, partnership, joint venture, fiduciary duty or the relation of principal and agent between the Parties hereto, it being understood that each Party is acting as an independent contractor, and neither Party shall have the authority to bind the other or the other’s representatives in any way.

 

 

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14.9          Waiver. No delay on the part of either Party hereto in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any power or right hereunder preclude other or further exercise thereof or the exercise of any other power or right. No waiver of this Agreement or any provision hereof shall be enforceable against any Party hereto unless in writing, signed by the Party against whom such waiver is claimed, and shall be limited solely to the one event.

 

14.10        Interpretation. This Agreement has been prepared jointly and no rule of strict construction shall be applied against either Party. In this Agreement, the singular shall include the plural and vice versa and the word “including” shall be deemed to be followed by the phrase “without limitation.” The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

 

14.11        Counterparts. This Agreement may be executed in counterparts, each of which together shall constitute one and the same Agreement. For purposes of executing this agreement, a facsimile copy or an emailed PDF of this Agreement, including the signature pages, will be deemed an original.

 

14.12        Licensee Covenant. Licensee covenants and agrees that, in conducting activities contemplated under this Agreement, it shall comply in all material respects with all applicable laws and regulations including, without limitation, those related to the manufacture, use, labeling importation and marketing of Licensed Products and Licensed Services.

 

14.13        Licensee Certification. Licensee certifies to COH under penalty of perjury, that Licensee has not been convicted of a criminal offense related to health care, is not currently debarred, excluded or otherwise ineligible for participation in federally funded health care programs and has not arranged or contracted (by employment or otherwise) with any employee, contractor, or agent that it knew or should have known are excluded from participation in any federal health care program, and will not knowingly arrange or contract with any such individuals or entities during the term of this Agreement. Licensee agrees to notify COH in writing immediately of any threatened, proposed or actual conviction relating to health care, of any threatened, proposed or actual debarment or exclusion from participation in federally funded programs, of COH or any employee, contractor or agent of COH. Any material breach of this Section 14.13 by Licensee shall be grounds for termination of this Agreement by COH in accordance with Section 8.2.1.

 

 

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14.14        Publicity. Neither Party may issue a press releases or otherwise disclose the existence or terms of this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed; provided, however, that once the existence or any terms or conditions of this Agreement has been publicly disclosed in a manner mutually and reasonably agreed-to by the Parties, either Party may republish the facts previously disclosed without the prior consent of the other Party. COH may, in its sole discretion and without the approval of Licensee, publicly disclose the existence of this Agreement and the overall potential value of the Agreement to COH so long as the detailed and specific terms and conditions of this Agreement are not disclosed. If a Third Party inquires whether a license is available, COH may disclose the existence of the Agreement and the extent of its grant in Section 3.1 to such Third Party, but will not disclose the name of the Licensee, except where COH is required to release information under either the California Public Records Act or other applicable law.

 

14.15        No Third Party Beneficiaries. Except for the rights of the COH Indemnities pursuant to Article 10, nothing in this Agreement, either express or implied, is intended to or shall confer upon any Third Party any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

*        *        *        *        *

 

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorized representatives.

 

AKRIVEIA THERAPEUTICS INC.			CITY OF HOPE
By:	/s/ Simon Tomlinson		By:	/s/ Robert Stone
Name:	Simon Tomlinson		Name:	Robert Stone
Title:	President and CEO		Title:	President and CEO

 

 

 

Exhibit 10.13

 

Certain identified information has been excluded from the exhibit because it is both (i) not
material and (ii) is the type of information that the registrant treats as private or confidential.
Double asterisks denote omissions.

 

CTLA-4 MONOCLONAL ANTIBODY LICENSE AGREEMENT

 

This LICENSE AGREEMENT (the “Agreement”) is entered into as of September 26, 2016 between:

 

A.

WUXI BIOLOGICS (HONG KONG) LIMITED, a Hong Kong corporation having its registration address at Suite 3701-10, 37/F., Jardine House, 1 Connaught Place, Central, Hong Kong (“WuXi”); and

 

B.

AKRIVEIA THERAPEUTICS INC., a Delaware corporation having an address at 23 Southern Hills Drive, Skillman, NJ 08558 (“Akriveia”).

 

BACKGROUND:

 

1.

Akriveia is a company dedicated to the discovery, commercial development and exploitation of proprietary pharmaceutical products and services.

 

2.

WuXi is a leading end-to-end biopharmaceutical open-access capability and technology platform with operations in China and the United States. WuXi has developed mAb molecules that bind a series of therapeutically relevant biological targets.

 

3.

Akriveia wishes to use its proprietary technology to modify WuXi’s mAb molecules and develop the modified molecules as therapeutic products. WuXi is willing to license the mAb molecules to Akriveia for this purpose.

 

AGREEMENT:

 

In consideration of the mutual promises and conditions set forth herein and other good and valuable consideration, WuXi and Akriveia, intending to be legally bound, agree as follows:

 

1.

Defined Terms

 

1.1.

The meanings of defined terms used in this Agreement are listed in Appendix 1.

 

1.2.

Defined terms are capitalized and may (or may not) be in italics.

 

2.

License

 

2.1.

Exclusive License Grant. WuXi grants to Akriveia - under WuXi’s rights in the Licensed Patent Rights and Licensed Technology - an exclusive, royalty-bearing license to:

 

2.1.1.

Modify Licensed mAbs using Akriveia Technology (both alone and together with one or more other technologies) for the purpose of developing Products and for such purpose reproduce and use the Licensed mAbs Materials, and it is understood and agreed that such modifications by Akriveia using Akriveia Technology, both alone and together with one or more other technologies, are hereby expressly contemplated, authorized and deemed within scope of the license granted, irrespective of any rights that may subsequently be granted by WuXi to third parties; and

 

 

2.1.2.

Manufacture (i.e. make and have made), use, sell, offer for sale and import any Products in the Licensed Territory and for such purpose reproduce and use the Licensed mAbs Materials and the Licensed Technology.

 

2.2.

Term of Licenses. The term of the license to Licensed Patent Rights in Section 2.1 will end on expiry of the last of the Licensed Patent Rights on a country-by-country basis.

 

2.3.

Paid-Up License. Akriveia will have a paid-up license permitting royalty free manufacture (i.e. making and having made), use, sale, offer for sale and import of Products in a country after the end of Akriveia’s last obligation to pay royalties on the Product’s Net Sales in that country.

 

2.4.

Sub-Licenses.

 

2.4.1.

Akriveia may sublicense through multiple tiers the licenses in Section 2.1 to: (i) any Affiliate; and (ii) third parties to permit such Affiliates or third parties:

 

a.

To make, have made, use, sell, offer for sale or import a Product developed or commercialized by Akriveia or its licensees; or

 

b.

To perform services for Akriveia in furtherance of the research, development or commercialization of Products by Akriveia or its licensees.

 

2.4.2.

If Akriveia grants a sublicense pursuant to this Section 2.4:

 

a.

Akriveia will be responsible for the sub-licensee performing in a manner consistent with Akriveia’s obligations under this Agreement;

 

b.

Akriveia will not be relieved of its obligations under this Agreement.

 

2.5.

Retained Rights. Each Party acknowledges that the rights granted under this Section 2 are limited to the scope expressly granted.

 

2.5.1.

With the exception of the specific rights granted in this Section 2, WuXi retains all rights in the Licensed Technology and Licensed Patent Rights including, without limitation,:

 

a.

The right to develop therapeutic and diagnostic products incorporating the Licensed mAbs but that do not use or incorporate any Akriveia Technology; and for clarity, no license or other right whatsoever to any Akriveia Technology is granted to WuXi pursuant to this Agreement;

 

 

b.

For clarity, Akriveia does not under this Agreement, nor does it have any obligation to grant, to WuXi any rights in any Patent Rights or other intellectual property rights owned, controlled or licensed by Akriveia that cover any Product.

 

3.

Technology Transfer.

 

3.1.

Transfer. In accordance with the Technology Transfer Plan attached as Appendix D WuXi will [**]. Each Party will [**] in performing the Technology Transfer Plan.

 

4.

Diligence.

 

4.1.

Diligence Standards & Decision Making. Akriveia will [**] develop and exploit Products [**]. Akriveia will have sole authority and discretion to make all decisions relating to [**] in the Licensed Territory .

 

4.2.

Diligence Reporting

 

4.2.1.

Annual Development Reports. Akriveia will submit to WuXi a written annual report summarizing the work undertaken during the year to develop any Products under this License Agreement with the first such annual report due on [**]. Thereafter, the report must be submitted within [**] after the end of each calendar year.

 

4.2.2.

Annual Commercialization Report. After a Product is approved for marketing or sale in any country, Akriveia will submit to WuXi a written annual report summarizing [**] during the previous year and [**] for any Products developed under this License Agreement. The annual report must be submitted within [**] after the end of each calendar year.

 

4.3.

Performance of [**]. Akriveia agrees that it will [**] contract with WuXi for WuXi to perform [**] services [**] for the development of any Products. Notwithstanding the foregoing, Akriveia may [**] if after [**], Akriveia determines, [**] that:

 

[**].

 

5.

Payment Terms

 

5.1.

Upfront Payment. There will be [**] from Akriveia to WuXi under this License Agreement.

 

 

5.2.

Development Milestones Payments. If a Product achieves a Development Milestone described in Table 1 below, Akriveia will pay WuXi the sum noted for that milestone. The milestone will not be payable if:

 

5.2.1.

the Product had previously achieved the milestone and the corresponding milestone payment was paid; or

 

5.2.2.

the Product is being developed as a back-up to a Lead Product and the Lead Product had previously achieved the milestone and the corresponding milestone payment was paid; or

 

5.2.3.

the Product is being developed as a reformulation or other variant form of a Product which had previously achieved the milestone and the corresponding milestone payment was paid.

 

Each Development Milestone associated payment shall be payable only once for a given Product (whether a reformulation or variant, or back-up to a Lead Product) such that the aggregate payable for Development Milestones under this Agreement for each given Product is $[**].

 

Table 1.

 

Milestone	Payment (USD)
[**]	[**]
[**]	[**]
[**]	[**]
[**]	[**]

 

5.3.

Royalty Payments.

 

5.3.1.

Royalties. Akriveia will pay WuXi a royalty based on a Product’s Net Sales in the Licensed Territory.

 

5.3.2.

Royalty Rates. The royalty rate will be determined by increments of annual Net Sales of the Product in the Licensed Territory as set out in Table 2 below, and for clarity, without aggregating the Net Sales of two or more different Products (such as may be determined or defined by the Regulatory Authority).

 

5.3.3.

End of Royalties. Akriveia’s obligation to pay royalties will end in each country on the later of:

 

a.

expiry of the last Valid Claim of a Licensed Patent Right claiming the Product in the country; or

 

 

b.

[**] from the First Commercial Sale, provided that if at any time after expiry of the Valid Claim as provided in 5.3.3.a, above, and before the foregoing [**] period is completed, the [**] is reached then Akriveia’s obligation to pay royalties will immediately end.

 

Table 2.

 

Annual Net Sales Tiers (USD) for a Product	Royalty
[**]	[**]
[**]	[**]
[**]	[**]

 

5.4.

Sales Milestone Payments. If a Product achieves a sales performance milestone described in Table 3, Akriveia will pay WuXi the sum noted for that milestone on a Product-by-Product basis [**]. The milestone payment will only be paid the first time each Product achieves the sales milestone. The Net Sales used to calculate milestone payments will be based on Licensed Territory Net Sales of Products on which royalties are payable under Section 5.3.

 

Table 3.

 

Annual Net Sales (USD) for a Product	Payment (USD)
[**]	[**]
[**]	[**]
[**]	[**]
[**]	[**]

 

5.5.

Currency Conversion. The amount of Net Sales in any foreign currency will be computed by:

 

5.5.1.

Converting the Net Sales into U.S. dollars [**] for the close of the last business day of the calendar quarter for which the relevant royalty payment is due; and

 

5.5.2.

Deducting [**].

 

5.6.

General Payment Matters.

 

5.6.1.

All payments will be made in U.S. currency by electronic funds transfer.

 

5.6.2.

All payments [**] will be made within [**] after the payment becomes due.

 

 

5.6.3.

Royalty payments on Net Sales will be made within [**] after the end of each calendar quarter in which the Net Sales are made. These payments must be accompanied by a statement showing:

 

a.

The Net Sales of each Product by Akriveia or any sub-licensee of Akriveia in each country;

 

b.

The applicable royalty rate(s) for the relevant volume(s) of Net Sales of Product; and

 

c.

A calculation of the amount of royalty due, including any offsets or credits.

 

5.7.

Withholding Tax Matters. If any applicable law or regulation of any jurisdiction requires the withholding or payment of any taxes by Akriveia or any of its Affiliates or sub-licensees pursuant to Section 5, any such taxes [**]. Unless under the applicable laws or regulations, such payments can [**] Akriveia will [**].

 

6.

 

6.1.

Records and Inspection.

 

6.1.1.

Records. Akriveia [**] of its Net Sales. The records must [**]. The records must be kept for at least [**] from the date of each royalty or sales milestone payment.

 

6.1.2.

Inspection. For [**] after a royalty or sales milestone payment, WuXi may [**] appoint an independent, certified public accountant to inspect the records of Akriveia. The accountant must be reasonably acceptable to Akriveia.

 

6.1.3.

Notice and Place. Before inspecting the records WuXi must give Akriveia [**] notice. Akriveia must make the records available for the inspection during regular business hours at the place where the records are usually kept.

 

6.1.4.

Findings. The accountant’s findings will be binding on the Parties. If the accountant finds that Akriveia has underpaid, then Akriveia must pay the underpayment to WuXi within [**] of being notified of the finding. If the underpayment is [**] then Akriveia must reimburse to WuXi the cost of the audit. If the accountant finds that Akriveia has overpaid WuXi, then the overpayment must be refunded within [**] of WuXi being notified of the finding.

 

6.1.5.

Timing and Frequency. WuXi may only inspect the records [**] and may only inspect the records for any revenue share payment [**]. If WuXi does not inspect the records for a royalty or sales milestone payment within [**] of the payment being made, WuXi will be deemed to have accepted the accuracy of the records.

 

 

6.1.6.

Confidentiality. All information about Akriveia’s financial affairs learned by a WuXi during an inspection will be deemed Akriveia’s Confidential Information. It is understood and agreed that the accountant will disclose to WuXi only that information necessary to report the accuracy and completeness of Akriveia’s royalty and sales milestone payments to WuXi.

 

7.

Confidentiality

 

7.1.

Non-Disclosure. Except as provided in this Section 7 below, a Receiving Party may not disclose to a third party the following information without the written permission of the Disclosing Party:

 

7.1.1.

Disclosing Party’s Confidential Information disclosed under this Agreement.

 

7.1.2.

Any information deemed to be the Confidential Information of both Parties.

 

7.1.3.

The terms of this Agreement.

 

7.2.

Permitted Disclosures

 

7.2.1.

Required by Law. If a Receiving Party is required by law to disclose the information listed in Section 7.1, it must give the Disclosing Party prompt notice and cooperate with Disclosing Party if it seeks - at its expense - a protective order. If the Disclosing Party faits to obtain a protective order, the Receiving Party may - without the other’s permission - disclose the information that its legal counsel advises it is required to disclose.

 

7.2.2.

Staff. The Parties may disclose the information listed in Section 7.1 to their officers, employees, agents and consultants (“Staff”). . The Staff must be bound by contract to maintain such information in confidence on the same terms as are set forth in this Section 7

 

7.2.3.

Sub-Licensees & other Third Parties. Akriveia may disclose the information in Section 7.1.1 to a third party: (i) for use under a sublicense that Akriveia is entitled to grant under this Agreement; or (ii) providing services to Akriveia with respect any Product. The third party must be bound by contract to maintain such information in confidence on the same terms as are set forth in this Section 7.

 

7.2.4.

Potential Investors. A Party may disclose the terms of this Agreement to its:

 

a.

advisors;

 

 

b.

any potential investor that would qualify as accredited as defined in 17 C.F.R. Section 230.501

 

c.

investment bankers; and

 

d.

any potential acquirer of substantially all of the assets to which this Agreement relates or any potential sublicensee or potential commercialization partner.

 

7.3.

Use. The Parties may only use the information listed in Section 7 as expressly permitted by this Agreement. Akriveia may only use WuXi’s Confidential Information within the scope of the licenses granted hereunder including under Section 2.

 

7.4.

Measures.

 

7.4.1.

General Measures. The Parties will use the same measures to protect the other’s Confidential Information as it uses to protect its own Confidential Information. Each Party must ensure that each of its officers, employees, agents and consultants that will have access to the other’s Confidential Information are bound by contract to maintain the information in confidence. Further a Party must ensure that each of the individuals or entities listed in Section 7.2.4 are bound by contract to maintain the terms of this Agreement in confidence.

 

7.4.2.

Special Measures. During performance of any Technology Trannsfer Plan under Section 3, Akriveia must, prior to disclosing the sequence or structural information of any Licensed mAb to any person, notify WuXi in writing of the person or persons that it intends disclosing such information to, provide WuXi with a copy of the relevant confidentiality agreement between Akriveia and such persons and obtain WuXi’s written consent, provided that the foregoing procedure will not be required with respect to Akriveia’s designated laboratory.

 

7.5.

Return of Information. After termination of this Agreement, a Receiving Party will, on the Disclosing Party’s request, return or destroy all copies of documents provided by Disclosing Party that contain the requesting Disclosing Party’s Confidential Information. But, one (1) copy may be kept so that the Receiving Party can monitor its continuing obligations under this Section 7. The Confidential Information will be returned within [**] of the request.

 

7.6.

Duration. The obligations of this Section 7 will end if the information listed in Section 7 enters the public domain through no fault of the Receiving Party that received the information.

 

 

 

8.

Restrictions on Materials.

 

8.1.

Permitted Transfer. Akriveia may transfer Licensed mAb Materials to a third party:

 

8.1.1.

for use under a sublicense that Akriveia is entitled to grant under this Agreement; or

 

8.1.2.

engaged by Akriveia to perform services with respect to any Product.

 

8.2.

Permitted Use. Akriveia may only use the Licensed mAb Materials as contemplated by this Agreement including as contemplated by Section 2.1.2.

 

8.3.

Restricted Use & Transfer. Other than as provided in Section 8.1 and 8.2, Akriveia may not transfer Licensed mAb Materials to a third party or use the Licensed mAb Materials without the written permission of WuXi.

 

9.

Bankruptcy.

 

9.1.

Intellectual Property. All rights granted under this Agreement by WuXi are, for the purposes of Article 36S(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Article 101 of the U.S. Bankruptcy Code. The Parties agree that:

 

9.1.1.

Rights and Elections. Akriveia will retain - and may fully exercise - all of its rights and elections under the U.S. Bankruptcy Code, or equivalent legislation in any other jurisdiction.

 

9.1.2.

Delivery of Intellectual Property. In the event a bankruptcy proceeding is commenced by or against WuXi under the U.S. Bankruptcy Code, Akriveia will be entitled to a complete duplicate of (or complete access to, as appropriate) the intellectual property and its embodiments. If the intellectual property and its embodiments are not already in Akriveia’s possession, they must be promptly delivered to Akriveia at Akriveia’s request when:

 

a.

The bankruptcy proceeding is commenced, unless WuXi elects to continue to perform all of its obligations under this Agreement; or

 

b.

This Agreement is rejected by or on behalf of WuXi.

 

10.

Patent Filing, Prosecution & Maintenance

 

10.1.

WuXi’s Obligations. WuXi will [**] file, prosecute, maintain and enforce Licensed Patent Rights, provided, however, WuXi will: (a) [**] grant to Akriveia rights to enforce the Licensed Patent Rights [**] if the rights to develop and commercialize the Licensed mAb as an unmodified antibody have not been granted by WuXi to a third party licensee within [**] after the Effective Date, and upon Akriveia request from time-to-time, WuXi will provide updates on status of such out-license effort; and (b) until rights to enforce have been granted to Akriveia, upon Akriveia’s notice of infringing activity in the Field, WuXi will consider in good faith enforcing the Licensed Patents Rights against the infringers with the assistance of, and at the sole cost and expense of Akriveia.

 

 

10.2.

Defense. If a third party brings suit against Akriveia or any sub-licensee alleging that Akriveia’s practice of Licensed Patent Rights [**] infringes the third party’s intellectual property rights:

 

10.2.1.

Akriveia must give WuXi [**] written notice and give WuXi a copy of each communication relating to the alleged infringement;

 

10.2.2.

WuXi must[**] cooperate with Akriveia’s defense of the suit;

 

10.2.3.

WuXi will authorize Akriveia to conduct and dispose of the suit;

 

10.2.4.

Akriveia must obtain WuXi’s consent to any part of settlement that contemplates payment or other action by WuXi or waiver, amendment or abandonment of any Licensed Patent Rights [**];

 

10.2.5.

Akriveia may, at its expense, require WuXi to institute or join any defense and WuXi must execute all documents and take all other actions, which may reasonably be required in connection with the defense.

 

11.

Term and Termination

 

11.1.

Term. Unless sooner terminated, this Agreement will end on the last obligation of Akriveia to pay royalties under this License Agreement.

 

11.2.

Breach Events. The following will be breach events (“Breach Events”):

 

11.2.1.

Any representation or warranty of a party under this Agreement proves to have been incorrect in any material respect when made.

 

11.2.2.

A party fails in any material respect to perform or observe any term of this Agreement. But, only if the failure remains un-remedied for [**] after written notice from the other Party.

 

11.3.

Termination.

 

11.3.1.

A Party may terminate this Agreement [**] if the other Party is responsible for a Breach Event by giving written notice, provided that if the alleged breaching Party disputes the existence or materiality of a Breach Event in a notice provided to the non-breaching Party, then the non-breaching Party shall have no right to terminate this Agreement unless and until the arbitrator (per Section 16.2) has confirmed such existence and materiality, and thereafter, the breaching Party has failed to cure such breach within [**] after the arbitrator’s decision. It is understood and agreed that during the pendency of such dispute, all of the terms and conditions of this Agreement shall remain in effect and the Parties shall continue to perform all of their respective obligations hereunder. The Parties agree that [**] for any Product [**], termination pursuant to this Section 11.3 is a remedy to be invoked only if the breach cannot be adequately remedied through specific performance and/or payment of money damages.

 

 

11.3.2.

Akriveia may terminate this Agreement at anytime without cause by giving WuXi 90 days written notice.

 

11.4.

Effect of Termination.

 

11.4.1.

Termination of this Agreement will not prejudice:

 

a.

The following terms which will survive termination, Sections 5.5, 6, 7, 8, 11.2, 12, 13, 14;

 

b.

A party’s right to receive any payments accrued under and in accordance with Section 5; or

 

c.

Any other remedies which either party may otherwise have.

 

11.4.2.

On the date of termination:

 

a.

Licenses. The license under Section 2 will immediately terminate.

 

b.

Use of Licensed mAb. Akriveia must; (i) immediately and forever cease research, development or commercialization of any Product; and (ii) must at WuXi’s request destroy all Licensed mAb Materials in its or its sub-licensee’s possession.

 

12.

Representations & Warranties

 

12.1.

General. WuXi and Akriveia each represents and warrants to the other as follows:

 

12.1.1.

It is a corporation duly organized, validly existing and is in good standing under the laws of Hong Kong in the case of WuXi and Delaware in the case of Akriveia.

 

12.1.2.

It is qualified to do business and is in good standing in each jurisdiction in which it conducts business.

 

12.1.3.

It has all the power and authority to conduct its business as now being conducted.

 

 

12.1.4.

It has all power and authority to enter into and perform this Agreement.

 

12.1.5.

This Agreement has been duly authorized by all necessary corporate action and will not:

 

a.

require the consent of its stockholders;

 

b.

violate any applicable law;

 

c.

violate its certificate of incorporation or by-laws; or

 

d.

breach any material agreement, permit or other instrument that binds it or its assets.

 

12.1.6.

It does not owe an obligation to a third party that conflicts with this Agreement or that would impede its performance of this Agreement.

 

12.1.7.

It has sufficient rights in its tangible and intangible assets to perform this Agreement and it is not aware that a third party disputes these rights.

 

12.2.

IP Representation & Warranty. WuXi hereby represents and warrants that:

 

12.2.1.

WuXi has no knowledge of any information that adversely affects the validity or enforceability of the Licensed Patent Rights or WuXi’s rights in the Licensed Technology;

 

12.2.2.

The Licensed Patent Rights or Licensed Technology are not subject to any claim of invalidity, misuse, unenforceability or non-infringement;

 

12.2.3.

WuXi is the sole legal and beneficial owner of the Licensed Patent Rights and Licensed Technology and no license or other right in any of the foregoing that would conflict or restrict the rights granted to Akriveia under Section 2 of this Agreement has been or will be granted to any third party.

 

12.3.

IP Licensees Coexistence Covenant. WuXi hereby covenants with Akriveia that:

 

12.3.1.

WuXi will not grant a license or other right to a third party in the Licensed Patent Rights and Licensed Technology that would conflict with or restrict the rights granted to Akriveia under Section 2 of this Agreement;

 

12.3.2.

WuXi will include in any agreement granting a third party licenses or rights to the Licensed Patent Rights or Licensed Technology a contractual provision substantially equivalent in meaning to the following:

 

‘‘This license expressly excludes any rights whatsoever to research, develop or commercialize any pharmaceutical products developed through [**] of the Licensed mAb with the purpose of [**] through selective activation of [**].

 

Licensee acknowledges that WuXi has granted to a third party exclusive rights under the Licensed Patent Rights and Licensed Technology to [**] pharmaceutical products by modifying the Licensed mAb through [**] of the Licensed mAb with the purpose of [**] through selective activation of [**], both by itself and together with one or more other technologies, with no restrictions as to the nature or type of technologies. Accordingly, the exclusivity of any license granted to licensee may be limited by the rights already granted by WuXi to the aforementioned third-party. Licensee further acknowledges that the pharmacologically active molecule of the third-party’s products, after selective activation, may be similar or identical to a Licensed mAb”

 

 

12.3.3.

Within [**] of entering into an agreement granting a third party any rights in the Licensed Patent Rights or Licensed Technology, WuXi will notify Akriveia in writing. The notice will identify the third party, the Licensed mAb and the territory of the rights granted. The notice will also include a certification from WuXi of compliance with the covenants in 12.3.1 and 12.3.2 above.

 

13.

Covenants.

 

13.1.

During the Agreement, WuXi and Akriveia each covenant to the other that it will:

 

13.1.1.

Preserve its corporate existence.

 

13.1.2.

Remain qualified to do business in good standing in each jurisdiction in which it conducts business.

 

13.1.3.

Maintain the rights in its tangible and intangible assets needed to perform this Agreement.

 

13.1.4.

Not accept an obligation to a third party that conflicts with this Agreement or that would impede its performance of this Agreement.

 

13.1.5.

Comply in all material respects with the requirements of all applicable laws.

 

13.2.

Akriveia covenants that it will not:

 

13.2.1.

[**] Products in [**].

 

 

13.2.2.

Manufacture, use, sell, offer for sale or import the Licensed mAbs or any derivatives or modifications of Licensed mAbs except as expressly permitted under this Agreement (namely, as one or more Products).

 

14.

Indemnities.

 

14.1.

Akriveia Indemnity. Akriveia will indemnify WuXi and its Affiliates, and its or their officers, directors, shareholders, employees, agents and representatives (“WuXi Indemnified Parties”) against all liability and costs resulting from any third party claim made against an WuXi Indemnified Party arising from:

 

a.

Akriveia’s breach of any of its representations, warranties or covenants in Sections 12 and 13; or

 

b.

Akriveia’s manufacture, sale, offer for sale, use or import of a Product.

 

14.1.1.

Control. On receipt of notice of the claim, WuXi Indemnified Party must:

 

a.

Promptly notify Akriveia.

 

b.

Permit Akriveia [**] to handle and control the defense and settlement of the claim. But, WuXi Indemnified Party will have the right to participate in the defense of the claim at its own expense.

 

c.

Give Akriveia [**] all reasonable assistance in Akriveia’s handling of the claim.

 

14.1.2.

Exclusions. This indemnity will not apply to the extent any claim arises out of a WuXi Indemnified Party’s negligence, willful misconduct or breach of any term, representation, warranty or covenant in this Agreement.

 

14.2.

WuXi Indemnity. WuXi will indemnify Akriveia and its Affiliates, and its or their officers, directors, shareholders, employees, agents and representatives (“Akriveia Indemnified Parties”) against all liability and costs resulting from any third party claim made against an Akriveia Indemnified Party arising from WuXi’s breach of any of its representations, warranties or covenants in Sections 12 and 13.

 

14.2.1.

Control. On receipt of notice of the claim, Akriveia Indemnified Party must:

 

a.

Promptly notify WuXi.

 

b.

Permit WuXi [**] to handle and control the defense and settlement of the claim. But, Akriveia Indemnified Party will have the right to participate in the defense of the claim at its own expense.

 

c.

Give WuXi [**] all reasonable assistance WuXi’s handling of the claim.

 

 

14.2.2.

Exclusions. This indemnity will not apply to the extent any claim arises out of an Akriveia Indemnified Party’s negligence, willful misconduct or breach of any term, representation, warranty or covenant in this Agreement.

 

15.

Notices.

 

15.1.

All notices will be in writing and sent by certified mail, return receipt requested, courier, or facsimile to the addresses noted below. Notices will be deemed given on the date it is received.

 

15.1.1.

If to Akriveia:

23 Southern Hills Drive, Skillman, NJ 08558, USA Attention: CEO

 

15.1.2.

If to WuXi:

WuXi AppTec, Building 1, 288 Fute Zhong Road, Waigaoqiao Free Trade Zone, Shanghai, China 200131 Attention: CEO

 

16.

Miscellaneous

 

16.1.

Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, U.S.A., but without applying its conflicts of laws rules.

 

16.2.

Dispute Resolution. If a dispute cannot be resolved within [**] it will be finally settled by binding arbitration in San Francisco conducted according to the then current Rules of Arbitration of the International Chamber of Commerce and in the English language. Each Party has the right to institute an action in a court of proper jurisdiction for injunctive or other equitable relief pending a final decision by the arbitrator.

 

16.3.

Binding Effect. This Agreement is binding upon and inures to the benefit of a Party’s legal representatives, successors and permitted assigns.

 

16.4.

Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original.

 

16.5.

Amendment. This Agreement may only be amended or canceled in writing.

 

16.6.

Waiver. A Party’s compliance with the terms of this Agreement may only be waived by written notice from the other Party. Unless stated otherwise a waiver will not be deemed an ongoing waiver. Any delay or failure of a Party to require performance of a term of this Agreement will not prevent the Party from enforcing the term later.

 

 

16.7.

Third Party Beneficiaries. No third party has any rights under this Agreement.

 

16.8.

Relationship. The Parties are independent contractors. This Agreement does not create a partnership between the Parties or any third party.

 

16.9.

Assignment and Successors. A Party may not assign this Agreement without the permission of the other Party. But, a Party may - without the permission of the other Party - assign this Agreement to:

 

16.9.1.

Its Affiliates;

 

16.9.2.

Any purchaser of all or substantially all of its assets to which this Agreement relates; or

 

16.9.3.

Any successor corporation resulting from any merger or consolidation of such Party with or into such corporations;

 

16.10.

Force Majeure. A Party will not be in breach or liable for any failure or delay of its performance of this Agreement caused by natural disasters or circumstances reasonably beyond its control.

 

16.11.

Severability. If any provision of this Agreement is invalid or is unenforceable, the Parties intend that the remainder of the Agreement will be unaffected.

 

16.12.

Other Agreements. This Agreement is the sole agreements between the Parties with respect to the Licensed Technology.

 

16.13.

Conflicts. In case of any conflicts in the terms and conditions of this Agreement and the terms and conditions of any Appendices to this Agreement, the terms and conditions of this Agreement shall govern.

 

[Signature page follows]

 

 

This Agreement was executed on the date stated in the introductory clause.

 

WUXI BIOLOGICS (HONG KONG) LIMITED

AKRIVEIA THERAPEUTICS INC.

 

By:

/s/ Jing Li

By:

/s/ Simon Tomlinson

 

Name:

Jing Li

Name:

Simon Tomlinson

 

Title:

Vice President

Title:

Chief Executive Officer

Date:

Sept. 26, 2016

Date:

Sept. 28, 2016

 

 

 

Index of Appendices

 

1.       Appendix A – Definitions

 

2.       Appendix B – Licensed mAb Materials

 

3.       Appendix C – Licensed Patent Rights

 

4.       Appendix D – Technology Transfer Plan

 

 

Appendix A

 

Definitions

 

“Affiliate”	Means with respect to any Party, any person or entity controlling, controlled by or under common control with such Party.   For purposes of this definition, “control” means:   a)       Direct or indirect ownership of fifty percent (50%) or more of the stock or shares having the right to vote for the election of directors of such corporate entity; or   b)       the possession directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such entity, whether through the ownership of voting securities, by contract or otherwise.
“Akriveia Technology”	Means any approach to [**] of an antibody with the purpose of [**] through selective activation of [**].
“[**]”	Means [**].
“China Territory”	Means the People’s Republic of China including Hong Kong and Macau.
“Commencement of Phase I”	Means [**] in a Phase I clinical trial initiated by or on behalf of Akriveia anywhere in the Licensed Territory.
“Commencement of Phase II”	Means [**] in a Phase II clinical trial initiated by or on behalf of Akriveio anywhere in the Licensed Territory.
“Commencement of Phase III”	Means [**] in a Phase III clinical trial initiated by or on behalf of Akriveia anywhere in the Licensed Territory.
“Commercially Reasonable Efforts”	Means those efforts and resources that Akriveia would use were it developing or commercializing its own pharmaceutical products that are of similar market potential as the Product, taking into account [**], all as measured by the facts and circumstances at the time such efforts are due.

 

 

“Confidential Information”	Means all information disclosed by one Party to the other and which is designated as confidential in writing at the time of disclosure or if disclosed orally, summarized or referenced in a writing within [**] after the oral disclosure by:   (a)      the Disclosing Party;   (b)      a third party acting on the Disclosing Party’s behalf; or   (c)      a third party under an obligation of confidence to the Disclosing Party.   All WuXi Licensed Technology other than Licensed Patent Rights that have been published will be deemed WuXi’s Confidential Information.   All Information pertaining to Akriveia Technology or the development and/or commercialization of Products hereunder (including the contents of all Development and Commercialization reports provided to WuXi) will be deemed Akriveia’s Confidential Information.   The following information is not included in this definition. Information, as established by contemporaneous business records kept in the ordinary course, that:   a.       at the time of receiving the information such information was already known by the Receiving Party without any restriction on disclosure with respect to such information;   b.       is furnished to the Receiving Party by a third party without restriction on disclosure; or   c.       is independently developed by the Receiving Party without reference to any of the Disclosing Party’s Confidential Information.
“Control”, “Controlled” or “Controller”	Means with respect to any intellectual property right, the possession (whether by ownership or license, other than a license granted by one Party to the other pursuant to this Agreement) by a Party of the ability to grant to the other Party a license or to extend other rights as provided herein, under such first Party’s intellectual property right without violating the terms of any agreement or other arrangements with any third party.
“Disclosing Party”	Means a Party that discloses or is deemed to disclose its own Confidential Information to the other Party. With respect to any Confidential Information that is deemed to be the Confidential Information of both Parties then with respect to a Party in possession of such information the other Party will be considered the Disclosing Party.
“Effective Date”	Means the date set forth at the top of the first page of this Agreement.
“Field”	Means prevention and treatment of [**].
“Indemnified Parties”	Is defined in Section 13.1 and 13.2.
“Lead Product”	Is a Product for which Akriveia is developing an alternative Product that binds the same biological target and is being developed for the same therapeutic indications as a backup in case the initial Product’s development is terminated or delayed.

 

 

“Licensed mAbs”	Means the monoclonal antibody molecules described in Appendix B.
“Licensed mAb Materials”	Means any tangible samples of Licensed mAbs [**]: (i) provided by WuXi to Akriveia; or (ii) propagated or duplicated by Akriveia in the course of conducting the development and commercialization activities under this Agreement, in each case as listed in Appendix B.
“Licensed Patent Rights”	Means (i) all the Patent Rights listed in Exhibit F to this Agreement, and (ii) all other Patent Rights owned, in-licensed or otherwise controlled by WuXi or its Affiliates during the term of the Agreement with the right to sublicense (where applicable), that cover the Licensed mAbs or any of the Products.
“Licensed Technology”	Means the Licensed mAbs, Licensed mAb Materials, Licensed Patent Rights and all associated data, information and know-how.
“Licensed Territory”	Means [**]
“Net Sales”	means the gross sales of a Product by Akriveia, its Affiliates, or its sub-licensees to third parties, less the following deductions:   [**]

 

 

“Party” or “Parties”	WuXi and Akriveia are referred to in this Agreement collectively as the “Parties” and individually as a “Party”
“Patent Rights”	Means all the Valid Claims of patent applications and issued patents, whether domestic or foreign, including all continuations, continuations-in-part, divisions, and renewals, and letters of patent granted thereon, and all reissues, re-examination and extensions thereof and any patent restoration or extension period granted by a governmental authority, including but not limited to compensation for patent term lost during the clinical trial or regulatory approval process.
“Product”	Means any product in the Field that is developed by or on behalf of Akriveia or any of its sub-licensees that incorporates a Licensed mAb that has been modified using Akriveia’s Technology either alone or together with one or more other technologies.
“Receiving Party”	Means a Party that receives or is deemed to receive from the other Party the Confidential Information of such other Party.  With respect to any Confidential Information that is deemed to be the Confidential Information of both Parties then with respect to a Party in possession of such information it will be considered the Receiving Party.
“Regulatory Approval”	Means, with respect to a nation or, where applicable, a multinational jurisdiction, any approvals, licenses, registrations or authorizations granted by Regulatory Authority necessary for the manufacture, marketing and sale of a Product in such nation or such jurisdiction.
“Regulatory Authority”	Means any national (e.g., FDA), supranational (e.g., the EMEA), regional, state or local regulatory agency that has authority to grant Regulatory Approval of pharmaceutical products.
“Valid Claim”	Means a claim within Patent Rights so long as such claim shall not have been disclaimed by WuXi or shall not have been held invalid in a final decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken.

 

 

CONFIDENTIAL

Execution Copy  

 

AMENDMENT
TO THE
CTLA-4 MONOCLONAL ANTIBODY LICENSE AGREEMENT
BY AND BETWEEN
WUXI BIOLOGICS (HONG KONG) LIMITED AND AKRIVEIA CONCERTO LLC.

 

This AMENDMENT (the “Amendment”) amends the CTLA-4 Monoclonal Antibody License Agreement, dated September 26, 2016 (“Agreement”) entered into by and between WuXi Biologics (Hong Kong) Limited, a Hong Kong corporation having its registered address at Suite 3701-10 , 37/F, Jardine House, 1 Connaught Place, Central, Hong Kong (“WuXi”) and Akriveia Concerto LLC, a Delaware corporation having an address at 23 Southern Hills Drive, Skillman, NJ 08558 (as successor in interest to Akriveia Therapeutics Inc.) (“Akriveia”), and is effective as of December 30th, 2017 (“Amendment Effective Date”). Capitalized terms in this Amendment will have the meanings set forth in the Agreement.

 

A.

Pursuant to the Agreement, WuXi granted to Akriveia a license under the Licensed Patent Rights to use its proprietary technology to develop and modify WuXi’s mAb molecules and develop and commercialize such molecules as therapeutic products.

 

B.

The Parties wish to amend the Agreement to expand the scope of the existing exclusive license under the Licensed Patent Rights in accordance with the terms and conditions of this Amendment.

 

Notwithstanding anything to the contrary contained in the Agreement, and in consideration of the mutual promises and covenants set forth in the Agreement and this Amendment, the receipt and sufficiency of which are hereby acknowledged, and pursuant to Section 16.5 of the Agreement, the Parties agree as follows:

 

1.

The Parties agree to amend Appendix A of the Agreement to replace the definitions of “Licensed mAbs”, “Licensed mAbs Materials”, “Licensed Patent Rights”, “Licensed Territory” and “Product” in their entirety with the following:

 

“Licensed mAbs” means (i) any and all antibodies disclosed in the Licensed Patent Rights, together with (ii) [**], and (iii) [**] of (i) or (ii).

 

“Licensed mAbs Materials” means any tangible samples of Licensed mAbs and their associated cell-lines and nucleic acid vectors: (i) provided by WuXi to Akriveia, or (ii) propagated or duplicated by Akriveia in the course of conducting the development and commercialization activities under this Agreement.

 

“Licensed Patent Rights” means (i) all the Patent Rights listed in Appendix C to this Agreement, and (ii) all other Patent Rights owned, in-licensed or otherwise controlled by WuXi or its Affiliates during the term of the Agreement with the right to sublicense (where applicable), that cover the licensed mAbs or any of the Products.

 

 

CONFIDENTIAL

Execution Copy  

 

“Licensed Territory” means any country in the world including the China Territory.

 

“Product” means any product in the Field that is developed by or on behalf of Akriveia or any of its sub- licensees that incorporates a Licensed mAb.

 

2.       The Parties agree to amend Appendix A of the Agreement to add the following:

 

“Fab” means a fragment of an antibody that contains [**].

 

“First Commercial Sale” means the first sale of any Product under this Agreement following Regulatory Approval of such Product anywhere in the Licensed Territory.

 

3.

The Parties agree to amend Section 2 of the Agreement to replace that section in its entirety with the following:

 

2.            License

 

2.1

Exclusive License Grant. WuXi grants to Akriveia, under WuXi’s rights in the Licensed Patent Rights and Licensed Technology, an exclusive (even as to WuXi), sublicensable (subject to Section 2.4), transferable (subject to Section 16.9), royalty-bearing license to make, have made, use, sell, offer for sale, import and export any Products and for such purpose reproduce and use the Licensed Technology (and the Licensed mAbs Materials contained therein) in the Licensed Territory.

 

2.2

Term of Licenses. The term of the license to Licensed Patent Rights in Section 2.1 will end on expiry of the last of the Licensed Patent Rights on a country-by-country basis, and thereafter, the license to the Licensed Technology continues on a royalty-free basis in perpetuity.

 

2.3

Paid-Up License. Akriveia will have a paid-up license permitting royalty-free manufacture (i.e. making and having made), use, sale, offer for sale and import of Products in a country after the end of Akriveia’s last obligation to pay royalties on the Product’s Net Sales in that country and shall have no further obligations to WuXi in that country with respect to such Licensed Patents Rights or such Products.

 

2.4

Sub-Licenses. Akriveia may sublicense through multiple tiers the licenses in Section 2.1, on the condition that (a) Akriveia will be responsible for the sub-licensee performing in a manner consistent with Akriveia’s obligations under this Agreement and (b) Akriveia will not be relieved of its obligations under this Agreement due to the existence of such sublicense.

 

2.5

Refrained Rights. Each Party acknowledges that the rights granted under this Section 2 are limited to the scope expressly granted.

 

 

CONFIDENTIAL

Execution Copy

 

2.5.1.

With the exception of the specific rights granted in this Section 2, WuXi retains all rights in the Licensed Technology and Licensed Patent Rights.

 

2.5.2.

For clarity, (a) Akriveia does not under this Agreement, nor does it have any obligation to, grant to WuXi any rights in any Patent Rights or other intellectual property rights owned, controlled or licensed by Akriveia that cover any Product; and (b) for clarity, no license or other right whatsoever to any Akriveia Technology is granted to WuXi pursuant to this Agreement.

 

2.6.

Grant-Back License. Subject to the terms and conditions of this Agreement, and without limitation of any of Akriveia’s rights under this Section 2, Akriveia grants to WuXi, under its rights in the licensed Patent Rights and Licensed Technology granted in this Agreement, a payment-free, royalty-free, non-exclusive, transferable (subject to Section 16.9), license to make, have made, use, sell, offer for sale, import and export multi-specific antibodies incorporating a Fab from any Licensed mAb in the Licensed Territory together with at least one Fab derived from an antibody other than a Licensed mAb which additional Fab specifically targets a molecular target different from the Fob derived from the Licensed mAb. WuXi may sublicense the license granted in this Section 2.6, on the condition that (a) WuXi will be responsible for the sub-licensee performing in a manner consistent with WuXi’s obligations under this Agreement (including, without limitation, the preservation of Akriveia’s exclusive rights granted hereunder), and (b) WuXi will not be relieved of its obligations under this Agreement due to the existence of such sublicense.

 

4.

As consideration for entry into this Amendment and WuXi’s delivering PCT application to Akriveia, Akriveia will pay WuXi the sum of [**] dollars (US $[**]) within [**] after the Amendment Effective Date.

 

5.

The Parties agree to amend Section 5.2 of the Agreement to replace that section in its entirety with the following:

 

5.2.

Development Milestones Payments. If a Product achieves a Development Milestone described in Table 1 below, Akriveia will pay WuXi the sum noted for that milestone. The milestone will not be payable if:

 

5.2.1.

the Product had previously achieved the milestone and the corresponding milestone payment was paid; or

 

5.2.2.

the Product is being developed as a back-up to a Lead Product and the Lead Product had previously achieved the milestone and the corresponding milestone payment was paid; or

 

5.2.3.

the Product is being developed as a reformulation or other variant form of a Product which had previously achieved the milestone and the corresponding milestone payment was paid.

 

 

CONFIDENTIAL

Execution Copy

 

Each Development Milestone associated payment shall be payable only once for a given Product (whether a reformulation or variant, or back-up to a Lead Product) such that the aggregate payable for Development Milestones under this Agreement for each given Product is $25,750,000.00; provided, however, that the Regulatory Milestone is payable more than once by Akriveia if a Regulatory Approval is for a Product that (a) incorporates a different Licensed mAb to an already marketed Product; and (b) the existing, earlier approved, Product is intended to stay on the market and not be replaced by the subsequently approved Product (i.e., the later launched Product is not a “backup” that replaces an earlier molecule because it is deemed superior, but rather will be incorporated in a Product that is marketed alongside an already-launched Product containing a different licensed mAb).

 

Table 1.

 

Milestone	Payment (USD)
[**]	[**]
[**]	[**]
[**]	[**]
[**]	[**]
[**]	[**]
[**]	[**]
[**]	[**]

 

As used in this Section 5.2:

 

“[**]” means [**]; and

 

“[**]” means [**].

 

6.

The Parties agree to amend Sections 5.3.1 and 5.3.2 of the Agreement to replace those sections in their entirety with the following:

 

5.3.1

Royalties. Akriveia will pay WuXi a royalty based on the Net Sales of all Products in the Licensed Territory.

 

5.3.2.

Royalty Rates. The royalty rate will be determined by increments of annual Net Sales of all Product(s) in the Licensed Territory as set out in Table 2 below. For clarity, the royalty rates set forth in Table 2 below are payable on the total Net Sales of all Products (i.e., aggregating the Net Soles of all of the Products.

 

7.

The Parties agree to amend Table 2 in Section 5.3.3 of the Agreement to replace such table in its entirety with the following:

 

 

CONFIDENTIAL

Execution Copy

 

Table 2.

 

Annual Net Sales Tiers (USD) for all Products	Royalty
[**]	[**]
[**]	[**]
[**]	[**]

 

8.

The Parties agree to amend Section 5.4 of the Agreement to delete that section in its entirety.

 

9.

The Parties agree to amend Section 7.4.2 of the Agreement to delete that section in its entirety.

 

10.

The Parties agree to amend Section 10.1of the Agreement to replace that section in its entirety with the following:

 

10.1.

Patent Prosecution, Maintenance and Enforcement.

 

10.1

For each patent application and patent under the Licensed Patents Rights, Akriveia shall: (a) prepare, file, and prosecute such patent application; (b) maintain such patent; (c) [**]; (d) keep WuXi informed of the filing and progress of all material aspects of the prosecution of such patent application and the issuance of patents from any such patent application; (e) permit WuXi to [**] with respect to the preparation, filings and prosecution of Licensed Patent Rights; (f) [**] with WuXi concerning any decisions which [**] of such patent application or patent; and (g) notify WuXi in writing of [**] in the status of such patent or patent application.

 

10.2

A Party receiving notice of alleged infringement of any of the Licensed Patent Rights in the Licensed Territory shall promptly provide written notice to the other Party of the alleged infringement. Akriveia shall have first right to bring suit and control the conduct thereof, including settlement, to stop infringement of any Licensed Patent Rights, as determined by Akriveia. If Akriveia does not commence a particular infringement action [**], WuXi, after notifying Akriveia in writing, shall be entitled to bring such infringement action at its own expense. The party conducting such action shall have full control over its conduct. In any event, Akriveia and WuXi shall [**] in any such litigation [**].

 

11.

The Parties agree to amend Section 11.4 of the Agreement to replace that section in its entirety with the following:

 

11.4

Effect of Termination

 

11.4.1.

Termination or expiration of this Agreement will not prejudice:

 

(a)

The following terms, which will survive any termination or expiration: Sections 1, 2.3, 2.5, 2.6, 5.5, 5.6, 5.7, 6.1, 7, 8, 11.4, 13.2, 14, 15, and 16;

 

 

CONFIDENTIAL

Execution Copy

 

(b)

A Party’s right to receive any payment s accrued under and in accordance with Section 5; or

 

(c)

Any other remedies which either Party might otherwise have.

 

11.4.2.

On the effective date of termination of this Agreement (other than termination by Akriveia for a Breach Event for which WuXi is responsible):

 

(a)

Licenses. The license under Section 2 will immediately terminate.

 

(b)

Use of Licensed mAb. Akriveia must: (i) immediately and forever cease research, development or commercialization of any Product; and (ii) must at WuXi’ s request destroy all Licensed mAb Materials in its or its sub-licensee’s possession.

 

11.4.3

On the effective date of termination of this Agreement by Akriveia for a Breach Event for which WuXi is responsible, the license in Section 2.1 will automatically convert to an exclusive, perpetual, fully paid-up, royalty-free license on the terms set forth in Section 2.3.

 

12.

The Parties agree to amend Section 12.3 of the Agreement to delete subsections 12.3.2 and 12.3.3 in their entirety.

 

13.

The Parties agree to amend Section 13.2 of the Agreement to replace that section in its entirety with the following:

 

13.2

Without limiting Akriveia’s rights under Section 2 of this Agreement, subject to WuXi’s compliance with the terms and conditions of this Agreement, Akriveia covenants that [**].

 

14.

The Parties agree to amend Appendix B and D to delete that Appendix in its entirety.

 

15.

The Parties agree to amend Appendix C to replace the contents of that Appendix in its entirety with the following:

 

Title	Patent Application No.	Jurisdiction
[**]	[**]	[**]

 

 

16.

To the extent there is any conflict between the terms and conditions of this Amendment and the terms and conditions of the Agreement, the terms and conditions of this Amendment will control.

 

 

CONFIDENTIAL

Execution Copy

 

17.

Except as set forth in Sections 1 to 16 of this Amendment, all terms and conditions of the Agreement (including the Appendices to the Agreement) will remain in full force and effect without modification.

 

[SIGNATURES ON NEXT PAGE]

 

 

CONFIDENTIAL

Execution Copy

 

IN WITNESS WHEREOF, the Parties to this Amendment have caused it to be executed by their respective duly authorized representatives as of the Amendment Effective Date.

 

WuXi Biologics (Hong Kong) Limited			Akriveia Concerto LLC
By:	/s/ Chris Chen		By:	/s/ Simon Tomlinson
Name:	Chris Chen		Name:	Simon Tomlinson
[Type or Print]			[Type or Print]
Title:	CEO		Title:	Chief Executive Officer

 

(Signature Page to Amendment to CTLA-4 Monoclonal Antibody License Agreement)

 

 

 

 

 

Exhibit 10.14

 

828 WINTER STREET

WALTHAM, MASSACHUSETTS

 

LEASE SUMMARY SHEET

 

Execution Date:	August 26, 2019
Tenant:	AKREVIA THERAPEUTICS INC., a Delaware corporation
Tenant’s Mailing Address Prior to Occupancy:	Akrevia Therapeutics Inc. 610 Main Street Cambridge, MA 02139 Attn: Joseph Farmer
Landlord:	PPF OFF 828-830 WINTER STREET, LLC, a Delaware limited liability company
Building:	828 Winter Street, Waltham, Massachusetts.  The Building consists of three (3) stories, containing approximately 144,910 rentable square feet, including a four-story garage with 523 spaces (the “Garage”).  The land on which the Building and the Garage and the 830 Building (as hereinafter defined) are located (the “Land”) is more particularly described in Exhibit 2 attached hereto and made a part hereof.
Premises:	Approximately 27,829 rentable square feet, consisting of:   Prime Premises: Approximately 26,624 rentable square feet of space in the Building, located on a portion of the third (3rd) floor, which includes storage and mechanical space.   Basement Premises: Approximately 600 rentable square feet of space located in the basement, consisting of (i) the PH Premises located in the “PH System Room” which contains the PH systems of other tenants, and (ii) storage space.   Chemical Storage Premises: Approximately 375 rentable square feet of space located in the first (1st) floor common chemical storage and waste rooms of the Building.   Mechanical Penthouse Storage Premises: Approximately 231 rentable square feet of space located in the penthouse of the Building.   The term “Premises” shall mean the Prime Premises, Basement Premises, Chemical Storage Premises, and the Mechanical Penthouse Storage Premises, as applicable. The Premises are shown on the Lease Plans attached hereto as Exhibit 1A, Exhibit 1B, Exhibit 1C, and Exhibit 1D and made a part hereof (the “Lease Plans”).   Landlord and Tenant stipulate and agree that the Rentable Square Footage of the Building and the Rentable Square Footage of the Premises are correct and shall not be remeasured.

 

 

Property:	The existing 186,135 square foot lab/biotech building known and numbered as 830 Winter Street (the “830 Building”), the Building, the Land, and the other improvements located on, and to be constructed on, the Land.  The Property is part of the Waltham Woods/Reservoir Woods area (the “Waltham Woods/Reservoir Woods Park”) which, as of the date hereof, consists of the following properties and such other properties as may from time to time participate in the sharing of common exterior maintenance expenses: 840 Winter Street, Waltham Woods (860, 870, 880, and 890 Winter Street), and Reservoir Woods (920, 930, and 940 Winter Street).
Parking Areas:	The Garage and the surface parking spaces adjacent to the Building and the 830 Building, but not including the spaces in the existing garage level of the 830 Building (the “830 Garage”).
Term Commencement Date:	The date Landlord delivers possession of the Premises to Tenant, which is estimated to be the Execution Date.
Rent Commencement Date:	The date that is the earlier to occur of (i) the date that is eight (8) months after the Term Commencement Date or (ii) the date Tenant occupies any portion of the Premises for the conduct of business.
Expiration Date:	The last day of the calendar month in which the tenth (10th) anniversary of the Rent Commencement Date occurs.
Extension Term:	Subject to Section 1.2 below, one (1) extension term of five (5) years.

 

Landlord’s Contribution:	Either the Option One Landlord Contribution or the Option Two Landlord Contribution, as defined and more particularly set forth in the attached Exhibit 4.
Permitted Uses:	Prime Premises. Subject to Legal Requirements, general office, research, development and laboratory use, and other ancillary uses (including, but not limited to, vivarium uses), related to the foregoing.   Basement Premises: Subject to Legal Requirements, installation and maintenance of equipment for Tenant’s PH waste water treatment system for the Prime Premises, in accordance with applicable Environmental Laws, and other ancillary uses related to the foregoing.   Chemical Storage Premises: Subject to Legal Requirements, storage of Hazardous Materials which are permitted to be introduced by Tenant to the Premises in accordance with the provisions of the Lease and applicable Environmental Laws, and other ancillary uses related to the foregoing.   Mechanical Penthouse Storage Premises: Subject to Legal Requirements, the placement of Tenant’s mechanical equipment or storage.
Base Rent:	As set forth on Exhibit 1, subject to the provisions of Section 5.1 hereof.
Operating Costs and Taxes:	See Sections 5.2 and 5.3
Tenant’s Share:	A fraction, the numerator of which is the number of rentable square feet in the Premises and the denominator of which is the number of rentable square feet in the Building. As of the Execution Date, Tenant’s Share with respect to the Premises is 19.2%.   Notwithstanding the foregoing, with respect to Cafeteria Costs, as defined in Section 1.3(c), Tenant’s Share shall be defined as a fraction, the numerator of which is the number of employees of Tenant located in the Building and the denominator of which is the number of employees of all tenants in the Property (including Tenant) that have the right to use the Cafeterias.

 

 

Security Deposit/Letter of Credit:

$1,530,594.96, subject to the provisions of Section 7.1 hereof.

 

EXHIBIT 1	RENT SCHEDULE—OPTION 1 AND OPTION 2
EXHIBIT 1A	LEASE PLAN – PRIME PREMISES
EXHIBIT 1B	LEASE PLAN – BASEMENT PREMISES
EXHIBIT 1C	LEASE PLAN – CHEMICAL STORAGE PREMISES
EXHIBIT 1D	LEASE PLAN – MECHANICAL PENTHOUSE STORAGE PREMISES
EXHIBIT 1E	LEASE PLAN – EMERGENCY BACKUP GENERATOR LOCATION
EXHIBIT 2	LEGAL DESCRIPTION - LAND
EXHIBIT 4	WORK LETTER
EXHIBIT 5	INTENTIONALLY OMITTED
EXHIBIT 6	INTENTIONALLY OMITTED
EXHIBIT 7	LANDLORD’S SERVICES
EXHIBIT 8	TENANT’S HAZARDOUS MATERIALS
EXHIBIT 8-1	CONTROL AREAS
EXHIBIT 9	RULES AND REGULATIONS
EXHIBIT 9-1	BUILDING RULES AND REGULATIONS
EXHIBIT 9-2	CONSTRUCTION RULES AND REGULATIONS
EXHIBIT 10	TENANT WORK INSURANCE SCHEDULE
EXHIBIT 11	PARKING AND TRAFFIC DEMAND MANAGEMENT PLAN
EXHIBIT 11-1	840 WINTER PARKING OVERFLOW PLAN
EXHIBIT 12	LEED GUIDELINES
EXHIBIT 13	TENANT’S BASE BUILDING AIR AND POWER CAPACITY
EXHIBIT 14	PLAN – LOADING DOCKS, RECEIVING AREA, AND FREIGHT ELEVATORS
EXHIBIT 15	INITIAL TENANT WORK

 

 

Table of Contents

 

Page

 

1.

LEASE GRANT; TERM; APPURTENANT RIGHTS; EXCLUSIONS

1

 

1.1

Lease Grant

1

1.2

Extension Term

1

1.3

Appurtenant Rights

3

1.4

Tenant’s Access

5

1.5

No recording // Notice of Lease

5

1.6

Exclusions

5

1.7

Acid Neutralization Tank

6

 

2.

RIGHTS RESERVED TO LANDLORD

6

 

2.1

Additions and Alterations

6

2.2

Additions to the Property

7

2.3

Name and Address of Building

7

2.4

Landlord’s Access

7

2.5

Pipes, Ducts and Conduits

8

2.6

Minimize Interference

8

 

3.

CONDITION OF PREMISES

9

 

3.1

Condition of Premises

9

3.2

Condition of Base Building

9

3.3

Tenant Work

9

 

4.

USE OF PREMISES

9

 

4.1

Permitted Uses

9

4.2

Prohibited Uses

10

4.3

Transportation of Animals

10

4.4

MWRA Permit

11

4.5

Parking and Traffic Demand Management Plan

11

4.6

Vivarium

11

 

5.

RENT; ADDITIONAL RENT

12

 

5.1

Base Rent

12

5.2

Operating Costs

12

5.3

Taxes

16

5.4

Late Payments

18

5.5

No Offset; Independent Covenants; Waiver

19

5.6

Survival

19

 

6.

INTENTIONALLY OMITTED

19

 

7.

LETTER OF CREDIT

20

 

7.1

Amount

20

7.2

Application of Proceeds of Letter of Credit

21

7.3

Transfer of Letter of Credit

21

7.4

Cash Proceeds of Letter of Credit

21

7.5

Return of Security Deposit or Letter of Credit

22

 

8.

INTENTIONALLY OMITTED

22

 

 

Table of Contents (continued)

 

Page

 

9.		UTILITIES, LANDLORD’S SERVICES	22
	9.1	Electricity	22
	9.2	Water	22
	9.3	Gas	22
	9.4	Other Utilities	23
	9.5	Interruption or Curtailment of Utilities	23
	9.6	Landlord’s Services	23
10.		MAINTENANCE AND REPAIRS	23
	10.1	Maintenance and Repairs by Tenant	23
	10.2	Maintenance and Repairs by Landlord	24
	10.3	Accidents to Sanitary and Other Systems	24
	10.4	Floor Load--Heavy Equipment	24
	10.5	Premises Cleaning	24
	10.6	Pest Control	25
	10.7	Service Interruptions	25
11.		ALTERATIONS AND IMPROVEMENTS BY TENANT	26
	11.1	Landlord’s Consent Required	26
	11.2	After-Hours	27
	11.3	Harmonious Relations	28
	11.4	Liens	28
	11.5	General Requirements	28
12.		SIGNAGE	28
	12.1	Restrictions	28
	12.2	Monument Signage	28
	12.3	Building Directory/ Premises Entrance Signage	29
13.		ASSIGNMENT, MORTGAGING AND SUBLETTING	29
	13.1	Landlord’s Consent Required	29
	13.2	Landlord’s Recapture Right	29
	13.3	Standard of Consent to Transfer	30
	13.4	Listing Confers no Rights	30
	13.5	Profits In Connection with Transfers	30
	13.6	Prohibited Transfers	30
	13.7	Exceptions to Requirement for Consent	31
14.		INSURANCE;INDEMNIFICATION;EXCULPATION	31
	14.1	Tenant’s Insurance	31
	14.2	Indemnification	33
	14.3	Property of Tenant	33
	14.4	Limitation of Landlord’s Liability for Damage or Injury	33
	14.5	Waiver of Subrogation; Mutual Release	34
	14.6	Tenant’s Acts--Effect on Insurance	34
	14.7	Landlord’s Insurance	34

 

 

Table of Contents (continued)

 

Page

 

15.

CASUALTY;TAKING

35

 

	15.1	Damage	35
	15.2	Termination Rights	36
	15.3	Rent Abatement	37
	15.4	Taking for Temporary Use	37
	15.5	Disposition of Awards	37
16.		ESTOPPEL CERTIFICATE.	37
17.		HAZARDOUS MATERIALS	38
	17.1	Prohibition	38
	17.2	Environmental Laws	38
	17.3	Hazardous Material Defined	39
	17.4	Chemical Safety Program	39
	17.5	Testing	39
	17.6	Indemnity; Remediation	40
	17.7	Disclosures	41
	17.8	Removal	41
	17.9	Landlord Obligations with respect to Hazardous Materials	41
18.		RULES AND REGULATIONS.	42
	18.1	Rules and Regulations	42
	18.2	Energy Conservation	42
	18.3	Recycling	42
19.		LAWS AND PERMITS.	43
	19.1	Legal Requirements	43
20.		DEFAULT	44
	20.1	Events of Default	44
	20.2	Remedies	45
	20.3	Damages - Termination	46
	20.4	Landlord’s Self-Help; Fees and Expenses	47
	20.5	Waiver of Redemption, Statutory Notice and Grace Periods	47
	20.6	Landlord’s Remedies Not Exclusive	47
	20.7	No Waiver	47
	20.8	Restrictions on Tenant’s Rights	47
	20.9	Landlord Default	48
21.		SURRENDER; ABANDONED PROPERTY; HOLD-OVER	48
	21.1	Surrender	48
	21.2	Abandoned Property	50
	21.3	Holdover	50
	21.4	Warranties	50
22.		MORTGAGEE RIGHTS	50
	22.1	Subordination	50
	22.2	Notices	51
	22.3	Mortgagee Consent	51
	22.4	Mortgagee Liability	51

 

 

Table of Contents (continued)

 

Page

 

23.		QUIET ENJOYMENT.	51
24.		NOTICES.	52
25.		MISCELLANEOUS	52
	25.1	Separability	52
	25.2	Captions	53
	25.3	Broker	53
	25.4	Entire Agreement	53
	25.5	Governing Law	53
	25.6	Representation of Authority	53
	25.7	Expenses Incurred by Landlord Upon Tenant Requests	53
	25.8	Survival	54
	25.9	Limitation of Liability	54
	25.10	Binding Effect	54
	25.11	Landlord Obligations upon Transfer	55
	25.12	No Grant of Interest	55
	25.13	Financial Information	55
	25.14	OFAC Certification	55
	25.15	Confidentiality	56
	25.16	Force Majeure	56
	25.17	LEED Guidelines	56

 

 

THIS INDENTURE OF LEASE (this “Lease”) is hereby made and entered into on the Execution Date by and between Landlord and Tenant.

 

Each reference in this Lease to any of the terms and titles contained in any Exhibit attached to this Lease shall be deemed and construed to incorporate the data stated under that term or title in such Exhibit. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them as set forth in the Lease Summary Sheet which is attached hereto and incorporated herein by reference.

 

CREATION OF CONDOMINIUM

 

(1)         Tenant hereby acknowledges and agrees that, at Landlord’s sole election, Landlord may establish a condominium (the “Condominium”) by filing the Master Deed and Declaration of Trust of the Condominium. If Landlord makes such election, then the Building and the 830 Building shall each be Units of the Condominium; provided that no such Condominium shall materially adversely affect Tenant’s rights or increase Tenant’s obligations under this Lease (the Master Deed, as may be amended from time to time, being referred to herein as the “Master Deed” and the Declaration of Trust, as may be amended from time to time, being referred to herein as the “Declaration of Trust”).

 

(2)         The Lease shall be subject and subordinate, in all respects, to the Master Deed, the Declaration of Trust, and the other documents establishing the Condominium (the “Condominium Documents”). Tenant shall, at Landlord’s request, execute a reasonable instrument, in recordable form, confirming that the Lease is subject and subordinate to the Condominium Documents.

 

1.            LEASE GRANT; TERM; APPURTENANT RIGHTS; EXCLUSIONS

 

1.1        Lease Grant. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises upon and subject to terms and conditions of this Lease, for a term of years commencing on the Term Commencement Date and, unless earlier terminated or extended pursuant to the terms hereof, ending on the Expiration Date (the “Initial Term”; the Initial Term and any duly exercised Extension Terms are hereinafter collectively referred to as the “Term”).

 

1.2         Extension Term.

 

(a)          Provided that the following conditions, which may be waived by Landlord in its sole discretion, are satisfied (i) Tenant, an Affiliated Entity (hereinafter defined) and/or a Successor (hereinafter defined) is/are then occupying one hundred percent (100%) of the Premises; and (ii) no uncured Event of Default exists (1) as of the date of the Extension Notice (hereinafter defined), and (2) at the commencement of the Extension Term (hereinafter defined), Tenant shall have the option to extend the Term for one (1) additional term of five (5) years (the “Extension Term”), commencing as of the expiration of the Initial Term. Tenant must exercise such option to extend, if at all, by giving Landlord written notice (the “Extension Notice”) on or before the date that is fifteen (15) months prior to the Expiration Date, but not prior to the date that is eighteen (18) months prior to the Expiration Date, time being of the essence. Upon the timely giving of such notice, the Term shall be deemed extended upon all of the terms and conditions of this Lease, except that Base Rent during the Extension Term shall be calculated in accordance with this Section 1.2, Landlord shall have no obligation to construct or renovate the Premises, and Tenant shall have no further right to extend the Term. If Tenant fails to give timely notice, as aforesaid, Tenant shall have no further right to extend the Term. Notwithstanding the fact that Tenant’s proper and timely exercise of such option to extend the Term shall be self-executing, the parties shall promptly execute a lease amendment reflecting such Extension Term after Tenant exercises such option. The execution of such lease amendment shall not be deemed to waive any of the conditions to Tenant’s exercise of its rights under this Section 1.2.

 

 

(b)        The Base Rent during the Extension Term (the “Extension Term Base Rent”) shall be determined in accordance with the process described hereafter. Extension Term Base Rent shall be the fair market rental value of the Premises then demised to Tenant as of the commencement of the Extension Term as determined in accordance with the process described below, for renewals of combination laboratory and office space in the Winter Street area of Waltham of equivalent quality, size, utility and location, with the length of the Extension Term, the credit standing of Tenant, any economic concessions (including, without limitation, tenant improvement allowances and free rent) then being provided by landlords to tenants, and all other relevant factors to be taken into account. Within thirty (30) days after receipt of the Extension Notice, Landlord shall deliver to Tenant written notice of its determination of the Extension Term Base Rent for the Extension Term. Tenant shall, within thirty (30) days after receipt of such notice, notify Landlord in writing whether Tenant accepts or rejects Landlord’s determination of the Extension Term Base Rent (“Tenant’s Response Notice”). If Tenant fails timely to deliver Tenant’s Response Notice, Landlord’s determination of the Extension Term Base Rent shall be binding on Tenant.

 

(c)        If, and only if, Tenant’s Response Notice is timely delivered to Landlord and indicates both that Tenant rejects Landlord’s determination of the Extension Term Base Rent and desires to submit the matter to arbitration, then the Extension Term Base Rent shall be determined in accordance with the procedure set forth in this Section 1.2(c). In such event, within ten (10) days after receipt by Landlord of Tenant’s Response Notice indicating Tenant’s desire to submit the determination of the Extension Term Base Rent to arbitration, Tenant and Landlord shall each notify the other, in writing, of their respective selections of an appraiser (respectively, “Landlord’s Appraiser” and “Tenant’s Appraiser”). Landlord’s Appraiser and Tenant’s Appraiser shall then jointly select a third appraiser (the “Third Appraiser”) within ten (10) days of their appointment. All of the appraisers selected shall be individuals with at least five (5) consecutive years’ commercial appraisal experience for office and laboratory space in the area in which the Premises are located, shall be members of the Appraisal Institute (M.A.I.), and, in the case of the Third Appraiser, shall not have acted in any capacity for either Landlord or Tenant within five (5) years of his or her selection. The three appraisers shall determine the Extension Term Base Rent in accordance with the requirements and criteria set forth in Section 1.2(b) above, employing the method commonly known as Baseball Arbitration, whereby Landlord’s Appraiser and Tenant’s Appraiser each sets forth its determination of the Extension Term Base Rent as defined above, and the Third Appraiser must select one or the other (it being understood that the Third Appraiser shall be expressly prohibited from selecting a compromise figure). Landlord’s Appraiser and Tenant’s Appraiser shall deliver their determinations of the Extension Term Base Rent to the Third Appraiser within five (5) days of the appointment of the Third Appraiser, and the Third Appraiser shall render his or her decision within ten (10) days after receipt of both of the other two determinations of the Extension Term Base Rent. The Third Appraiser’s decision shall be binding on both Landlord and Tenant. Each party shall bear the cost of its own appraiser and the cost of the Third Appraiser shall be paid by the party whose determination is not selected.

 

 

1.3

Appurtenant Rights.

 

(a)          Common Areas. Subject to the terms of this Lease and the Rules and Regulations (hereinafter defined), Tenant shall have, as appurtenant to the Premises, rights to use in common with others entitled thereto, the following areas (such areas are hereinafter referred to as the “Common Areas”): (i) the common loading docks, hallways, lobby, and elevator of the Building serving the Premises, (ii) the common lavatories located on the floor(s) on which the Premises are located, (iii) common walkways and driveways necessary for access to the Building, (iv) the Parking Areas and (v) other areas and facilities designated by Landlord from time to time for the common use of tenants of the Building and others entitled thereto; and no other appurtenant rights or easements. The current location of the loading docks, receiving areas and freight elevators serving the Building are as shown on Exhibit 14 attached hereto, and are available for the use of the tenants in the Building and are part of the Common Areas.

 

(b)          Parking. During the Term, Landlord shall, subject to the terms hereof, make available up to seventy (70) parking spaces free of charge (except that the costs of maintenance and repair of the parking areas shall, subject to Section 5.2, be included in Operating Costs) for Tenant’s use in the Parking Areas serving the Building. The number of parking spaces in the parking areas reserved for Tenant, as modified pursuant to this Lease or as otherwise permitted by Landlord, are hereinafter referred to as the “Parking Spaces.” Tenant shall have no right to hypothecate or encumber the Parking Spaces, and shall not sublet, assign, or otherwise transfer the Parking Spaces other than to employees of Tenant occupying the Premises or to a Successor (hereinafter defined), an Affiliated Entity (hereinafter defined) or a transferee pursuant to an approved Transfer under Section 13 of this Lease. Subject to Landlord’s right to reserve parking for other tenants of the Building, said Parking Spaces will be on an unassigned, non-reserved basis, and shall be subject to such reasonable rules and regulations as may be in effect for the use of the parking areas from time to time. Reserved and handicap parking spaces must be honored. Notwithstanding anything to the contrary contained herein, Landlord shall have the right, upon at least three (3) months’ written notice to Tenant, to temporarily (i.e., for a period not to exceed three (3) months, other than for reasons of Force Majeure) relocate all or any portion of the Parking Spaces in to other portions of the Property and/or parking areas owned, controlled or leased by Landlord within a half-mile radius of the Property. In addition, Landlord may, at its election, implement valet and tandem parking in order to accommodate the parking needs of the Property from time to time. Tenant hereby acknowledges that Landlord has granted to an adjacent property owner the right to park up to 120 vehicles in the parking facilities serving the Building, for overflow parking, in the location shown on the plan attached hereto as Exhibit 11-1, on a daily basis between the hours of 7 p.m. to 7 a.m. (the “Off Business Hours Parking Hours”). The foregoing acknowledgement shall not affect Tenant’s rights under this Section 1.3(b) with respect to any time period other than during the Off Business Hours Parking Hours.

 

 

(c)          Cafeterias. Subject to the provisions of this Section 1.3(c), Tenant, its employees, contractors, and visitors shall have the right to use in common with others entitled thereto: (i) the existing cafeteria currently being operated in the Building (“828 Cafeteria”), and (ii) the cafeteria in the 830 Building (the “830 Cafeteria”), (the 828 Cafeteria and the 830 Cafeteria are referred to collectively herein as the “Cafeterias”, as the same may be relocated as hereinafter set forth, so long as Tenant has the right the right to use them). Notwithstanding the foregoing, the 828 Cafeteria may not be in operation prior to the time when the Building has achieved occupancy of at least thirty-five percent (35%) of the rentable area of the Building. Subject to the provisions of Section 5.2, any amounts paid by Landlord to such third-party operator(s) on account of its operation of the Cafeteria(s) in excess of the net revenues derived from the operation of the Cafeteria(s) shall be included in Operating Costs, as shall all of Landlord’s costs of cleaning, maintaining, and repairing the Cafeteria(s) (collectively referred to herein as (“Cafeteria Costs”). Notwithstanding anything to the contrary contained herein, during the Term, as the same may be extended hereby, Landlord shall be obligated to operate at least one Cafeteria which will provide food services substantially similar to those currently provided at the 830 Cafeteria, and Tenant shall be entitled to use the same in accordance with this Section 1.3(c). If for any reason Landlord or the owner of the 830 Building decides to cease operating a Cafeteria, then within thirty (30) days after delivery of written notice from Landlord to Tenant of Landlord’s decision, then Tenant shall no longer have the right to use such Cafeteria and that portion of the Building shall be removed from the calculation of Common Areas and Tenant’s Proportionate Shares shall be adjusted accordingly.

 

(d)         Shower and Changing Rooms. During the Term, Tenant and its employees shall have the right to use in common with others entitled thereto the shower and changing rooms located in the Building (the “Shower and Changing Rooms”), for so long as Landlord or any third-party operator shall operate the Shower and Changing Rooms. Landlord shall, at its expense, install and maintain card readers at appropriate access points to the Shower and Changing Rooms and issue identification cards to authorized users. Subject to Section 5.2 of this Lease, any amounts paid by Landlord on account of its operation of the Shower and Changing Rooms (including, without limitation, Landlord’s costs of cleaning, maintaining, and repairing the Shower and Changing Rooms) shall be included in Operating Costs. If for any reason Landlord decides to cease operating the Shower and Changing Rooms, then within thirty (30) days after delivery of written notice from Landlord to Tenant of Landlord’s decision, then (x) Tenant shall no longer have the right to use the Shower and Changing Rooms and that portion of the Building shall be removed from the calculation of Common Areas and Tenant’s Proportionate Shares shall be adjusted accordingly, and (y) Landlord shall provide shower and changing rooms located in the 830 Building, which rooms shall be of similar size and quality as the Shower and Changing Rooms, and Tenant shall be entitled to use the same in accordance with this Section 1.3(d).

 

 

(e)          On-Site Generator. Subject to Legal Requirements and Landlord’s prior written approval of plans and specifications therefor, Tenant may install, operate and maintain, in the rooftop location shown on Exhibit 1E attached or another location mutually agreed to by the parties (the “Generator Location”), an emergency generator and equipment related thereto (collectively, the “Emergency Back-up Equipment”) at Tenant’s sole cost and expense. Landlord shall have no obligation to provide any services including, without limitation, electric current or gas service, to the Emergency Back-up Equipment, provided, however, subject to Legal Requirements and Landlord’s prior written approval of plans and specifications therefor, Tenant may also install, maintain and operate necessary utility connections between the Emergency Back-up Equipment and the Premises (which utility connections shall be deemed part of the Emergency Back-up Equipment). Landlord may, in its sole and absolute discretion, require Tenant, at Landlord’s cost, to relocate any or all of the Emergency Back-up Equipment to a location with comparable functionality, which relocation shall be performed by Tenant within a reasonable period following such request (taking into account any reasonable time necessary to obtain permits and approvals for such work, Tenant hereby agreeing to use diligent good faith efforts to obtain the same and to promptly commence and prosecute to completion such relocation thereafter). Landlord agrees to require such relocation no more than once during the Term (provided that such limitation shall not apply to temporary relocations required in connection with any required maintenance, repair or replacement by Landlord). Landlord’s approval of the Emergency Back-up Equipment shall not be unreasonably withheld, conditioned or delayed. Tenant shall be responsible for the cost of repairing and maintaining the Emergency Back-up Equipment in good order, condition and repair and in compliance with Legal Requirements and, subject to the provisions of Section 14.5, for the cost of repairing any damage to the Property, or the cost of any necessary improvements to the Property, caused by or as a result of the installation, replacement and/or removal of the Emergency Back-up Equipment. Landlord makes no warranties or representations to Tenant as to the suitability of the Generator Location for the installation and operation of the Emergency Back-up Equipment. Tenant shall not install or operate the Emergency Back-up Equipment until Tenant has obtained and submitted to Landlord copies of all required governmental permits, licenses, and authorizations necessary for the installation and operation thereof. In addition, Tenant shall comply with all reasonable Rules and Regulations in connection with the installation, maintenance and operation of the Emergency Back-up Equipment.

 

1.4         Tenant’s Access. From and after the Term Commencement Date and until the end of the Term, Tenant shall have access to the Premises twenty-four (24) hours a day, seven (7) days a week, subject to Landlord’s reasonable Building security requirements, causes beyond Landlord’s reasonable control, Legal Requirements, the Rules and Regulations, the terms of this Lease, Force Majeure (hereinafter defined) and matters of record.

 

1.5         No recording // Notice of Lease. Neither party shall record this Lease. Tenant shall not record a memorandum of this Lease and/or a notice of this Lease. Notwithstanding the foregoing, if the Initial Term plus any Extension Term(s) exceed in the aggregate seven (7) years, Landlord agrees to join in the execution, in recordable form, of a statutory notice of lease and/or written declaration in which shall be stated the Term Commencement Date, the Rent Commencement Date, the number and length of the Extension Term(s) and the Expiration Date, which notice of lease may be recorded by Tenant with the Middlesex South Registry of Deeds and/or filed with the Middlesex South Registry District of the Land Court, as appropriate (alternatively and collectively, the “Registry”) at Tenant’s sole cost and expense. If a notice of lease was previously recorded with the Registry, upon the expiration or earlier termination of this Lease, Landlord shall deliver to Tenant a notice of termination of lease and Tenant shall promptly execute, acknowledge, and deliver the same (together with any other instrument(s) that may be necessary in order to record and/or file same with the Registry) to Landlord for Landlord’s execution and recordation with the Registry, which obligation shall survive the expiration or earlier termination of the Lease.

 

1.6         Exclusions. The following are expressly excluded from the Premises and reserved to Landlord: all the perimeter walls of the Premises (except the inner surfaces thereof), the Common Areas, and any space in or adjacent to the Premises used for shafts, stacks, pipes, conduits, wires and appurtenant fixtures, fan rooms, ducts, electric or other utilities, sinks or other Building facilities, and the use of all of the foregoing, except as expressly permitted pursuant to Section 1.3(a) above.

 

 

1.7

Acid Neutralization Tank.

 

(a)         The provisions of this Section 1.7 are subject to Section 10.1 below:

 

(b)         Tenant shall have the right to install within the PH Premises for Tenant’s exclusive use a separate acid neutralization tank (“Tenant’s Acid Neutralization Tank”) in accordance with the provisions of this Lease, including, without limitation, Section 11 hereof. Tenant shall have the exclusive right, throughout the Term of the Lease, as the same may be extended, to use the Acid Neutralization Tank in accordance with Legal Requirements. Tenant shall obtain, and maintain all governmental permits and approvals necessary for the operation and maintenance of the Acid Neutralization Tank. Tenant shall be responsible for all costs, charges and expenses incurred from time to time in connection with or arising out of the operation, use, maintenance, repair or refurbishment of the Acid Neutralization Tank, including all clean-up costs relating to the Acid Neutralization Tank (collectively, “Tank Costs”), except, subject to Section 14.5, to the extent such costs are caused by the negligence or willful misconduct of any of the Landlord Parties (as hereinafter defined).

 

(c)         Tenant shall be responsible for the operation, cleanliness, and maintenance of the Acid Neutralization Tank and the appurtenances, all of which shall remain the personal property of Landlord, and shall be left in place by Tenant at the expiration or earlier termination of the Lease. Such maintenance and operation shall be performed in a manner to avoid any unreasonable interference with any other tenants or Landlord. Without limiting the foregoing, Landlord makes no warranties or representations to Tenant as to the suitability of the PH System Premises for the operation of the Acid Neutralization Tank. Tenant shall have no right to make any changes, alterations, additions, decorations or other improvements to the PH System Premises without Landlord’s prior written consent which shall not be unreasonably withheld, conditioned or delayed. Tenant agrees to maintain the Acid Neutralization Tank in good condition and repair. Landlord shall have no obligation to provide any services, including, without limitation, electric current, to the Acid Neutralization Tank.

 

2.

RIGHTS RESERVED TO LANDLORD

 

2.1        Additions and Alterations. Landlord reserves the right, at any time and from time to time, to make such changes, alterations, additions, improvements, repairs or replacements in or to the Property (including the Premises but, with respect to the Premises, only for purposes of repairs, maintenance, replacements and the exercise of any other rights expressly reserved to Landlord herein) and the fixtures and equipment therein, as well as in or to the street entrances and/or the Common Areas, as it may deem necessary or desirable, provided, however, that there be no material obstruction of permanent access to, or material interference with the use and enjoyment of, the Premises by Tenant. Subject to the foregoing, Landlord expressly reserves the right to temporarily close all, or any portion, of the Common Areas for the purpose of making repairs or changes thereto.

 

 

2.2

Additions to the Property.

 

(a)          Landlord may at any time or from time to time (i) construct additional improvements and related site improvements (collectively, “Future Development”) in all or any part of the Property, (ii) change the location or arrangement of any improvement outside the Building in or on the Property or all or any part of the Common Areas, or add or deduct any land to or from the Property; provided that there shall be no material increase in Tenant’s obligations or material interference with Tenant’s rights under this Lease in connection with the exercise of the foregoing reserved rights.

 

(b)         In case any excavation shall be made for building or improvements or for any other purpose upon the land adjacent to or near the Premises, Tenant will afford without charge to Landlord, or the person or persons, firms or corporations causing or making such excavation, license to enter upon the Premises for the purpose of doing such work as Landlord or such person or persons, firms or corporation shall deem to be necessary to preserve the walls or structures of the Building from injury, and to protect the Building by proper securing of foundations.

 

2.3         Name and Address of Building. Landlord reserves the right at any time and from time to time to change the name or address of the Building and/or the Property, provided Landlord gives Tenant at least three (3) months’ prior written notice thereof.

 

2.4

Landlord’s Access.

 

(a)          Subject to the terms hereof, Tenant shall (a) upon reasonable advance notice, (not less than forty-eight (48) hours), which may be by email at farmer@akrevia.com or some other address as may be provided in writing by Tenant to Landlord (except that no notice shall be required in emergency situations), permit Landlord and any holder of a Mortgage (hereinafter defined) (each such holder, a “Mortgagee”), and the agents, representatives, employees and contractors of each of them, to have reasonable access to the Premises at all reasonable hours for the purposes of inspection, making repairs, replacements or improvements in or to the Premises or the Building or equipment therein (including, without limitation, sanitary, electrical, heating, air conditioning or other systems), complying with all applicable laws, ordinances, rules, regulations, statutes, by-laws, court decisions and orders and requirements of all public authorities (collectively, “Legal Requirements”), or exercising any right reserved to Landlord under this Lease (including without limitation the right to take upon or through, or to keep and store within the Premises all necessary materials, tools and equipment); (b) permit Landlord and its agents and employees, at reasonable times, upon reasonable advance notice, to show the Premises during normal business hours (i.e., Monday – Friday 8 A.M. - 6 P.M., Saturday 8 A.M. – 1 P.M., excluding holidays) to any prospective Mortgagee or purchaser of the Building and/or the Property or of the interest of Landlord therein, and, during the last twelve (12) months of the Term or at any time after the occurrence of an Event of Default, prospective tenants; and (c) upon reasonable prior written notice from Landlord, permit Landlord and its agents, at Landlord’s sole cost and expense, to perform environmental audits, environmental site investigations and environmental site assessments (“Site Assessments”) in, on, under and at the Premises and the Land, it being understood that Landlord shall repair any damage arising as a result of the Site Assessments, and such Site Assessments may include both above and below the ground testing and such other tests as may be necessary or appropriate to conduct the Site Assessments. In addition, to the extent that it is necessary to enter the Premises in order to access any area that serves any portion of the Building outside the Premises, then Tenant shall, upon as much advance notice as is practical under the circumstances, and in any event at least twenty-four (24) hours’ prior written notice (except that no notice shall be required in emergency situations), permit contractors engaged by other occupants of the Building to pass through the Premises in order to access such areas but only if accompanied by a representative of Landlord. Notwithstanding anything to the contrary contained herein, Tenant shall be entitled to have a representative present for any access by Landlord or any Landlord Parties in exercising its rights under this Section 2.4.

 

 

(b)          Secure Areas within the Premises. Notwithstanding the foregoing, Tenant, at its own expense may, as hereinafter set forth, designate one or more areas of the Premises to be “Secure Areas” (i.e., portions of the Premises to which Landlord shall not have a right of entry or access for any reason whatsoever (except as otherwise provided below). Tenant may, from time to time, exercise its right to create Secure Areas by delivering to Landlord, for Landlord’s written approval, a plan showing the location of any such Secure Areas. Landlord agrees that it will not unreasonably withhold, condition or delay such consent. If Landlord must gain access to a Secure Areas in a non-emergency situation, Landlord shall contact Tenant, and Landlord and Tenant shall arrange a mutually agreed upon time for Landlord to have such access. Landlord shall be accompanied by an employee of Tenant or a party designated by Tenant (the “Escort”). Tenant shall make an Escort available to Landlord during business hours. At all times, Landlord shall comply with all reasonable security measures of the Tenant pertaining to the Secure Areas. If an emergency representing an imminent risk of injury to persons or material property damage in the Building or the Premises, including, without limitation, a suspected fire or flood, requires Landlord to gain access to the Secure Areas, Landlord may enter the Secure Areas without an Escort. If practicable under the circumstances, Landlord shall immediately notify (which may be oral notification) and request that Tenant make an Escort available to Landlord if time permits, and if Tenant shall not make an Escort available to accompany Landlord, then Tenant hereby authorizes Landlord to enter the Secure Areas forcibly or with a master key, and to enter without an Escort. In any such event, except (subject to Section 14.5 of this Lease) to the extent resulting from Landlord’s negligence or willful misconduct, Landlord shall have no liability whatsoever to Tenant, and Tenant shall pay all reasonable expenses incurred by Landlord in repairing or reconstructing any entrance, corridor, door or other portions of the Premises damaged as a result of a forcible entry by Landlord. Landlord shall have no obligation to provide either janitorial service or cleaning in the Secure Areas unless Tenant shall make arrangements to have an Escort in the Secure Areas at the time such service or cleaning is provided to the remainder of the Premises

 

2.5         Pipes, Ducts and Conduits. Tenant shall permit Landlord to erect, use, maintain and relocate pipes, ducts and conduits in and through the Premises, provided the same do not reduce the rentable square footage of the Premises, other than by a de minimis amount, or adversely affect the appearance of the Premises. In exercising its rights under this Section 2.5, Landlord shall make commercially reasonable efforts to locate any pipes, ducts, and conduits behind walls and above ceilings so as to minimize interference with the Premises.

 

2.6      Minimize Interference. Except in the event of an emergency, Landlord shall use commercially reasonable efforts to minimize any interference with Tenant’s business operations and use and occupancy of the Premises in connection with the exercise any of the foregoing rights under this Section 2.

 

 

3.            CONDITION OF PREMISES

 

3.1         Condition of Premises. Subject to Landlord’s obligation to perform Landlord’s Work (as set forth in the Work Letter attached hereto as Exhibit 4), Tenant acknowledges and agrees that Tenant is leasing the Premises in their “AS IS,” “WHERE IS” condition and with all faults on the Execution Date, without representations or warranties, express or implied, in fact or by law, of any kind, and without recourse to Landlord. Tenant shall not exceed its allotted base building capacities defined on Exhibit 13 attached hereto.

 

3.2         Condition of Base Building. Landlord hereby represents to Tenant (“Landlord’s Warranty”) that, as of the Execution Date: (i) all of the following existing portions of the Building are in good repair and working order: the roof, foundation, footings, slab, structural walls, exterior windows, plumbing, fire sprinkler/life safety system, lighting, heating, ventilation and air conditioning systems, and electrical systems serving the Premises (except to the extent modified or otherwise impaired by any improvements constructed by Tenant), and (ii) the existing base building improvements in the Premises are in compliance with all applicable zoning and building laws and other ordinances and regulations. Landlord’s obligations under this Section 3.2 shall only apply during the Warranty Period, as hereinafter defined. The “Warranty Period” shall commence as of the Term Commencement Date and shall expire twelve (12) months following the Term Commencement Date. Landlord agrees to correct or repair, at Landlord’s expense (and not in Operating Costs), items which are in breach of Landlord’s Warranty, provided that Landlord receives written notice of the need for such correction or repair prior to the end of the Warranty Period. Landlord shall be deemed to have satisfied all of its obligations under this Section 3.2 to the extent that Landlord has not received written notice of the need for corrective work or repairs prior to the end of the Warranty Period. In the event of any breach of Landlord’s Warranty, then Landlord shall correct such breach, as promptly as possible, and to the extent that the correction of such breach is covered under valid and enforceable warranties given Landlord by contractors or subcontractors, Landlord, at its option, may pursue such claims directly or assign any such warranties to Tenant for enforcement.

 

3.3        Tenant Work. Tenant, at Tenant’s sole cost and expense, but subject to Tenant’s right to receive Landlord’s Contribution (as defined in Exhibit 4 attached hereto), shall perform the Tenant Work (as defined in Exhibit 4), as more particularly described in Exhibit 4 attached hereto. The Tenant Work shall be performed in accordance with the provisions of Section 11 and Exhibit 4 of this Lease.

 

4.            USE OF PREMISES

 

4.1         Permitted Uses. During the Term, Tenant shall use the Premises only for the Permitted Uses and for no other purposes. Service and utility areas (whether or not a part of the Premises) shall be used only for the particular purpose for which they are designed. Tenant shall keep the Premises equipped with appropriate safety appliances to the extent required by applicable laws or insurance requirements. Landlord shall cooperate with Tenant, in such manner as Tenant may reasonably request, in assisting Tenant to obtain any governmental permits or approvals necessary to enable Tenant to use the Premises for any of the Permitted Uses, provided that Landlord shall not be obligated to incur any out-of-pocket costs or expenses or incur any liability in connection with any such request.

 

 

4.2

Prohibited Uses.

 

(a)          Notwithstanding any other provision of this Lease, Tenant shall not use the Premises or the Building, or any part thereof, or suffer or permit the use or occupancy of the Premises or the Building or any part thereof by any of the Tenant Parties (i) in a manner which would violate any of the covenants, agreements, terms, provisions and conditions of this Lease or otherwise applicable to or binding upon the Premises; (ii) for any unlawful purposes or in any unlawful manner; (iii) which, in the reasonable judgment of Landlord (taking into account the use of the Building as a combination laboratory, research and development and office building and the Permitted Uses) shall (a) impair, interfere with or otherwise diminish the quality of any of the Building services or the proper and economic heating, cleaning, ventilating, air conditioning or other servicing of the Building or Premises, or the use or occupancy of any of the Common Areas; (b) occasion impairment, interference or injury in any material respect (and Tenant shall not install or use any electrical or other equipment of any kind, which, in the reasonable judgment of Landlord, will cause any such impairment, interference, or injury), or cause any injury or damage to any occupants of the Premises or other tenants or occupants of the Building or their property; or (c) cause harmful air emissions, laboratory odors or noises or any unusual or other objectionable odors, noises or emissions to emanate from the Premises; (iv) in a manner which is inconsistent with the operation and/or maintenance of the Building as a first- class combination office, research, development and laboratory facility; or (v) in a manner which shall increase such insurance rates on the Building or on property located therein over that applicable when Tenant first took occupancy of the Premises hereunder. Notwithstanding the foregoing, Landlord agrees that Tenant’s use of the Premises for the Permitted Use (as opposed to the particular manner of Tenant’s use of the Premises) shall not, in and of itself, be deemed to breach the provisions of this Section 4.2.

 

(b)          With respect to the use and occupancy of the Premises and the Common Areas, Tenant will not: (i) place or maintain any signage (except as set forth in Section 12.2 below), trash, refuse or other articles in any vestibule or entry of the Premises, on the footwalks or corridors adjacent thereto or elsewhere on the exterior of the Premises, nor obstruct any driveway, corridor, footwalk, parking area, mall or any other Common Areas; (ii) permit undue accumulations of or burn garbage, trash, rubbish or other refuse within or without the Premises; (iii) permit the parking of vehicles so as to interfere with (x) the ability of others, entitled thereto, to park in the common parking areas, or (y) the use of any driveway, corridor, footwalk, parking area, or other Common Areas; (iv) receive or ship articles of any kind outside of those areas reasonably designated by Landlord; (v) conduct or permit to be conducted any auction, going out of business sale, bankruptcy sale (unless directed by court order), or other similar type sale in or connected with the Premises; (vi) use the name of Landlord, or any of Landlord’s affiliates in any publicity, promotion, trailer, press release, advertising, printed, or display materials without Landlord’s prior written consent; or (vii) except in connection with Alterations (hereinafter defined) approved by Landlord, cause or permit any hole to be drilled or made in any part of the Building.

 

4.3         Transportation of Animals. No animals, animal waste, food or supplies relating to the animals maintained from time to time in the animal storage areas of the Premises shall be transported within the Building except as provided in this Section 4.3. All deliveries of animals or animal food or supplies to Tenant at the Building shall be made prior to 9:00 a.m.  No transportation of animals, animal waste, food or supplies within the Building shall occur between the hours of 11:00 a.m. and 1:00 p.m.  At all times that animals are transported within the Common Areas, they shall be transported in an appropriate cage or other container. At no time shall any animals, animal waste, food or supplies relating to the animals be brought into, transported through, or delivered to the lobby of the Building or be transported within the Building in elevators other than the freight elevator.

 

 

4.4         MWRA Permit. Tenant shall establish and maintain with respect to its use of wastewater facilities exclusively serving the Leased Premises, an MWRA waste water discharge program administered by a licensed, qualified individual (which individual may be (i) a third party contractor/consultant approved by Landlord, which approval shall not be unreasonably withheld, or (ii) an employee of Tenant or Tenant’s affiliate) in accordance with the requirements of the Massachusetts Water Resources Authority (“MWRA”) and any other applicable governmental authority. Tenant shall be solely responsible for all costs incurred in connection with such MWRA waste water discharge, and Tenant shall provide Landlord with such documentation as Landlord may reasonably require evidencing Tenant’s compliance with the requirements of (a) the MWRA and any other applicable governmental authority with respect to such chemical safety program and (b) this Section. Tenant shall obtain and maintain during the Term (i) any permit required by the MWRA (“MWRA Permit”) and (ii) a wastewater treatment operator license from the Commonwealth of Massachusetts with respect to Tenant’s use of any acid neutralization tank exclusively serving the Leased Premises in the Building. Tenant shall not introduce anything into the acid neutralization tank serving the Premises, if any (x) in violation of the terms of the MWRA Permit, (y) in violation of Legal Requirements or (z) that would interfere with the proper functioning of any such acid neutralization tank.

 

4.5         Parking and Traffic Demand Management Plan. The Property is subject to a Parking and Traffic Demand Management Plan with the City of Waltham, a copy of which is attached hereto as Exhibit 11 (the “Initial PTDM”). Tenant agrees, at its sole expense, to comply with the requirements of the Initial PTDM, only insofar as they apply to the Premises and/or Tenant’s use and occupancy thereof. In the event that the Initial PTDM is ever modified, supplemented, amended or replaced (“PTDM Modifications”), Tenant agrees, at its sole expense, to comply with the requirements of the PTDM Modifications, only insofar as they apply to the Premises and/or Tenant’s use and occupancy thereof.

 

4.6         Vivarium. Tenant shall be responsible, at its sole expense, for the operations of its vivarium in accordance with all Legal Requirements and with best industry practices. Without limiting the general application of the foregoing, Tenant shall separately dispose of all waste products from the operation of Tenant’s vivarium, including, without limitation, dead animals, strictly in accordance with Legal Requirements. Landlord shall have the right, from time to time by written notice to Tenant, to promulgate reasonable rules and regulations with respect to the operation of Tenant’s vivarium so as to minimize any adverse effects that such operation may have on other occupants of the Building, including without limitation, regulations as to noise mitigation.

 

 

5.            RENT; ADDITIONAL RENT

 

5.1         Base Rent. The Base Rent during the Term shall be determined in accordance with the process described hereafter. Base Rent shall be either (i) in the event Tenant elects, or is deemed to have elected, the Option One Landlord Contribution (as defined in Exhibit 4), the Option One Base Rent as set forth on Exhibit 1, or (ii) in the event Tenant elects the Option Two Landlord Contribution (as defined in Exhibit 4), the Option Two Base Rent as set forth on Exhibit 1. Commencing upon the Rent Commencement Date, and thereafter during the Term, subject to and in accordance with this Section 5.1, Tenant shall pay to Landlord the applicable Base Rent specified in Exhibit 1. During the Term, Tenant shall pay to Landlord Base Rent in equal monthly installments, in advance and without demand on the first day of each month for and with respect to such month. Unless otherwise expressly provided herein, the payment of Base Rent, additional rent and other charges reserved and covenanted to be paid under this Lease with respect to the Premises (collectively, “Rent”) shall commence on the Rent Commencement Date, and shall be prorated for any partial months. Rent shall be payable to Landlord or, if Landlord shall so direct in writing, to Landlord’s agent or nominee, in lawful money of the United States which shall be legal tender for payment of all debts and dues, public and private, at the time of payment.

 

5.2

Operating Costs.

 

(a)        “Operating Costs” shall mean all costs incurred and expenditures of whatever nature made by Landlord in the operation, management, repair, replacement, maintenance and insurance (including, without limitation, environmental liability insurance and property insurance on Landlord-supplied leasehold improvements for tenants, but not property insurance on tenants’ equipment) of the Property or allocated to the Property, including without limitation all costs of labor (wages, salaries, fringe benefits, etc.) up to and including the Director of Property Management, however denominated, any costs for utilities supplied to exterior areas and the Common Areas, and any costs for repair and replacements, cleaning and maintenance of the exterior areas and the Common Areas (including, without limitation, the Building’s share of Common Expenses under the Condominium Documents and costs of maintaining and operating the exterior common areas and facilities of the Waltham Woods/Reservoir Woods Park allocable to the Building), related equipment, facilities and appurtenances and HVAC equipment, security services, a management fee paid to Landlord’s property manager in the amount not to exceed four percent (4%) of gross revenues of the Building, the costs (“Management Office Costs”), including, without limitation, a commercially reasonable rental factor, of Landlord’s management office for the Property, which management office may be located outside the Property and which may serve other properties in addition to the Property (in which event such costs shall be equitably allocated among the properties served by such office), the cost of operating any amenities in the Property available to all tenants of the Property and any subsidy provided by Landlord for or with respect to any such amenity, and the Annual Charge-Off (as hereinafter defined) with respect to a Permitted Capital Expenditure (as hereinafter defined). Operating Costs shall not include Excluded Costs (hereinafter defined).

 

(b)        Capital Expenditures. Permitted Capital Expenditures (as hereinafter defined) shall only be included in Operating Costs for each fiscal year during the Term of the Lease to the extent of the Annual Charge-Off, as hereinafter defined, for such fiscal year with respect to such capital expenditure. Operating Costs shall not include any Annual Charge-Off with respect to Excluded Costs, as hereinafter defined. For the purposes hereof:

 

(i)         “Annual Charge-Off” means the annual amount of principal and interest payments which would be required to repay a loan in equal monthly installments over the Useful Life, as defined below, of the capital item in question on a direct reduction basis at an annual interest rate equal to the Capital Interest Rate, as defined below, where the initial principal balance is the cost of the capital item in question.

 

 

(ii)       “Useful Life” shall be reasonably determined by Landlord in accordance with generally accepted accounting principles and commercially reasonable practices in effect at the time of acquisition of the capital item.

 

(iii)      “Capital Interest Rate” shall be defined as an annual rate of either one percentage point over the AA bond rate (Standard & Poor’s corporate composite or, if unavailable, its equivalent) as reported in the financial press at the time the capital expenditure is made or, if the capital item is acquired through third-party financing, then the actual (including fluctuating) rate paid by Landlord in financing the acquisition of such capital item.

 

(c)        “Excluded Costs” shall be defined as (i) any fixed or percentage ground rent payable to any ground lessor, or any mortgage charges (including interest, principal, points and fees and any debt service costs (provided however, that the provisions of this clause (i) shall not be deemed to exclude mortgage charges and debt service costs incurred with respect to Permitted Capital Expenditures, as hereinafter defined, from Operating Costs); (ii) brokerage commissions, marketing costs, concessions and leasehold improvement costs incurred in connection with the leasing of any rentable space at the Building including, without limitation, finders’ fees, attorneys’ fees and expenses, entertainment costs and travel expenses; (iii) salaries and bonuses and benefits of officers, executives of Landlord and administrative employees above the grade of Director of Property Management; (iv) the cost of work done by Landlord for a particular tenant or any special work or service performed for any tenant (including Tenant) billable to such tenant or any costs in connection with services or benefits that are provided to or for the particular benefit of other tenants but not offered to Tenant; (v) the cost of items which, by generally accepted accounting principles, would be capitalized on the books of Landlord or are otherwise not properly chargeable against income, except to the extent such capital item is (A) required by any Legal Requirements following the Execution Date of this Lease, or (B) reasonably projected to reduce Operating Costs (collectively, “Permitted Capital Expenditures”); (vi) the costs of Landlord’s Work and any contributions made by Landlord to any tenant of the Property in connection with the build-out of its premises; (vii) franchise or income taxes imposed on Landlord; (viii) costs paid directly by individual tenants to suppliers, including tenant electricity, telephone and other utility costs; (ix) increases in premiums for insurance when such increase is caused by the use of the Building by Landlord or any other tenant of the Building; (x) depreciation of the Building; (xi) costs relating to maintaining Landlord’s existence as a corporation, partnership or other entity; (xii) the cost of any items for which Landlord is reimbursed by insurance, condemnation awards, refund, rebate or otherwise, and expenses for repairs or maintenance covered by warranties, guaranties and service contracts; (xiii) costs incurred in connection with any disputes between Landlord and its employees, between Landlord and Building management, or between Landlord and other tenants or occupants; (xiv) attorneys’ fees incurred in connection with lease negotiations, disputes with individual tenants and/or for the existence, maintenance or non-Building related operations of the legal entity or entities of which Landlord is comprised or the development of additional space at the Building; (xv) Taxes; (xvi) the cost of any repairs or restoration required because of fire, other casualty or taking, provided, however, that Operating Costs may include costs of repairs which are not covered because the cost of such repairs is within a commercially reasonable deductible carried under Landlord’s casualty insurance policy (Tenant hereby agreeing that, as of the Execution Date, $25,000.00 is a commercially reasonable deductible), (xvii) management and administrative fees, other than as provided in Section 5.2(a) above; (xviii) the cost of remediating Hazardous Materials from the Building other than Included Hazardous Materials, as hereinafter defined; “Included Hazardous Materials” shall be defined as all Hazardous Materials, other than: (A) any material or substance located in the Building or the Property on the Execution Date which, as of the Execution Date, is not considered under then existing Legal Requirements, to be Hazardous Material, but which is subsequently determined to be a Hazardous Material by reason of a Legal Requirement which first becomes effective after the Execution Date of this Lease, and (B) any material or substance that is introduced to the Building or the Property after the Execution Date which, when introduced to the Building or the Property, is not then (i.e., at the time of introduction to the Building or the Property) considered, as a matter of any Legal Requirement, to be a Hazardous Material, but which is subsequently determined to be a Hazardous Material by reason of Legal Requirements which first becomes effective after the date of introduction of such material or substance to the Building or Property; (xix) any cost covered by a warranty that Landlord is required to obtain in connection with the Building or the Land; (xx) any amounts paid to a person, firm, corporation or other entity under common ownership and control with Landlord that is in excess of a commercially reasonable amount paid on a market rate basis (other than management fees); (xxi) the cost of acquiring sculptures, paintings, and other objects of art; (xxii) depreciation of the Building or any part thereof (provided however, that the provisions of this clause (xxii) shall not be deemed to exclude depreciation incurred with respect to Permitted Capital Expenditures from Operating Costs; (xxiii) any compensation paid to personnel in retail concessions operated by Landlord and any subsidies or concessions to third parties operating retail concessions at the Building, provided that the provisions of this clause (xxiii) shall not be deemed to exclude from Operating Costs such compensation, subsidies or concessions incurred by Landlord with respect to the Cafeterias; (xxiv) replacement or contingency reserves; (xxv) Landlord’s general overhead, provided however, that the provisions of this clause (xxv) shall not be deemed to exclude an equitable allocation of Management Office Costs, as set forth in Section 5.2(a) above; and (xxvi) any costs incurred with respect to the retail portions of the Building, provided that the provisions of this clause (xxvi) shall not be deemed to exclude from Operating Costs incurred by Landlord with respect to the Cafeterias and the Shower and Changing Rooms. Notwithstanding anything to the contrary contained herein, the properly passed through cost of any Permitted Capital Expenditures shall be amortized over the useful life of such capital item.

 

 

(d)          Payment of Operating Costs. Commencing as of the Rent Commencement Date and continuing thereafter throughout the remainder of the Term of the Lease, Tenant shall pay to Landlord, as additional rent, Tenant’s Share of Operating Costs. Landlord may make a good faith estimate of Tenant’s Share of Operating Costs for any fiscal year or part thereof during the Term, and Tenant shall pay to Landlord, on the Rent Commencement Date and on the first (1st) day of each calendar month thereafter, an amount equal to Tenant’s Share of Operating Costs for such fiscal year and/or part thereof divided by the number of months therein. Landlord may estimate and re-estimate Tenant’s Share of Operating Costs and deliver a copy of the estimate or re-estimate to Tenant. Thereafter, the monthly installments of Tenant’s Share of Operating Costs shall be appropriately adjusted in accordance with the estimations so that, by the end of the fiscal year in question, Tenant shall have paid all of Tenant’s Share of Operating Costs as estimated by Landlord. Any amounts paid based on such an estimate shall be subject to adjustment as herein provided when actual Operating Costs are available for each fiscal year. As of the Execution Date, the Property’s fiscal year is January 1 - December 31.

 

 

(e)          Annual Reconciliation. Landlord shall, within one hundred twenty (120) days after the end of each fiscal year, deliver to Tenant a reasonably detailed statement of the actual amount of Operating Costs for such fiscal year (“Year End Statement”). Failure of Landlord to provide the Year End Statement within the time prescribed shall not relieve Tenant from its obligations hereunder, provided, however, Landlord shall be obligated to bill any Operating Costs on or before the date (“Outside Billing Date”) which is two (2) years after the end of the fiscal year in which the expenditure is made. If the total of such monthly remittances on account of any fiscal year is greater than Tenant’s Share of Operating Costs actually incurred for such fiscal year, then, provided no Event of Default has occurred, Tenant may credit the difference against the next installment of additional rent on account of Operating Costs due hereunder, except that if such difference is determined after the end of the Term, Landlord shall refund such difference to Tenant within thirty (30) days after such determination to the extent that such difference exceeds any amounts then due from Tenant to Landlord. If the total of such remittances is less than Tenant’s Share of Operating Costs actually incurred for such fiscal year, Tenant shall pay the difference to Landlord, as additional rent hereunder, within thirty (30) days of Tenant’s receipt of an invoice therefor. Landlord’s estimate of Operating Costs for the next fiscal year shall be based upon the Operating Costs actually incurred for the prior fiscal year as reflected in the Year-End Statement plus a reasonable adjustment based upon estimated increases in Operating Costs. The provisions of this Section 5.2(d) shall survive the expiration or earlier termination of this Lease.

 

(f)            Part Years. If the Rent Commencement Date or the Expiration Date occurs in the middle of a fiscal year, Tenant shall be liable for only that portion of the Operating Costs with respect to such fiscal year within the Term from and after the Rent Commencement Date on pro-rated basis.

 

(g)          Gross-Up. If, during any fiscal year, less than 95% of the Building is occupied by tenants or if Landlord was not supplying all tenants with the services being supplied to Tenant hereunder, actual Operating Costs incurred shall be reasonably extrapolated by Landlord on an item-by-item basis to the reasonable Operating Costs that would have been incurred if the Building was 95% occupied and such services were being supplied to all tenants, and such extrapolated Operating Costs shall, for all purposes hereof, be deemed to be the Operating Costs for such fiscal year. This “gross up” treatment shall be applied only with respect to variable Operating Costs arising from services provided to Common Areas or to space in the Building being occupied by tenants (which services are not provided to vacant space or may be provided only to some tenants) in order to allocate equitably such variable Operating Costs to the tenants receiving the benefits thereof.

 

 

 

(h)          Audit Right. Provided there is no Event of Default nor any event which, with the passage of time and/or the giving of notice would constitute an Event of Default, Tenant may, upon at least sixty (60) days’ prior written notice, inspect or audit Landlord’s records relating to Operating Costs for any periods of time within the previous fiscal year before the audit or inspection. However, no audit or inspection shall extend to periods of time before the Rent Commencement Date. If Tenant fails to object to the calculation of Tenant’s Share of Operating Costs on the Year-End Statement within ninety (90) days after such statement has been delivered to Tenant and/or fails to complete any such audit or inspection within one- hundred twenty (120) days after receipt of the Year End Statement, then Tenant shall be deemed to have waived its right to object to the calculation of Tenant’s Share of Operating Costs for the year in question and the calculation thereof as set forth on such statement shall be final. Tenant’s audit or inspection shall be conducted only at Landlord’s offices or the offices of Landlord’s property manager during business hours reasonably designated by Landlord. Tenant shall pay the cost of such audit or inspection. Tenant may not conduct an inspection or have an audit performed more than once during any fiscal year. If, after such inspection or audit has been performed, it is finally determined or mutually agreed that there has been an underpayment by Tenant, then Tenant shall pay to Landlord, as additional rent hereunder, any underpayment of any such costs, as the case may be, within thirty (30) days after receipt of an invoice therefor. In the event the Landlord disagrees in good faith with the results of the audit, Landlord shall notify Tenant within fifteen (15) days of the audit, and Landlord and Tenant shall mutually select a neutral third party to evaluate the charges for Tenant’s Share of Operating Costs, and the results of such third party’s evaluation shall bind Landlord and Tenant and shall be final. Costs charged by any such third party shall be shared equally by Landlord and Tenant. If, after such inspection or audit has been performed, it is finally determined or mutually agreed that that there has been overpayment by Tenant, then Landlord shall credit such overpayment against the next installment(s) of Base Rent thereafter payable by Tenant, except that if such overpayment is determined after the termination or expiration of the Term, Landlord shall promptly refund to Tenant the amount of such overpayment less any amounts then due from Tenant to Landlord. Tenant shall maintain the results of any such audit or inspection confidential and shall not be permitted to use any third party to perform such audit or inspection, other than an independent firm of certified public accountants (A) reasonably acceptable to Landlord, (B) which is not compensated on a contingency fee basis or in any other manner which is dependent upon the results of such audit or inspection, and (C) which executes Landlord’s standard confidentiality agreement whereby it shall agree to maintain the results of such audit or inspection confidential. The provisions of this Section 5.2(g) shall survive the expiration or earlier termination of this Lease.

 

5.3          Taxes.

 

(a)            “Taxes” shall mean the real estate taxes and other taxes, levies and assessments imposed upon the Building and the Land, and upon any personal property of Landlord used in the operation thereof, or on Landlord’s interest therein or such personal property; charges, fees and assessments for transit, housing, police, fire or other services or purported benefits to the Building and the Land (including without limitation any community preservation assessments); service or user payments in lieu of taxes; and any and all other taxes, levies, betterments, assessments and charges arising from the ownership, leasing, operation, use or occupancy of the Building and the Land or based upon rentals derived therefrom, which are or shall be imposed by federal, state, county, municipal or other governmental authorities. From and after substantial completion of any occupiable improvements constructed as part of a Future Development, if such improvements are not separately assessed, Landlord shall reasonably allocate Taxes between the Building and such improvements and the land area associated with the same. Taxes shall not include any inheritance, estate, succession, gift, franchise, rental, income or profit tax, capital stock tax, capital levy or excise, or any income taxes arising out of or related to the ownership and operation of the Building and the Land, provided, however, that any of the same and any other tax, excise, fee, levy, charge or assessment, however described, that may in the future be levied or assessed as a substitute for or an addition to, in whole or in part, any tax, levy or assessment which would otherwise constitute Taxes, whether or not now customary or in the contemplation of the parties on the Execution Date of this Lease, shall constitute Taxes, but only to the extent calculated as if the Building and the Land were the only real estate owned by Landlord. “Taxes” shall also include reasonable expenses (including without limitation legal and consultant fees) of tax abatement or other proceedings contesting assessments or levies.

 

 

(b)           “Tax Period” shall be any fiscal/tax period in respect of which Taxes are due and payable to the appropriate governmental taxing authority (i.e., as mandated by the governmental taxing authority), any portion of which period occurs during the Term of this Lease.

 

(c)           Payment of Taxes. Commencing as of the Rent Commencement Date and continuing thereafter throughout the remainder of the Term of the Lease, Tenant shall pay to Landlord, as additional rent, Tenant’s Share of Taxes. Landlord may make a good faith estimate of the Taxes to be due by Tenant for any Tax Period or part thereof during the Term, and Tenant shall pay to Landlord, on the Rent Commencement Date and on the first (1st) day of each calendar month thereafter, an amount equal to Tenant’s Share of Taxes for such Tax Period or part thereof divided by the number of months therein. Landlord may estimate and re-estimate Tenant’s Share of Taxes and deliver a copy of the estimate or re-estimate to Tenant. Thereafter, the monthly installments of Tenant’s Share of Taxes shall be appropriately adjusted in accordance with the estimations so that, by the end of the Tax Period in question, Tenant shall have paid all of Tenant’s Share of Taxes as estimated by Landlord. Any amounts paid based on such an estimate shall be subject to adjustment as herein provided when actual Taxes are available for each Tax Period. If the total of such monthly remittances is greater than Tenant’s Share of Taxes actually due for such Tax Period, then, provided no Event of Default has occurred, Tenant may credit the difference against the next installment of additional rent on account of Taxes due hereunder, except that if such difference is determined after the end of the Term, Landlord shall refund such difference to Tenant within thirty (30) days after such determination to the extent that such difference exceeds any amounts then due from Tenant to Landlord. If the total of such remittances is less than Tenant’s Share of Taxes actually due for such Tax Period, Tenant shall pay the difference to Landlord, as additional rent hereunder, within thirty (30) days of Tenant’s receipt of an invoice therefor. Landlord’s estimate for the next Tax Period shall be based upon actual Taxes for the prior Tax Period plus a reasonable adjustment based upon estimated increases in Taxes. The provisions of this Section 5.3(c) shall survive the expiration or earlier termination of this Lease.

 

(d)           Effect of Abatements. Appropriate credit against Taxes shall be given for any refund obtained by reason of a reduction in any Taxes by the assessors or the administrative, judicial or other governmental agency responsible therefor after deduction of Landlord’s expenditures for reasonable legal fees and for other reasonable expenses incurred in obtaining the Tax refund.

 

(e)           Part Years. If the Rent Commencement Date or the Expiration Date occurs in the middle of a Tax Period, Tenant shall be liable for only that portion of the Taxes, as the case may be, with respect to such Tax Period within the Term from and after the Rent Commencement Date.

 

 

5.4           Late Payments.

 

(a)           Any payment of Rent due hereunder not paid when due shall bear interest for each month or fraction thereof from the due date until paid in full at the annual rate of eighteen percent (18%), or at any applicable lesser maximum legally permissible rate for debts of this nature (the “Default Rate”).

 

(b)           Additionally, if Tenant fails to make any payment within five (5) business days after the due date therefor, Landlord may charge Tenant a fee, which shall constitute liquidated damages, equal to three percent (3%) of any such late payment; provided, however, Landlord shall waive the late fee once in any twelve-(12)-month period in the event Tenant shall pay such late payment within five (5) business days following Landlord’s written notice to Tenant of the occurrence of such late payment.

 

(c)           For each Tenant payment check to Landlord that is returned by a bank for any reason, Tenant shall pay a returned check charge equal to the amount as shall be customarily charged by Landlord’s bank at the time.

 

(d)           Money paid by Tenant to Landlord shall be applied to Tenant’s account in the following order: first, to any unpaid additional rent, including without limitation late charges, returned check charges, legal fees and/or court costs chargeable to Tenant hereunder; and then to unpaid Base Rent.

 

(e)          The parties agree that the late charge referenced in Section 5.4(b) represents a fair and reasonable estimate of the costs that Landlord will incur by reason of any late payment by Tenant, and the payment of late charges and interest are distinct and separate in that the payment of interest is to compensate Landlord for the use of Landlord’s money by Tenant, while the payment of late charges is to compensate Landlord for Landlord’s processing, administrative and other costs incurred by Landlord as a result of Tenant’s delinquent payments. Acceptance of a late charge or interest shall not constitute a waiver of Tenant’s default with respect to the overdue amount or prevent Landlord from exercising any of the other rights and remedies available to Landlord under this Lease or at law or in equity now or hereafter in effect.

 

(f)           If Tenant during any six (6) month period shall be more than five (5) days delinquent in the payment of any installment of Rent on three (3) or more occasions, then, notwithstanding anything herein to the contrary, Landlord may, by written notice to Tenant, elect to require Tenant to pay all Base Rent and additional rent on account of Operating Costs and Taxes quarterly in advance. Such right shall be in addition to and not in lieu of any other right or remedy available to Landlord hereunder or at law on account of Tenant’s default hereunder.

 

 

5.5          No Offset; Independent Covenants; Waiver. Rent shall be paid without notice or demand, and without setoff, counterclaim, defense, abatement, suspension, deferment, reduction or deduction, except as expressly provided herein. TENANT WAIVES ALL RIGHTS (I) TO ANY ABATEMENT, SUSPENSION, DEFERMENT, REDUCTION OR DEDUCTION OF OR FROM RENT, AND (II) TO QUIT, TERMINATE OR SURRENDER THIS LEASE OR THE PREMISES OR ANY PART THEREOF, EXCEPT AS EXPRESSLY PROVIDED HEREIN. TENANT HEREBY ACKNOWLEDGES AND AGREES THAT THE OBLIGATIONS OF TENANT HEREUNDER SHALL BE SEPARATE AND INDEPENDENT COVENANTS AND AGREEMENTS, THAT RENT SHALL CONTINUE TO BE PAYABLE IN ALL EVENTS AND THAT THE OBLIGATIONS OF TENANT HEREUNDER SHALL CONTINUE UNAFFECTED, UNLESS THE REQUIREMENT TO PAY OR PERFORM THE SAME SHALL HAVE BEEN TERMINATED PURSUANT TO AN EXPRESS PROVISION OF THIS LEASE. LANDLORD AND TENANT EACH ACKNOWLEDGES AND AGREES THAT THE INDEPENDENT NATURE OF THE OBLIGATIONS OF TENANT HEREUNDER REPRESENTS FAIR, REASONABLE, AND ACCEPTED COMMERCIAL PRACTICE WITH RESPECT TO THE TYPE OF PROPERTY SUBJECT TO THIS LEASE, AND THAT THIS AGREEMENT IS THE PRODUCT OF FREE AND INFORMED NEGOTIATION DURING WHICH BOTH LANDLORD AND TENANT WERE REPRESENTED BY COUNSEL SKILLED IN NEGOTIATING AND DRAFTING COMMERCIAL LEASES IN MASSACHUSETTS, AND THAT THE ACKNOWLEDGEMENTS AND AGREEMENTS CONTAINED HEREIN ARE MADE WITH FULL KNOWLEDGE OF THE HOLDING IN WESSON V. LEONE ENTERPRISES, INC., 437 MASS. 708 (2002). SUCH ACKNOWLEDGEMENTS, AGREEMENTS AND WAIVERS BY TENANT ARE A MATERIAL INDUCEMENT TO LANDLORD ENTERING INTO THIS LEASE.

 

5.6          Survival. Any obligations under this Section 5 which shall not have been paid at the expiration or earlier termination of the Term shall survive such expiration or earlier termination and shall be paid when and as the amount of same shall be determined and be due.

 

6.             INTENTIONALLY OMITTED

 

 

7.             LETTER OF CREDIT

 

7.1          Amount. Contemporaneously with the execution of this Lease, Tenant shall deliver to Landlord cash in the amount of $765,297.48 (the “Initial Cash Security Deposit”), which shall be held by Landlord in accordance with Section 7.4 below. Notwithstanding the foregoing, in the event Tenant elects the Option Two Landlord Contribution (as defined in Exhibit 4), Tenant shall, within five (5) business days of such election, deliver to Landlord either (x) additional cash in the amount of $10,435.90, for a total amount of $775,733.38, or (y) if Tenant has already delivered a Letter of Credit (as hereinafter defined) as set forth below, then an amendment to such Letter of Credit increasing the amount thereof to $775,733.38, and in either case such total amount shall then be considered to be the Initial Cash Security Deposit for all purposes under this Lease. Notwithstanding anything to the contrary herein contained, Tenant shall, no later than six (6) months after the Execution Date (the “Letter of Credit Replacement Date”), deliver to Landlord a Letter of Credit (as hereinafter defined) in an amount equal to either (a) the Initial Cash Security Deposit if the Letter of Credit Replacement Date occurs before the Increase Date (as hereinafter defined), or (b) the Total Security Deposit Amount (as hereinafter defined) if the Letter of Credit Replacement Date occurs on or after the Increase Date, which Letter of Credit shall serve to replace the Initial Cash Security Deposit. Tenant shall, within ten (10) business days after the date (the “Increase Date”) which is the earlier to occur of (x) December 1, 2019, and (y) the date Tenant completes its Series B financing, deliver to Landlord either (I) the balance of the Total Security Deposit Amount in cash, if the Letter of Credit Replacement Date has not yet occurred, (II) an amendment to the existing Letter of Credit (“Letter of Credit Amendment”), if applicable, in form and substance reasonably acceptable to Landlord, increasing the amount of the Letter of Credit to the Total Security Deposit Amount, or (III) a Letter of Credit in an amount equal to the Total Security Deposit Amount, which Letter of Credit shall serve to replace the Initial Cash Security Deposit as security for the full and faithful performance by Tenant of each and every term, provision, covenant and condition of this Lease. Promptly following Landlord’s receipt of the Letter of Credit, Landlord shall return the remaining balance of the Initial Cash Security Deposit to Tenant. The “Total Security Deposit Amount” shall mean either (x) in the event Tenant elects, or is deemed to have elected, the Option One Landlord Contribution, $1,530,595.00, or (y) in the event Tenant elects the Option Two Landlord Contribution, $1,551,466.75. The “Letter of Credit” shall mean an irrevocable letter of credit that shall (a) be in the applicable amount in accordance with the provisions of this Section 7.1; (b) be issued in a form reasonably approved by Landlord; (c) name Landlord as its beneficiary; (d) be drawn on an FDIC insured financial institution reasonably satisfactory to Landlord (“Approved Issuer”) that both (x) has an office in the greater Boston metropolitan area that will accept presentation of, and pay against, or allow for facsimile presentment for the payment of the Letter of Credit and (y) satisfies both the Minimum Rating Agency Threshold and the Minimum Capital Threshold (as those terms are defined below). The “Minimum Rating Agency Threshold” shall mean that the issuing bank has outstanding unsecured, uninsured and unguaranteed senior long-term indebtedness that is then rated (without regard to qualification of such rating by symbols such as “+” or “-” or numerical notation) “Baa” or better by Moody’s Investors Service, Inc. and/or “BBB” or better by Standard & Poor’s Rating Services, or a comparable rating by a comparable national rating agency designated by Landlord in its discretion. The “Minimum Capital Threshold” shall mean that the issuing bank has combined capital, surplus and undivided profits of not less than $10,000,000,000. Notwithstanding the foregoing, Landlord hereby agrees that, as of the Execution Date, Silicon Valley Bank is an Approved Issuer. The Letter of Credit (and any renewals or replacements thereof) shall (1) be for a term of not less than one (1) year, (2) permit multiple drawings, (3) either be fully transferable by Landlord without the payment of any fees or charges by Landlord, or Tenant shall be obligated to cause a replacement Letter of Credit to be issued for the benefit of Landlord’s transferee, at no fee or charge to Landlord, subject only to the return of the original Letter of Credit and (4) automatically renew for successive one (1) year periods unless at least sixty (60) days prior to the then current expiration date Tenant provides written notice to Landlord that the Letter of Credit will not be extended beyond the current expiration date. If the issuer of the Letter of Credit gives notice of its election not to renew such Letter of Credit for any additional period, Tenant shall be required to deliver a substitute Letter of Credit satisfying the conditions hereof at least thirty (30) days prior to the expiration of the term of such Letter of Credit. If the issuer of the Letter of Credit fails to satisfy either or both of the Minimum Rating Agency Threshold or the Minimum Capital Threshold, Tenant shall be required to deliver a substitute letter of credit from another issuer reasonably satisfactory to the Landlord and that satisfies both the Minimum Rating Agency Threshold and the Minimum Capital Threshold not later than ten (10) business days after Landlord notifies Tenant of such failure. Tenant agrees that it shall from time to time, as necessary, whether as a result of a draw on the Letter of Credit by Landlord pursuant to the terms hereof or as a result of the expiration of the Letter of Credit then in effect, renew or replace the original and any subsequent Letter of Credit so that a Letter of Credit, in the amount required hereunder, is in effect until a date which is at least sixty (60) days after the Expiration Date. If Tenant fails to furnish such renewal or replacement at least sixty (60) days prior to the stated expiration date of the Letter of Credit then held by Landlord, Landlord may draw upon such Letter of Credit and hold the proceeds thereof (and such proceeds need not be segregated) as a Security Deposit pursuant to the terms of this Article 7. Any renewal or replacement of the original or any subsequent Letter of Credit shall meet the requirements for the original Letter of Credit as set forth above, except that such replacement or renewal shall be issued by an Approved Issuer.

 

 

7.2          Application of Proceeds of Letter of Credit. Upon an Event of Default, or if any proceeding shall be instituted by or against Tenant pursuant to any of the provisions of any Act of Congress or State law relating to bankruptcy, reorganizations, arrangements, compositions or other relief from creditors (and, in the case of any proceeding instituted against it, if Tenant shall fail to have such proceedings dismissed within thirty (30) days) or if Tenant is adjudged bankrupt or insolvent as a result of any such proceeding, Landlord at its sole option may draw down all or a part of the Letter of Credit. The balance of any Letter of Credit cash proceeds shall be held in accordance with Section 7.4 below. Should the entire Letter of Credit, or any portion thereof, be drawn down by Landlord, Tenant shall, upon the written demand of Landlord, deliver a replacement Letter of Credit in the amount drawn, and Tenant’s failure to do so within ten (10) days after receipt of such written demand shall constitute an additional Event of Default hereunder. The application of all or any part of the cash proceeds of the Letter of Credit to any obligation or default of Tenant under this Lease shall not deprive Landlord of any other rights or remedies Landlord may have nor shall such application by Landlord constitute a waiver by Landlord.

 

7.3         Transfer of Letter of Credit. In the event that Landlord transfers its interest in the Premises, Tenant shall upon notice from and at no cost to Landlord, deliver to Landlord an amendment to the Letter of Credit or a replacement Letter of Credit naming Landlord’s successor as the beneficiary thereof. If Tenant fails to deliver such amendment or replacement within ten (10) days after written notice from Landlord, Landlord shall have the right to draw down the entire amount of the Letter of Credit and hold the proceeds thereof in accordance with Section 7.5 below.

 

7.4          Cash Proceeds of Letter of Credit. Landlord shall hold the Initial Cash Security Deposit and/or the balance of proceeds remaining after a draw on the Letter of Credit (each hereinafter referred to as the “Security Deposit”) as security for Tenant’s performance of all its Lease obligations. After an Event of Default, Landlord may apply the Security Deposit, or any part thereof, to Landlord’s damages without prejudice to any other Landlord remedy. Landlord has no obligation to pay interest on the Security Deposit and may co-mingle the Security Deposit with Landlord’s funds. If Landlord conveys its interest under this Lease, the Security Deposit, or any part not applied previously, may be turned over to the grantee in which case Tenant shall look solely to the grantee for the proper application and return of the Security Deposit.

 

 

7.5          Return of Security Deposit or Letter of Credit. Should Tenant comply with all of such terms, covenants and conditions and promptly pay all sums payable by Tenant to Landlord hereunder, the Security Deposit and/or Letter of Credit or the remaining proceeds therefrom, as applicable, shall (less any portion thereof which may have been utilized by Landlord to cure any default or applied to any actual damage suffered by Landlord) be returned to Tenant within forty-five (45) days after the latest to occur of: (i) the end of the Term, (ii) the delivery by Tenant to Landlord of the Premises free and clear of all parties claiming under Tenant and in compliance with Section 21 of the Lease, and (iii) the delivery to Landlord of an acceptable Surrender Report, as defined in Section 21 of the Lease, unless an Event of Default (or a default that with notice and the passage of time would constitute an Event of Default) exists at the end of the Term, in which event, the forty-five-(45)-day period shall commence on the date that Tenant cures such Event of Default or default.

 

8.             INTENTIONALLY OMITTED

 

9.             UTILITIES, LANDLORD’S SERVICES

 

9.1          Electricity. Commencing on the Rent Commencement Date, Tenant shall pay all charges for electricity furnished to the Premises and any equipment exclusively serving the Premises, as additional rent, as measured by a separate check meter which shall be installed by Tenant as part of the Tenant Work. Tenant shall, at Tenant’s sole cost and expense, maintain and keep in good order, condition and repair the metering equipment used to measure electricity furnished to the Premises and any equipment exclusively serving the same. Tenant shall pay to Landlord the full amount of any charges attributable to such check meter, based on Landlord’s reading of such check meter, on or before the later to occur of (i) the due date therefor or thirty (30) days following delivery of an invoice for such costs from Landlord. At Tenant’s request, Landlord shall provide Tenant with reasonable back-up documentation regarding the total charges and the method of allocating the charges to Tenant.

 

9.2         Water. Landlord shall contract with the utility provider for water service to the Property, including the Premises. Except as otherwise provided below, the cost of providing water service to the Premises and all other portions of the Building (including, without limitation, the premises of other tenants or occupants of the Building) shall be included in Operating Costs. Notwithstanding the foregoing, if Landlord determines that Tenant is using water in excess of its proportionate share (by floor area) of the total water usage in the Building, Landlord may elect, at Tenant’s expense, to furnish and install in a location in or near the Premises metering equipment to measure water furnished to the Premises and any equipment exclusively serving the same. In such event, Tenant shall, within thirty (30) days after Landlord’s written demand therefor from time to time, pay to Landlord, as additional rent, the full amount of any water service charges attributable to such meter.

 

9.3          Gas. Landlord shall contract with the utility provider for gas service to the Property, including the Premises. The cost of gas used to serve base building plumbing, mechanical and electrical systems shall be included in the costs reimbursed by Tenant pursuant to Section 9.6 below. If Tenant requires gas service for the operation of Tenant’s laboratory equipment in the Premises, Tenant shall pay all charges for gas furnished to the Premises and/or any equipment exclusively serving the Premises as additional rent, based, at Landlord’s election, (i) on Landlord’s reasonable estimate of such gas usage or (ii) on metering or submetering equipment installed by Landlord at Tenant’s expense.

 

 

9.4          Other Utilities. Subject to Landlord’s reasonable rules and regulations governing the same, Tenant shall obtain and pay, as and when due, for all other utilities and services consumed in and/or furnished to the Premises, together with all taxes, penalties, surcharges and maintenance charges pertaining thereto.

 

9.5          Interruption or Curtailment of Utilities. When necessary by reason of accident or emergency, or for repairs, alterations, replacements or improvements which in the reasonable judgment of Landlord are desirable or necessary to be made, Landlord reserves the right, upon as much prior notice to Tenant as is practicable under the circumstances and no less than twenty- four (24) hours’ notice except in the event of an emergency, to interrupt, curtail, or stop (i) the furnishing of hot and/or cold water, and (ii) the operation of the plumbing and electric systems. Landlord shall exercise reasonable diligence to eliminate the cause of any such interruption, curtailment, stoppage or suspension, but, except as set forth in Section 10.7, there shall be no diminution or abatement of Rent or other compensation due from Landlord to Tenant hereunder, nor shall this Lease be affected or any of Tenant’s obligations hereunder reduced, and Landlord shall have no responsibility or liability for any such interruption, curtailment, stoppage, or suspension of services or systems.

 

9.6          Landlord’s Services. Subject to reimbursement pursuant to Section 5.2 above, Landlord shall provide the services described in Exhibit 7 attached hereto and made a part hereof (“Landlord’s Services”), at the level of service set forth therein. All costs incurred in connection with the provision of Landlord’s Services shall be included in Operating Costs. Tenant shall pay such costs monthly, together with monthly installments of Base Rent, on an estimated basis in amounts from time to time reasonably determined by Landlord. After the close of each fiscal year, Landlord shall determine the actual amount of such costs for such year and deliver to Tenant a reasonably detailed statement thereof, together with a statement of the amounts paid by Tenant on an estimated basis toward such costs as aforesaid. If such statement indicates that the estimated amounts paid by Tenant are less than Tenant’s allocable share of the actual amount of such costs for such fiscal year, then Tenant shall pay the amount of such shortfall to Landlord within thirty (30) days after delivery of such statement. If such statement indicates that Tenant’s estimated payments for such year exceed the actual amount of such costs for such year, then Landlord shall credit the excess against the next due installment(s) of additional rent payable under this Section 9.6.

 

10.          MAINTENANCE AND REPAIRS

 

10.1        Maintenance and Repairs by Tenant. Tenant shall keep neat and clean and free of insects, rodents, vermin and other pests and in good repair, order and condition the Premises, including without limitation the entire interior of the Premises, all electronic, phone and data cabling and related equipment (other than building service equipment) that is installed by or for the exclusive benefit of the Tenant (whether located in the Premises or other portions of the Building), all fixtures, equipment and specialty lighting therein, electrical equipment wiring, doors, non-structural walls, windows and floor coverings, reasonable wear and tear and damage by Casualty excepted.

 

 

10.2       Maintenance and Repairs by Landlord. Except as otherwise provided in Section 15, and subject to Tenant’s obligations in Section 10.1 above, Landlord shall maintain and keep in good working order (i) the Building foundation, the roof, Building structure, exterior windows and related assemblies, structural floor slabs and columns of the Building, and (ii) the base Building systems, including, without limitation, all common mechanical, electrical and HVAC systems serving the Building in good repair, order and condition. In addition, Landlord shall operate and maintain the Common Areas in substantially the same manner as comparable combination office and laboratory facilities in the vicinity of the Premises. All costs incurred by Landlord under this Section 10.2 shall be included in Operating Costs, subject to, and in accordance with Section 5.2.

 

10.3       Accidents to Sanitary and Other Systems. Tenant shall give to Landlord prompt notice of any fire or accident in the Premises or in the Building and of any damage to, or defective condition in, any part or appurtenance of the Building including, without limitation, sanitary, electrical, ventilation, heating and air conditioning or other systems located in, or passing through, the Premises. Except as otherwise provided in Section 15, and subject to Tenant’s obligations in Section 10.1 above, such damage or defective condition shall be remedied by Landlord with reasonable diligence, but, subject to Section 14.5 below, if such damage or defective condition was caused by any of the Tenant Parties, the cost to remedy the same shall be paid by Tenant.

 

10.4        Floor Load--Heavy Equipment. Tenant shall not place a load upon any floor of the Premises exceeding the floor load per square foot of area which such floor was designed to carry and which is allowed by Legal Requirements. The floor load capacity of the Premises is 100 pounds per square foot. Landlord reserves the right to prescribe the weight and position of all safes, heavy machinery, heavy equipment, freight, bulky matter or fixtures (collectively, “Heavy Equipment”), in a commercially reasonable manner, which shall be placed so as to distribute the weight. Heavy Equipment shall be placed and maintained by Tenant at Tenant’s expense in settings sufficient in Landlord’s reasonable judgment to absorb and prevent vibration, noise and annoyance. Tenant shall not move any Heavy Equipment into or out of the Building without giving Landlord prior written notice thereof and observing all of Landlord’s Rules and Regulations with respect to the same. If such Heavy Equipment requires special handling, Tenant agrees to employ only persons holding a Master Rigger’s License to do said work, and that all work in connection therewith shall comply with Legal Requirements. Any such moving shall be at the sole risk and hazard of Tenant and Tenant will defend, indemnify and save Landlord and Landlord’s agents (including without limitation its property manager), contractors and employees (collectively with Landlord, the “Landlord Parties”) harmless from and against any and all claims, damages, losses, penalties, costs, expenses and fees (including without limitation reasonable legal fees) (collectively, “Claims”) resulting directly or indirectly from such moving, except, subject to Section 14.5 hereof, to the extent caused by the negligence or willful misconduct of any Landlord Parties. Proper placement of all Heavy Equipment in the Premises shall be Tenant’s responsibility.

 

10.5        Premises Cleaning. Tenant shall be responsible, at its sole cost and expense, for janitorial and trash removal services and other biohazard disposal services for the Premises, including the laboratory areas thereof. Such services shall be performed by licensed (where required by law or governmental regulation), insured and qualified contractors approved in advance, in writing, by Landlord (which approval shall not be unreasonably withheld, delayed or conditioned) and on a sufficient basis to ensure that the Premises are at all times kept neat and clean. Landlord shall provide a dumpster and/or compactor at the Building loading dock for Tenant’s disposal of non-biohazard material. All costs incurred by Landlord in connection with such dumpster and/or compactor shall be included in Operating Costs as provided in Section 5.2.

 

 

10.6        Pest Control. Tenant, at Tenant’s sole cost and expense, shall cause the Premises to be exterminated on a monthly basis to Landlord’s reasonable satisfaction and shall cause all portions of the Premises used for the storage, preparation, service or consumption of food or beverages to be cleaned daily in a manner reasonably satisfactory to Landlord, and to be treated against infestation by insects, rodents and other vermin and pests whenever there is evidence of any infestation. Tenant shall not permit any person to enter the Premises for the purpose of providing such extermination services, unless such persons have been approved by Landlord. If requested by Landlord, Tenant shall, at Tenant’s sole cost and expense, store any refuse generated in the Premises by the consumption of food or beverages in a cold box or similar facility.

 

10.7       Service Interruptions.

 

(a)           Abatement of Rent. In the event that: (i) there shall be an interruption, curtailment or suspension of any service or failure to perform any obligation required to be provided or performed by Landlord pursuant to Sections 9 and/or 10 (and no reasonably equivalent alternative service or supply is provided by Landlord) that shall materially interfere with Tenant’s use and enjoyment of the Premises, or any portion thereof (any such event, a “Service Interruption”), and (ii) such Service Interruption shall continue for five (5) consecutive business days following receipt by Landlord of written notice (the “Service Interruption Notice”) from Tenant describing such Service Interruption (“Abatement Service Interruption Cure Period”), and (iii) such Service Interruption shall not have been caused by an act or omission of Tenant or Tenant’s agents, employees, contractors or invitees (an event that satisfies the foregoing conditions (i)-(iii) being referred to hereinafter as a “Material Service Interruption”) then, Tenant, subject to the next following sentence, shall be entitled to an equitable abatement of Base Rent, Operating Costs and Taxes based on the nature and duration of the Material Service Interruption and the area of the Premises affected, for any and all days following the Material Service Interruption Cure Period that both (x) the Material Service Interruption is continuing and (y) Tenant does not use such affected areas of the Premises for any of the Permitted Uses. Any efforts by Tenant to respond or react to any Material Service Interruption, including, without limitation, any activities by Tenant to remove its personal property from the affected areas of the Premises, shall not constitute a use that precludes abatement pursuant to this Section 10.7(a). The Abatement Service Interruption Cure Period shall be extended by reason of any delays in Landlord’s ability to cure the Service Interruption in question caused by Landlord’s Force Majeure, provided however, that in no event shall the Abatement Service Interruption Cure Period with respect to any Service Interruption be longer than ten (10) consecutive business days after Landlord receives the applicable Service Interruption Notice.

 

(b)           Tenant’s Termination Right. In the event that: (i) a Service Interruption occurs, and (ii) such Service Interruption continues for a period of ninety (90) consecutive days after Landlord receives a Service Interruption Notice with respect to such Service Interruption (“Termination Service Interruption Cure Period”), and (iii) such Service Interruption shall not have been caused by an act or omission of Tenant or Tenant’s agents, employees, contractors or invitees, and (iv) for so long as Tenant ceases to use the affected portion of the Premises during such Service Interruption, then Tenant shall have the right to terminate this Lease by giving a written termination notice to Landlord after the expiration of the Termination Service Interruption Cure Period. If such Service Interruption is cured within ten (10) days (“Post Termination Notice Cure Period”) after Landlord receives such termination notice, then Tenant shall have no right to terminate this Lease based upon such Service Interruption and Tenant’s termination notice shall be of no force or effect. The Termination Service Interruption Cure Period and the Post-Termination Notice Cure Period shall each be extended by reason of any delays in Landlord’s ability to cure the Service Interruption in question caused by Landlord’s Force Majeure, provided however, that in no event shall the aggregate extension of the Termination Service Interruption Cure Period and the Post-Termination Notice Cure Period by reason of Landlord’s Force Majeure exceed sixty (60) days.

 

 

(c)         The provisions of this Section 10.7 shall not apply in the event of a Service Interruption caused by Casualty or Taking (see Section 15 hereof).

 

(d)           The provisions of this Section 10.7 set forth Tenant’s sole rights and remedies, both in law and in equity, in the event of any Service Interruption.

 

11.          ALTERATIONS AND IMPROVEMENTS BY TENANT

 

11.1        Landlord’s Consent Required.

 

(a)           Tenant shall not make any alterations, decorations, installations, removals, additions or improvements (collectively with the Tenant Work, “Alterations”) in or to the Premises without Landlord’s prior written approval of the contractor(s), written plans and specifications and a time schedule therefor. Landlord reserves the right to require that Tenant use Landlord’s preferred vendor(s) for any Alterations that involve roof penetrations, alarm tie- ins, sprinklers, fire alarm and other life safety equipment. Tenant shall not make any amendments or additions to plans and specifications approved by Landlord without Landlord’s prior written consent. Landlord’s approval of non-structural Alterations shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, except to the extent as set forth in Exhibit 4, Landlord may withhold its consent in its sole discretion (a) to any Alteration to or affecting the fixed lab benches, fume hoods, roof and/or building systems, (b) with respect to matters of aesthetics relating to Alterations to or affecting the exterior of the Building, and (c) to any Alteration affecting the Building structure. Tenant shall be responsible for all elements of the design of Tenant’s plans (including, without limitation, compliance with Legal Requirements, 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 Tenant’s plans shall in no event relieve Tenant of the responsibility for such design. In seeking Landlord’s approval, Tenant shall provide Landlord, at least fourteen (14) business days in advance of any proposed construction, with plans, specifications, bid proposals, certified stamped engineering drawings and calculations by Tenant’s engineer of record or architect of record, (including connections to the Building’s structural system, modifications to the Building’s envelope, non-structural penetrations in slabs or walls, and modifications or tie-ins to life safety systems), work contracts, requests for laydown areas and such other information concerning the nature and cost of the Alterations as Landlord may reasonably request. Landlord shall have no liability or responsibility for any claim, injury or damage alleged to have been caused by the particular materials (whether building standard or non-building standard), appliances or equipment selected by Tenant in connection with any work performed by or on behalf of Tenant. Except as otherwise expressly set forth herein, all Alterations shall be done at Tenant’s sole cost and expense and at such times and in such manner as Landlord may from time to time reasonably designate. If Tenant shall make any Alterations, then Landlord may elect to require Tenant at the expiration or sooner termination of the Term to restore the Premises to substantially the same condition as existed immediately prior to the Alterations, provided that Landlord’s election shall be made in writing at the time it grants its consent to the particular Alteration. Notwithstanding the foregoing, if Tenant shall make any Alterations, then, if Landlord, in Landlord’s reasonable judgment, determines that the Alterations (i) adversely affect the general utility of the Building for use by prospective tenants thereof, or (ii) require unusual expense to restore and/or readapt the Premises to usual use as a biotechnology office and research and development facility, such Alterations being hereinafter referred to as “Specialty Alterations”, Landlord may elect to require Tenant at the expiration or sooner termination of the Term to restore the Premises to substantially the same condition as existed immediately prior to the Specialty Alterations. Landlord agrees that it will make such election with respect to any Specialty Alteration at the time that Landlord approves Tenant’s plans and specifications for a Specialty Alteration, if Tenant gives written notice to Landlord requesting Landlord to make such election at the time of such approval. Without limiting the foregoing, Alterations associated with Tenant’s vivarium operations in the Premises (“Vivarium Alterations”) may, at Landlord’s election, be deemed to be Specialty Alterations. Tenant shall provide Landlord with reproducible record drawings (in CAD format) of all Alterations within sixty (60) days after completion thereof,

 

 

(b)           Alterations Permitted without Landlord’s Consent. Notwithstanding anything to the contrary herein contained, Tenant shall have the right without obtaining the prior consent of Landlord, but upon prior notice to Landlord as provided below, to make Alterations to the Premises where: (i) the same are within the interior of the Premises, and do not affect the exterior of the Building and do not affect any of the Building’s systems or the ceiling of the Premises; (ii) the same do not affect the roof or any structural element of the Building, or the fire protection systems of the Building; (iii) the same do not create a nuisance and do not interfere with the rights of other tenants located in the Building; (iv) the cost of any individual Alteration shall not exceed $150,000.00 in cost; (v) Tenant shall comply with the provisions of this Lease, and if such work increases the cost of insurance or taxes, Tenant shall pay for any such increase in cost; and (vi) Tenant gives Landlord at least five (5) business days’ prior notice describing such work in reasonable detail, accompanied by copies of plans and specifications therefor (to the extent plans and specifications are typically prepared in accordance with such work (the “Permitted Alterations”)).

 

11.2       After-Hours. Landlord and Tenant recognize that to the extent Tenant elects to perform some or all of the Alterations during times other than normal construction hours (i.e., Monday-Friday, 7:00 a.m. to 3:00 p.m., excluding holidays), Landlord may need to make arrangements to have supervisory personnel on site. Accordingly, Landlord and Tenant agree as follows: Tenant shall give Landlord at least two (2) business days’ prior written notice of any time outside of normal construction hours when Tenant intends to perform any Alterations (the “After-Hours Work”). Tenant shall reimburse Landlord, within ten (10) days after demand therefor, for the cost of Landlord’s supervisory personnel overseeing the After-Hours Work. In addition, if construction during normal construction hours unreasonably disturbs other tenants of the Building, in Landlord’s sole discretion, Landlord may require Tenant to stop the performance of Alterations during normal construction hours and to perform the same after hours, subject to the foregoing requirement to pay for the cost of Landlord’s supervisory personnel.

 

 

11.3        Harmonious Relations. Tenant agrees that it will not, either directly or indirectly, use any contractors and/or materials if their use will create any difficulty, whether in the nature of a labor dispute or otherwise, with other contractors and/or labor engaged by Tenant or Landlord or others in the construction, maintenance and/or operation of the Building, the Property or any part thereof. In the event of any such difficulty, upon Landlord’s request, Tenant shall cause all contractors, mechanics or laborers causing such difficulty to leave the Property immediately.

 

11.4        Liens. No Alterations shall be undertaken by Tenant until: (i) Tenant has made provision for written waiver of liens from all contractors for such Alteration; and (ii) with respect to any Alteration, the cost of which exceeds $500,000: (x) Tenant has provided Landlord with reasonable evidence that there is sufficient funding to pay for such Alteration, and (y) Tenant has required its general contractor to obtain appropriate surety payment and performance bonds which shall name Landlord as an additional obligee and has filed lien bond(s) (in jurisdictions where available) on behalf of such contractors. Any mechanic’s lien filed against the Premises or the Building for work claimed to have been done for, or materials claimed to have been furnished to, Tenant shall be discharged by Tenant within ten (10) business days thereafter, at Tenant’s expense by filing the bond required by law or otherwise.

 

11.5       General Requirements. Unless Landlord and Tenant otherwise agree in writing, Tenant shall (a) procure or cause others to procure on its behalf all necessary permits before undertaking any Alterations in the Premises (and provide copies thereof to Landlord); (b) perform all of such Alterations in a good and workmanlike manner, employing materials of good quality and in compliance with Landlord’s construction rules and regulations, all insurance requirements of this Lease, and Legal Requirements; and (c) defend, indemnify and hold the Landlord Parties harmless from and against any and all Claims occasioned by or growing out of such Alterations, except to the extent caused by the negligence or willful misconduct of any Landlord Parties.

 

12.          SIGNAGE

 

12.1        Restrictions. Tenant shall have the right to install Building standard signage identifying Tenant’s business at the entrance to the Premises, which signage shall be subject to Landlord’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed). Subject to the foregoing, and subject to Section 12.2 below, Tenant shall not, without first obtaining Landlord’s written approval (which approval Landlord may withhold, in Landlord’s sole discretion), place or suffer to be placed or maintained on the exterior of the Premises, or any part of the interior visible from the exterior thereof, any sign, banner, advertising matter or any other thing of any kind (including, without limitation, any hand-lettered advertising), and shall not place or maintain any decoration, letter or advertising matter on the glass of any window or door of the Premises without first obtaining Landlord’s written approval. No signs may be put on or in any window or elsewhere if visible from the exterior of the Building.

 

12.2        Monument Signage. For so long as (x) there is no Event of Default of Tenant and (y) the Lease is in full force and effect (the “Monument Signage Condition”), then Tenant shall have the right to require Landlord to list, at Landlord’s initial cost and expense, Tenant’s name (“Tenant’s Monument Signage”) on the existing exterior monument sign (the “Monument Sign”) serving the Property at the entrance from the MWF Road during the initial Term of the Lease, and any extensions thereof, subject to the provisions of this Section 12.2. The parties hereby agree that the maintenance and removal of such Tenant’s Monument Signage (including, without limitation, the repair and cleaning of the existing monument facade upon removal of Tenant’s Monument Signage) shall be performed at Landlord’s sole cost and expense, except that Tenant shall be responsible for the cost of any change in Tenant’s Monument Signage during the initial Term of the lease.

 

 

12.3        Building Directory/Premises Entrance Signage.

 

(a)           Landlord shall list Tenant within the directory in the Building lobby once installed. The initial listing shall be at Landlord’s cost and expense, and any changes to such directory listing shall be at Tenant’s cost and expense.

 

(b)           Tenant shall have the right, at Tenant’s cost, to install a building standard Tenant identification sign at the entrance to the Premises.

 

13.          ASSIGNMENT, MORTGAGING AND SUBLETTING

 

13.1        Landlord’s Consent Required. Tenant shall not mortgage or encumber this Lease or in whole or in part whether at one time or at intervals, operation of law or otherwise. Except as expressly otherwise set forth herein, Tenant shall not, without Landlord’s prior written consent, assign, sublet, license or transfer this Lease or the Premises in whole or in part whether by changes in the ownership or control of Tenant, or any direct or indirect owner of Tenant, whether at one time or at intervals, by sale or transfer of stock, partnership or beneficial interests, operation of law or otherwise, or permit the occupancy of all or any portion of the Premises by any person or entity other than Tenant’s employees (each of the foregoing, a “Transfer”). Any purported Transfer made without Landlord’s consent, if required hereunder, shall be void and confer no rights upon any third person, provided that if there is a Transfer, Landlord may collect rent from the transferee without waiving the prohibition against Transfers, accepting the transferee, or releasing Tenant from full performance under this Lease. In the event of any Transfer in violation of this Article 13, Landlord shall have the right to terminate this Lease upon thirty (30) days’ written notice to Tenant given within sixty (60) days after receipt of written notice from Tenant to Landlord of any Transfer, or within one (1) year after Landlord first learns of the Transfer if no notice is given. No Transfer shall relieve Tenant of its primary obligation as party Tenant hereunder, nor shall it reduce or increase Landlord’s obligations under this Lease.

 

13.2        Landlord’s Recapture Right

 

(a)           Except as for Permitted Transfers, as provided in Section 13.7 below, Tenant shall, prior to offering or advertising the Premises or any portion thereof for a Transfer, give a written notice (the “Recapture Notice”) to Landlord which: (i) states that Tenant desires to make a Transfer, (ii) identifies the affected portion of the Premises (the “Recapture Premises”), (iii) identifies the period of time (the “Recapture Period”) during which Tenant proposes to sublet the Recapture Premises, or indicates that Tenant proposes to assign its interest in this Lease, and (iv) offers to Landlord to terminate this Lease with respect to the Recapture Premises (in the case of a proposed assignment of Tenant’s interest in this Lease or a subletting for the remainder of the Term of this Lease) or to suspend the Term for the Recapture Period (i.e. the Term with respect to the Recapture Premises shall be terminated during the Recapture Period and Tenant’s rental obligations shall be proportionately reduced). Landlord shall have fifteen (15) business days within which to respond to the Recapture Notice.

 

 

(b)           Notwithstanding anything to the contrary contained herein, if Landlord notifies Tenant that it accepts the offer contained in the Recapture Notice or any subsequent Recapture Notice, Tenant shall have the right, for a period of fifteen (15) days following receipt of such notice from Landlord, time being of the essence, to notify Landlord in writing that it wishes to withdraw such offer and this Lease shall continue in full force and effect.

 

13.3        Standard of Consent to Transfer. If Landlord does not timely give written notice to Tenant accepting a Recapture Offer or declines to accept the same, then Landlord agrees that, subject to the provisions of this Article 13, Landlord shall not unreasonably withhold, condition or delay its consent to a Transfer on the terms contained in the Recapture Notice to an entity which will use the Premises for any of the Permitted Uses. Without limiting the reasonable reasons why Landlord may withhold its consent to a proposed Transfer, it shall be reasonable for Landlord to withhold its consent to a proposed Transfer if, in Landlord’s reasonable opinion: (a) the Proposed Transferee does not have a tangible net worth and other financial indicators sufficient to meet the Transferee’s obligations under the Transfer instrument in question; (b) the Proposed Transferee has a business reputation that is not compatible with the operation of a first-class combination laboratory, research, development and office building; or (c) the intended use of such entity violates any restrictive use provisions then in effect with respect to space in the Building.

 

13.4        Listing Confers no Rights. The listing of any name other than that of Tenant, whether on the doors of the Premises or on the Building directory, or otherwise, shall not operate to vest in any such other person, firm or corporation any right or interest in this Lease or in the Premises or be deemed to effect or evidence any consent of Landlord, it being expressly understood that any such listing is a privilege extended by Landlord revocable at will by written notice to Tenant.

 

13.5        Profits In Connection with Transfers. Except with respect to any Permitted Transfers, as defined in Section 13.7, Tenant shall, within thirty (30) days of receipt thereof, pay to Landlord fifty percent (50%) of any rent, sum or other consideration to be paid or given in connection with any Transfer, either initially or over time, after deducting reasonable actual out- of-pocket legal, and brokerage expenses incurred by Tenant and unamortized improvements paid for by Tenant in connection therewith and any rental concessions, in excess of Rent hereunder as if such amount were originally called for by the terms of this Lease as additional rent.

 

13.6        Prohibited Transfers. Notwithstanding any contrary provision of this Lease, Tenant shall have no right to make a Transfer unless on both (i) the date on which Tenant notifies Landlord of its intention to enter into a Transfer and (ii) the date on which such Transfer is to take effect, there is no Event of Default under this Lease. Notwithstanding anything to the contrary contained herein, Tenant agrees that in no event shall Tenant make a Transfer to (a) any government agency; (b) any tenant, subtenant or occupant of other space in the Building; or (c) any entity with whom Landlord is currently negotiating, or shall have negotiated in the three (3) months immediately preceding such proposed Transfer, for space in the Property.

 

 

 

13.7           Exceptions to Requirement for Consent. Notwithstanding anything to the contrary herein contained, Tenant shall have the right, without obtaining Landlord’s consent and without giving Landlord a Recapture Notice, but upon prior written notice to Landlord, to (a) make a Transfer to an Affiliated Entity (hereinafter defined) so long as the transfer to such Affiliated Entity is for legitimate business purposes (and not for the purpose of avoiding the provisions of this Section 13), and (b) assign all of Tenant’s interest in and to the Lease to a Successor, provided that prior to or simultaneously with any assignment pursuant to this Section 13.7, such Affiliated Entity or Successor, as the case may be, and Tenant execute and deliver to Landlord an assignment and assumption agreement in form and substance reasonably acceptable to Landlord whereby such Affiliated Entity or Successor, as the case may be, shall agree to be independently bound by and upon all the covenants, agreements, terms, provisions and conditions set forth in the Lease on the part of Tenant to be performed, and whereby such Affiliated Entity or Successor, as the case may be, shall expressly agree that the provisions of this Article 13 shall, notwithstanding such Transfer, continue to be binding upon it with respect to all future Transfers. In addition, a public offering of the stock of Tenant on a national securities exchange shall not be a Transfer pursuant to this Article 13. For the purposes hereof, an “Affiliated Entity” shall be defined as any entity which is controlled by, is under common control with, or which controls Tenant. For the purposes hereof, a “Successor” shall be defined as any entity into or with which Tenant is merged or with which Tenant is consolidated or which acquires all or substantially all of Tenant’s stock or assets, provided that the surviving entity shall have a net worth and other financial indicators sufficient to meet Tenant’s obligations hereunder. Transfers to Affiliated Entities and to Successors which are permitted pursuant to this Section 13.7, are referred to collectively herein as “Permitted Transfers”, and such Affiliated Entities and Successors are referred to herein as “Permitted Transferees”.

 

14.           INSURANCE; INDEMNIFICATION; EXCULPATION

 

14.1        Tenant’s Insurance.

 

(a)           Tenant shall procure, pay for and keep in force throughout the Term (and for so long thereafter as Tenant remains in occupancy of the Premises) commercial general liability insurance insuring Tenant on an occurrence basis against all claims and demands for personal injury liability (including, without limitation, bodily injury, sickness, disease, and death) or damage to property which may be claimed to have occurred from and after the time any of the Tenant Parties shall first enter the Premises, of not less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) in the aggregate annually, and from time to time thereafter shall be not less than such higher amounts, if procurable, as may be reasonably required by Landlord. Tenant shall also carry umbrella liability coverage in an amount of no less than Ten Million Dollars ($10,000,000). Such policy shall also include contractual liability coverage covering Tenant’s liability assumed under this Lease, including without limitation Tenant’s indemnification obligations. Such insurance policy(ies) shall name Landlord, Landlord’s managing agent and persons claiming by, through or under them, if any, as additional insureds.

 

 

(b)           Tenant shall take out and maintain throughout the Term a policy of fire, vandalism, malicious mischief, extended coverage and so-called “all risk” coverage in an amount equal to one hundred percent (100%) of the replacement cost insuring (i) all items or components of Alterations (collectively, the “Tenant-Insured Improvements”), and (ii) all Lab Services Equipment, as defined in Section 10.1, and (iii) of Tenant’s furniture, equipment, fixtures and property of every kind, nature and description related or arising out of Tenant’s leasehold estate hereunder, which may be in or upon the Premises or the Building, (collectively, “Tenant’s Property”). The insurance required to be maintained by Tenant pursuant to this Section 14.1(b) referred to herein as “Tenant Property Insurance” shall insure the interests of both Landlord and Tenant as their respective interests may appear from time to time.

 

(c)           Workers’ Compensation and Employer’s Liability insurance affording statutory coverage and containing statutory limits with the Employer’s Liability portion thereof to have minimum limits of $1,000,000.00.

 

(d)           Tenant shall take out and maintain a policy of business interruption insurance throughout the Term sufficient to cover twenty-four (24) months of Rent due hereunder and Tenant’s business losses during such 24-month period.

 

(e)           During periods when the Tenant Work and/or any Alterations are being performed, Tenant shall maintain, or cause to be maintained, so-called all risk or special cause of loss property insurance or its equivalent and/or builders risk insurance on 100% replacement cost coverage basis, including hard and soft costs coverages. Such insurance shall protect and insure Landlord, Landlord’s agents, Tenant and Tenant’s contractors, as their interests may appear, against loss or damage by fire, water damage, vandalism and malicious mischief, and such other risks as are customarily covered by so-called all risk or special cause of loss property / builders risk coverage or its equivalent.

 

(f)           Tenant shall procure and maintain at its sole expense such additional insurance as may be necessary to comply with any Legal Requirements.

 

(g)           Tenant shall cause all contractors and subcontractors to maintain during the performance of any Alterations the insurance described in Exhibit 10 attached hereto.

 

(h)           The insurance required pursuant to Sections 14.1(a), (b), (c), (d), (e) and (f) (collectively, “Tenant’s Insurance Policies”) shall be effected with insurers approved by Landlord, with a rating of not less than “A-XI” in the current Best’s Insurance Reports, and authorized to do business in the Commonwealth of Massachusetts under valid and enforceable policies. Tenant’s Insurance Policies shall each provide that it shall not be canceled or modified without at least ten (10) days’ prior written notice to each insured named therein; provided, however, in the event Tenant’s insurer will not provide such notice, Tenant shall be obligated to provide Landlord with ten (10) days’ prior written notice of any cancellation or modification. Tenant’s Insurance Policies may include deductibles in an amount no greater than the greater of $25,000 or commercially reasonable amounts. On or before the date on which any of the Tenant Parties shall first enter the Premises and thereafter not less than five (5) days prior to the expiration date of each expiring policy, Tenant shall deliver to Landlord binders of Tenant’s Insurance Policies issued by the respective insurers setting forth in full the provisions thereof together with evidence satisfactory to Landlord of the payment of all premiums for such policies. In the event of any claim, and upon Landlord’s request, Tenant shall deliver to Landlord complete copies of Tenant’s Insurance Policies. Upon request of Landlord, Tenant shall deliver to any Mortgagee copies of the foregoing documents.

 

 

14.2           Indemnification. Except to the extent caused by the negligence or willful misconduct of any of the Landlord Parties, Tenant shall defend, indemnify and save the Landlord Parties harmless from and against any and all Claims asserted by or on behalf of any person, firm, corporation or public authority arising from:

 

(a)           Tenant’s breach of any covenant or obligation under this Lease;

 

(b)           Any injury to or death of any person, or loss of or damage to property, sustained or occurring in, at or upon the Premises;

 

(c)           Any injury to or death of any person, or loss of or damage to property arising out of the use or occupancy of the Premises by or the negligence or willful misconduct of any of the Tenant Parties; and

 

(d)           On account of or based upon any work or thing whatsoever done (other than by Landlord or any of the Landlord Parties) at the Premises during the Term and during the period of time, if any, prior to the Term Commencement Date that any of the Tenant Parties may have been given access to the Premises.

 

14.3           Property of Tenant. Tenant covenants and agrees that, to the maximum extent permitted by Legal Requirements, all of Tenant’s Property at the Premises shall be at the sole risk and hazard of Tenant, and that if the whole or any part thereof shall be damaged, destroyed, stolen or removed from any cause or reason whatsoever, no part of said damage or loss shall be charged to, or borne by, Landlord, except, subject to Section 14.5 hereof, to the extent such damage or loss is due to the negligence or willful misconduct of any of the Landlord Parties.

 

14.4           Limitation of Landlord’s Liability for Damage or Injury. Landlord shall not be liable for any injury or damage to persons, animals or property resulting from fire, explosion, falling plaster, steam, gas, air contaminants or emissions, electricity, electrical or electronic emanations or disturbance, water, rain or snow or leaks from any part of the Building or from the pipes, appliances, equipment or plumbing works or from the roof, street or sub-surface or from any other place or caused by dampness, vandalism, malicious mischief or by any other cause of whatever nature, except, subject to Section 14.5, to the extent caused by or due to the negligence or willful misconduct of any of the Landlord Parties, and then, where notice and an opportunity to cure are appropriate (i.e., where Tenant has an opportunity to know of such condition sufficiently in advance of the occurrence of any such injury or damage resulting therefrom as would have enabled Landlord to prevent such damage or loss had Tenant notified Landlord of such condition) only after (i) notice to Landlord of the condition claimed to constitute negligence or willful misconduct, and (ii) the expiration of a reasonable time after such notice has been received by Landlord without Landlord having commenced to take all reasonable and practicable means to cure or correct such condition. Notwithstanding the foregoing, in no event shall any of the Landlord Parties be liable for any loss which is covered by insurance policies actually carried or required to be so carried by this Lease; nor shall any of the Landlord Parties be liable for any such damage caused by other tenants or persons in the Building or caused by operations in construction of any private, public, or quasi-public work; nor shall any of the Landlord Parties be liable for any latent defect in the Premises or in the Building.

 

 

14.5           Waiver of Subrogation; Mutual Release. Landlord and Tenant each hereby waives on behalf of itself and its property insurers (none of which shall ever be assigned any such claim or be entitled thereto due to subrogation or otherwise) any and all rights of recovery, claim, action, or cause of action against the other and its agents, officers, servants, partners, shareholders, or employees (collectively, the “Related Parties”) for any loss or damage that may occur to or within the Premises or the Building or any improvements thereto, or any personal property of such party therein which is insured against under any Property Insurance (as defined in Section 14.7) policy actually being maintained by the waiving party from time to time, even if not required hereunder, or which would be insured against under the terms of any Property Insurance policy required to be carried or maintained by the waiving party hereunder, whether or not such insurance coverage is actually being maintained, including, in every instance, such loss or damage that may be caused by the negligence of the other party hereto and/or its Related Parties. Landlord and Tenant each agrees to cause appropriate clauses to be included in its Property Insurance policies necessary to implement the foregoing provisions. For avoidance of doubt, each party (“Waiving Party”) expressly waives any claim which it might have against the other party (“Released Party”) for damage to property which is not covered by reason of any deductible or self-insured retention under the Waiving Party’s Property Insurance, or by reason of the fact that the Waiving Party is self-insuring damage to its property.

 

14.6           Tenant’s Acts--Effect on Insurance. Tenant shall not do or permit any Tenant Party to do any act or thing upon the Premises or elsewhere in the Building which will invalidate or be in conflict with any insurance policies covering the Building and the fixtures and property therein; and shall not do, or permit to be done, any act or thing upon the Premises which shall subject Landlord to any liability or responsibility for injury to any person or persons or to property by reason of any business or operation being carried on upon said Premises or for any other reason. Notwithstanding anything to the contrary contained herein, Tenant shall not be liable for any increases in the rate of insurance unless such increases arise from Tenant’s manner of use of the Premises (as opposed to Tenant’s use of the Premises for the Permitted Uses). If by reason of the failure of Tenant to comply with the provisions hereof the insurance rate applicable to any policy of insurance shall at any time thereafter be higher than it otherwise would be, Tenant shall reimburse Landlord within thirty (30) days of Landlord’s written demand for that part of any insurance premiums which shall have been charged because of such failure by Tenant, together with interest at the Default Rate until paid in full, within thirty (30) days after receipt of an invoice therefor. In addition, Tenant shall reimburse Landlord for any increase in insurance premium arising as a result of Tenant’s use and/or storage of any Hazardous Materials in the Premises.

 

14.7           Landlord’s Insurance. Landlord shall carry at all times during the Term of this Lease: (i) commercial general liability insurance with respect to the Building, the Land and the Common Areas thereof in an amount not less than Five Million Dollars ($5,000,000) combined single limit per occurrence, (ii) with respect to the Building, excluding Tenant-Insured Improvements and improvements made by other tenants or occupants, insurance against loss or damage caused by any peril covered under fire, extended coverage and all risk insurance with coverage against vandalism, malicious mischief and such other insurable hazards and contingencies as are from time to time normally insured against by owners of similar first-class multi-tenant buildings in the City of Waltham or which are required by Landlord’s mortgagee, in an amount equal to one hundred percent (100%) of the full replacement cost thereof above foundation walls (“Landlord Property Insurance”), and (iii) rent interruption insurance covering at least eighteen (18) months. Any and all such insurance: (x) may be maintained under a blanket policy affecting other properties of Landlord and/or its affiliated business organizations, and (y) may be written with commercially reasonable deductibles as determined by Landlord. The costs incurred by Landlord related to such insurance shall be included in Operating Costs. Tenant Property Insurance and Landlord Property Insurance are referred to collectively herein as “Property Insurance”.

 

 

15.           CASUALTY; TAKING

 

15.1           Damage. If the Premises are damaged in whole or part because of fire or other insured casualty (“Casualty”), or if the Premises are subject to a taking in connection with the exercise of any power of eminent domain, condemnation, or purchase under threat or in lieu thereof (any of the foregoing, a “Taking”), then unless this Lease is terminated in accordance with Section 15.2 below, Landlord shall restore the Building and/or the Premises to substantially the same condition as existed immediately following the completion of Landlord’s Work, or in the event of a partial Taking which affects the Building and the Premises, restore the remainder of the Building and the Premises not so Taken to substantially the same condition as is reasonably feasible. Landlord shall, within sixty (60) days after any Casualty, deliver to Tenant an engineering estimate (“Restoration Estimate”) from a reputable contractor or engineer, setting forth an estimate of the period of time (“Restoration Period”) that it will take for Landlord to restore the Building and/or Premises, as aforesaid. If, in Landlord’s reasonable judgment, any element of the Tenant-Insured Improvements can more effectively be restored as an integral part of Landlord’s restoration of the Building or the Premises, such restoration shall also be made by Landlord, but at Tenant’s sole cost and expense. Subject to rights of Mortgagees, Tenant Delays, Legal Requirements then in existence and to delays for adjustment of insurance proceeds or Taking awards, as the case may be, and instances of Force Majeure, Landlord shall substantially complete such restoration within one (1) year after Landlord’s receipt of all required permits therefor with respect to substantial reconstruction of at least 50% of the Building, or, within one hundred eighty (180) days after Landlord’s receipt of all required permits therefor in the case of restoration of less than 50% of the Building. Upon substantial completion of such restoration by Landlord, Tenant shall use diligent efforts to complete restoration of the Premises to substantially the same condition as existed immediately prior to such Casualty or Taking, as the case may be, as soon as reasonably possible. Tenant agrees to cooperate with Landlord in such manner as Landlord may reasonably request to assist Landlord in collecting insurance proceeds due in connection with any Casualty which affects the Premises or the Building. In no event shall Landlord be required to expend more than the Net (hereinafter defined) insurance proceeds Landlord receives for damage to the Premises and/or the Building or the Net Taking award attributable to the Premises and/or the Building. “Net” means the insurance proceeds or Taking award actually paid to Landlord (and not paid over to a Mortgagee) less all costs and expenses, including adjusters and attorney’s fees, of obtaining the same. In the Operating Year in which a Casualty occurs, there shall be included in Operating Costs Landlord’s deductible under its property insurance policy. Except as Landlord may elect pursuant to this Section 15.1, under no circumstances shall Landlord be required to repair any damage to, or make any repairs to or replacements of, any Tenant-Insured Improvements.

 

 

15.2           Termination Rights.

 

(a)           Landlord’s Termination Rights. Landlord may terminate this Lease upon thirty (30) days’ prior written notice to Tenant if:

 

(i)           any material portion of the Building or any material means of access thereto is taken;

 

(ii)           more than thirty-five percent (35%) of the Building is damaged by Casualty; or

 

(iii)           if the estimated time to complete restoration exceeds one (1) year from the date on which Landlord receives all required permits for such restoration.

 

(b)           Tenant’s Termination Rights. Tenant may terminate this Lease upon thirty (30) days’ prior written notice to Landlord if:

 

(i)           any material portion of the Premises or any material means of access thereto is taken, so that, in Tenant’s reasonable judgment, the continued operation of Tenant’s business in the Premises is materially adversely affected;

 

(ii)           if, 50% or more of the Building is damaged by a Casualty and the estimated Restoration Period, as set forth in the Restoration Estimate, exceeds one (1) year from the date on which Landlord receives all required permits for such restoration; or

 

(iii)           if less than 50% of the Building is damaged by a Casualty, Tenant’s use of and/or access to the Premises is materially adversely affected by such Casualty, estimated Restoration Period, as set forth in the Restoration Estimate, exceeds six (6) months from the date on which Landlord receives all required permits for such restoration; and

 

(iv)           if Landlord is so required but fails to complete restoration of the Premises within the time frames and subject to the conditions set forth in Section 15.1 above, then Tenant may terminate this Lease upon thirty (30) days written notice to Landlord; provided, however, that if Landlord completes such restoration within thirty (30) days after receipt of any such termination notice on account of Landlord’s failure to so complete within the time period required, such termination notice shall be null and void and this Lease shall continue in full force and effect.

 

The remedies set forth in this Section 15.2(b) and in Section 15.2(c) below are Tenant’s sole and exclusive rights and remedies based upon Landlord’s failure to complete the restoration of the Premises as set forth herein.

 

(c)           Either Party May Terminate. In the case of any Casualty or Taking affecting the Premises and occurring during the last twelve (12) months of the Term, then (i) if such Casualty or Taking results in more than twenty-five percent (25%) of the floor area of the Premises being unsuitable for the Permitted Uses, or (ii) the damage to the Premises costs more than $250,000 to restore, then either Landlord or Tenant shall have the option to terminate this Lease upon thirty (30) days’ written notice to the other. In addition, if Landlord’s Mortgagee does not release sufficient insurance proceeds to cover the cost of Landlord’s restoration obligations, then Landlord shall (i) notify Tenant thereof, and (ii) have the right to terminate this Lease. If Landlord does not terminate this Lease pursuant to the previous sentence and such notice by Landlord does not include an agreement by Landlord to pay for the difference between the cost of such restoration and such released insurance proceeds, then Tenant may terminate this Lease by written notice to Landlord on or before the date that is thirty (30) days after such notice.

 

 

(d)           Automatic Termination. In the case of a Taking of the entire Premises, then this Lease shall automatically terminate as of the date of possession by the Taking authority.

 

15.3           Rent Abatement. In the event of a Casualty affecting the Premises, there shall be an equitable adjustment of Base Rent, Operating Costs and Taxes based upon the degree to which Tenant’s ability to conduct its business in the Premises is impaired by reason of such Casualty from and after the date of a Casualty, and continuing until the following portions of the repair and restoration work to be performed by Landlord, as set forth above, are substantially completed: (i) any repair and restoration work to be performed by Landlord within the Premises, and (ii) repair and restoration work with respect to the Common Areas to the extent that damage to the Common Areas caused by such Casualty materially adversely affects Tenant’s use of, or access to, the Premises.

 

15.4           Taking for Temporary Use. If the Premises are Taken for temporary use, this Lease and Tenant’s obligations, including without limitation the payment of Rent, shall continue. For purposes hereof, a “Taking for temporary use” shall mean a Taking of ninety (90) days or less.

 

15.5           Disposition of Awards. Except for any separate award for Tenant’s movable trade fixtures, relocation expenses, and unamortized leasehold improvements paid for by Tenant (provided that the same may not reduce Landlord’s award), all Taking awards to Landlord or Tenant shall be Landlord’s property without Tenant’s participation, and Tenant hereby assigns to Landlord Tenant’s interest, if any, in such award. Tenant may pursue its own claim against the Taking authority.

 

16.           ESTOPPEL CERTIFICATE.

 

Tenant shall at any time and from time to time upon not less than ten (10) business days’ prior written notice from Landlord, execute, acknowledge and deliver to Landlord a statement in writing certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications), and the dates to which Rent has been paid in advance, if any, stating to Tenant’s knowledge whether or not Landlord is in default in performance of any covenant, agreement, term, provision or condition contained in this Lease and, if so, specifying each such default, and such other facts as Landlord may reasonably request, it being intended that any such statement delivered pursuant hereto may be relied upon by Landlord, any prospective purchaser of the Building or of any interest of Landlord therein, any Mortgagee or prospective Mortgagee thereof, any lessor or prospective lessor thereof, any lessee or prospective lessee thereof, or any prospective assignee of any mortgage thereof. Time is of the essence with respect to any such requested certificate, Tenant hereby acknowledging the importance of such certificates in mortgage financing arrangements, prospective sales and the like.

 

 

17.           HAZARDOUS MATERIALS

 

17.1           Prohibition. Tenant shall not, without the prior written consent of Landlord, bring or permit to be brought or kept in or on the Premises or elsewhere in the Building or the Property (i) any inflammable, combustible or explosive fluid, material, chemical or substance (except for standard office supplies stored in proper containers); and (ii) any Hazardous Material (hereinafter defined), other than the types and quantities of Hazardous Materials which are listed on Exhibit 8 attached hereto (“Tenant’s Hazardous Materials”), provided that the same shall at all times be brought upon, kept or used in Tenant’s ‘control areas’, as described in, and in accordance with Exhibit 8-1 attached hereto and in accordance with all applicable Legal Requirements, including, without limitation, the International Building Code (2018) and Environmental Laws (hereinafter defined), and prudent environmental practice and (with respect to medical waste and so-called “biohazard” materials) good scientific and medical practice. Tenant shall be responsible for assuring that all laboratory uses are adequately and properly vented. On or before each anniversary of the Term Commencement Date, and on any earlier date during the 12-month period on which Tenant intends to add a new Hazardous Material or materially increase the quantity of any Hazardous Material to the list of Tenant’s Hazardous Materials, Tenant shall submit to Landlord an updated list of Tenant’s Hazardous Materials for Landlord’s review and approval, which approval shall not be unreasonably withheld, conditioned or delayed. Landlord shall have the right, from time to time, to inspect the Premises for compliance with the terms of this Section 17.1. Notwithstanding the foregoing, with respect to any of Tenant’s Hazardous Materials which Tenant does not properly handle, store or dispose of in compliance with all applicable Environmental Laws (hereinafter defined), prudent environmental practice and (with respect to medical waste and so-called “biohazard materials”) good scientific and medical practice, Tenant shall, upon written notice from Landlord, no longer have the right to bring such material into the Building or the Property until Tenant has demonstrated, to Landlord’s reasonable satisfaction, that Tenant has implemented programs to thereafter properly handle, store or dispose of such material. In order to induce Landlord to waive its otherwise applicable requirement that Tenant maintain insurance in favor of Landlord against liability arising from the presence of radioactive materials in the Premises, and without limiting the foregoing, Tenant hereby represents and warrants to Landlord that at no time during the Term will Tenant bring upon, or permit to be brought upon, the Premises any radioactive materials whatsoever.

 

17.2           Environmental Laws. For purposes hereof, “Environmental Laws” shall mean all laws, statutes, ordinances, rules and regulations of any local, state or federal governmental authority having jurisdiction concerning environmental, health and safety matters, including but not limited to any discharge by any of the Tenant Parties into the air, surface water, sewers, soil or groundwater of any Hazardous Material (hereinafter defined) whether within or outside the Premises, including, without limitation (a) the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., (b) the Federal Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., (c) the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., (d) the Toxic Substances Control Act of 1976, 15 U.S.C. Section 2601 et seq., and (e) Chapter 21E of the General Laws of Massachusetts. Tenant, at its sole cost and expense, shall comply with (i) Environmental Laws, and (ii) any rules, requirements and safety procedures of the Massachusetts Department of Environmental Protection, the City of Waltham and any insurer of the Building or the Premises with respect to Tenant’s use, storage and disposal of any Hazardous Materials.

 

 

17.3           Hazardous Material Defined. As used herein, the term “Hazardous Material” means asbestos, oil or any hazardous, radioactive or toxic substance, material or waste or petroleum derivative which is or becomes regulated by any Environmental Law, including without limitation live organisms, viruses and fungi, medical waste and any so-called “biohazard” materials. The term “Hazardous Material” includes, without limitation, oil and/or any material or substance which is (i) designated as a “hazardous substance,” “hazardous material,” “oil,” “hazardous waste” or toxic substance under any Environmental Law.

 

17.4           Chemical Safety Program. Tenant shall establish and maintain a chemical safety program administered by a licensed, qualified individual in accordance with the requirements of any applicable governmental authority. Tenant shall be solely responsible for all costs incurred in connection with such chemical safety program, and Tenant shall provide Landlord with such documentation as Landlord may reasonably require evidencing Tenant’s compliance with the requirements of (a) any applicable governmental authority with respect to such chemical safety program and (b) this Section. Tenant shall obtain and maintain during the Term any permit required by any such applicable governmental authority.

 

17.5           Testing. If any Mortgagee or governmental authority requires testing to determine whether there has been any release of Hazardous Materials and such testing is required as a result of the acts or omissions of any of the Tenant Parties in violation of this Lease, then Tenant shall reimburse Landlord within thirty (30) days of Landlord’s written demand, as additional rent, for the reasonable costs thereof, together with interest at the Default Rate until paid in full. Tenant shall execute affidavits, certifications and the like, as may be reasonably requested by Landlord from time to time concerning Tenant’s best knowledge and belief concerning the presence of Hazardous Materials in or on the Premises, the Building or the Property. In addition to the foregoing, if Landlord reasonably believes that any Hazardous Materials have been released on the Premises in violation of this Lease or any Legal Requirement, Landlord shall have the right to conduct appropriate tests of the Premises or any portion thereof to demonstrate that Hazardous Materials are present or that contamination has occurred due to the acts or omissions of any of the Tenant Parties in violation of this Lease. Tenant shall pay all reasonable costs of such tests if such tests reveal that Hazardous Materials exist at the Premises in violation of this Lease or any Legal Requirement. Further, Landlord shall have the right to cause a third-party consultant retained by Landlord, at Landlord’s expense (provided, however, that such costs shall be included in Operating Costs, if allowed pursuant to Section 5.2), to review, but not more than once in any calendar year, Tenant’s lab operations, procedures and permits to ascertain whether or not Tenant is complying with law and adhering to best industry practices. Tenant agrees to cooperate in good faith with any such review and to provide to such consultant any information requested by such consultant and reasonably required in order for such consultant to perform such review, but nothing contained herein shall require Tenant to provide proprietary or confidential information to such consultant.

 

 

17.6           Indemnity; Remediation.

 

(a)           Tenant hereby covenants and agrees to indemnify, defend and hold the Landlord Parties harmless from and against any and all Claims against any of the Landlord Parties arising out of contamination of any part of the Property or other adjacent property, which contamination arises as a result of: (i) the presence of Hazardous Material in the Premises, the presence of which is caused by any act or omission of any of the Tenant Parties, or (ii) from a breach by Tenant of its obligations under this Article 17. This indemnification of the Landlord Parties by Tenant includes, without limitation, reasonable costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work or any other response actions required by any federal, state or local governmental agency or political subdivision because of Hazardous Material present in the soil, soil vapor or ground water on or under or any indoor air in the Building based upon the circumstances identified in the first sentence of this Section 17.6. The indemnification and hold harmless obligations of Tenant under this Section 17.6 shall survive the expiration or any earlier termination of this Lease. Without limiting the foregoing, if the presence of any Hazardous Material in the Building or otherwise in the Property is caused or permitted by any of the Tenant Parties and results in any contamination of any part of the Property or any adjacent property, Tenant shall promptly take all actions at Tenant’s sole cost and expense as are necessary to return the Property and/or the Building or any adjacent property to their condition as of the date of this Lease, provided that Tenant shall first obtain Landlord’s written approval of such actions, which approval shall not be unreasonably withheld, conditioned or delayed so long as such actions, in Landlord’s reasonable discretion, would not potentially have any adverse effect on the Property, and, in any event, Landlord shall not withhold its approval of any proposed actions which are required by applicable Environmental Laws. The provisions of this Section 17.6 shall survive the expiration or earlier termination of the Lease.

 

(b)           Without limiting the obligations set forth in Section 17.6(a) above, if any Hazardous Material is in, on, under, at or about the Building or the Property as a result of the acts or omissions of any of the Tenant Parties and results in any contamination of any part of the Property or any adjacent property that is in violation of any applicable Environmental Law or that requires the performance of any response action pursuant to any Environmental Law, Tenant shall promptly take all actions at Tenant’s sole cost and expense as are necessary to reduce such Hazardous Material to amounts below any applicable Reportable Quantity, any applicable Reportable Concentration and any other applicable standard set forth in any Environmental Law such that no further response actions are required; provided that Tenant shall first obtain Landlord’s written approval of such actions, which approval shall not be unreasonably withheld, conditioned or delayed so long as such actions would not be reasonably expected to have an adverse effect on the market value or utility of the Property for the Permitted Uses, and in any event, Landlord shall not withhold its approval of any proposed actions which are required by applicable Environmental Laws (such approved actions, “Tenant’s Remediation”).

 

(c)           In the event that Tenant fails to complete Tenant’s Remediation prior to the end of the Term, then:

 

(i)           until the completion of Tenant’s Remediation (as evidenced by the certification of Tenant’s Licensed Site Professional (as such term is defined by applicable Environmental Laws), who shall be reasonably acceptable to Landlord) (the “Remediation Completion Date”), Tenant shall pay to Landlord, with respect to the portion of the Premises which reasonably cannot be occupied by a new tenant until completion of Tenant’s Remediation, (A) additional rent on account of Operating Costs and Taxes and (B) Base Rent in an amount equal to the greater of (1) the fair market rental value of such portion of the Premises (determined in substantial accordance with the process described in Section 1.2 above), and (2) Base Rent attributable to such portion of the Premises in effect immediately prior to the end of the Term; and

 

 

(ii)           Tenant shall maintain responsibility for Tenant’s Remediation and Tenant shall complete Tenant’s Remediation as soon as reasonably practicable in accordance with Environmental Laws. If Tenant does not diligently pursue completion of Tenant’s Remediation, Landlord shall have the right to either (A) assume control for overseeing Tenant’s Remediation, in which event Tenant shall pay all reasonable costs and expenses of Tenant’s Remediation (it being understood and agreed that all costs and expenses of Tenant’s Remediation incurred pursuant to contracts entered into by Tenant shall be deemed reasonable) within thirty (30) days of demand therefor (which demand shall be made no more often than monthly), and Landlord shall be substituted as the party identified on any governmental filings as the party responsible for the performance of such Tenant’s Remediation or (B) require Tenant to maintain responsibility for Tenant’s Remediation, in which event Tenant shall complete Tenant’s Remediation as soon as reasonably practicable in accordance with Environmental Laws, it being understood that Tenant’s Remediation shall not contain any requirement that Tenant remediate any contamination to levels or standards more stringent than those associated with the Property’s current office, research and development, laboratory, and vivarium uses.

 

(d)           The provisions of this Section 17.6 shall survive the expiration or earlier termination of this Lease.

 

17.7           Disclosures. Prior to bringing any Hazardous Material into any part of the Property, Tenant shall deliver to Landlord the following information with respect thereto: (a) a description of handling, storage, use and disposal procedures; (b) all plans or disclosures and/or emergency response plans which Tenant has prepared, including without limitation Tenant’s Spill Response Plan, and all plans which Tenant is required to supply to any governmental agency or authority pursuant to any Environmental Laws; (c) copies of all Required Permits relating thereto; and (d) other information reasonably requested by Landlord.

 

17.8           Removal. Tenant shall be responsible, at its sole cost and expense, for Hazardous Material and other biohazard disposal services for the Premises. Such services shall be performed by contractors reasonably acceptable to Landlord and on a sufficient basis to ensure that the Premises are at all times kept neat, clean and free of Hazardous Materials and biohazards except in appropriate, specially marked containers reasonably approved by Landlord.

 

17.9           Landlord Obligations with respect to Hazardous Materials.

 

(a)           Landlord Representations, Covenants and Indemnity. Landlord hereby represents and warrants to Tenant that, to the Best of Landlord’s Knowledge (as that term is defined in clause (c) below), except to the extent (if any) as may be disclosed in the following described environmental assessment reports which have been made available by Landlord to Tenant (the “Disclosed Materials”), there exist, as of the Execution Date of this Lease, no Hazardous Materials on the Property which are in violation of applicable Environmental Laws or that require reporting, investigation, remediation or other response under Chapter 21E or other Environmental Laws:

 

•Phase I Environmental Site Assessment, 830 Winter Street, Waltham, Massachusetts, prepared by Boston Environmental Corporation, dated June 26, 2015.

 

 

Landlord covenants that neither Landlord nor any of the Landlord Parties shall bring any Hazardous Materials in or on to the Property or discharge any Hazardous Materials in or on to the Property which are, in either case, in violation of applicable Environmental Laws. Landlord hereby indemnifies and shall defend and hold Tenant, its officers, directors, employees, and agents harmless from any Claims arising as result of any breach by Landlord of its representations, warranties, or covenants under this Section 17.9(a).

 

(b)           Landlord Remediation. If Hazardous Materials are discovered in, on or under the Property which are not in compliance with applicable Environmental Laws or that require reporting, investigation, remediation or other response under Chapter 21E or other Environmental Laws, and which are not the responsibility of Tenant pursuant to this Article 17, then Landlord shall remove or remediate the same, when, if, and in the manner required by applicable Environmental Laws.

 

(c)           To the Best of Landlord’s Knowledge. The phrase “to the Best of Landlord’s Knowledge” under shall mean the best of the knowledge of Tyson Reynoso, Landlord’s asset manager with respect to the Property.

 

18.           RULES AND REGULATIONS.

 

18.1           Rules and Regulations. Tenant will faithfully observe and comply with the Rules and Regulations attached hereto as Exhibit 9 (“Current Rules and Regulations”) and reasonable rules and regulations as may be promulgated, from time to time, with respect to the Building, the Property and construction within the Property (collectively, the “Rules and Regulations”). The Current Rules and Regulations consist of the Building Rules and Regulations attached hereto as Exhibit 9-1 and the Construction Rules and Regulations attached hereto as Exhibit 9-2. In the case of any conflict between the provisions of this Lease and any future rules and regulations, the provisions of this Lease shall control. Nothing contained in this Lease shall be construed to impose upon Landlord any duty or obligation to enforce the Rules and Regulations or the terms, covenants or conditions in any other lease as against any other tenant and Landlord shall not be liable to Tenant for violation of the same by any other tenant, its servants, employees, agents, contractors, visitors, invitees or licensees.

 

18.2           Energy Conservation. Landlord may institute upon written notice to Tenant such policies, programs and measures as may be necessary, required, or expedient for the conservation and/or preservation of energy or energy services (collectively, the “Conservation Program”), provided however, that the Conservation Program does not, by reason of such policies, programs and measures, reduce the level of energy or energy services being provided to the Premises below the level of energy or energy services then being provided in comparable combination laboratory, research and development and office buildings in the vicinity of the Premises, provided the same shall not come at a material cost to Tenant, or materially adversely affect Tenant’s use of the Premises for any of the Permitted Uses, or (ii) as may be necessary or required to comply with Legal Requirements or standards or the other provisions of this Lease. Upon receipt of such notice, Tenant shall comply with the Conservation Program.

 

18.3           Recycling. Upon written notice, Landlord may establish policies, programs and measures for the recycling of paper, products, plastic, tin and other materials (a “Recycling Program”). Upon receipt of such notice, Tenant will comply with the Recycling Program at Tenant’s sole cost and expense.

 

 

19.           LAWS AND PERMITS.

 

19.1           Legal Requirements. Tenant shall not cause or permit the Premises, or cause the Property or the Building to be used in any way that violates any Legal Requirement, order, permit, approval, variance, covenant or restrictions of record or any provisions of this Lease, interferes with the rights of tenants of the Building, or constitutes a nuisance or waste. Tenant shall obtain, maintain and pay for all permits and approvals needed for the operation of Tenant’s business, as soon as reasonably possible, and in any event shall not undertake any operations or use unless all applicable permits and approvals are in place and shall, promptly take all actions necessary to comply with all Legal Requirements, including, without limitation, the Occupational Safety and Health Act, applicable to Tenant’s use of the Premises, the Property or the Building. Tenant shall maintain in full force and effect all certifications or permissions required by any authority having jurisdiction to authorize, franchise or regulate Tenant’s use of the Premises. Tenant shall be solely responsible for procuring and complying at all times with any and all necessary permits and approvals directly or indirectly relating or incident to: the conduct of its activities on the Premises; its scientific experimentation, transportation, storage, handling, use and disposal of any chemical or radioactive or bacteriological or pathological substances or organisms or other hazardous wastes or environmentally dangerous substances or materials or medical waste or animals or laboratory specimens. Within ten (10) days of a request by Landlord, which request shall be made not more than once during each period of twelve (12) consecutive months during the Term hereof, unless otherwise requested by any mortgagee of Landlord or unless Landlord reasonably suspects that Tenant has violated the provisions of this Section 19.1, Tenant shall furnish Landlord with copies of all such permits and approvals that Tenant possesses or has obtained together with a certificate certifying that such permits are all of the permits that Tenant possesses or has obtained with respect to the Premises. Tenant shall promptly give written notice to Landlord of any warnings or violations relative to the above received from any federal, state or municipal agency or by any court of law and shall promptly cure the conditions causing any such violations. Tenant shall not be deemed to be in default of its obligations under the preceding sentence to promptly cure any condition causing any such violation in the event that, in lieu of such cure, Tenant shall contest the validity of such violation by appellate or other proceedings permitted under applicable law, provided that: (i) any such contest is made reasonably and in good faith, (ii) Tenant makes provisions, including, without limitation, posting bond(s) or giving other security, reasonably acceptable to Landlord to protect Landlord, the Building and the Property from any liability, costs, damages or expenses arising in connection with such alleged violation and failure to cure, (iii) Tenant shall agree to indemnify, defend (with counsel reasonably acceptable to Landlord) and hold Landlord harmless from and against any and all liability, costs, damages, or expenses arising in connection with such condition and/or violation, (iv) Tenant shall promptly cure any violation in the event that its appeal of such violation is overruled or rejected, and (v) Tenant’s decision to delay such cure shall not, in Landlord’s good faith determination, be likely to result in any actual or threatened bodily injury, property damage, or any civil or criminal liability to Landlord, any tenant or occupant of the Building or the Property, or any other person or entity. Nothing contained in this Section 19.1 shall be construed to expand the uses permitted hereunder beyond the Permitted Uses. Landlord shall comply with any Legal Requirements and with any direction of any public office or officer relating to the maintenance or operation of the structural elements of the Building and the Common Areas, and the costs so incurred by Landlord shall be included in Operating Costs in accordance with the provisions of Section 5.2.

 

 

20.           DEFAULT

 

20.1           Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder by Tenant:

 

(a)           If Tenant fails to make any payment of Rent or any other payment required hereunder, as and when due, and such failure shall continue for a period of five (5) business days after notice thereof from Landlord to Tenant; provided, however, an Event of Default shall occur hereunder without any obligation of Landlord to give any notice if (i) Tenant fails to make any payment within five (5) days after the due date therefor, and (ii) Landlord has given Tenant written notice under this Section 20.1(a) on more than two (2) occasions during the twelve (12) month interval preceding such failure by Tenant;

 

(b)           Intentionally omitted;

 

(c)           If Tenant shall fail to execute and deliver to Landlord an estoppel certificate pursuant to Article 16 above or a subordination and attornment agreement pursuant to Article 22 below, within the timeframes set forth therein;

 

(d)           If Tenant shall fail to maintain any insurance required hereunder;

 

(e)           If Tenant shall fail to timely deliver a Letter of Credit by the Letter of Credit Replacement Date, restore the Security Deposit to its original amount or deliver a replacement Letter of Credit, in each case as and when required under Article 7 above;

 

(f)           If Tenant causes or suffers any release of Hazardous Materials in or near the Property;

 

(g)           If Tenant shall make a Transfer in violation of the provisions of Article 13 above, or if any event shall occur or any contingency shall arise whereby this Lease, or the term and estate thereby created, would (by operation of law or otherwise) devolve upon or pass to any person, firm or corporation other than Tenant, except as expressly permitted under Article 13 hereof;

 

(h)           Tenant’s failure to timely deliver to Landlord the Total Security Deposit Amount, as defined in Section 7.1;

 

(i)           The failure by Tenant to observe or perform any of the covenants or provisions of this Lease to be observed or performed by Tenant, other than as specified above, and such failure continues for more than thirty (30) days after notice thereof from Landlord; provided, further, that if the nature of Tenant’s default is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant shall commence such cure within said thirty (30) day period and thereafter diligently prosecute such cure to completion, which completion shall occur not later than ninety (90) days from the date of such notice from Landlord;

 

 

(j)           Tenant shall be involved in financial difficulties as evidenced by an admission in writing by Tenant of Tenant’s inability to pay its debts generally as they become due, or by the making or offering to make a composition of its debts with its creditors;

 

(k)           Tenant shall make an assignment or trust mortgage, or other conveyance or transfer of like nature, of all or a substantial part of its property for the benefit of its creditors,

 

(l)           an attachment on mesne process, on execution or otherwise, or other legal process shall issue against Tenant or its property and a sale of any of its assets shall be held thereunder;

 

(m)           the leasehold hereby created shall be taken on execution or by other process of law and shall not be revested in Tenant within thirty (30) days thereafter;

 

(n)           a receiver, sequesterer, trustee or similar officer shall be appointed by a court of competent jurisdiction to take charge of all or any part of Tenant’s Property and such appointment shall not be vacated within thirty (30) days; or

 

(n)           any proceeding shall be instituted by or against Tenant pursuant to any of the provisions of any Act of Congress or State law relating to bankruptcy, reorganizations, arrangements, compositions or other relief from creditors, and, in the case of any proceeding instituted against it, if Tenant shall fail to have such proceedings dismissed within thirty (30) days or if Tenant is adjudged bankrupt or insolvent as a result of any such proceeding.

 

With respect to the defaults set forth in subsections (c), (d), (e), (f) and (g) above, if Tenant shall fail to cure the default within the respective required timeframes set forth in this Lease, and such failure shall continue for three (3) business days after Tenant’s receipt of a Reminder Notice (as defined below), then such events shall be deemed to be an Event of Default. For purposes hereof, a “Reminder Notice” shall be a notice from Landlord to Tenant that states in bold faced capital letters at the top of the first page thereof the following: “TENANT’S FAILURE TO CURE DEFAULT WITHIN THREE (3) BUSINESS DAYS AFTER RECEIPT OF THIS NOTICE SHALL CONSTITUTE AN EVENT OF DEFAULT.

 

20.2           Remedies. Upon an Event of Default, Landlord may, by notice to Tenant, elect to terminate this Lease; and thereupon (and without prejudice to any remedies which might otherwise be available for arrears of Rent or preceding breach of covenant or agreement and without prejudice to Tenant’s liability for damages as hereinafter stated), upon the giving of such notice, this Lease shall terminate as of the date specified therein as though that were the Expiration Date. Upon such termination, Landlord shall have the right to utilize the Security Deposit or draw down the entire Letter of Credit, as applicable, and apply the proceeds thereof to its damages hereunder. Without being taken or deemed to be guilty of any manner of trespass or conversion, and without being liable to indictment, prosecution or damages therefor, Landlord may, by lawful process, enter into and upon the Premises (or any part thereof in the name of the whole); repossess the same, as of its former estate; and expel Tenant and those claiming under Tenant. The words “re-entry” and “re-enter” as used in this Lease are not restricted to their technical legal meanings.

 

 

20.3          Damages - Termination.

 

(a)            Upon the termination of this Lease under the provisions of this Article 20, Tenant shall pay to Landlord Rent up to the time of such termination, shall continue to be liable for any preceding breach of covenant, and in addition, shall pay to Landlord as damages, at the election of Landlord, either:

 

(i)            the amount (discounted to present value at the rate of five percent (5%) per annum) by which, at the time of the termination of this Lease (or at any time thereafter if Landlord shall have initially elected damages under Section 20.3(a)(ii) below), (x) the aggregate of Rent projected over the period commencing with such termination and ending on the Expiration Date, exceeds (y) the aggregate projected rental value of the Premises for such period, taking into account a reasonable time period during which the Premises shall be unoccupied, plus all Reletting Costs (hereinafter defined); or

 

(ii)           amounts equal to Rent which would have been payable by Tenant had this Lease not been so terminated, payable upon the due dates therefor specified herein following such termination and until the Expiration Date, provided, however, if Landlord shall re-let the Premises during such period, that Landlord shall credit Tenant with the net rents received by Landlord from such re-letting, such net rents to be determined by first deducting from the gross rents as and when received by Landlord from such re-letting the expenses incurred or paid by Landlord in terminating this Lease, as well as the expenses of re-letting, including altering and preparing the Premises for new tenants, brokers’ commissions, and all other similar and dissimilar expenses properly chargeable against the Premises and the rental therefrom (collectively, “Reletting Costs”), it being understood that any such re-letting may be for a period equal to or shorter or longer than the remaining Term; and provided, further, that (x) in no event shall Tenant be entitled to receive any excess of such net rents over the sums payable by Tenant to Landlord hereunder and (y) in no event shall Tenant be entitled in any suit for the collection of damages pursuant to this Section 20.3(a)(ii) to a credit in respect of any net rents from a re-letting except to the extent that such net rents are actually received by Landlord prior to the commencement of such suit. If the Premises or any part thereof should be re-let in combination with other space, then proper apportionment on a square foot area basis shall be made of the rent received from such re-letting and of the expenses of re-letting.

 

(b)           In calculating the amount due under Section 20.3(a)(i), above, there shall be included, in addition to the Base Rent, all other considerations agreed to be paid or performed by Tenant, including without limitation Tenant’s Share of Operating Costs and Taxes, on the assumption that all such amounts and considerations would have increased at the rate of three percent (3%) per annum for the balance of the full term hereby granted.

 

(c)           Suit or suits for the recovery of such damages, or any installments thereof, may be brought by Landlord from time to time at its election, and nothing contained herein shall be deemed to require Landlord to postpone suit until the date when the Term would have expired if it had not been terminated hereunder.

 

(d)           Nothing herein contained shall be construed as limiting or precluding the recovery by Landlord against Tenant of any sums or damages to which, in addition to the damages particularly provided above, Landlord may lawfully be entitled by reason of any Event of Default hereunder.

 

 

20.4        Landlord’s Self-Help; Fees and Expenses. If Tenant shall default in the performance of any covenant on Tenant’s part to be performed in this Lease contained, including without limitation the obligation to maintain the Premises in the required condition pursuant to Section 10.1 above, Landlord may, upon reasonable advance notice, except that no notice shall be required in an emergency, immediately, or at any time thereafter, perform the same for the account of Tenant. Tenant shall pay to Landlord within thirty (30) days of Landlord’s demand therefor any costs incurred by Landlord in connection therewith, together with interest at the Default Rate until paid in full. In addition, Tenant shall pay all of Landlord’s costs and expenses, including without limitation reasonable attorneys’ fees, incurred (i) in enforcing any obligation of Tenant under this Lease or (ii) as a result of Landlord or any of the Landlord Parties, without its fault, being made party to any litigation pending by or against any of the Tenant Parties.

 

20.5        Waiver of Redemption, Statutory Notice and Grace Periods. Tenant does hereby waive and surrender all rights and privileges which it might have under or by reason of any present or future Legal Requirements to redeem the Premises or to have a continuance of this Lease for the Term hereby demised after being dispossessed or ejected therefrom by process of law or under the terms of this Lease or after the termination of this Lease as herein provided. Except to the extent prohibited by Legal Requirements, any statutory notice and grace periods provided to Tenant by law are hereby expressly waived by Tenant.

 

20.6        Landlord’s Remedies Not Exclusive. The specified remedies to which Landlord may resort hereunder are cumulative and are not intended to be exclusive of any remedies or means of redress to which Landlord may at any time be lawfully entitled, and Landlord may invoke any remedy (including the remedy of specific performance) allowed at law or in equity as if specific remedies were not herein provided for.

 

20.7        No Waiver. Landlord’s failure to seek redress for violation, or to insist upon the strict performance, of any covenant or condition of this Lease, or any of the Rules and Regulations promulgated hereunder, shall not prevent a subsequent act, which would have originally constituted a violation, from having all the force and effect of an original violation. The receipt by Landlord of Rent with knowledge of the breach of any covenant of this Lease shall not be deemed a waiver of such breach. The failure of Landlord to enforce any of such Rules and Regulations against Tenant and/or any other tenant in the Building shall not be deemed a waiver of any such Rules and Regulations. No provisions of this Lease shall be deemed to have been waived by either party unless such waiver be in writing signed by such party. No payment by Tenant or receipt by Landlord of a lesser amount than the Rent herein stipulated shall be deemed to be other than on account of the stipulated Rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or pursue any other remedy in this Lease provided.

 

20.8        Restrictions on Tenant’s Rights. During the continuation of any Event of Default, (a) Landlord shall not be obligated to provide Tenant with any notice pursuant to Sections 2.3 and 2.4 above; and (b) Tenant shall not have the right to make, nor to request Landlord’s consent or approval with respect to, any Alterations or Transfers.

 

 

20.9        Landlord Default. Notwithstanding anything to the contrary contained in the Lease, Landlord shall in no event be in default in the performance of any of Landlord’s obligations under this Lease unless Landlord shall have failed to perform such obligations within thirty (30) days (or such additional time as is reasonably required to correct any such default, provided Landlord commences cure within 30 days) after notice by Tenant to Landlord properly specifying wherein Landlord has failed to perform any such obligation. Except as expressly set forth in this Lease, Tenant shall not have the right to terminate or cancel this Lease or to withhold rent or to set-off or deduct any claim or damages against rent as a result of any default by Landlord or breach by Landlord of its covenants or any warranties or promises hereunder, except in the case of a wrongful eviction of Tenant from the Premises (constructive or actual) by Landlord, and then only if the same continues after notice to Landlord thereof and an opportunity for Landlord to cure the same as set forth above. In addition, Tenant shall not assert any right to deduct the cost of repairs or any monetary claim against Landlord from rent thereafter due and payable under this Lease.

 

21.          SURRENDER; ABANDONED PROPERTY; HOLD-OVER

 

21.1            Surrender

 

(a)            Upon the expiration or earlier termination of the Term, Tenant shall (i) peaceably quit and surrender to Landlord the Premises (including without limitation all fixed lab benches, fume hoods, electric, plumbing, heating and sprinkling systems, fixtures and outlets, vaults, paneling, molding, shelving, radiator enclosures, cork, rubber, linoleum and composition floors, ventilating, silencing, air conditioning and cooling equipment therein and all other furniture, fixtures, and equipment that was either provided by Landlord or paid for in whole or in part by any allowance provided to Tenant by Landlord under this Lease) broom clean, in good order, repair and condition excepting only ordinary wear and tear and damage by fire or other insured Casualty; (ii) remove all of Tenant’s Property, all autoclaves and cage washers and, to the extent specified by Landlord, Alterations made by Tenant (in accordance with Section 11.1(a)); and (iii) repair any damages to the Premises or the Building caused by the installation or removal of Tenant’s Property and/or such Alterations. Tenant’s obligations under this Section 21.1(a) shall survive the expiration or earlier termination of this Lease.

 

 

(b)            Prior to the expiration of this Lease (or within thirty (30) days after any earlier termination), Tenant shall clean and otherwise decommission all interior surfaces (including floors, walls, ceilings, and counters), piping, supply lines, waste lines, acid neutralization systems and plumbing in and/or exclusively serving the Premises, and all exhaust or other ductwork in and/or exclusively serving the Premises, in each case which has carried or released or been contacted by any Hazardous Materials or other chemical or biological materials used in the operation of the Premises, and shall otherwise clean the Premises so as to permit the Surrender Plan (defined below) to be issued. At least thirty (30) days prior to the expiration of the Term (or, if applicable, within five (5) business days after any earlier termination of this Lease), Tenant shall deliver to Landlord a reasonably detailed narrative description of the actions proposed (or required by any Legal Requirements) to be taken by Tenant in order to render the Premises (including any Alterations permitted or required by Landlord to remain therein) free of Hazardous Materials and otherwise released for unrestricted use and occupancy including without limitation causing the Premises to be decommissioned in accordance with the regulations of the U.S. Nuclear Regulatory Commission and/or the Massachusetts Department of Public health (the “MDPH”) for the control of radiation, and cause the Premises to be released for unrestricted use by the Radiation Control Program of the MDPH (the “Surrender Plan”). The Surrender Plan (i) shall be accompanied by a current list of (A) all Required Permits held by or on behalf of any Tenant Party with respect to Hazardous Materials in, on, under, at or about the Premises, and (B) Tenant’s Hazardous Materials, and (ii) shall be subject to the review and approval of Landlord’s environmental consultant. In connection with review and approval of the Surrender Plan, upon request of Landlord, Tenant shall deliver to Landlord or its consultant such additional non-proprietary information concerning the use of and operations within the Premises as Landlord shall request. On or before the expiration of the Term (or within thirty (30) days after any earlier termination of this Lease, during which period Tenant’s use and occupancy of the Premises shall be governed by Section 21.3 below), Tenant shall (i) perform or cause to be performed all actions described in the approved Surrender Plan, and (ii) deliver to Landlord a certification from a third party certified industrial hygienist reasonably acceptable to Landlord certifying that the Premises do not contain any Hazardous Materials and evidence that the approved Surrender Plan shall have been satisfactorily completed by a contractor acceptable to Landlord, and Landlord shall have the right, subject to reimbursement at Tenant’s expense as set forth below, to cause Landlord’s environmental consultant to inspect the Premises and perform such additional procedures as may be deemed reasonably necessary to confirm that the Premises are, as of the expiration of the Term (or, if applicable, the date which is thirty (30) days after any earlier termination of this Lease), free of Hazardous Materials and otherwise available for unrestricted use and occupancy as aforesaid. Landlord shall have the unrestricted right to deliver the Surrender Plan and any report by Landlord’s environmental consultant with respect to the surrender of the Premises to third parties. Such third parties and the Landlord Parties shall be entitled to rely on the Surrender Report. If Tenant shall fail to prepare or submit a Surrender Plan approved by Landlord, or if Tenant shall fail to complete the approved Surrender Plan, or if such Surrender Plan, whether or not approved by Landlord, shall fail to adequately address the use of Hazardous Materials by any of the Tenant Parties in, on, at, under or about the Premises, Landlord shall have the right to take any such actions as Landlord may deem reasonable or appropriate to assure that the Premises and the Property are surrendered in the condition required hereunder, the cost of which actions shall be reimbursed by Tenant as additional rent within thirty (30) days of Landlord’s written demand. Tenant’s obligations under this Section 21.1(b) shall survive the expiration or earlier termination of the Term.

 

(c)            No act or thing done by Landlord during the Term shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such surrender shall be valid, unless in writing signed by Landlord. Unless otherwise agreed by the parties in writing, no employee of Landlord or of Landlord’s agents shall have any power to accept the keys of the Premises prior to the expiration or earlier termination of this Lease. The delivery of keys to any employee of Landlord or of Landlord’s agents shall not operate as a termination of this Lease or a surrender of the Premises.

 

(d)           Notwithstanding anything to the contrary contained herein, Tenant shall, at its sole cost and expense, remove from the Premises, prior to the end of the Term, any item installed by or for Tenant and which, pursuant to Legal Requirements, must be removed therefrom before the Premises may be used by a subsequent tenant.

 

 

21.2        Abandoned Property. After the expiration or earlier termination hereof, if Tenant fails to remove any property from the Building or the Premises which Tenant is obligated by the terms of this Lease to remove within five (5) business days after written notice from Landlord, such property (the “Abandoned Property”) shall be conclusively deemed to have been abandoned, and may either be retained by Landlord as its property or sold or otherwise disposed of in such manner as Landlord may see fit. If any item of Abandoned Property shall be sold, Tenant hereby agrees that Landlord may receive and retain the proceeds of such sale and apply the same, at its option, to the expenses of the sale, the cost of moving and storage, any damages to which Landlord may be entitled under Section 20 hereof or pursuant to law, and to any arrears of Rent.

 

21.3        Holdover. If any of the Tenant Parties holds over (which term shall include, without limitation, the failure of Tenant or any Tenant Party to perform all of its obligations under Section 21.1 above) after the end of the Term, Tenant shall be deemed a tenant-at- sufferance subject to the provisions of this Lease. Whether or not Landlord has previously accepted payments of Rent from Tenant:

 

(a)           Tenant shall pay Base Rent at the Hold Over Percentage, as hereinafter defined, of the highest rate of Base Rent payable during the Term,

 

(b)           Tenant shall continue to pay to Landlord all additional rent, and

 

(c)            in the event such hold over extends beyond thirty (30) days after the end of the Term, Tenant shall be liable for all damages, including without limitation lost business and consequential damages, incurred by Landlord as a result of such holding over, Tenant hereby acknowledging that Landlord may need the Premises after the end of the Term for other tenants and that the damages which Landlord may suffer as the result of Tenant’s holding over cannot be determined as of the Execution Date. Nothing contained herein shall grant Tenant the right to holdover after the expiration or earlier termination of the Term. The “Hold Over Percentage” shall be 150% for the first sixty (60) days of such holdover, and 200% for any period of hold over after the first sixty (60) days. Nothing contained herein shall grant Tenant the right to holdover after the expiration or earlier termination of the Term.

 

21.4        Warranties. Tenant hereby assigns to Landlord any warranties in effect on the last day of the Term with respect to any fixtures and Alterations installed in the Premises. Tenant shall provide Landlord with copies of any such warranties prior to the expiration of the Term (or, if the Lease is earlier terminated, within five (5) days thereafter).

 

22.            MORTGAGEE RIGHTS

 

22.1        Subordination. Tenant’s rights and interests under this Lease shall be (i) subject and subordinate to any ground lease, overleases, mortgage, deed of trust, or similar instrument covering the Premises, the Building and/or the Land and to all advances, modifications, renewals, replacements, and extensions thereof (each of the foregoing, a “Mortgage”) so long as the applicable Mortgagee and Tenant execute an SNDA, as hereinafter defined, or (ii) if any Mortgagee elects, prior to the lien of any present or future Mortgage. Tenant further shall attorn to and recognize any successor landlord, whether through foreclosure or otherwise, as if the successor landlord were the originally named landlord. The provisions of this Section 22.1 shall be self-operative and no further instrument shall be required to effect such subordination or attornment; however, Tenant agrees to execute, acknowledge and deliver such instruments, confirming such subordination and attornment in such form as shall be requested by any such holder within fifteen (15) days of request therefor.

 

 

Landlord agrees to use reasonable efforts to obtain an SNDA, as hereinafter defined, from the holder of any future mortgage which affects the Property. An “SNDA” shall be defined as a subordination, non-disturbance and attornment agreement on the standard form of SNDA then being used by the holder of the Mortgage in question, with such commercially reasonable modifications as may be requested by Tenant.

 

22.2            Notices. Tenant shall give each Mortgagee the same notices given to Landlord concurrently with the notice to Landlord, and each Mortgagee shall have a reasonable opportunity thereafter to cure a Landlord default, and Mortgagee’s curing of any of Landlord’s default shall be treated as performance by Landlord.

 

22.3            Mortgagee Consent. Tenant acknowledges that, where applicable, any consent or approval hereafter given by Landlord may be subject to the further consent or approval of a Mortgagee; and the failure or refusal of such Mortgagee to give such consent or approval shall, notwithstanding anything to the contrary in this Lease contained, constitute reasonable justification for Landlord’s withholding its consent or approval.

 

22.4            Mortgagee Liability. Tenant acknowledges and agrees that if any Mortgage shall be foreclosed, (a) the liability of the Mortgagee and its successors and assigns shall exist only so long as such Mortgagee or purchaser is the owner of the Premises, and such liability shall not continue or survive after further transfer of ownership; and (b) subject to the last sentence of this Section 22.4, such Mortgagee and its successors or assigns shall not be (i) liable for any act or omission of any prior lessor under this Lease; (ii) liable for the performance of Landlord’s covenants pursuant to the provisions of this Lease which arise and accrue prior to such entity succeeding to the interest of Landlord under this Lease or acquiring such right to possession; (iii) subject to any offsets or defense which Tenant may have at any time against Landlord; (iv) bound by any base rent or other sum which Tenant may have paid previously for more than one (1) month; or (v) liable for the performance of any covenant of Landlord under this Lease which is capable of performance only by the original Landlord. Notwithstanding the foregoing: (x) nothing shall relieve any Mortgagee, purchaser at foreclosure, or grantee of a deed in lieu of foreclosure from: (i) any liability which it has as Landlord under the Lease from and after the date (the “Succession Date”) which it succeeds to Landlord’s interest under the Lease, and (y) any obligation which Landlord has to perform repairs or maintenance under the Lease based upon the fact that the need for such repairs or maintenance first arose after the Succession Date.

 

23.            QUIET ENJOYMENT.

 

Landlord covenants that so long as Tenant keeps and performs each and every covenant, agreement, term, provision and condition herein contained on the part and on behalf of Tenant to be kept and performed, Tenant shall peaceably and quietly hold, occupy and enjoy the Premises during the Term from and against the claims of all persons lawfully claiming by, through or under Landlord subject, nevertheless, to the covenants, agreements, terms, provisions and conditions of this Lease, any matters of record or of which Tenant has knowledge and to any Mortgage to which this Lease is subject and subordinate, as hereinabove set forth.

 

 

24.            NOTICES.

 

Any notice, consent, request, bill, demand or statement hereunder (each, a “Notice”) by either party to the other party shall be in writing and shall be deemed to have been duly given when either delivered by hand or by nationally recognized overnight courier (in either case with evidence of delivery or refusal thereof) addressed as follows:

 

If to Landlord:	PPF OFF 828-830 WINTER STREET, LLC c/o King Street Properties 800 Boylston Street, Suite 1570 Boston, MA 02199 Attention: Stephen D. Lynch
With a copy to:	Morgan Stanley 585 Broadway, 37th Floor New York, NY 10036 Attention: Jennie P. Friend [**]
And to:	Goulston & Storrs PC 400 Atlantic Avenue Boston, MA 02110 Attention: King Street
If to Tenant:	Akrevia Therapeutics Inc. 610 Main Street Cambridge, MA 02139 Attn: Joe Farmer

 

Notwithstanding the foregoing, any notice from Landlord to Tenant regarding ordinary business operations (e.g., exercise of a right of access to the Premises, maintenance activities, invoices, etc.) may also be given by written notice delivered by email to those parties listed in Section 2.4. Either party may at any time change the address or specify an additional address for such Notices by delivering or mailing, as aforesaid, to the other party a notice stating the change and setting forth the changed or additional address, provided such changed or additional address is within the United States. Notices shall be effective upon the date of receipt or refusal thereof.

 

25.            MISCELLANEOUS

 

25.1            Separability. If any provision of this Lease or portion of such provision or the application thereof to any person or circumstance is for any reason held invalid or unenforceable, the remainder of this Lease (or the remainder of such provision) and the application thereof to other persons or circumstances shall not be affected thereby.

 

 

25.2        Captions. The captions are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope of this Lease nor the intent of any provisions thereof.

 

25.3        Broker. Tenant and Landlord each warrants and represents that it has dealt with no broker in connection with the consummation of this Lease other than Colliers International and CBRE (collectively, the “Broker”). Tenant and Landlord each agrees to defend, indemnify and save the other harmless from and against any Claims arising in breach of the representation and warranty set forth in the immediately preceding sentence. Landlord shall be solely responsible for the payment of any brokerage commissions to Broker.

 

25.4        Entire Agreement. This Lease, Lease Summary Sheet and Exhibits 1-12 attached hereto and incorporated herein contain the entire and only agreement between the parties and any and all statements and representations, written and oral, including previous correspondence and agreements between the parties hereto, are merged herein. Tenant acknowledges that all representations and statements upon which it relied in executing this Lease are contained herein and that Tenant in no way relied upon any other statements or representations, written or oral. This Lease may not be modified orally or in any manner other than by written agreement signed by the parties hereto.

 

25.5        Governing Law. This Lease is made pursuant to, and shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts and any applicable local municipal rules, regulations, by-laws, ordinances and the like.

 

25.6        Representation of Authority. By his or her execution hereof, each of the signatories on behalf of the respective parties hereby warrants and represents to the other that he or she is duly authorized to execute this Lease on behalf of such party. Upon Landlord’s request, Tenant shall provide Landlord with evidence that any requisite resolution, corporate authority and any other necessary consents have been duly adopted and obtained.

 

25.7        Expenses Incurred by Landlord Upon Tenant Requests.

 

(a)            Tenant shall, upon demand, reimburse Landlord for all reasonable expenses, including, without limitation, legal fees, incurred by Landlord in connection with all requests by Tenant for consents, approvals or execution of collateral documentation related to this Lease, including, without limitation, costs incurred by Landlord in the review and approval of Tenant’s plans and specifications in connection with proposed Alterations to be made by Tenant to the Premises or in connection with requests by Tenant for Landlord’s consent to make a Transfer. Such costs shall be deemed to be additional rent under this Lease.

 

(b)            Notwithstanding the foregoing: (i) the amount of legal fees which Tenant is required to reimburse Landlord with respect to any Transfer shall not exceed the Transfer Legal Fee Cap, as hereinafter defined, with respect to such Transfer, and (ii) with respect any request by Tenant to review and approve Tenant’s plans and specifications with respect to any Alteration, Tenant shall only be required to reimburse Landlord for third party consultants engaged by Landlord to review such plans and specifications as Landlord, in good faith determines is necessary (e.g., reviews by structure engineers, MEP engineers, etc.). The “Transfer Legal Fees Cap” shall be defined as $2,500.00, except that (a) the Transfer Legal Fees Cap shall increase by $500 every fifth (5th) anniversary of the Term Commencement Date, and (b) the Transfer Legal Fees Cap shall not apply to Tenant’s request for Landlord’s approval of any sub-sublease of any tier.

 

 

(c)            In the case of litigation or other legal proceeding between Landlord and Tenant relating to the provisions of this Lease or Tenant’s occupancy of the Premises, the losing party shall, upon demand, reimburse the prevailing party for its reasonable costs of prosecuting and/or defending such proceeding (including, without limitation, reasonable attorneys’ fees.

 

25.8        Survival. Without limiting any other obligation of Tenant which may survive the expiration or prior termination of the Term, all obligations on the part of Tenant to indemnify, defend, or hold Landlord harmless, as set forth in this Lease shall survive the expiration or prior termination of the Term.

 

25.9        Limitation of Liability.

 

(a)           Limitation on Landlord’s Liability. Tenant shall neither assert nor seek to enforce any claim against Landlord or any of the Landlord Parties, or the assets of any of the Landlord Parties, for breach of this Lease or otherwise, other than against Landlord’s interest in the Building and in the uncollected rents, issues and profits thereof, and Tenant agrees to look solely to such interest for the satisfaction of any liability of Landlord under this Lease. This Section 25.9 shall not limit any right that Tenant might otherwise have to obtain injunctive relief against Landlord. Landlord and Tenant specifically agree that in no event shall any officer, director, trustee, employee or representative of Landlord or any of the other Landlord Parties ever be personally liable for any obligation under this Lease, nor shall Landlord or any of the other Landlord Parties be liable for consequential or incidental damages or for lost profits whatsoever in connection with this Lease.

 

(b)           Limitation on Tenant’s Liability. Landlord shall neither assert nor seek to enforce any claim against Tenant or any of the Tenant Parties for breach of this Lease or otherwise, other than against the assets and property of Tenant, and Landlord agrees to look solely to such assets and property for the satisfaction of any liability of Tenant or any Tenant Parties under this Lease. This Section 25.9(b) shall not limit any right that Landlord might otherwise have to obtain injunctive relief against Tenant. Landlord and Tenant specifically agree that in no event: (i) any officer, director, trustee, employee or representative of Tenant or any of the other Tenant Parties ever be personally liable for any obligation under this Lease, and (ii) Tenant or any of the other Tenant Parties be liable for consequential or incidental damages or for lost profits whatsoever in connection with this Lease, except that nothing in this Section 25.9(b) shall limit or affect any liability or obligation which Tenant may have in the event of any breach by Tenant of its obligations under either Section 17 (Hazardous Materials) or Section 21.3 (Holdover).

 

25.10      Binding Effect. The covenants, agreements, terms, provisions and conditions of this Lease shall bind and benefit the successors and assigns of the parties hereto with the same effect as if mentioned in each instance where a party hereto is named or referred to, except that no violation of the provisions of Article 13 hereof shall operate to vest any rights in any successor or assignee of Tenant. A facsimile signature on this Lease shall be equivalent to, and have the same force and effect as, an original signature.

 

 

25.11      Landlord Obligations upon Transfer. Upon any sale, transfer or other disposition of the Building, Landlord shall be entirely freed and relieved from the performance and observance thereafter of all covenants and obligations hereunder on the part of Landlord to be performed and observed, it being understood and agreed in such event (and it shall be deemed and construed as a covenant running with the land) that the person succeeding to Landlord’s ownership of said reversionary interest shall thereupon and thereafter assume, and perform and observe, any and all of such covenants and obligations of Landlord, except as otherwise agreed in writing.

 

25.12      No Grant of Interest. Tenant shall not grant any interest whatsoever in any fixtures within the Premises or any item paid in whole or in part by Landlord’s Contribution or by Landlord.

 

25.13      Financial Information. Tenant shall deliver to Landlord, within thirty (30) days after Landlord’s reasonable request (which request may be made no more often than one time every twelve (12) month period provided that such limitation shall not apply in the event of a sale or financing of any of Landlord’s interest in the Lease or the Premises), Tenant’s most recently completed balance sheet and related statements of income, shareholder’s equity and cash flows statements (audited if available) reviewed by an independent certified public accountant and certified by an officer of Tenant as being true and correct in all material respects. Any such financial information may be relied upon by any actual or potential lessor, purchaser, or mortgagee of the Property or any portion thereof.

 

25.14      OFAC Certification. As an inducement to Landlord to enter into this lease, Tenant hereby represents and warrants that: (i) Tenant is not, nor is it owned or Controlled directly or, to Tenant’s knowledge, indirectly by, any person, group, entity or nation named on any list issued by the Office of Foreign Assets Control of the United States Department of the Treasury pursuant to Executive Order 13224 or any similar list or any law, order, rule or regulation or any Executive Order of the President of the United States as a terrorist, “Specially Designated National and Blocked Person” or other banned or blocked person (any such person, group, entity or nation being hereinafter referred to as a “Prohibited Person”); (ii) Tenant is not (nor is it owned, Controlled, directly or, to Tenant’s knowledge, indirectly, by any person, group, entity or nation which is) acting directly or, to Tenant’s knowledge, indirectly for or on behalf of any Prohibited Person; and (iii) neither Tenant (nor any person, group, entity or nation which owns or Controls Tenant, directly or, to Tenant’s knowledge, indirectly) has conducted or will conduct business or has engaged or will engage in any transaction or dealing with any Prohibited Person, including without limitation any assignment of this lease or any subletting or all or any portion of the Premises or the making or receiving of any contribution or funds, goods or services to or for the benefit of a Prohibited Person. In connection with the foregoing, it is expressly understood and agreed that (x) any breach by Tenant of the foregoing representations and warranties shall be an Event of Default, and (y) the representations, warranties and covenants contained in this Section 25.14 shall be continuing in nature and shall survive the expiration or earlier termination of this Lease.

 

 

25.15      Confidentiality. Tenant acknowledges and agrees that the terms of this Lease are confidential. Disclosure of the terms hereof could adversely affect the ability of Landlord to negotiate other leases with respect to the Building and may impair Landlord’s relationship with other tenants of the Building. Tenant shall not disclose the terms and conditions of this Lease (“Landlord Confidential Information”) to any other person or entity without the prior written consent of Landlord, which may be given or withheld by Landlord, in Landlord’s sole discretion, except as required for financial disclosures or securities filings, as required by the order of any court or public body with authority over Tenant, or in connection with any litigation between Landlord and Tenant with respect to this Lease or to Tenant’s partners, officers, directors, employees, brokers, attorneys, or as may be required as part of any financing or Tenant’s normal course of business, provided that any recipient from Tenant of Landlord Confidential Information is required by Tenant to keep Landlord’s Confidential Information confidential in accordance with the terms of this Section 25.15. It is understood and agreed that damages alone would be an inadequate remedy for the breach of this provision by Tenant, and Landlord shall also have the right to seek specific performance of this provision and to seek injunctive relief to prevent its breach or continued breach.

 

25.16      Force Majeure. Other than for Tenant’s obligations under this Lease that can be performed by the payment of money (e.g., payment of Rent and maintenance of insurance), whenever a period of time is herein prescribed for action to be taken by either party hereto, such party shall not be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, acts of terrorism, governmental laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond the control of such party (collectively “Force Majeure”). In no event shall financial inability of a party be deemed to be Force Majeure.

 

25.17      LEED Guidelines. Tenant acknowledges and agrees that the Building is LEED Certified, and Landlord has provided Tenant with a copy of the LEED Guidelines attached hereto as Exhibit 12, Tenant shall comply with such reasonable rules and regulations as Landlord may require in order to maintain such status, provided the same shall not materially adversely affect Tenant’s rights or increase Tenant’s obligations under this Lease.

 

[SIGNATURES ON FOLLOWING PAGE]

 

 

IN WITNESS WHEREOF the parties hereto have executed this Lease as a sealed instrument as of the Execution Date.

 

LANDLORD

 

PPF OFF 828-830 WINTER STREET, LLC,

 

a Delaware limited liability company

 

By: PPF MASS REIT, LLC, a Delaware
limited liability company, its Sole Member

 

By: PPF OP, LP, a Delaware limited
partnership, its Sole Partner

 

By: PPF OPGP, LLC, a Delaware
limited liability company, its
General Partner

 

By: Prime Property Fund, LLC,
a Delaware limited liability company,
its Sole Member

 

By: Morgan Stanley Real Estate
Advisor, Inc., a Delaware
corporation, its Investment Adviser

 

By:

/s/ Matthew Miller

 

Name: Matthew Miller

 

Title: Vice President

 

TENANT

 

AKREVIA THERAPEUTICS INC.,

a Delaware corporation By:

 

By:

/s/ Joseph Farmer

 

Name: Joseph Farmer

 

Title: COO

 

 

EXHIBIT 1

 

RENT SCHEDULE—OPTION 1 AND OPTION 2

 

OPTION 1
BASE RENT:

 

Year			Premises				Rent/SF				Annual Total				Monthly
1				27,829			$	55.00			$	1,530,595.00			$	127,549.58
2				27,829			$	56.65			$	1,576,512.85			$	131,376.07
3				27,829			$	58.35			$	1,623,822.15			$	135,318.51
4				27,829			$	60.10			$	1,672,522.90			$	139,376.91
5				27,829			$	61.90			$	1,722,615.10			$	143,551.26
6				27,829			$	63.76			$	1,774,377.04			$	147,864.75
7				27,829			$	65.67			$	1,827,530.43			$	152,294.20
8				27,829			$	67.64			$	1,882,353.56			$	156,862,80
9				27,829			$	69.67				1,938,846.43			$	161,570.54
10				27,829			$	72.76			$	1,997,009.04			$	166,417.42

 

OPTION 2
BASE RENT:

 

Year			Premises				Rent/SF				Annual Total				Monthly
1				27,829			$	55.75			$	1,551,466.75			$	129,288.90
2				27,829			$	57.42			$	1,597,941.18			$	133,161.77
3				27,829			$	59.14			$	1,645,807.06			$	137,150.59
4				27,829			$	60.91			$	1,695,064.39			$	141,255.37
5				27,829			$	62.74			$	1,745,991.46			$	145,499.29
6				27,829			$	64.62			$	1,798,309.98			$	149,859.17
7				27,829			$	66.56			$	1,852,298.24			$	154,358.19
8				27,829			$	68.56			$	1,907,956.24			$	158,996.35
9				27,829			$	70.62			$	1,965,283.98			$	163,773.67
10				27,829			$	72.74			$	2,024,281.46			$	168,690.12

 

EXHIBIT 1, PAGE 1

 

 

Exhibit 10.15

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”), is made as of September 30, 2021 by and between Xilio Therapeutics, Inc. (the “Company”), and René Russo, Pharm.D. (the “Executive”) (together, the “Parties”).

 

RECITALS

 

WHEREAS, the Company desires to continue to employ the Executive as its President and Chief Executive Officer; and

 

WHEREAS, the Company and the Executive are party to a letter agreement dated May 14, 2019, as amended, detailing the terms and conditions of the Executive’s employment (the “Existing Agreement”) and desire to amend and restate the Existing Agreement in its entirety; and

 

WHEREAS, the Executive has agreed to accept continued employment on the terms and conditions set forth in this Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the Parties herein contained, the Parties hereto agree as follows:

 

1. Agreement. Provided that the Executive remains employed by the Company as of the date on which the registration statement relating to the Company’s initial public offering (the “IPO”) is effective (the “Effective Date”), this Agreement shall be effective as of such date. As of the Effective Date, the Executive shall continue to be an employee of the Company until such employment relationship is terminated in accordance with Section 7 hereof (the “Term of Employment”).

 

2. Position. During the Term of Employment, the Executive shall serve as the President and Chief Executive Officer of the Company and shall continue serve on the Company’s board of directors (the “Board”), subject to the Executive’s reelection thereto from time to time by the Company’s stockholders, working out of the Company’s office in Waltham, Massachusetts, and travelling as reasonably required by the Executive’s job duties.

 

3. Scope of Employment. During the Term of Employment, the Executive shall be responsible for the performance of those duties consistent with the Executive’s position as President and Chief Executive Officer. The Executive shall report to the Board and shall perform and discharge faithfully, diligently, and to the best of the Executive’s ability, the Executive’s duties and responsibilities hereunder. The Executive shall devote substantially all of the Executive’s business time, loyalty, attention and efforts to the business and affairs of the Company and its affiliates. During the Term of Employment, the Executive will not engage in any other employment, occupation, consulting, or other business activity directly related to the business in which the Company is now involved or becomes involved during the Term of Employment without the prior written consent of the Chairman of the Board. Notwithstanding the foregoing, the Executive may serve on other boards of directors with the approval of the Chairman of the Board, and the Executive may engage in religious, charitable or other community activities as long as such services and activities are disclosed to the Chairman of the Board and do not materially interfere with the Executive’s performance of duties to the Company or the Executive’s obligations pursuant to the Restrictive Covenants Agreement. The Executive agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein that may be adopted from time to time by the Company.

 

 

4. Compensation. As full compensation for all services rendered by the Executive to the Company and any affiliate thereof, during the Term of Employment, the Company will provide to the Executive the following:

 

(a) Base Salary. Effective as of the Effective Date, the Executive shall receive a base salary at the annualized rate of $575,000 (the “Base Salary”). The Executive’s Base Salary shall be paid in equal installments in accordance with the Company’s regularly established payroll procedures. The Executive’s Base Salary will be reviewed on an annual or more frequent basis by the Board and, except as set forth in Section 7(c)(i), is subject to increase (but not decrease) in the discretion of the Board.

 

(b) Annual Discretionary Bonus. Following the end of each calendar year beginning with the 2021 calendar year, the Executive will be considered for an annual incentive bonus with respect to each fiscal year of the Executive’s employment with the Company. The amount, terms and conditions of such bonus (if any) are to be determined at the sole discretion of the Board. The Executive’s target incentive bonus shall (the “Target Bonus”) shall be 55% of base salary. The actual payout amount for any calendar year is discretionary and will be subject to the Board’s assessment of Executive’s performance, business conditions at the Company, and the terms of any applicable bonus plan. No amount of annual bonus is guaranteed, and the Executive must be an employee in good standing on the last day of the applicable bonus year in order to be eligible for any annual bonus for such year, except as specifically set forth in Section 8 below. Any annual performance bonus will be paid by no later than March 15 of the calendar year after the bonus year to which it relates.

 

(c) Equity Awards. The Executive shall be granted an option to purchase 475,394 shares of Company common stock, prior to giving effect to any reverse stock split with respect to the Company’s common stock undertaken in connection with the IPO and subject to and effective on the Company’s agreement to a price to the public in the IPO and pursuant to the terms and provisions of the Company’s 2021 Stock Incentive Plan, with such option having an exercise price per share equal to the price per share at which the common stock is to be sold to the public in the IPO and being subject to such other terms and conditions as the Board shall approve. The Executive will be eligible to receive future equity awards, if any, at such times and on such terms and conditions as the Board shall, in its sole discretion, determine.

 

(d) Benefits. Subject to eligibility requirements and the Company’s policies, the Executive shall have the right, on the same basis as other similarly-situated employees of the Company, to participate in, and to receive benefits under, all employee health, disability, insurance, fringe, welfare benefit and retirement plans, arrangements, practices and programs the Company provides to its senior executives in accordance with the terms thereof as in effect from time to time. The Company reserves the right to modify, amend or terminate any and all of its benefits plans at is discretion.

 

 

(e) Paid Time Off. During the Term, the Executive shall be entitled to vacation and holidays in accordance with the Company’s applicable policy.

 

(f) Withholdings. All compensation payable to the Executive shall be subject to applicable taxes and withholdings.

 

5. Expenses. The Executive will be reimbursed for the Executive’s actual, necessary and reasonable business expenses pursuant to Company policy, subject to the provisions of Section 3 of Exhibit A attached hereto.

 

6. Restrictive Covenants Agreement. As a condition of the Executive’s continued employment pursuant to the terms hereof, the Executive shall execute the Proprietary Rights, Non-Disclosure, Non-Competition and Non-Solicitation, and Developments Agreement (the “Restrictive Covenant Agreement”) attached hereto as Exhibit B. The Executive acknowledges that the Executive’s receipt of the grant of stock options set forth in Section 4(c) of this Agreement is contingent upon the Executive’s Agreement to the non-competition provisions set forth in the Restrictive Covenant Agreement, and that such consideration is fair and reasonable in exchange for the Executive’s compliance with such non-competition obligations. Notwithstanding anything to the contrary in this Agreement, the Executive acknowledges and agrees that (i) the non-competition obligations set forth in the attached Restrictive Covenant Agreement shall not take effect until the later of (x) the Effective Date and (y) the eleventh (11^th) business day after the Company provided this Agreement to the Executive for review and execution; and (ii) until such date, the non-competition restrictions previously agreed to by the Executive shall remain in full force and effect.

 

7. Employment Termination. This Agreement and the employment of the Executive shall terminate upon the occurrence of any of the following:

 

(a) Upon the death or Disability of the Executive. As used in this Agreement, the term “Disability” shall mean a physical or mental illness or disability that prevents the Executive from performing the duties of the Executive’s position for a period of more than any three (3) consecutive months or for periods aggregating more than twenty-six (26) weeks in any twelve-month period. The Company shall determine in good faith and in its sole discretion whether the Executive is unable to perform the services provided for herein.

 

(b) At the election of the Company, with or without Cause (as defined below), immediately upon written notice by the Company to the Executive. As used in this Agreement, “Cause” shall mean, as determined in good faith by the Board:

 

(i) conduct by the Executive constituting a material act of misconduct in connection with the performance of the Executive’s duties, including, without limitation, misappropriation of funds or property of the Company or any of its subsidiaries or affiliates other than the occasional, customary and de minimis use of company property for personal purposes;

 

(ii) the Executive’s commission of acts satisfying the elements of (A) any felony or (B) a misdemeanor involving moral turpitude, deceit, dishonesty or fraud;

 

 

(iii) any misconduct by the Executive, regardless of whether or not in the course of the Executive’s employment, that would reasonably be expected to result in material injury or substantial reputational harm to the Company or any of its subsidiaries or affiliates if the Executive were to continue to be employed in the same position; for the avoidance of doubt, a violation of the Company’s anti-discrimination or anti-harassment policies shall constitute Cause pursuant to this (iii);

 

(iv) the Executive’s continued non-performance of the Executive’s duties hereunder (other than by reason of the Executive’s Disability) which has continued for more than 30 days following written notice of such non-performance from the Board;

 

(v) the Executive’s material breach of any of the provisions contained in this Agreement or the Restrictive Covenants Agreement (as defined below); or

 

(vi) the Executive’s failure to reasonably cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation.

 

(c) At the election of the Executive, with or without Good Reason (as defined below), upon written notice by the Executive to the Company (subject, if it is with Good Reason, to the timing provisions set forth in the definition of Good Reason). As used in this Agreement, “Good Reason” shall mean that the Executive has completed all steps of the Good Reason Process (hereinafter defined) following the occurrence of any of the following events without the Executive’s consent (each, a “Good Reason Condition”):

 

(i)

a material diminution of the Executive’s Base Salary, other than in connection with, and substantially proportionate to, reductions by the Company of the base salaries of all or substantially all senior management employees of the Company;

 

(ii)

a material diminution in the Executive’s role, duties, authority or responsibilities; provided, however, that a reduction in authority, duties or responsibilities primarily by virtue of the Company being acquired and made part of a larger entity (whether as a subsidiary, business unit or otherwise) will not constitute Good Reason;

 

(iii)

a material change in the geographic location at which the Executive provides services to the Company, such that there is an increase of at least thirty (30) miles of driving distance to such location from the Executive’s principal residence as of such change; or

 

(iv)

any material breach by the Company of this Agreement (to the extent not otherwise covered by this paragraph) or any other written agreement between the Company and the Executive;

 

 

“Good Reason Process” consists of the following steps: (i) the Executive reasonably determines in good faith that a Good Reason Condition has occurred; (ii) the Executive notifies the Company in writing of the first occurrence of the Good Reason Condition within 90 days of the first occurrence of such condition; (iii) the Executive cooperates in good faith with the Company’s efforts, for a period of not less than 30 days following such notice (the “Cure Period”), to remedy the Good Reason Condition; (iv) notwithstanding such efforts, the Good Reason Condition continues to exist; and (v) the Executive terminates employment within 90 days after the end of the Cure Period. If the Company cures the Good Reason Condition during the Cure Period, Good Reason shall be deemed not to have occurred.

 

8. Effect of Termination.

 

(a)  All Terminations Other Than by the Company Without Cause or by the Executive With Good Reason. If the Executive’s employment is terminated under any circumstances other than a termination by the Company without Cause or a termination by the Executive with Good Reason (including a voluntary termination by the Executive without Good Reason or a termination by the Company for Cause or due to the Executive’s death or Disability), the Company’s obligations under this Agreement shall immediately cease and the Executive shall only be entitled to receive (i) the Base Salary that has accrued and to which the Executive is entitled as of the effective date of such termination (the “Date of Termination”) and to the extent consistent with general Company policy, to be paid in accordance with the Company’s established payroll procedure and applicable law but no later than the next regularly scheduled pay period, (ii) unreimbursed business expenses for which expenses the Executive has timely submitted appropriate documentation in accordance with Section 5 hereof, and (iii) any amounts or benefits to which the Executive is then entitled under the terms of the benefit plans then-sponsored by the Company in accordance with their terms (and not accelerated to the extent acceleration does not satisfy Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”)) (the payments described in this sentence, the “Accrued Obligations”).

 

(b) Termination by the Company Without Cause or by the Executive With Good Reason Prior to or More Than Twelve Months Following a Change in Control. If the Executive’s employment is terminated by the Company without Cause or by the Executive with Good Reason prior to, or more than twelve (12) months following, a Change in Control (as defined below), the Executive shall be entitled to the Accrued Obligations. In addition, and subject to the conditions of Section 8(d), the Company shall:

 

(i) pay the Executive an amount equal to (x) twelve (12) months (the “Severance Period”) of the Executive’s Base Salary, and (y) the Executive’s Target Bonus for the year in which the Date of Termination occurs, without regard to whether the metrics have been established or achieved for such year (such bonus amount prorated to reflect the period during such year that the Executive was employed prior to the Date of Termination); provided in the event the Executive is entitled to any payments pursuant to the Restrictive Covenants Agreement, the amounts received by the Executive pursuant to this (i) in any calendar year will be reduced by the amount the Executive is paid in the same such calendar year pursuant to the Restrictive Covenants Agreement (the “Restrictive Covenants Agreement Setoff”); and

 

 

(ii) provided the Executive is eligible for and timely elects to continue receiving group medical insurance pursuant to the “COBRA” law, continue to pay for twelve (12) months following the Executive’s termination date or until the Executive has secured other employment or is no longer eligible for coverage under COBRA, whichever occurs first, the share of the premium for health coverage that is paid by the Company for active and similarly-situated employees who receive the same type of coverage, unless the Company’s provision of such COBRA payments will violate the nondiscrimination requirements of applicable law, in which case the Company shall convert such payments to payroll payments directly to the Executive for the time period specified above. Such payments, if to the Executive, shall be subject to tax-related deductions and withholdings and paid on the Company’s regular payroll dates. For the avoidance of doubt, the taxable payments described above may be used for any purpose, including, but not limited to, continuation coverage under COBRA (collectively, the “Severance Benefits”).

 

(c) Termination by the Company Without Cause or by the Executive With Good Reason Within Twelve Months Following a Change in Control. If the Executive’s employment is terminated by the Company without Cause or by the Executive with Good Reason within twelve (12) months following a Change in Control, then the Executive shall be entitled to the Accrued Obligations. In addition, in lieu of the Severance Benefits set forth in Section 8(b) above, and subject to the conditions of Section 8(d), the Company shall:

 

(i) pay the Executive an amount equal to (x) eighteen (18) months (the “Change in Control Severance Period”) of the Executive’s Base Salary (or Executive’s Base Salary in effect immediately prior to the Change in Control, if higher), and (y) an amount equal to 150% of the Executive’s Target Bonus for the year in which the Date of Termination occurs, without regard to whether the metrics have been established or achieved for such year; provided in the event the Executive is entitled to any payments pursuant to the Restrictive Covenants Agreement, the amounts received by the Executive pursuant to this (i) in any calendar year will be reduced by the Restrictive Covenants Agreement Setoff;

 

(ii) provided the Executive is eligible for and timely elects to continue receiving group medical insurance pursuant to the “COBRA” law, continue to pay for eighteen (18) months following the Executive’s termination date or until the Executive has secured other employment or is no longer eligible for coverage under COBRA, whichever occurs first, the share of the premium for health coverage that is paid by the Company for active and similarly-situated employees who receive the same type of coverage, unless the Company’s provision of such COBRA payments will violate the nondiscrimination requirements of applicable law, in which case the Company shall convert such payments to payroll payments directly to the Executive for the time period specified above. Such payments, if to the Executive, shall be subject to tax-related deductions and withholdings and paid on the Company’s regular payroll dates. For the avoidance of doubt, the taxable payments described above may be used for any purpose, including, but not limited to, continuation coverage under COBRA; and

 

 

(iii) notwithstanding anything to the contrary in any applicable equity incentive award agreement, stock option agreement or other stock-based award agreement, all equity incentive awards, stock options and other stock-based awards subject to time-based vesting held by the Executive shall be accelerated, such that all then-unvested equity awards that vest based solely on the passage of time immediately vest and become fully exercisable or non-forfeitable as of the Executive’s Date of Termination (collectively, the “Change in Control Severance Benefits”); provided that, if any equity incentive awards, stock options and other stock-based awards held by the Executive prior to the Effective Date have accelerated vesting terms that a more favorable to the Executive than those set forth in this Section 8(c)(iii), the vesting terms of those equity incentive awards, stock options or other stock-based awards shall apply as opposed to the accelerated vesting terms set forth in this Section 8(c)(iii) solely with respect to such awards.

 

(d) Release and Timing of Payments. As a condition of the Executive’s receipt of the Severance Benefits or the Change in Control Severance Benefits, as applicable, the Executive must execute and deliver to the Company a severance and release of claims agreement in a form to be provided by the Company (the “Severance Agreement”), which Severance Agreement will include, at a minimum, a release of all releasable claims, non-disparagement, confidentiality, and cooperation obligations, a reaffirmation of the Executive’s continuing obligations under the Restrictive Covenants Agreement, and an agreement not to compete with the Company for twelve (12) months following the Date of Termination. The Severance Agreement must become irrevocable within sixty (60) days following the date of the Executive’s Date of Termination (or such shorter period as may be directed by the Company). The Severance Benefits or the Change in Control Severance Benefits, as applicable, are subject to Exhibit A and, to the extent taxable, shall be paid out in substantially equal installments in accordance with the Company’s payroll practice over the Severance Period or the Change in Control Severance Period, as applicable, commencing within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, any payments due under Section 8(b) or 8(c) above, to the extent they qualify as “non-qualified deferred compensation” within the meaning of Section 409A of the Code, shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Date of Termination. The Executive must continue to comply with the Severance Agreement, the Restrictive Covenants Agreement and any similar agreement with the Company in order to be eligible to receive or continue receiving the Severance Benefits or Change in Control Severance Benefits, as applicable.

 

 

(e) Change in Control Definition. For purposes of this Agreement, “Change in Control” shall mean the occurrence of any of the following events, provided that such event or occurrence constitutes a change in the ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, as defined in Treasury Regulation §§ 1.409A-3(i)(5)(v), (vi) and (vii): (i) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act) fifty percent (50%) or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (1) any acquisition of capital stock of the Company directly from the Company or (2) any acquisition of capital stock of the Company by any entity pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection (iii) of this definition; or (ii) a change in the composition of the Board that results in the Continuing Directors (as defined below) no longer constituting a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (x) who was a member of the Board on the Effective Date or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or (iii) the consummation of a merger, consolidation, reorganization, recapitalization or share exchange involving the Company, or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of the following two (2) conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one (1) or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person (excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, fifty percent (50%) or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or (iv) the liquidation or dissolution of the Company. Notwithstanding the foregoing, if the definition of Change in Control (or similar definition) in an equity incentive award, stock option or other stock-based award agreement between the Executive and the Company dated prior to the Effective Date (each, a “Preexisting Equity Agreement”) is broader than this definition of Change in Control in this Agreement, the definition of Change in Control (or similar definition) in such Preexisting Equity Agreement shall apply solely with respect to the equity award covered by such Preexisting Equity Agreement.

 

 

9. Modified Section 280G Cutback. Notwithstanding any other provision of this Agreement, except as set forth in Section 9(b), in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the following provisions shall apply:

 

(a) The Company shall not be obligated to provide to the Executive any portion of any “Contingent Compensation Payments” (as defined below) that the Executive would otherwise be entitled to receive to the extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(1) of the Code) for the Executive. For purposes of this Section 9, the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Payments” and the aggregate amount (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Amount.”

 

(b) Notwithstanding the provisions of Section 9(a), no such reduction in Contingent Compensation Payments shall be made if (1) the Eliminated Amount (computed without regard to this sentence) exceeds (2) one hundred percent (100%) of the aggregate present value (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any additional taxes that would be incurred by the Executive if the Eliminated Payments (determined without regard to this sentence) were paid to the Executive (including state and federal income taxes on the Eliminated Payments, the excise tax imposed by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in excess of the Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes). The override of such reduction in Contingent Compensation Payments pursuant to this Section 9(b) shall be referred to as a “Section 9(b) Override.” For purpose of this paragraph, if any federal or state income taxes would be attributable to the receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated Payment by the maximum combined federal and state income tax rate provided by law.

 

(c) For purposes of this Section 9 the following terms shall have the following respective meanings:

 

(i) “Change in Ownership or Control” shall mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of the Code.

 

(ii) “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of compensation that is made or made available (under this Agreement or otherwise) to or for the benefit of a “disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.

 

 

(d) Any payments or other benefits otherwise due to the Executive following a Change in Ownership or Control that could reasonably be characterized (as determined by the Company) as Contingent Compensation Payments (the “Potential Payments”) shall not be made until the dates provided for in this Section 9(d). Within thirty (30) days after each date on which the Executive first becomes entitled to receive (whether or not then due) a Contingent Compensation Payment relating to such Change in Ownership or Control, the Company shall determine and notify the Executive (with reasonable detail regarding the basis for its determinations) (1) which Potential Payments constitute Contingent Compensation Payments, (2) the Eliminated Amount and (3) whether the Section 9(b) Override is applicable. Within thirty (30) days after delivery of such notice to the Executive, the Executive shall deliver a response to the Company (the “Executive Response”) stating either (A) that the Executive agrees with the Company’s determination pursuant to the preceding sentence or (B) that the Executive disagrees with such determination, in which case the Executive shall set forth (x) which Potential Payments should be characterized as Contingent Compensation Payments, (y) the Eliminated Amount, and (z) whether the Section 9(b) Override is applicable. In the event that the Executive fails to deliver an Executive Response on or before the required date, the Company’s initial determination shall be final. If and to the extent that any Contingent Compensation Payments are required to be treated as Eliminated Payments pursuant to this Section 9, then the payments shall be reduced or eliminated, as determined by the Company, in the following order: (i) any cash payments, (ii) any taxable benefits, (iii) any nontaxable benefits, and (iv) any vesting of equity awards in each case in reverse order beginning with payments or benefits that are to be paid the farthest in time from the date that triggers the applicability of the excise tax, to the extent necessary to maximize the Eliminated Payments. If the Executive states in the Executive Response that the Executive agrees with the Company’s determination, the Company shall make the Potential Payments to the Executive within three (3) business days following delivery to the Company of the Executive Response (except for any Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). If the Executive states in the Executive Response that the Executive disagrees with the Company’s determination, then, for a period of sixty (60) days following delivery of the Executive Response, the Executive and the Company shall use good faith efforts to resolve such dispute. If such dispute is not resolved within such 60-day period, such dispute shall be settled exclusively by arbitration in Boston, Massachusetts, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Company shall, within three (3) business days following delivery to the Company of the Executive Response, make to the Executive those Potential Payments as to which there is no dispute between the Company and the Executive regarding whether they should be made (except for any such Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). The balance of the Potential Payments shall be made within three (3) business days following the resolution of such dispute. Subject to the limitations contained in Sections 9(a) and 9(b) hereof, the amount of any payments to be made to the Executive following the resolution of such dispute shall be increased by the amount of the accrued interest thereon computed at the prime rate announced from time to time by The Wall Street Journal, compounded monthly from the date that such payments originally were due.

 

The provisions of this Section 9 are intended to apply to any and all payments or benefits available to the Executive under this Agreement or any other agreement or plan under which the Executive may receive Contingent Compensation Payments.

 

10. Absence of Restrictions. The Executive represents and warrants that the Executive is not bound by any employment contracts, restrictive covenants or other restrictions that prevent the Executive from carrying out the Executive’s responsibilities for the Company, or which are in any way inconsistent with any of the terms of this Agreement.

 

11. Notice. Any notice delivered under this Agreement shall be deemed duly delivered three (3) business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, one (1) business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, or immediately upon hand delivery, in each case to the address of the recipient set forth below.

 

 

To the Executive: At the address set forth in the Executive’s personnel file

 

To Company:

 

Xilio Therapeutics, Inc.

828 Winter Street, Suite 300

Waltham, MA 02451

Attention: Legal Department

 

Either Party may change the address to which notices are to be delivered by giving notice of such change to the other Party in the manner set forth in this Section 11.

 

12. Governing Law; Enforcement. The terms of this Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with this Agreement, the Executive’s employment with the Company or any other relationship between the Executive and the Company (the “Disputes”) will be governed by Massachusetts law, excluding laws relating to conflicts or choice of law. The Executive and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in the Commonwealth of Massachusetts in connection with any Dispute or any claim related to any Dispute.

 

13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both Parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business; provided, however, that the obligations of the Executive are personal and shall not be assigned by the Executive.

 

14. At-Will Employment. During the Term of Employment, the Executive will continue to be an at-will employee of the Company, which means that, notwithstanding any provision set forth herein, the employment relationship can be terminated by either Party for any reason, at any time, with or without prior notice and with or without Cause.

 

15. Acknowledgment. The Executive states and represents that the Executive has had an opportunity to fully discuss and review the terms of this Agreement with an attorney. The Executive further states and represents that the Executive has carefully read this Agreement, understands the contents herein, freely and voluntarily assents to all of the terms and conditions hereof, and signs the Executive’s name of the Executive’s own free act.

 

16. No Oral Modification, Waiver, Cancellation or Discharge. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive. No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

 

 

17. Captions and Pronouns. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa.

 

18. Interpretation. The Parties agree that this Agreement will be construed without regard to any presumption or rule requiring construction or interpretation against the drafting Party. References in this Agreement to “include” or “including” should be read as though they said “without limitation” or equivalent forms. References in this Agreement to the “Board” shall include any authorized committee thereof.

 

19. Severability. Each provision of this Agreement must be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. Moreover, if a court of competent jurisdiction determines any of the provisions contained in this Agreement to be unenforceable because the provision is excessively broad in scope, whether as to duration, activity, geographic application, subject or otherwise, it will be construed, by limiting or reducing it to the extent legally permitted, so as to be enforceable to the extent compatible with then applicable law to achieve the intent of the Parties.

 

20. Entire Agreement. This Agreement constitutes the entire agreement between the Parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement, including, without limitation, the Existing Agreement.

 

[Signatures on Page Following]

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year set forth above.

 

XILIO THERAPEUTICS, INC.
By:	/s/ Daniel S. Lynch
Name:	Daniel S. Lynch
Title:	Chairman of the Board of Directors
EXECUTIVE:
/s/ René Russo
René Russo

 

 

EXHIBIT A

 

Payments Subject to Section 409A

 

1.             Subject to this Exhibit A, any severance payments that may be due under the Agreement shall begin only upon the date of the Executive’s “separation from service” (determined as set forth below) which occurs on or after the termination of the Executive’s employment. The following rules shall apply with respect to distribution of the severance payments, if any, to be provided to the Executive under the Agreement, as applicable:

 

(a)            It is intended that each installment of the severance payments provided under the Agreement shall be treated as a separate “payment” for purposes of Section 409A of the Internal Revenue Code (“Section 409A”). Neither the Company nor the Executive shall have the right to accelerate or defer the delivery of any such payments except to the extent specifically permitted or required by Section 409A.

 

(b)            If, as of the date of the Executive’s “separation from service” from the Company, the Executive is not a “specified employee” (within the meaning of Section 409A), then each installment of the severance payments shall be made on the dates and terms set forth in the letter agreement.

 

(c)            If, as of the date of the Executive’s “separation from service” from the Company, the Executive is a “specified employee” (within the meaning of Section 409A), then:

 

(i)

Each installment of the severance payments due under the Agreement that, in accordance with the dates and terms set forth herein, will in all circumstances, regardless of when the Executive’s separation from service occurs, be paid within the short-term deferral period (as defined under Section 409A) shall be treated as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A and shall be paid on the dates and terms set forth in the Agreement; and

 

(ii)

Each installment of the severance payments due under the Agreement that is not described in this Exhibit A, Section 1(c)(i) and that would, absent this subsection, be paid within the six-month period following the Executive’s “separation from service” from the Company shall not be paid until the date that is six months and one day after such separation from service (or, if earlier, the Executive’s death), with any such installments that are required to be delayed being accumulated during the six-month period and paid in a lump sum on the date that is six months and one day following the Executive’s separation from service and any subsequent installments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the preceding provisions of this sentence shall not apply to any installment of payments if and to the maximum extent that that such installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation by reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation from service). Any installments that qualify for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of the Executive’s second taxable year following the taxable year in which the separation from service occurs.

 

 

2.             The determination of whether and when the Executive’s separation from service from the Company has occurred shall be made and in a manner consistent with, and based on the presumptions set forth in, Treasury Regulation Section 1.409A-1(h). Solely for purposes of Section 2 of this Exhibit A, “Company” shall include all persons with whom the Company would be considered a single employer under Section 414(b) and 414(c) of the Code.

 

3.             All reimbursements and in-kind benefits provided under the Agreement shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that (i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in the Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (iv) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit.

 

4.             The Company makes no representation or warranty and shall have no liability to the Executive or to any other person if any of the provisions of the Agreement (including this Exhibit A) are determined to constitute deferred compensation subject to Section 409A but that do not satisfy an exemption from, or the conditions of, that section.

 

5.             The Agreement is intended to comply with, or be exempt from, Section 409A and shall be interpreted accordingly.

 

[Remainder of page intentionally left blank.]

 

 

EXHIBIT B

 

Restrictive Covenants Agreement

 

 

 

Exhibit 10.16

 

May 24, 2019

 

Joseph L. Farmer

 

Re:

Employment Agreement

 

Dear Joe:

 

On behalf of Akrevia Therapeutics Inc. (the “Company”), I am pleased to offer you the position as the Company’s Chief Operating Officer (“COO”). The terms of your employment are set forth below in this Employment Agreement (the “Agreement.)

 

1.            Position. As the Company’s CBO/COO, you will report to the Company’s Chief Executive Officer (“CEO”). This is a full-time employment position. It is understood and agreed that, while you render services to the Company, you will not engage in any other employment, consulting or other business activities (whether full-time or part-time). Notwithstanding the foregoing, you may engage in the activities listed on Exhibit A hereto and engage in religious, charitable or other community activities as long as such services and activities are disclosed to the Board and do not interfere with your performance of your duties to the Company.

 

2.            Start Date. Your employment with the Company will begin on May 28, 2019 (the “Start Date”).

 

3.            Salary. The Company will pay you an initial base salary at the rate of $350,000 per year, payable in accordance with the Company’s standard payroll schedule and subject to applicable deductions and withholdings. Your base salary will be subject to periodic review and upward adjustment at the Company’s discretion. The base salary in effect at any given time is referred to herein as “Base Salary.”

 

4.            Annual Bonus. During the term of your employment with the Company, you will be considered for an annual incentive bonus with respect to each fiscal year of your employment with the Company. The amount, terms and conditions of such bonus (if any) are to be determined at the sole discretion of the Board. Your initial target annual incentive bonus (the “Target Bonus”) shall be 40% of your Base Salary, with any bonus payable in respect of 2019 prorated from the Start Date. To earn an incentive bonus, you must be employed by the Company as of the payment date of such incentive bonus. The actual payout amount for any calendar year is discretionary and will be subject to the Board’s assessment of your performance, business conditions at the Company, and the terms of any applicable annual bonus plan. The annual incentive bonus, if any, shall be paid between January 1st and March 15th of the calendar year following the calendar year to which such bonus relates. The Board expects to review your job performance on an annual basis and the Board will mutually agree with you the criteria that it will use to assess your performance, including for bonus purposes.

 

 

5.            Equity. In connection with the commencement of your employment and subject to the approval of the Board of Directors of the Company’s parent, Akrevia Therapeutics, LLC (“Parent”), you will be granted 556,480 Incentive Units of the Parent, which Incentive Units are intended to qualify as profits interests, and which units represent 1.5% of the Parent’s outstanding capitalization following the completion of the Parent’s Series A Preferred Unit financing, such issuance to be submitted to the Parent’s Board for approval and subject to the terms and conditions set forth herein. The Board is currently obtaining a fair market valuation of this profits interest and will proceed with this grant once obtained. Subject to your continued employment with the Company on each applicable vesting date, this grant will vest over four years, with 25% of the Incentive Units to vest twelve months after the Start Date and with the remainder vesting monthly thereafter over the following 36 months, in approximately equal amounts. This Incentive Unit grant shall be governed by the terms and conditions of the Incentive Unit Grant Agreement entered into by yourself and the Parent and the Parent’s Limited Liability Company Agreement, as amended or restated from time to time. 

 

6.            Benefits/Vacation. You will be eligible, subject to the terms of the applicable plans and programs, to participate in health and dental insurance and other benefits programs, such as life and disability insurance, that have been, or may be, adopted by the Company to the same extent as, and subject to the same terms, conditions and limitations applicable to, other employees of the Company (the “Benefits Programs”). You will also be eligible to accrue at least 15 days of paid vacation per calendar year, of which up to 5 accrued but unused days may be rolled over to the following calendar year. In addition, you will be entitled to all paid holidays given by the Company to its executive officers. The Company reserves the right to modify, amend or cancel one or more of the Benefits Programs.

 

7.            Expenses. You will be entitled to receive prompt reimbursement for all reasonable expenses you incur during your employment in performing services hereunder, in accordance with the policies and procedures then in effect and established by the Company for its executive officers.

 

8.            At-Will Employment; Accrued Obligations. Your employment is “at will,” meaning you or the Company may terminate it at any time for any or no reason, with or without notice or cause, subject to the terms of this Agreement. In the event of the ending of your employment for any reason, the Company shall pay you (i) your Base Salary plus any accrued but unused vacation through your last day of employment (the “Date of Termination”), and (ii) the amount of any documented expenses properly incurred by you on behalf of the Company prior to any such termination and not yet reimbursed (the “Accrued Obligations”).

 

9.            Severance Pay and Benefits Upon a Qualifying Termination Outside of the Change in Control Period. In the event that a Qualifying Termination occurs outside of the Change in Control Period, then subject to (i) you signing a separation agreement and release in a form and manner reasonably satisfactory to the Company, which shall include, without limitation, a general release of claims against the Company and all related persons and entities and a reaffirmation of all of your Continuing Obligations (as defined below), and shall provide that if you materially breach any of the Continuing Obligations (as determined by the Board of Directors in good faith), all payments of the Severance Amount shall immediately cease (the “Separation Agreement and Release”), and (ii) the Separation Agreement and Release becoming irrevocable, all within 60 days after the Date of Termination (or such shorter period as set forth in the Separation Agreement and Release): 

 

 

(a)           The Company shall pay you an amount equal to the sum of (i) 9 months of your Base Salary, and (ii) your Target Bonus for the year in which the Date of Termination occurs, without regard to whether the metrics have been established or achieved for such year (such bonus amount prorated to reflect the period during such year that you were employed prior to the Date of Termination) (the “Severance Amount”); provided in the event you are entitled to any payments pursuant to the Restrictive Covenants Agreement, the Severance Amount received in any calendar year will be reduced by the amount you are paid in the same such calendar year pursuant to the Restrictive Covenants Agreement (the “Restrictive Covenants Agreement Setoff”); and

 

(b)           subject to your copayment of premium amounts at the applicable active employees’ rate and your proper election to receive benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall pay to the group health plan provider or the COBRA provider a monthly payment equal to the monthly employer contribution that the Company would have made to provide health insurance to you if you had remained employed by the Company until the earliest of (A) the 9 month anniversary of the Date of Termination; (B) your eligibility for group medical plan benefits under any other employer’s group medical plan; or (C) the cessation of your continuation rights under COBRA; provided, however, if the Company reasonably determines that it cannot pay such amounts to the group health plan provider or the COBRA provider (if applicable) without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then the Company shall convert such payments to payroll payments directly to you for the time period specified above. Such payments, if to you, shall be subject to tax-related deductions and withholdings and paid on the Company’s regular payroll dates. For the avoidance of doubt, the taxable payments described above may be used for any purpose, including, but not limited to, continuation coverage under COBRA.

 

The amounts payable under Section 9, to the extent taxable, shall be paid out in substantially equal installments in accordance with the Company’s payroll practice over 12 months commencing within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, the Severance Amount, to the extent it qualifies as “non-qualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Date of Termination. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section l.409A-2(b)(2).

 

10.          Severance Pay and Benefits Upon a Qualifying Termination Within the Change in Control Period. The provisions of this Section 10 shall apply in lieu of, and expressly supersede, the provisions of Section 9 regarding severance pay and benefits upon a Qualifying Termination if such termination of employment occurs within the Change in Control Period.

 

 

These provisions shall terminate and be of no further force or effect after the Change in Control Period.

 

(a)           Change in Control Period. In the event that a Qualifying Termination occurs within the Change in Control Period, then, subject to your signing the Separation Agreement and Release and the Separation Agreement and Release becoming fully effective, all within the time frame set forth in the Separation Agreement and Release but in no event more than 60 days after the Date of Termination:

 

(i)           the Company shall pay you an amount equal to the sum of (x) 12 months of your then current Base Salary (or your Base Salary in effect immediately prior to the Change in Control, if higher) and (y) 100% of your Target Bonus for the year in which the Date of Termination occurs, without regard to whether the metrics have been established or achieved for such year) (the “Change in Control Payment”); provided the Change in Control Payment shall be reduced by the amount of the Restrictive Covenants Agreement Setoff, if applicable, paid or to be paid in the same calendar year; and

 

(ii)           notwithstanding anything to the contrary in any applicable incentive unit agreement, option agreement or other stock-based award agreement, all incentive units, stock options and other stock-based awards subject to time-based vesting held by you (the “Time-Based Equity Awards”) shall immediately accelerate and become fully exercisable or nonforfeitable as of the later of (i) the Date of Termination or (ii) the Effective Date of the Separation Agreement and Release (the “Accelerated Vesting Date”); provided that any termination or forfeiture of the unvested portion of such Time-Based Equity Awards that would otherwise occur on the Date of Termination in the absence of this Agreement will be delayed until the Effective Date of the Separation Agreement and Release and will only occur if the vesting pursuant to this subsection does not occur due to the absence of the Separation Agreement and Release becoming fully effective within the time period set forth therein. Notwithstanding the foregoing, no additional vesting of the Time-Based Equity Awards shall occur during the period between the Date of Termination and the Accelerated Vesting Date; and

 

(iii)         subject to your copayment of premium amounts at the applicable active employees’ rate and your proper election to receive benefits under COBRA, the Company shall pay to the group health plan provider or the COBRA provider a monthly payment equal to the monthly employer contribution that the Company would have made to provide health insurance to you if you had remained employed by the Company until the earliest of (A) the 12 month anniversary of the Date of Termination; (B) your eligibility for group medical plan benefits under any other employer’s group medical plan; or (C) the cessation of your continuation rights under COBRA; provided, however, if the Company reasonably determines that it cannot pay such amounts to the group health plan provider or the COBRA provider (if applicable) without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then the Company shall convert such payments to payroll payments directly to you for the time period specified above. Such payments, if to you, shall be subject to tax-related deductions and withholdings and paid on the Company’s regular payroll dates. For the avoidance of doubt, the taxable payments described above may be used for any purpose, including, but not limited to, continuation coverage under COBRA.

 

 

The amounts payable under this Section 10, to the extent taxable, shall be paid out in substantially equal installments in accordance with the Company’s payroll practice over 12 months commencing within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payments to the extent they qualify as “non-qualified deferred compensation” within the meaning of Section 409A of the Code, shall be paid or commence to be paid in the second calendar year by the last day of such 60-day period.

 

11.          Definitions

 

(a)           “Cause” shall mean any of the following: (i) conduct by you constituting a material act of misconduct in connection with the performance of your duties, including, without limitation, (A) willful failure or refusal to perform material responsibilities that have been requested by the Board; (B) dishonesty to the Board with respect to any material matter; or (C) misappropriation of funds or property of the Parent, the Company or any of its subsidiaries or affiliates other than the occasional, customary and de minimis use of Company property for personal purposes; (ii) your commission of acts satisfying the elements of (A) any felony or (B) a misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) any misconduct by you, regardless of whether or not in the course of your employment, that would reasonably be expected to result in material injury or substantial reputational harm to the Parent, the Company or any of its subsidiaries or affiliates if you were to continue to be employed in the same position; (iv) your continued non-performance of your duties hereunder (other than by reason of your physical or mental illness, incapacity or disability) which has continued for more than 30 days following written notice of such non-performance from the Board; (v) your material breach of any of the provisions contained in this Agreement or the Restrictive Covenants Agreement (as defined below); or (vi) your failure to reasonably cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation.

 

(b)           “Change in Control” shall mean any of the following:

 

(i)           any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”) (other than the Company or the Parent, any of its or their subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or the Parent, or any of its or their subsidiaries), together with all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company or the Parent representing 50 percent or more of the combined voting power of the Company’s or the Parent’s then outstanding securities having the right to vote in an election of the Company’s or the Parent’s Board (“Voting Securities”) (in such case other than as a result of an acquisition of securities directly from the Company or the Parent); or 

 

 

(ii)           the date a majority of the members of the Company’ s or the Parent’s Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s or the Parent’s Board before the date of the appointment or election; or

 

(iii)          the consummation of (A) any consolidation or merger of the Company or the Parent where the stockholders of the Company or the Parent, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate more than 50 percent of the voting shares of the Company or the Parent issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), or (B) any sale or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or the Parent.

 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by the Company or the Parent which, by reducing the number of shares of Voting Securities outstanding, increases the proportionate number of Voting Securities beneficially owned by any person to 50 percent or more of the combined voting power of all of the then outstanding Voting Securities; provided, however, that if any person referred to in this sentence shall thereafter become the beneficial owner of any additional shares of Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from the Company or the Parent) and immediately thereafter beneficially owns 50 percent or more of the combined voting power of all of the then outstanding Voting Securities, then a “Change in Control” shall be deemed to have occurred for purposes of the foregoing clause (i). Further, and notwithstanding anything herein, to the extent required under Section 409A of the Internal Revenue Code, no event shall constitute a Change in Control unless such event also constitutes a “change in control event” within the meaning of Treasury Regulation 1.409A-3(i)(5).

 

(c)           “Change in Control Period” means the 12 months immediately following the occurrence of the first event constituting a Change in Control.

 

(d)           “Good Reason” shall mean that you have completed all steps of the Good Reason Process (hereinafter defined) following the occurrence of any of the following events without your consent (each, a “Good Reason Condition”): (i) a material diminution in your role, responsibilities, authority or duties; (ii) a material diminution in your Base Salary except for across-the-board salary reductions based on the Company’s financial performance similarly affecting all or substantially all senior management employees of the Company; (iii) a material change in the geographic location at which you provide services to the Company, such that there is an increase of at least thirty (30) miles of driving distance to such location from your principal residence as of such change; or (iv) a material breach of this Agreement by the Company.

 

 

(e)           “Good Reason Process” consists of the following steps: (i) you reasonably determine in good faith that a Good Reason Condition has occurred; (ii) you notify the Company in writing of the first occurrence of the Good Reason Condition within 90 days of the first occurrence of such condition; (iii) you cooperate in good faith with the Company’s efforts, for a period of not less than 30 days following such notice (the “Cure Period”), to remedy the Good Reason Condition; (iv) notwithstanding such efforts, the Good Reason Condition continues to exist; and (v) you terminate employment within 90 days after the end of the Cure Period. If the Company cures the Good Reason Condition during the Cure Period, Good Reason shall be deemed not to have occurred.

 

(f)            “Qualifying Termination” shall mean the termination of your employment by the Company without Cause or the termination of your employment by you for Good Reason. For the avoidance of doubt, in the event your employment is terminated by the Company for any reason other than a termination by the Company without Cause or by you for Good Reason, you will be entitled to the Accrued Obligations but not to any severance pay or benefits pursuant to Section 9 or Section 10 of this Agreement.

 

12.          Confidential Information and Restricted Activities. As a condition of employment, you will be required to enter into the Employee Proprietary Information and Invention Assignment Agreement attached hereto as Exhibit B (the “Restrictive Covenants Agreement”). For purposes of this Agreement, the obligations that arise in the Restrictive Covenants Agreement and any other agreement relating to confidentiality, assignment of inventions, or other restrictive covenants shall collectively be referred to as the “Continuing Obligations.”

 

13.          Taxes; Section 409A

 

(a)           All forms of compensation referred to in this Agreement are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law. You hereby acknowledge that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and you will not make any claim against the Company or the Board related to tax liabilities arising from your compensation.

 

 

(b)          Anything in this Agreement to the contrary notwithstanding, if at the time of your separation from service within the meaning of Section 409A of the Code, the Company determines that you are a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that you become entitled to under this Agreement on account of your separation from service would be considered deferred compensation subject to the 20% additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after your separation from service, or (B) your death. If any such delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of this provision, and the balance of the installments shall be payable in accordance with their original schedule. All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by you during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon your termination of employment, then such payments or benefits shall be payable only upon your “separation from service.” The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section l.409A-l(h). The Company and you intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code. The Company makes no representation or warranty and shall have no liability to you or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.

 

14.          Interpretation and Enforcement. This Agreement, including the Restrictive Covenants Agreement, constitutes the complete agreement between you and the Company, contains all of the terms of your employment with the Company and supersedes any prior agreements, representations or understandings (whether written, oral or implied) between you and the Company, including without limitation the Offer Letter. The terms of this Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with this Agreement, your employment with the Company or any other relationship between you and the Company (the “Disputes”) will be governed by Massachusetts law, excluding laws relating to conflicts or choice of law. You and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in the Commonwealth of Massachusetts in connection with any Dispute or any claim related to any Dispute.

 

15.          Assignment. Neither you nor the Company may make any assignment of this Agreement or any interest in it, by operation of law or otherwise, without the prior written consent of the other; provided, however, that the Company may assign its rights and obligations under this Agreement (including the Restrictive Covenants Agreement) without your consent to any affiliate or to any person or entity with whom the Company shall hereafter effect a reorganization, consolidate with, or merge into or to whom it transfers all or substantially all of its properties or assets. This Agreement shall inure to the benefit of and be binding upon you and the Company, and each of your and its respective successors, executors, administrators, heirs and permitted assigns.

 

16.          Conditions. Notwithstanding anything to the contrary herein, the effectiveness of this Agreement shall be conditioned on (i) your satisfactory completion of reference and background checks, if so requested by the Company, and (ii) your submission of satisfactory proof of your legal authorization to work in the United States

 

 

17.          Miscellaneous. This Agreement may not be modified or amended, and no breach shall be deemed to be waived, unless agreed to in writing by you and a Board member of the Company. The headings and captions in this Agreement are for convenience only and in no way define or describe the scope or content of any provision of this Agreement. The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. By signing this Agreement, you represent to the Company that you have no contractual commitments or other legal obligations that would or may prohibit you from performing your duties for the Company.

 

Please acknowledge, by signing below, that you have accepted this Agreement.

 

	Very truly yours,
	AKREVIA THERAPEUTICS INC.
	By:	/s/ René Russo
		René Russo, CEO

 

I have read and accept this employment offer:

 

/s/ Joseph L. Farmer
Joseph L. Farmer
Dated: May 24, 2019

 

 

Exhibit A 

 

Permitted Activities

 

 

Exhibit B

 

Restrictive Covenants Agreement 

 

 

Exhibit 10.17

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”), is made as of September 30, 2021 by and between Xilio Therapeutics, Inc. (the “Company”), and Martin Huber, M.D. (the “Executive”) (together, the “Parties”).

 

RECITALS

 

WHEREAS, the Company desires to continue to employ the Executive as its President of R&D and Chief Medical Officer; and

 

WHEREAS, the Company and the Executive are party to a letter agreement dated January 9, 2020 detailing the terms and conditions of the Executive’s employment (the “Existing Agreement”) and desire to amend and restate the Existing Agreement in its entirety; and

 

WHEREAS, the Executive has agreed to accept continued employment on the terms and conditions set forth in this Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the Parties herein contained, the Parties hereto agree as follows:

 

1. Agreement. Provided that the Executive remains employed by the Company as of the date on which the registration statement relating to the Company’s initial public offering (the “IPO”) is effective (the “Effective Date”), this Agreement shall be effective as of such date. As of the Effective Date, the Executive shall continue to be an employee of the Company until such employment relationship is terminated in accordance with Section 7 hereof (the “Term of Employment”).

 

2. Position. During the Term of Employment, the Executive shall serve as the President of R&D and Chief Medical Officer of the Company, working out of the Company’s office in Waltham, Massachusetts, and travelling as reasonably required by the Executive’s job duties.

 

3. Scope of Employment. During the Term of Employment, the Executive shall be responsible for the performance of those duties consistent with the Executive’s position as President of R&D and Chief Medical Officer of the Company. The Executive shall report to the Chief Executive Officer of the Company or another executive designated by the Company and shall perform and discharge faithfully, diligently, and to the best of the Executive’s ability, the Executive’s duties and responsibilities hereunder. The Executive shall devote substantially all of the Executive’s business time, loyalty, attention and efforts to the business and affairs of the Company and its affiliates. During the Term of Employment, the Executive will not engage in any other employment, occupation, consulting, or other business activity directly related to the business in which the Company is now involved or becomes involved during the Term of Employment without the prior written consent of the Chief Executive Officer of the Company. Notwithstanding the foregoing, the Executive may serve on other boards of directors with the approval of the Chairman of the Board of Directors of the Company (the “Board”), and the Executive may engage in religious, charitable or other community activities as long as such services and activities are disclosed to the Chief Executive Officer of the Company and do not materially interfere with the Executive’s performance of duties to the Company or the Executive’s obligations pursuant to the Restrictive Covenants Agreement. The Executive agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein that may be adopted from time to time by the Company.

 

 

4. Compensation. As full compensation for all services rendered by the Executive to the Company and any affiliate thereof, during the Term of Employment, the Company will provide to the Executive the following:

 

(a) Base Salary. Effective as of the Effective Date, the Executive shall receive a base salary at the annualized rate of $475,000 (the “Base Salary”). The Executive’s Base Salary shall be paid in equal installments in accordance with the Company’s regularly established payroll procedures. The Executive’s Base Salary will be reviewed on an annual or more frequent basis by the Board and, except as set forth in Section 7(c)(i), is subject to increase (but not decrease) in the discretion of the Board.

 

(b) Annual Discretionary Bonus. Following the end of each calendar year beginning with the 2021 calendar year, the Executive will be considered for an annual incentive bonus with respect to each fiscal year of the Executive’s employment with the Company. The amount, terms and conditions of such bonus (if any) are to be determined at the sole discretion of the Board. The Executive’s target incentive bonus shall (the “Target Bonus”) shall be 45% of base salary. The actual payout amount for any calendar year is discretionary and will be subject to the Board’s assessment of Executive’s performance, business conditions at the Company, and the terms of any applicable bonus plan. No amount of annual bonus is guaranteed, and the Executive must be an employee in good standing on the last day of the applicable bonus year in order to be eligible for any annual bonus for such year, except as specifically set forth in Section 8 below. Any annual performance bonus will be paid by no later than March 15 of the calendar year after the bonus year to which it relates.

 

(c) Equity Awards. The Executive shall be granted an option to purchase 1,492,051 shares of Company common stock, prior to giving effect to any reverse stock split with respect to the Company’s common stock undertaken in connection with the IPO and subject to and effective on the Company’s agreement to a price to the public in the IPO and pursuant to the terms and provisions of the Company’s 2021 Stock Incentive Plan, with such option having an exercise price per share equal to the price per share at which the common stock is to be sold to the public in the IPO and being subject to such other terms and conditions as the Board shall approve. The Executive will be eligible to receive future equity awards, if any, at such times and on such terms and conditions as the Board shall, in its sole discretion, determine.

 

(d) Benefits. Subject to eligibility requirements and the Company’s policies, the Executive shall have the right, on the same basis as other similarly-situated employees of the Company, to participate in, and to receive benefits under, all employee health, disability, insurance, fringe, welfare benefit and retirement plans, arrangements, practices and programs the Company provides to its senior executives in accordance with the terms thereof as in effect from time to time. The Company reserves the right to modify, amend or terminate any and all of its benefits plans at is discretion.

 

 

(e) Paid Time Off. During the Term, the Executive shall be entitled to vacation and holidays in accordance with the Company’s applicable policy.

 

(f) Withholdings. All compensation payable to the Executive shall be subject to applicable taxes and withholdings.

 

5. Expenses. The Executive will be reimbursed for the Executive’s actual, necessary and reasonable business expenses pursuant to Company policy, subject to the provisions of Section 3 of Exhibit A attached hereto.

 

6. Restrictive Covenants Agreement. As a condition of the Executive’s continued employment pursuant to the terms hereof, the Executive shall execute the Proprietary Rights, Non-Disclosure, Non-Competition and Non-Solicitation, and Developments Agreement (the “Restrictive Covenant Agreement”) attached hereto as Exhibit B. The Executive acknowledges that the Executive’s receipt of the grant of stock options set forth in Section 4(c) of this Agreement is contingent upon the Executive’s Agreement to the non-competition provisions set forth in the Restrictive Covenant Agreement, and that such consideration is fair and reasonable in exchange for the Executive’s compliance with such non-competition obligations. Notwithstanding anything to the contrary in this Agreement, the Executive acknowledges and agrees that (i) the non-competition obligations set forth in the attached Restrictive Covenant Agreement shall not take effect until the later of (x) the Effective Date and (y) the eleventh (11^th) business day after the Company provided this Agreement to the Executive for review and execution; and (ii) until such date, the non-competition restrictions previously agreed to by the Executive shall remain in full force and effect.

 

7. Employment Termination. This Agreement and the employment of the Executive shall terminate upon the occurrence of any of the following:

 

(a) Upon the death or Disability of the Executive. As used in this Agreement, the term “Disability” shall mean a physical or mental illness or disability that prevents the Executive from performing the duties of the Executive’s position for a period of more than any three (3) consecutive months or for periods aggregating more than twenty-six (26) weeks in any twelve-month period. The Company shall determine in good faith and in its sole discretion whether the Executive is unable to perform the services provided for herein.

 

(b) At the election of the Company, with or without Cause (as defined below), immediately upon written notice by the Company to the Executive. As used in this Agreement, “Cause” shall mean, as determined in good faith by the Company the Executive’s:

 

(i) conduct by the Executive constituting a material act of misconduct in connection with the performance of the Executive’s duties, including, without limitation, misappropriation of funds or property of the Company or any of its subsidiaries or affiliates other than the occasional, customary and de minimis use of company property for personal purposes;

 

(ii) the Executive’s commission of acts satisfying the elements of (A) any felony or (B) a misdemeanor involving moral turpitude, deceit, dishonesty or fraud;

 

 

(iii) any misconduct by the Executive, regardless of whether or not in the course of the Executive’s employment, that would reasonably be expected to result in material injury or substantial reputational harm to the Company or any of its subsidiaries or affiliates if the Executive were to continue to be employed in the same position; for the avoidance of doubt, a violation of the Company’s anti-discrimination or anti-harassment policies shall constitute Cause pursuant to this (iii);

 

(iv) the Executive’s continued non-performance of the Executive’s duties hereunder (other than by reason of the Executive’s Disability) which has continued for more than 30 days following written notice of such non-performance from the Board;

 

(v) the Executive’s material breach of any of the provisions contained in this Agreement or the Restrictive Covenants Agreement (as defined below); or

 

(vi) the Executive’s failure to reasonably cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation.

 

(c) At the election of the Executive, with or without Good Reason (as defined below), upon written notice by the Executive to the Company (subject, if it is with Good Reason, to the timing provisions set forth in the definition of Good Reason). As used in this Agreement, “Good Reason” shall mean that the Executive has completed all steps of the Good Reason Process (hereinafter defined) following the occurrence of any of the following events without the Executive’s consent (each, a “Good Reason Condition”):

 

(i)

a material diminution of the Executive’s Base Salary, other than in connection with, and substantially proportionate to, reductions by the Company of the base salaries of all or substantially all senior management employees of the Company;

 

(ii)

a material diminution in the Executive’s role, duties, authority or responsibilities; provided, however, that a reduction in authority, duties or responsibilities primarily by virtue of the Company being acquired and made part of a larger entity (whether as a subsidiary, business unit or otherwise) will not constitute Good Reason;

 

(iii)

a material change in the geographic location at which the Executive provides services to the Company, such that there is an increase of at least thirty (30) miles of driving distance to such location from the Executive’s principal residence as of such change; or

 

(iv)

any material breach by the Company of this Agreement (to the extent not otherwise covered by this paragraph) or any other written agreement between the Company and the Executive;

 

 

“Good Reason Process” consists of the following steps: (i) the Executive reasonably determines in good faith that a Good Reason Condition has occurred; (ii) the Executive notifies the Company in writing of the first occurrence of the Good Reason Condition within 90 days of the first occurrence of such condition; (iii) the Executive cooperates in good faith with the Company’s efforts, for a period of not less than 30 days following such notice (the “Cure Period”), to remedy the Good Reason Condition; (iv) notwithstanding such efforts, the Good Reason Condition continues to exist; and (v) the Executive terminates employment within 90 days after the end of the Cure Period. If the Company cures the Good Reason Condition during the Cure Period, Good Reason shall be deemed not to have occurred.

 

8. Effect of Termination.

 

(a)  All Terminations Other Than by the Company Without Cause or by the Executive With Good Reason. If the Executive’s employment is terminated under any circumstances other than a termination by the Company without Cause or a termination by the Executive with Good Reason (including a voluntary termination by the Executive without Good Reason or a termination by the Company for Cause or due to the Executive’s death or Disability), the Company’s obligations under this Agreement shall immediately cease and the Executive shall only be entitled to receive (i) the Base Salary that has accrued and to which the Executive is entitled as of the effective date of such termination (the “Date of Termination”) and to the extent consistent with general Company policy, to be paid in accordance with the Company’s established payroll procedure and applicable law but no later than the next regularly scheduled pay period, (ii) unreimbursed business expenses for which expenses the Executive has timely submitted appropriate documentation in accordance with Section 5 hereof, and (iii) any amounts or benefits to which the Executive is then entitled under the terms of the benefit plans then-sponsored by the Company in accordance with their terms (and not accelerated to the extent acceleration does not satisfy Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”)) (the payments described in this sentence, the “Accrued Obligations”).

 

(b) Termination by the Company Without Cause or by the Executive With Good Reason Prior to or More Than Twelve Months Following a Change in Control. If the Executive’s employment is terminated by the Company without Cause or by the Executive with Good Reason prior to, or more than twelve (12) months following, a Change in Control (as defined below), the Executive shall be entitled to the Accrued Obligations. In addition, and subject to the conditions of Section 8(d), the Company shall:

 

(i) pay the Executive an amount equal to (x) nine (9) months (the “Severance Period”) of the Executive’s Base Salary, and (y) the Executive’s Target Bonus for the year in which the Date of Termination occurs, without regard to whether the metrics have been established or achieved for such year (such bonus amount prorated to reflect the period during such year that the Executive was employed prior to the Date of Termination); provided in the event the Executive is entitled to any payments pursuant to the Restrictive Covenants Agreement, the amounts received by the Executive pursuant to this (i) in any calendar year will be reduced by the amount the Executive is paid in the same such calendar year pursuant to the Restrictive Covenants Agreement (the “Restrictive Covenants Agreement Setoff”); and

 

 

(ii) provided the Executive is eligible for and timely elects to continue receiving group medical insurance pursuant to the “COBRA” law, continue to pay for nine (9) months following the Executive’s termination date or until the Executive has secured other employment or is no longer eligible for coverage under COBRA, whichever occurs first, the share of the premium for health coverage that is paid by the Company for active and similarly-situated employees who receive the same type of coverage, unless the Company’s provision of such COBRA payments will violate the nondiscrimination requirements of applicable law, in which case the Company shall convert such payments to payroll payments directly to the Executive for the time period specified above. Such payments, if to the Executive, shall be subject to tax-related deductions and withholdings and paid on the Company’s regular payroll dates. For the avoidance of doubt, the taxable payments described above may be used for any purpose, including, but not limited to, continuation coverage under COBRA (collectively, the “Severance Benefits”).

 

(c) Termination by the Company Without Cause or by the Executive With Good Reason Within Twelve Months Following a Change in Control. If the Executive’s employment is terminated by the Company without Cause or by the Executive with Good Reason within twelve (12) months following a Change in Control, then the Executive shall be entitled to the Accrued Obligations. In addition, in lieu of the Severance Benefits set forth in Section 8(b) above, and subject to the conditions of Section 8(d), the Company shall:

 

(i) pay the Executive an amount equal to (x) twelve (12) months (the “Change in Control Severance Period”) of the Executive’s Base Salary (or Executive’s Base Salary in effect immediately prior to the Change in Control, if higher), and (y) an amount equal to the Executive’s Target Bonus for the year in which the Date of Termination occurs, without regard to whether the metrics have been established or achieved for such year; provided in the event the Executive is entitled to any payments pursuant to the Restrictive Covenants Agreement, the amounts received by the Executive pursuant to this (i) in any calendar year will be reduced by the Restrictive Covenants Agreement Setoff;

 

(ii) provided the Executive is eligible for and timely elects to continue receiving group medical insurance pursuant to the “COBRA” law, continue to pay for twelve (12) months following the Executive’s termination date or until the Executive has secured other employment or is no longer eligible for coverage under COBRA, whichever occurs first, the share of the premium for health coverage that is paid by the Company for active and similarly-situated employees who receive the same type of coverage, unless the Company’s provision of such COBRA payments will violate the nondiscrimination requirements of applicable law, in which case the Company shall convert such payments to payroll payments directly to the Executive for the time period specified above. Such payments, if to the Executive, shall be subject to tax-related deductions and withholdings and paid on the Company’s regular payroll dates. For the avoidance of doubt, the taxable payments described above may be used for any purpose, including, but not limited to, continuation coverage under COBRA; and

 

 

(iii) notwithstanding anything to the contrary in any applicable equity incentive award agreement, stock option agreement or other stock-based award agreement, all equity incentive awards, stock options and other stock-based awards subject to time-based vesting held by the Executive shall be accelerated, such that all then-unvested equity awards that vest based solely on the passage of time immediately vest and become fully exercisable or non-forfeitable as of the Executive’s Date of Termination (collectively, the “Change in Control Severance Benefits”); provided that, if any equity incentive awards, stock options and other stock-based awards held by the Executive prior to the Effective Date have accelerated vesting terms that a more favorable to the Executive than those set forth in this Section 8(c)(iii), the vesting terms of those equity incentive awards, stock options or other stock-based awards shall apply as opposed to the accelerated vesting terms set forth in this Section 8(c)(iii) solely with respect to such awards.

 

(d) Release and Timing of Payments. As a condition of the Executive’s receipt of the Severance Benefits or the Change in Control Severance Benefits, as applicable, the Executive must execute and deliver to the Company a severance and release of claims agreement in a form to be provided by the Company (the “Severance Agreement”), which Severance Agreement will include, at a minimum, a release of all releasable claims, non-disparagement, confidentiality, and cooperation obligations, a reaffirmation of the Executive’s continuing obligations under the Restrictive Covenants Agreement, and an agreement not to compete with the Company for twelve (12) months following the Date of Termination. The Severance Agreement must become irrevocable within sixty (60) days following the date of the Executive’s Date of Termination (or such shorter period as may be directed by the Company). The Severance Benefits or the Change in Control Severance Benefits, as applicable, are subject to Exhibit A and, to the extent taxable, shall be paid out in substantially equal installments in accordance with the Company’s payroll practice over the Severance Period or the Change in Control Severance Period, as applicable, commencing within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, any payments due under Section 8(b) or 8(c) above, to the extent they qualify as “non-qualified deferred compensation” within the meaning of Section 409A of the Code, shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Date of Termination. The Executive must continue to comply with the Severance Agreement, the Restrictive Covenants Agreement and any similar agreement with the Company in order to be eligible to receive or continue receiving the Severance Benefits or Change in Control Severance Benefits, as applicable.

 

 

(e) Change in Control Definition. For purposes of this Agreement, “Change in Control” shall mean the occurrence of any of the following events, provided that such event or occurrence constitutes a change in the ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, as defined in Treasury Regulation §§ 1.409A-3(i)(5)(v), (vi) and (vii): (i) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act) fifty percent (50%) or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (1) any acquisition of capital stock of the Company directly from the Company or (2) any acquisition of capital stock of the Company by any entity pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection (iii) of this definition; or (ii) a change in the composition of the Board that results in the Continuing Directors (as defined below) no longer constituting a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (x) who was a member of the Board on the Effective Date or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or (iii) the consummation of a merger, consolidation, reorganization, recapitalization or share exchange involving the Company, or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of the following two (2) conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one (1) or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person (excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, fifty percent (50%) or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or (iv) the liquidation or dissolution of the Company. Notwithstanding the foregoing, if the definition of Change in Control (or similar definition) in an equity incentive award, stock option or other stock-based award agreement between the Executive and the Company dated prior to the Effective Date (each, a “Preexisting Equity Agreement”) is broader than this definition of Change in Control in this Agreement, the definition of Change in Control (or similar definition) in such Preexisting Equity Agreement shall apply solely with respect to the equity award covered by such Preexisting Equity Agreement.

 

 

9. Modified Section 280G Cutback. Notwithstanding any other provision of this Agreement, except as set forth in Section 9(b), in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the following provisions shall apply:

 

(a) The Company shall not be obligated to provide to the Executive any portion of any “Contingent Compensation Payments” (as defined below) that the Executive would otherwise be entitled to receive to the extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(1) of the Code) for the Executive. For purposes of this Section 9, the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Payments” and the aggregate amount (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Amount.”

 

(b) Notwithstanding the provisions of Section 9(a), no such reduction in Contingent Compensation Payments shall be made if (1) the Eliminated Amount (computed without regard to this sentence) exceeds (2) one hundred percent (100%) of the aggregate present value (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any additional taxes that would be incurred by the Executive if the Eliminated Payments (determined without regard to this sentence) were paid to the Executive (including state and federal income taxes on the Eliminated Payments, the excise tax imposed by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in excess of the Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes). The override of such reduction in Contingent Compensation Payments pursuant to this Section 9(b) shall be referred to as a “Section 9(b) Override.” For purpose of this paragraph, if any federal or state income taxes would be attributable to the receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated Payment by the maximum combined federal and state income tax rate provided by law.

 

(c) For purposes of this Section 9 the following terms shall have the following respective meanings:

 

(i) “Change in Ownership or Control” shall mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of the Code.

 

(ii) “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of compensation that is made or made available (under this Agreement or otherwise) to or for the benefit of a “disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.

 

 

(d) Any payments or other benefits otherwise due to the Executive following a Change in Ownership or Control that could reasonably be characterized (as determined by the Company) as Contingent Compensation Payments (the “Potential Payments”) shall not be made until the dates provided for in this Section 9(d). Within thirty (30) days after each date on which the Executive first becomes entitled to receive (whether or not then due) a Contingent Compensation Payment relating to such Change in Ownership or Control, the Company shall determine and notify the Executive (with reasonable detail regarding the basis for its determinations) (1) which Potential Payments constitute Contingent Compensation Payments, (2) the Eliminated Amount and (3) whether the Section 9(b) Override is applicable. Within thirty (30) days after delivery of such notice to the Executive, the Executive shall deliver a response to the Company (the “Executive Response”) stating either (A) that the Executive agrees with the Company’s determination pursuant to the preceding sentence or (B) that the Executive disagrees with such determination, in which case the Executive shall set forth (x) which Potential Payments should be characterized as Contingent Compensation Payments, (y) the Eliminated Amount, and (z) whether the Section 9(b) Override is applicable. In the event that the Executive fails to deliver an Executive Response on or before the required date, the Company’s initial determination shall be final. If and to the extent that any Contingent Compensation Payments are required to be treated as Eliminated Payments pursuant to this Section 9, then the payments shall be reduced or eliminated, as determined by the Company, in the following order: (i) any cash payments, (ii) any taxable benefits, (iii) any nontaxable benefits, and (iv) any vesting of equity awards in each case in reverse order beginning with payments or benefits that are to be paid the farthest in time from the date that triggers the applicability of the excise tax, to the extent necessary to maximize the Eliminated Payments. If the Executive states in the Executive Response that the Executive agrees with the Company’s determination, the Company shall make the Potential Payments to the Executive within three (3) business days following delivery to the Company of the Executive Response (except for any Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). If the Executive states in the Executive Response that the Executive disagrees with the Company’s determination, then, for a period of sixty (60) days following delivery of the Executive Response, the Executive and the Company shall use good faith efforts to resolve such dispute. If such dispute is not resolved within such 60-day period, such dispute shall be settled exclusively by arbitration in Boston, Massachusetts, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Company shall, within three (3) business days following delivery to the Company of the Executive Response, make to the Executive those Potential Payments as to which there is no dispute between the Company and the Executive regarding whether they should be made (except for any such Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). The balance of the Potential Payments shall be made within three (3) business days following the resolution of such dispute. Subject to the limitations contained in Sections 9(a) and 9(b) hereof, the amount of any payments to be made to the Executive following the resolution of such dispute shall be increased by the amount of the accrued interest thereon computed at the prime rate announced from time to time by The Wall Street Journal, compounded monthly from the date that such payments originally were due.

 

The provisions of this Section 9 are intended to apply to any and all payments or benefits available to the Executive under this Agreement or any other agreement or plan under which the Executive may receive Contingent Compensation Payments.

 

10. Absence of Restrictions. The Executive represents and warrants that the Executive is not bound by any employment contracts, restrictive covenants or other restrictions that prevent the Executive from carrying out the Executive’s responsibilities for the Company, or which are in any way inconsistent with any of the terms of this Agreement.

 

 

11. Notice. Any notice delivered under this Agreement shall be deemed duly delivered three (3) business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, one (1) business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, or immediately upon hand delivery, in each case to the address of the recipient set forth below.

 

To the Executive: At the address set forth in the Executive’s personnel file

 

To Company:

 

Xilio Therapeutics, Inc.

828 Winter Street, Suite 300

Waltham, MA 02451

Attention: Legal Department

 

Either Party may change the address to which notices are to be delivered by giving notice of such change to the other Party in the manner set forth in this Section 11.

 

12. Governing Law; Enforcement. The terms of this Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with this Agreement, the Executive’s employment with the Company or any other relationship between the Executive and the Company (the “Disputes”) will be governed by Massachusetts law, excluding laws relating to conflicts or choice of law. The Executive and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in the Commonwealth of Massachusetts in connection with any Dispute or any claim related to any Dispute.

 

13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both Parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business; provided, however, that the obligations of the Executive are personal and shall not be assigned by the Executive.

 

14. At-Will Employment. During the Term of Employment, the Executive will continue to be an at-will employee of the Company, which means that, notwithstanding any provision set forth herein, the employment relationship can be terminated by either Party for any reason, at any time, with or without prior notice and with or without Cause.

 

15. Acknowledgment. The Executive states and represents that the Executive has had an opportunity to fully discuss and review the terms of this Agreement with an attorney. The Executive further states and represents that the Executive has carefully read this Agreement, understands the contents herein, freely and voluntarily assents to all of the terms and conditions hereof, and signs the Executive’s name of the Executive’s own free act.

 

16. No Oral Modification, Waiver, Cancellation or Discharge. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive. No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

 

 

17. Captions and Pronouns. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa.

 

18. Interpretation. The Parties agree that this Agreement will be construed without regard to any presumption or rule requiring construction or interpretation against the drafting Party. References in this Agreement to “include” or “including” should be read as though they said “without limitation” or equivalent forms. References in this Agreement to the “Board” shall include any authorized committee thereof.

 

19. Severability. Each provision of this Agreement must be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. Moreover, if a court of competent jurisdiction determines any of the provisions contained in this Agreement to be unenforceable because the provision is excessively broad in scope, whether as to duration, activity, geographic application, subject or otherwise, it will be construed, by limiting or reducing it to the extent legally permitted, so as to be enforceable to the extent compatible with then applicable law to achieve the intent of the Parties.

 

20. Entire Agreement. This Agreement constitutes the entire agreement between the Parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement, including, without limitation, the Existing Agreement.

 

[Signatures on Page Following]

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year set forth above.

 

XILIO THERAPEUTICS, INC.

 

By:	/s/ René Russo
Name:	René Russo
Title:	President and Chief Executive Officer

 

EXECUTIVE:

 

/s/ Martin Huber
Martin Huber, M.D.

 

 

EXHIBIT A

 

Payments Subject to Section 409A

 

1.             Subject to this Exhibit A, any severance payments that may be due under the Agreement shall begin only upon the date of the Executive’s “separation from service” (determined as set forth below) which occurs on or after the termination of the Executive’s employment. The following rules shall apply with respect to distribution of the severance payments, if any, to be provided to the Executive under the Agreement, as applicable:

 

(a)            It is intended that each installment of the severance payments provided under the Agreement shall be treated as a separate “payment” for purposes of Section 409A of the Internal Revenue Code (“Section 409A”). Neither the Company nor the Executive shall have the right to accelerate or defer the delivery of any such payments except to the extent specifically permitted or required by Section 409A.

 

(b)            If, as of the date of the Executive’s “separation from service” from the Company, the Executive is not a “specified employee” (within the meaning of Section 409A), then each installment of the severance payments shall be made on the dates and terms set forth in the letter agreement.

 

(c)            If, as of the date of the Executive’s “separation from service” from the Company, the Executive is a “specified employee” (within the meaning of Section 409A), then:

 

(i)

Each installment of the severance payments due under the Agreement that, in accordance with the dates and terms set forth herein, will in all circumstances, regardless of when the Executive’s separation from service occurs, be paid within the short-term deferral period (as defined under Section 409A) shall be treated as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A and shall be paid on the dates and terms set forth in the Agreement; and

 

(ii)

Each installment of the severance payments due under the Agreement that is not described in this Exhibit A, Section 1(c)(i) and that would, absent this subsection, be paid within the six-month period following the Executive’s “separation from service” from the Company shall not be paid until the date that is six months and one day after such separation from service (or, if earlier, the Executive’s death), with any such installments that are required to be delayed being accumulated during the six-month period and paid in a lump sum on the date that is six months and one day following the Executive’s separation from service and any subsequent installments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the preceding provisions of this sentence shall not apply to any installment of payments if and to the maximum extent that that such installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation by reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation from service). Any installments that qualify for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of the Executive’s second taxable year following the taxable year in which the separation from service occurs.

 

 

2.             The determination of whether and when the Executive’s separation from service from the Company has occurred shall be made and in a manner consistent with, and based on the presumptions set forth in, Treasury Regulation Section 1.409A-1(h). Solely for purposes of Section 2 of this Exhibit A, “Company” shall include all persons with whom the Company would be considered a single employer under Section 414(b) and 414(c) of the Code.

 

3.             All reimbursements and in-kind benefits provided under the Agreement shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that (i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in the Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (iv) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit.

 

4.             The Company makes no representation or warranty and shall have no liability to the Executive or to any other person if any of the provisions of the Agreement (including this Exhibit A) are determined to constitute deferred compensation subject to Section 409A but that do not satisfy an exemption from, or the conditions of, that section.

 

5.             The Agreement is intended to comply with, or be exempt from, Section 409A and shall be interpreted accordingly.

 

[Remainder of page intentionally left blank.]

 

 

EXHIBIT B

 

Restrictive Covenants Agreement

 

 

 

Exhibit 10.18

 

VIA ELECTRONIC MAIL

 

March 12, 2021

 

Joseph L. Farmer

 

Dear Joe:

 

As we discussed, your employment with Xilio Therapeutics, Inc. (f/k/a/ Akrevia Therapeutics, Inc., and hereinafter, the “Company”) will end effective March 12, 2021 (the “Separation Date”). As we also discussed, although you are electing to leave the Company, the Company has agreed to provide you with the severance benefits described in detail in paragraph 1 below if you sign and return this letter agreement to me no later than April 3, 2021 (but no earlier than the Separation Date) and do not revoke your agreement (as described below). By signing and returning this letter agreement and not revoking your acceptance, you will be entering into a binding agreement with the Company and will be agreeing to the terms and conditions set forth in the numbered paragraphs below, including the release of claims set forth in paragraph 2. Therefore, you are advised to consult with an attorney before signing this letter agreement and you have been given at least twenty-one (21) days to do so. If you sign this letter agreement, you may change your mind and revoke your agreement during the seven (7) business day period after you have signed it (the “Revocation Period”) by notifying me in writing. If you do not so revoke, this letter agreement will become a binding agreement between you and the Company upon the expiration of the Revocation Period.

 

Although your receipt of the severance benefits is expressly conditioned on your timely entering into this letter agreement, the following will apply regardless of whether or not you do so:

 

•

As of the Separation Date, all salary payments from the Company will cease and any benefits you had as of the Separation Date under Company-provided benefit plans, programs, or practices will terminate, except as required by applicable law.

 

•

You will receive payment for your final wages and any unused vacation time accrued through the Separation Date.

 

•

You may, if eligible and at your own cost, elect to continue receiving group medical insurance pursuant to the “COBRA” law. Please consult the COBRA materials to be provided under separate cover for details regarding these benefits.

 

•

You are obligated to keep confidential and not to use or disclose any and all non-public information concerning the Company that you acquired during the course of your employment with the Company, including any non-public information concerning the Company’s business affairs, business prospects, and financial condition, except as otherwise permitted by paragraph 9 below. Further, you remain subject to your continuing obligations to the Company as set forth in the Employee Proprietary Information and Invention Assignment Agreement (the “Restrictive Covenants Agreement”) you previously executed in connection with your commencement of employment with the Company, which obligations remain in full force and effect.

 

•

You must return to the Company no later than the Separation Date all Company property.

 

 

If you elect to timely sign and return this letter agreement and do not revoke your acceptance within the Revocation Period, the following terms and conditions will also apply:

 

1.             Severance Benefits – The Company will provide you with the following severance benefits (the “severance benefits”):

 

a.             Severance Pay. The Company will pay to you an aggregate amount of two hundred eighty-five thousand eight hundred thirty-three dollars ($285,833), less all applicable taxes and withholdings (the “Severance Sum”), which is equivalent to the sum of (i) nine (9) months of your current base salary, plus (ii) your prorated 2021 bonus at target; provided, however, that the Severance Sum shall be reduced by any Garden Leave Pay that the Company provides to you pursuant to the Restrictive Covenants Agreement. The Severance Sum will be paid in equal installments over a nine (9) month period in accordance with the Company’s regular payroll practices (with each such installment during the first six (6) months following the Separation Date reduced to reflect the Garden Leave Pay being provided to you during the same period), but in no event shall payments begin earlier than the Company’s first payroll date following expiration of the Revocation Period. Should you materially breach any of your material obligations under the Restrictive Covenants Agreement (as determined by the Company’s Board of Directors in good faith), these severance payments shall immediately cease and no further amounts shall be due to you hereunder.

 

b.             COBRA Contribution. Should you timely elect and be eligible to continue receiving group health insurance pursuant to the “COBRA” law, the Company will, until the earlier of (x) the date that is nine (9) months following the Separation Date, and (y) the date on which you are eligible to obtain alternative coverage with another employer (as applicable, the “COBRA Contribution Period”), continue to pay the share of the premiums for such coverage to the same extent it was paying such premiums on your behalf immediately prior to the Separation Date. The remaining balance of any premium costs during the COBRA Contribution Period, and all premium costs thereafter, shall be paid by you on a monthly basis for as long as, and to the extent that, you remain eligible for COBRA continuation. You agree that, should you become eligible to obtain alternative health insurance coverage with another employer prior to the date that is nine (9) months following the Separation Date, you will so inform the Company in writing within five (5) business days of obtaining such coverage.

 

c.             Consulting Agreement. The Company will enter into a consulting agreement with you in the form attached hereto as Attachment A (the “Consulting Agreement”). During the Consultation Period set forth in the Consulting Agreement, you shall provide services to the Company as a consultant pursuant to the terms set forth therein. During the Consultation Period, and contingent on your continued provision of services to the Company, the outstanding equity awards previously granted to you by the Company (collectively, the “Equity Awards”) will continue to vest and be exercisable in accordance with the applicable equity plans and agreements. Notwithstanding the foregoing or the provisions of any equity award agreement between the Company and you, you acknowledge that any outstanding stock options that were granted in connection with your employment with the Company and that were intended to be incentive stock options at the time of grant will be treated as nonstatutory stock options beginning three (3) months after the Separation Date. For the avoidance of doubt, you acknowledge that should you revoke your acceptance of this letter agreement during the Revocation Period, the Consulting Agreement will immediately terminate on the date of any such revocation, in accordance with the terms set forth in the Consulting Agreement.

 

 

You will not be eligible for, nor shall you have a right to receive, any payments or benefits from the Company following the Separation Date other than as set forth in this paragraph.

 

2.             Release of Claims – In consideration of the severance benefits, which you acknowledge you would not otherwise be entitled to receive, you hereby fully, forever, irrevocably and unconditionally release, remise and discharge the Company, its affiliates, subsidiaries, parent companies, predecessors, and successors, and all of their respective past and present officers, directors, stockholders, partners, members, employees, agents, representatives, plan administrators, attorneys, insurers and fiduciaries (each in their individual and corporate capacities) (collectively, the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses (including attorneys’ fees and costs), of every kind and nature that you ever had or now have against any or all of the Released Parties, whether known or unknown, including, but not limited to, any and all claims arising out of or relating to your employment with and/or separation from the Company, including, but not limited to, all claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the Genetic Information Nondiscrimination Act of 2008, 42 U.S.C. § 2000ff et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., and the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., all as amended; all claims arising out of the Massachusetts Fair Employment Practices Act, Mass. Gen. Laws ch. 151B, § 1 et seq., the Massachusetts Wage Act, Mass. Gen. Laws ch. 149, § 148 et seq. (Massachusetts law regarding payment of wages and overtime), the Massachusetts Civil Rights Act, Mass. Gen. Laws ch. 12, §§ 11H and 11I, the Massachusetts Equal Rights Act, Mass. Gen. Laws. ch. 93, § 102, Mass. Gen. Laws ch. 214, § 1C (Massachusetts right to be free from sexual harassment law), the Massachusetts Labor and Industries Act, Mass. Gen. Laws ch. 149, § 1 et seq., Mass. Gen. Laws ch. 214, § 1B (Massachusetts right of privacy law), the Massachusetts Maternity Leave Act, Mass. Gen. Laws ch. 149, § 105D, and the Massachusetts Small Necessities Leave Act, Mass. Gen. Laws ch. 149, § 52D, all as amended; all common law claims including, but not limited to, actions in defamation, intentional infliction of emotional distress, misrepresentation, fraud, wrongful discharge, and breach of contract (including without limitation all claims arising out of or related to the Employment Agreement between you and the Company dated May 24, 2019); all claims to any non-vested ownership interest in the Company, contractual or otherwise; all state and federal whistleblower claims to the maximum extent permitted by law; and any claim or damage arising out of your employment with and/or separation from the Company (including a claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not expressly referenced above; provided, however, that this release of claims does not prevent you from filing a charge with, cooperating with, or participating in any investigation or proceeding before, the Equal Employment Opportunity Commission or a state fair employment practices agency (except that you acknowledge that you may not recover any monetary benefits in connection with any such charge, investigation, or proceeding, and you further waive any rights or claims to any payment, benefit, attorneys’ fees or other remedial relief in connection with any such charge, investigation or proceeding).

 

 

3.             Continuing Obligations – You acknowledge and reaffirm your confidentiality and non-disclosure obligations discussed on the first page of this letter agreement, as well as all of your obligations set forth in the Restrictive Covenant Agreements, including without limitation your non-competition obligations set forth in Section 3(d) thereof, all of which obligations survive your separation from employment with the Company.

 

4.             Non-Disparagement – You understand and agree that, to the extent permitted by law and except as otherwise permitted by paragraph 9 below, you will not, in public or private, make any false, disparaging, derogatory or defamatory statements, online (including, without limitation, on any social media, networking, or employer review site) or otherwise, to any person or entity, including, but not limited to, any media outlet, industry group, financial institution or current or former employee, board member, consultant, client or customer of the Company, regarding the Company or any of its directors or officers, or regarding the Company’s business affairs, business prospects, or financial condition. In return, the Company’s directors and officers will not to make any false, disparaging, derogatory or defamatory statements, online or otherwise, to any third party regarding you.

 

5.             Company Affiliation – You agree that, following the Separation Date, you will not hold yourself out as an officer, employee, or otherwise as a representative of the Company, and you agree to update any directory information that indicates you are currently affiliated with the Company. Without limiting the foregoing, you confirm that, within five (5) days following the Separation Date, you will update any and all social media accounts (including, without limitation, LinkedIn, Facebook, Twitter and Four Square) to reflect that you are no longer employed by or associated with the Company.

 

6.             Return of Company Property – You confirm that, except as mutually agreed and required to perform the services described in the Consulting Agreement you have returned to the Company all keys, files, records (and copies thereof), equipment (including, but not limited to, computer hardware, software, printers, flash drives and other storage devices, wireless handheld devices, cellular phones, tablets, etc.), Company identification, and any other Company owned property in your possession or control, and that you have left intact all, and have otherwise not destroyed, deleted, or made inaccessible to the Company any, electronic Company documents, including, but not limited to, those that you developed or helped to develop during your employment, and that you have not (a) retained any copies in any form or media; (b) maintained access to any copies in any form, media, or location; (c) stored any copies in any physical or electronic locations that are not readily accessible or not known to the Company or that remain accessible to you; or (d) sent, given, or made accessible any copies to any persons or entities that the Company has not authorized to receive such electronic or hard copies. You further confirm that you have cancelled all accounts for your benefit, if any, in the Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone accounts, and computer accounts.

 

 

7.             Business Expenses and Final Compensation – You acknowledge that you have been reimbursed by the Company for all business expenses incurred in conjunction with the performance of your employment and that no other reimbursements are owed to you. You further acknowledge that you have received payment in full for all services rendered in conjunction with your employment by the Company, including payment for all wages, bonuses, commissions, and accrued, unused vacation time, and that no other compensation is owed to you except as provided herein.

 

8.             Confidentiality – You understand and agree that, to the extent permitted by law and except as otherwise permitted by paragraph 9 below, the terms and contents of this letter agreement, and the contents of the negotiations and discussions resulting in this letter agreement, shall be maintained as confidential by you and your agents and representatives and shall not be disclosed except as otherwise agreed to in writing by the Company.

 

9.             Scope of Disclosure Restrictions – Nothing in this letter agreement prohibits you from communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing information to government agencies, filing a complaint with government agencies, or participating in government agency investigations or proceedings. You are not required to notify the Company of any such communications; provided, however, that nothing herein authorizes the disclosure of information you obtained through a communication that was subject to the attorney-client privilege. Further, notwithstanding your confidentiality and nondisclosure obligations, you are hereby advised as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.”

 

10.           Cooperation – You agree that, to the extent permitted by law, you shall cooperate with the Company in the investigation, defense or prosecution of any claims or actions which already have been brought, are currently pending, or which may be brought in the future against the Company by a third party or by or on behalf of the Company against any third party, whether before a state or federal court, any state or federal government agency, or a mediator or arbitrator related to events about which you have relevant knowledge. Your cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with the Company’s counsel, at reasonable times and locations mutually agreed by you and the Company, to investigate or prepare the Company’s claims or defenses, to prepare for trial or discovery or an administrative hearing, mediation, arbitration or other proceeding and to act as a witness when requested by the Company. The Company will reimburse you for all reasonable and documented out of pocket costs that you incur to comply with this paragraph. You further agree that, to the extent permitted by law, you will notify the Company promptly in the event that you are served with a subpoena (other than a subpoena issued by a government agency), or in the event that you are asked to provide a third party (other than a government agency) with information concerning any actual or potential complaint or claim against the Company.

 

 

11.           Amendment and Waiver – This letter agreement shall be binding upon the parties and may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by duly authorized representatives of the parties hereto. This letter agreement is binding upon and shall inure to the benefit of the parties and their respective agents, assigns, heirs, executors, successors, and administrators. No delay or omission by the Company in exercising any right under this letter agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

 

12.           Validity – Should any provision of this letter agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this letter agreement.

 

13.           Nature of Agreement – You understand and agree that this letter agreement is a severance agreement and does not constitute an admission of liability or wrongdoing on the part of the Company.

 

14.           Acknowledgments – You acknowledge that you have been given at least twenty- one (21) days to consider this letter agreement, and that the Company is hereby advising you to consult with an attorney of your own choosing prior to signing this letter agreement. You understand that you may revoke this letter agreement for a period of seven (7) days after you sign this letter agreement by notifying me in writing, and the letter agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period. You understand and agree that by entering into this letter agreement, you are waiving any and all rights or claims you might have under the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act, and that you have received consideration beyond that to which you were previously entitled.

 

15.           Voluntary Assent – You affirm that no other promises or agreements of any kind have been made to or with you by any person or entity whatsoever to cause you to sign this letter agreement, and that you fully understand the meaning and intent of this letter agreement. You further state and represent that you have carefully read this letter agreement, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign your name of your own free act.

 

16.           Applicable Law – This letter agreement shall be interpreted and construed by the laws of the Commonwealth of Massachusetts, without regard to conflict of laws provisions. You hereby irrevocably submit to and acknowledge and recognize the jurisdiction of the courts of the Commonwealth of Massachusetts, or if appropriate, a federal court located in the Commonwealth of Massachusetts (which courts, for purposes of this letter agreement, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this letter agreement or the subject matter hereof.

 

 

17.           Entire Agreement – This letter agreement contains and constitutes the entire understanding and agreement between the parties hereto with respect to your severance benefits and the settlement of claims against the Company and cancels all previous oral and written negotiations, agreements, and commitments in connection therewith.

 

18.           Tax Acknowledgement – In connection with the severance benefits provided to you pursuant to this letter agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and you shall be responsible for all applicable taxes with respect to such severance benefits under applicable law. You acknowledge that you are not relying upon the advice or representation of the Company with respect to the tax treatment of any of the severance benefits set forth in paragraph 1 of this letter agreement.

 

[signature page follows]

 

 

	Very truly yours,
	By:	/s/ René Russo
		René Russo
		CEO

 

I hereby agree to the terms and conditions set forth above. I have been given at least twenty-one (21) days to consider this letter agreement, and I have chosen to execute this on the date below. I intend that this letter agreement will become a binding agreement between me and the Company if I do not revoke my acceptance in seven (7) days.

 

/s/ Joseph L. Farmer		3/12/2021
Joseph L. Farmer		Date

 

To be returned in a timely manner as set forth on the first page of this letter agreement.

 

 

ATTACHMENT A

 

CONSULTING AGREEMENT

 

This Consulting Agreement (the “Agreement”), effective as of the Effective Date (as defined herein), is entered into between Xilio Therapeutics, Inc. (the “Company”) and Joseph L. Farmer (the “Consultant”).

 

WHEREAS, the Company desires to retain the services of the Consultant and the Consultant desires to perform certain services for the Company; and

 

WHEREAS, the Consultant is in the business of providing such services and has agreed to provide such services pursuant to the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE in consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, the parties agree as follows:

 

1.             Services. The Consultant agrees to perform such consulting and advisory services to and for the Company as may be reasonably requested from time to time by the Company, as specified on Schedule A to this Agreement.

 

2.             Term. Provided the Consultant has timely signed and returned to the Company the letter agreement to which this Agreement is attached as Attachment A (the “Letter Agreement”),the term of this Agreement shall commence on March 13, 2021 and shall continue through November 30, 2021 (the “Expiration Date”), unless terminated earlier pursuant to the provisions of Section 4 (such period being referred to as the “Consultation Period”).

 

3.             Consideration and Reimbursement.

 

a.             Equity Vesting. In full consideration of the services performed by the Consultant under this Agreement, and for so long as the Consultant provides services to the Company pursuant to this Agreement, any and all outstanding and unvested equity awards granted to the Consultant by the Company will continue to vest and be exercisable in accordance with the applicable equity plans and award agreements. Vesting will cease immediately upon termination of this Agreement for any reason in accordance with Section 4 below. The Consultant shall have three (3) months following the end of the Consultation Period to exercise any equity awards that have vested and become exercisable as of such date in accordance with and subject to applicable equity plans and award agreements.

 

b.             Expense Reimbursement. The Company shall reimburse the Consultant for all reasonable out-of-pocket expenses incurred by the Consultant in connection with the performance of the services under this Agreement. The Consultant shall submit to the Company itemized monthly statements, in a form satisfactory to the Company, of such expenses incurred in the previous month. The Company shall pay to the Consultant amounts shown on each such statement within thirty (30) days after receipt thereof. Notwithstanding the foregoing, the Consultant shall not incur total expenses in excess of $500.00 per month without the prior written approval of the Company.

 

 

c.             No Employee Benefits. The Consultant’s relationship with the Company will be that of an independent contractor, and the Consultant shall not, in connection with this relationship, be entitled to any benefits, coverages or privileges, including, without limitation, health insurance, social security, unemployment, workers compensation, or pension payments, made available to employees of the Company.

 

4.             Termination. This Agreement may be terminated prior to the Expiration Date in the following manner: (a) by the Company at any time immediately upon written notice if the Consultant has materially breached this Agreement or the Letter Agreement; (b) by the Consultant at any time immediately upon written notice if the Company has materially breached this Agreement or the Letter Agreement; (c) by either the Company or the Consultant upon not less than thirty (30) days’ prior written notice; or (d) at any time upon the mutual written consent of the parties hereto. Notwithstanding the foregoing, and for the avoidance of doubt, the Company may terminate this Agreement effective immediately by giving written notice to the Consultant if the Consultant fails to timely sign the Letter Agreement, or revokes the Letter Agreement within seven (7) days after signing it as set forth in the Letter Agreement. In the event of any termination, the Consultant shall be entitled only to reimbursements for expenses incurred in accordance with Section 3(b) prior to termination, and no further payments of any kind will be due. In addition, vesting of the equity will cease immediately upon termination.

 

5.             Cooperation. The Consultant shall perform the services hereunder in a professional manner and consistent with the highest industry standards. The Company shall provide such access to its information and property as may be reasonably required in order to permit the Consultant to perform the Consultant’s obligations hereunder. The Consultant shall cooperate with the Company’s personnel, shall not interfere with the conduct of the Company’s business, and shall observe all rules, regulations and security requirements of the Company concerning the safety of persons and property.

 

6.             Proprietary Information and Inventions.

 

6.1            Proprietary Information.

 

a.            The Consultant acknowledges that the Consultant’s relationship with the Company is one of high trust and confidence and that in the course of the Consultant’s service to the Company, Consultant will have access to and contact with Proprietary Information. The Consultant will not disclose any Proprietary Information to any person or entity other than employees of the Company or use the same for any purposes (other than in the performance of the services) without written approval by an officer of the Company, either during or after the Consultation Period, unless and until such Proprietary Information has become public knowledge without fault by the Consultant.

 

b.            For purposes of this Agreement, Proprietary Information shall mean, by way of illustration and not limitation, all information, whether or not in writing, whether or not patentable and whether or not copyrightable, of a private, secret or confidential nature, owned, possessed or used by the Company, concerning the Company’s business, business relationships or financial affairs, including, without limitation, any Invention, formula, vendor information, customer information, apparatus, equipment, trade secret, process, research, report, technical or research data, clinical data, know-how, computer program, software, software documentation, hardware design, technology, product, processes, methods, techniques, formulas, compounds, projects, developments, marketing or business plan, forecast, unpublished financial statement, budget, license, price, cost, customer, supplier or personnel information or employee list that is communicated to, learned of, developed or otherwise acquired by the Consultant in the course of the Consultant’s service as a consultant to the Company.

 

 

 

c.            The Consultant agrees that all files, documents, letters, memoranda, reports, records, data sketches, drawings, models, laboratory notebooks, program listings, computer equipment or devices, computer programs or other written, photographic, or other tangible material containing Proprietary Information, whether created by the Consultant or others, which shall come into Consultant’s custody or possession, shall be and are the exclusive property of the Company to be used by the Consultant only in the performance of the Consultant’s duties for the Company and shall not be copied or removed from the Company premises except in the pursuit of the business of the Company. All such materials or copies thereof and all tangible property of the Company in the custody or possession of the Consultant shall be delivered to the Company, upon the earlier of (i) a request by the Company or (ii) the termination of this Agreement. After such delivery, the Consultant shall not retain any such materials or copies thereof or any such tangible property.

 

d.            The Consultant agrees that Consultant’s obligation not to disclose or to use information and materials of the types set forth in paragraphs (b) and (c) above, and Consultant’s obligation to return materials and tangible property set forth in paragraph (c) above extends to such types of information, materials and tangible property of customers of the Company or suppliers to the Company or other third parties who may have disclosed or entrusted the same to the Company or to the Consultant.

 

e.            The Consultant acknowledges that the Company from time to time may have agreements with other persons or with the United States Government, or agencies thereof, that impose obligations or restrictions on the Company regarding inventions made during the course of work under such agreements or regarding the confidential nature of such work. The Consultant agrees to be bound by all such obligations and restrictions that are known to the Consultant and to take all action necessary to discharge the obligations of the Company under such agreements.

 

f.             The Consultant’s obligations under this Section 6.1 shall not apply to any information that (i) is or becomes known to the general public under circumstances involving no breach by the Consultant or others of the terms of this Section 6.1, (ii) is generally disclosed to third parties by the Company without restriction on such third parties, or (iii) is approved for release by written authorization of an officer of the Company. Further, nothing herein prohibits the Consultant from communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing information to government agencies or participating in government agency investigations or proceedings. In addition, notwithstanding the Consultant’s confidentiality and nondisclosure obligations, the Consultant is hereby advised as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.”

 

 

6.2           Inventions.

 

a.             The Consultant will make full and prompt disclosure to the Company of all inventions, creations, improvements, enhancements, designs, innovations, discoveries, processes, methods, techniques, developments, software, computer programs, and works of authorship, whether or not patentable and whether or not copyrightable, that are created, made, conceived or reduced to practice by the Consultant or under the Consultant’s direction or jointly with others during the Consultation Period, whether or not during normal working hours or on the premises of the Company (all of which are collectively referred to in this Agreement as “Inventions”). The Consultant agrees to assign and does hereby assign to the Company (or any person or entity designated by the Company) all of the Consultant’s right, title and interest in and to all Inventions and all related patents, patent applications, copyrights created in the work(s) of authorship, trademarks, trade names, and other industrial and intellectual property rights and applications therefor in the United States and elsewhere. However, the previous sentence shall not apply to Inventions that do not relate to the present or planned business or research and development of the Company and that are made and conceived by the Consultant not during normal working hours, not on the Company’s premises and not using the Company’s tools, devices, equipment or Proprietary Information. The Consultant understands that, to the extent this Agreement shall be construed in accordance with the laws of any state that precludes a requirement that an individual assign certain classes of inventions, this Section 6.2(a) shall be interpreted not to apply to any invention that a court rules and/or the Company agrees falls within such classes. The Consultant further acknowledges that each original work of authorship that is made by the Consultant (solely or jointly with others) within the scope of the Agreement and which is protectable by copyright is a “work made for hire,” as that term is defined in the United States Copyright Act. The Consultant hereby waives all claims to moral rights in any Inventions.      ·

 

b.             The Consultant agrees that if, in the course of performing the services, the Consultant incorporates into any Invention developed under this Agreement any preexisting invention, improvement, development, concept, discovery or other proprietary information owned by the Consultant or in which the Consultant has an interest (“Prior Inventions”), (i) the Consultant will inform the Company, in writing before incorporating such Prior Inventions into any Invention, and (ii) the Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, transferable worldwide license with the right to grant and authorize sublicenses, to make, have made, modify, use, import, offer for sale, sell, reproduce, distribute, modify, adapt, prepare derivative works of, display, perform, and otherwise exploit such Prior Inventions, without restriction, including, without limitation, as part of or in connection with such Invention, and to practice any method related thereto. The Consultant will not incorporate any invention, improvement, development, concept, discovery or other proprietary information owned by any third party into any Invention without the Company’s prior written permission.

 

c.             The Consultant agrees to cooperate fully with the Company, both during and after the Consultation Period, with respect to the procurement, maintenance, and enforcement of copyrights, patents and other intellectual property rights (both in the United States and foreign countries) relating to Inventions. The Consultant shall sign all papers, including, without limitation, copyright applications, patent applications, declarations, oaths, formal assignments, assignments of priority rights, and powers of attorney, which the Company may deem necessary or desirable in order to protect its rights and interests in any Invention. The Consultant further agrees that if the Company is unable, after reasonable effort, to secure the signature of the Consultant on any such papers, any executive officer of the Company shall be entitled to execute any such papers as the agent and the attorney-in-fact of the Consultant, and the Consultant hereby irrevocably designates and appoints each executive officer of the Company as the Consultant’s agent and attorney-in-fact to execute any such papers on the Consultant’s behalf, and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights and interests in any Invention, under the conditions described in this sentence.

 

 

d.             The Consultant shall maintain adequate and current written records (in the form of notes, sketches, drawings and as may be specified by the Company) to document the conception and/or first actual reduction to practice of any Invention. Such written records shall be available to and remain the sole property of the Company at all times.

 

7.             Non-Exclusivity. The Company retains the right to contract with other companies and/or individuals for consulting services without restriction. Similarly, except as and to the extent set forth in the Letter Agreement and the Restrictive Covenants Agreement (as defined in the Letter Agreement), the Consultant retains the right to contract with other companies or entities for the Consultant’s consulting services.

 

8.             Other Agreements; Warranty.

 

a.             The Consultant hereby represents that, except as the Consultant has disclosed in writing to the Company, the Consultant is not bound by the terms of any agreement with any third party to refrain from using or disclosing any trade secret or confidential or proprietary information in the course of Consultant’s consultancy with the Company, to refrain from competing, directly or indirectly, with the business of such third party or to refrain from soliciting employees, customers or suppliers of such third party. The Consultant further represents that Consultant’s performance of all the terms of this Agreement and the performance of the services as a consultant of the Company do not and will not breach any agreement with any third party to which the Consultant is a party (including, without limitation, any nondisclosure or non-competition agreement), and that the Consultant will not disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging to any current or previous employer or others.

 

b.             The Consultant hereby represents, warrants and covenants that Consultant has the skills and experience necessary to perform the services, that Consultant will perform said services in a professional, competent and timely manner, that Consultant has the power to enter into this Agreement and that Consultant’s performance hereunder will not infringe upon or violate the rights of any third party or violate any federal, state or municipal laws.

 

 

9.             Independent Contractor Status.

 

a.             The Consultant shall perform all services under this Agreement as an “independent contractor” and not as an employee or agent of the Company. The Consultant is not authorized to assume or create any obligation or responsibility, express or implied, on behalf of, or in the name of, the Company or to bind the Company in any manner. Nothing herein shall create, expressly or by implication, a partnership, joint venture or other association between the parties.

 

b.             The Consultant shall have the right to control and determine the time, place, methods, manner and means of performing the services. In performing the services, the amount of time devoted by the Consultant on any given day will be entirely within the Consultant’s control, and the Company will rely on the Consultant to put in the amount of time necessary to fulfill the requirements of this Agreement. The Consultant will provide all equipment and supplies required to perform the services. The Consultant is not required to attend regular meetings at the Company. However, upon reasonable notice, the Consultant shall meet with representatives of the Company at a location to be designated by the parties to this Agreement.

 

c.              In the performance of the services, the Consultant has the authority to control and direct the performance of the details of the services, the Company being interested only in the results obtained. However, the services contemplated by the Agreement must meet the Company’s standards and approval and shall be subject to the Company’s general right of inspection and supervision to secure their satisfactory completion.

 

d.             The Consultant shall not use the Company’s trade names, trademarks, service names or service marks without the prior approval of the Company.

 

e.             The Consultant shall be solely responsible for all state and federal income taxes, unemployment insurance and social security taxes in connection with this Agreement and for maintaining adequate workers’ compensation insurance coverage.

 

10.           Remedies. The Consultant acknowledges that any breach of the provisions of Section 6 of this Agreement shall result in serious and irreparable injury to the Company for which the Company cannot be adequately compensated by monetary damages alone. The Consultant agrees, therefore, that, in addition to any other remedy the Company may have, the Company shall be entitled to enforce the specific performance of this Agreement by the Consultant and to seek both temporary and permanent injunctive relief (to the extent permitted by law) without the necessity of proving actual damages or posting a bond.

 

11.           Indemnification. The Consultant shall be solely liable for, and shall indemnify, defend and hold harmless the Company and its successors and assigns from any claims, suits, judgments or causes of action initiated by any third party against the Company where such actions result from or arise out of the services performed by the Consultant under this Agreement. The Consultant shall further be solely liable for, and shall indemnify, defend and hold harmless the Company and its successors and assigns from and against any claim or liability of any kind (including penalties, fees or charges) resulting from the Consultant’s failure to pay the taxes, penalties, and payments referenced in Section 9 of this Agreement. The Consultant shall further indemnify, defend and hold harmless the Company and its successors and assigns from and against any and all loss or damage resulting from any misrepresentation, or any non-fulfillment of any representation, responsibility, covenant or agreement on Consultants part, as well as any and all acts, suits, proceedings, demands, assessments, penalties, judgments of or against the Company relating to or arising out of the activities of the Consultant and the Consultant shall pay reasonable attorneys’ fees, costs and expenses incident thereto.

 

 

12.           Notices. All notices required or permitted under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the address shown above, or at such other address or addresses as either party shall designate to the other in accordance with this Section 12.I

 

13.           Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa.

 

14.           Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement; provided, however, for the avoidance of doubt, that nothing herein supersedes the Letter Agreement or the Restrictive Covenants Agreement into which the Consultant entered in connection with his prior employment by the Company, which remains in full force and effect.

 

15.           Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Consultant.

 

16.           Non-Assignability of Contract. This Agreement is personal to the Consultant and the Consultant shall not have the right to assign any of Consultant’s rights or delegate any of Consultant’s duties without the express written consent of the Company. Any non-consented-to assignment or delegation, whether express or implied or by operation of law, shall be void and shall constitute a breach and a default by the Consultant.

 

17.           Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts without giving effect to any choice or conflict of law provision or rule that would cause the application of laws of any other jurisdiction.

 

18.           Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, both parties and their respective successors and assigns, including any corporation with which, or into which, the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Consultant are personal and shall not be assigned by Consultant.

 

19.           Interpretation. If any restriction set forth in Section 6 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable.

 

20.           Survival. Sections 4 through 20 shall survive the expiration or termination of this Agreement.

 

 

21.           Miscellaneous.

 

a.              No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

 

b.             The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit, or affect the scope or substance of any section of this Agreement.

 

c.              In the event that any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement as of the date and year first above written.

 

	Xilio Therapeutics, Inc.
	By:	/s/ René Russo
	Name:	René Russo
	Title:	CEO
	CONSULTANT:
	/s/ Joseph L. Farmer
	Joseph L. Farmer

 

 

Schedule A

 

Description of Services

 

The Consultant shall, from time to time, and upon the Company’s request, provide the Company with consulting and advisory services related to the Company’s finances. It is anticipated that the Consultant shall perform such services for the Company no more than 5 hours per week.

 

 

Exhibit 10.19

 

EXECUTION VERSION

 

SERVICE AGREEMENT

 

THIS SERVICE AGREEMENT (this “Agreement”), made this 11^th day of June, 2020, is entered into by Xilio Therapeutics Inc., a Delaware corporation (the “Company”), and Daniel S. Lynch (the “Director”).

 

INTRODUCTION

 

The Company and the Director desire to establish the terms and conditions under which the Director will serve as the Chairman of the boards of directors of the Company Entities (as defined below).

 

It is anticipated that on or about June 30, 2020, the Company and its parent company, Xilio Therapeutics LLC (the “LLC Parent”), will undergo a restructuring pursuant to which a wholly owned subsidiary of a corporation newly formed under the laws of Delaware (such newly formed corporation, the “Ultimate Corporate Parent”) will be merged with and into the LLC Parent, with the LLC Parent becoming a wholly owned subsidiary of the Ultimate Corporate Parent and the current equityholders of the LLC Parent receiving in such transaction shares of capital stock of the Ultimate Corporate Parent (the “Restructuring”).

 

In consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties agree as follows:

 

1.            Services. The Director agrees to serve as Chairman of the Boards (as defined below) and to provide related advisory and oversight services to and for the Company as may be reasonably requested from time to time by the Boards, the Company, the LLC Parent and, following the effectiveness of the Restructuring, the Ultimate Corporate Parent relating to their ongoing operations and strategic matters. Such services shall be performed at such times and places as shall be mutually agreed to by the Company and the Director. The Company agrees to cause the Director (a) to be elected, promptly after the execution and delivery of this Agreement, to (i) the Board of Directors (as defined in the Fourth Amended and Restated Limited Liability Company Agreement of the LLC Parent, dated as of December 12, 2019, as amended to date) of the LLC Parent (the “LLC Parent Board”), (ii) the Board of Directors of the Company (the “Company Board”), (iii) upon the effectiveness of the Restructuring, the Board of Directors of the Ultimate Corporate Parent (the “Ultimate Corporate Parent Board”, and together with the LLC Parent Board and the Company Board, the “Boards”) and (iv) the Compensation Committee of whichever of the LLC Parent Board, the Company Board or the Ultimate Corporate Parent Board that, from time to time, has a committee that principally makes compensation decisions with respect to the Company Entities (such committee, the “Compensation Committee”) and (b) to be appointed as Chairman of the LLC Parent Board, Chairman of the Company Board, Chairman of the Compensation Committee and, upon the effectiveness of the Restructuring, Chairman of the Ultimate Corporate Parent Board, and the Director agrees to serve in such capacities. The Director shall serve as Chairman of the LLC Parent Board, the Company Board and, from and after the effectiveness of the Restructuring, the Ultimate Corporate Parent Board, in each case until his resignation, retirement or removal as Chairman of the applicable Board in accordance with the bylaws or organizational documents that are then applicable to such entity.

 

 

2.             Term. This Agreement shall commence on the date hereof and shall continue until terminated in accordance with the provisions of Section 4 (the “Service Period”).

 

3.             Compensation.

 

3.1     Director Fees. During the Service Period, the Company shall pay to the Director fees for his service as a director of $20,833.33 per month ($250,000 on an annual basis (the “Cash Compensation”)), payable in arrears on the last day of each month. Payment for any partial month during the Service Period shall be prorated. The Company and the Director acknowledge and agree that the Cash Compensation shall be for the Director’s service as a director.

 

3.2     Equity Compensation.

 

(a)           Initial Equity Grant. As soon as practicable after the effectiveness of the Restructuring, the Ultimate Corporate Parent shall grant the Director a stock option (the “Initial Option”) for the purchase of 1,280,572 shares of common stock of the Ultimate Corporate Parent (the “Initial Shares”) at a purchase price per share equal to the fair market value per share of common stock of the Ultimate Corporate Parent on the date of grant as determined by the Ultimate Corporate Parent Board based on the results of a Section 409A valuation. The Company hereby represents and warrants that the Initial Shares will represent a one and one half percent (1.5%) ownership interest in the Ultimate Corporate Parent as of the date of grant (based on the number of shares of common stock of the Ultimate Corporate Parent then outstanding, assuming the issuance of all shares of capital stock reserved for future issuance under any stock incentive plan of the Ultimate Corporate Parent, the exercise of all outstanding options, warrants and other rights to purchase capital stock of the Ultimate Corporate Parent and the conversion of all securities convertible, directly or indirectly, into common stock of the Ultimate Corporate Parent (the method of such calculation, a “Fully Diluted Basis”)). Subject to the acceleration provisions set forth in Sections 3.2(c) and 3.5, the Initial Option will vest, starting on the date hereof (the “Vesting Commencement Date”), at the rate of 1/48th of the Initial Shares for each consecutive month that the Director continues to provide services to the Ultimate Corporate Parent or any of its parent companies or subsidiaries, including the LLC Parent and the Company (collectively, the “Company Entities”), from and after the Vesting Commencement Date until the date that is four (4) full years after the Vesting Commencement Date, at which time, subject to the Director’s continued service, the Initial Option will be fully vested.

 

(b)           Additional Equity Grants. In addition, for so long as the Director continues to provide services to any Company Entity, the Ultimate Corporate Parent shall grant the Director one or more additional stock options (the “Additional Options”) for the purchase of additional shares of common stock of the Ultimate Corporate Parent (the “Additional Shares”) on the terms and subject to the conditions set forth in this Section 3.2(b). The Ultimate Corporate Parent shall grant the Director an Additional Option in connection with each issuance by the Ultimate Corporate Parent of any of its equity securities that causes the Initial Shares and any Additional Shares subject to outstanding Additional Options or issued to the Director pursuant to the exercise of Additional Options collectively to represent, immediately following such issuance, less than a one and one half percent (1.5%) overall ownership position in the Ultimate Corporate Parent, calculated on a Fully Diluted Basis (each, a “Dilutive Issuance”). The number of Additional Shares purchasable pursuant to the Additional Option to be issued in connection with each Dilutive Issuance shall equal the number of whole shares of common stock of the Ultimate Corporate Parent necessary for the Director to maintain a one and one half percent (1.5%) overall ownership position in the Ultimate Corporate Parent after such Dilutive Issuance and the grant of such Additional Option (calculated on a Fully Diluted Basis). The per share exercise price of each Additional Option will be equal to the fair market value of one share of common stock of the Ultimate Corporate Parent at the time of the grant of such Additional Option. An Additional Option will be issued concurrently with or as soon as reasonably practicable after each Dilutive Issuance. Subject to the acceleration provisions set forth in Sections 3.2(c) and 3.5 hereof, each Additional Option will vest over four (4) years, calculated using the Vesting Commencement Date as the start date of such vesting, at the rate of 1/48th of the applicable Additional Shares for each consecutive month that the Director continues to provide services to any Company Entity until the date that is four (4) full years after the Vesting Commencement Date, at which time, subject to the Director’s continued service, such Additional Option will be fully vested. The obligation of the Ultimate Corporate Parent to grant Additional Options pursuant to this Section 3.2(b) shall terminate immediately prior to the initial underwritten public offering of the Ultimate Corporate Parent’s common stock pursuant to a registration statement under the Securities Act of 1933, as amended (an “IPO”).

 

(c)            Acceleration. Notwithstanding the vesting schedules of the Initial Option and any Additional Options, upon an Acceleration Event (as defined below), the vesting schedule of the Initial Option and any Additional Options shall be accelerated in full and the Initial Option and any Additional Options shall be immediately exercisable with respect to the full number of Initial Shares and Additional Shares, respectively. An “Acceleration Event” means, regardless of form thereof, consummation of (a) the sale of all or substantially all of the assets of the Company Entities on a consolidated basis to an unrelated person or entity, (b) a merger, reorganization or consolidation in which the outstanding shares of capital stock of the Ultimate Corporate Parent are converted into or exchanged for securities of the successor entity and the holders of the Ultimate Corporate Parent’s outstanding voting power immediately prior to such transaction do not own, in substantially the same proportions, a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction, (c) the sale of all or a majority of the outstanding capital stock of the Ultimate Corporate Parent in a single transaction or series of related transactions to an unrelated person or entity, (d) any other transaction in which the owners of the Ultimate Corporate Parent’s outstanding voting power immediately prior to such transaction do not own, in substantially the same proportions, a majority of the outstanding voting power of the successor entity immediately upon completion of the transaction (the events described in clauses (a) through (d), a “Sale”) or (e) an IPO in connection with which (i) the Director ceases to serve as the Chairman of the Ultimate Corporate Parent Board (or, in the event that the Restructuring has not been completed, of the LLC Parent Board or its successor entity) and (ii) the Ultimate Corporate Parent (or the LLC Parent or its successor entity) does not offer to engage the Director as an advisor through the date that is four (4) full years after the Vesting Commencement Date on fair and reasonable terms and in a manner that, if Director were to accept such offer, would result in the Initial Option and any Additional Options continuing to vest following the Director ceasing to serve as Chairman.

 

(d)           No Restructuring. In the event that the Restructuring has not been effected prior to July 15, 2020, on such date the LLC Parent shall issue a profits interest to the Director that reflects, mutatis mutandis, the terms of the Initial Option set forth in Section 3.2(a). Further, in the event that the Restructuring has not been effected prior to July 15, 2020, then, following the issuance of the profits interest that reflects the terms of the Initial Option and for so long as the Restructuring has not become effective, in connection with each issuance by the LLC Parent of any of its equity securities that would, if such issuance were instead issued by the Ultimate Corporate Parent after the Restructuring, constitute a Dilutive Issuance, the LLC Parent shall issue a profits interest to the Director that reflects, mutatis mutandis, the terms of the Additional Option that would have been issued in connection with such issuance, as set forth in Section 3.2(b). The acceleration provisions set forth in Sections 3.2(c) and 3.5 hereof shall apply to each profits interest, if any, issued in accordance with this Section 3.2(d).

 

3.3     Reimbursement of Expenses. The Company shall reimburse the Director for all reasonable, documented, out-of-pocket expenses incurred or paid by the Director in connection with, or related to, the performance of his duties, responsibilities or services under this Agreement, including a pro rata portion of Director’s out-of-pocket administrative support expenses and other general business expenses incurred or paid by the Director generally in connection with his chairman or senior executive positions with the Company Entities and other companies (determined on the basis of the total number of chairman or senior executive positions from time to time held by the Director). The Director shall submit to the Company documentation, expense statements and other supporting evidence as the Company may reasonably request from the Director and an itemized monthly statement of such expenses incurred in the previous month. The Company shall pay to the Director amounts shown on each such statement within thirty (30) days after receipt thereof. Without limiting the foregoing, the Company shall pay the reasonable and documented fees and expenses of The Moulton Law Group, PLLC, counsel for the Director, incurred in connection with the engagement of the Director by the Company and the related equity grants to the Director contemplated herein, not to exceed $7,500.

 

3.4     Benefits. The Director shall not be entitled to any benefits, coverages or privileges, including, without limitation, social security, unemployment, medical or pension payments, made available to employees of the Company.

 

3.5     Termination Payment and Vesting Acceleration.

 

(a)               In the event the Director ceases to serve as Chairman of the LLC Parent Board, the Company Board and, if applicable, the Ultimate Corporate Parent Board, then (i) the Director shall be entitled to Cash Compensation that would have been payable to the Director pursuant to Section 3.1 during the Post Termination Period (but only to the extent not already paid) (the “Termination Payment”), which amount shall be paid in a lump sum within fifteen (15) days following the Effective Date, and (ii) the Initial Option and the Additional Option, if any, that would have vested during the Post Termination Period if the Director has not ceased serving as Chairman of the LLC Parent Board, the Company Board and, if applicable, the Ultimate Corporate Parent Board shall vest and become exercisable (the “Termination Accelerated Vesting”).

 

(b)           For purposes of this Agreement, “Post Termination Period” shall mean a period immediately following the date that the Director ceases to serve as Chairman of the LLC Parent Board, the Company Board and, if applicable, the Ultimate Corporate Parent Board of twelve (12) successive months.

 

4.             Termination. This Agreement shall automatically terminate upon the date that the Director ceases to serve as Chairman of the LLC Parent Board, the Company Board and, if applicable, the Ultimate Corporate Parent Board. In the event of the termination of this Agreement, the Director shall be entitled to (a) (i) payment of his Cash Compensation accrued through the effective date of such termination, (ii) payment for expenses paid or incurred prior to the effective date of termination and (iii) payment of the Termination Payment, and (b) the Termination Accelerated Vesting.

 

5.             Cooperation. The Director shall use his best efforts in the performance of his obligations under this Agreement. The Company shall provide such access to its information and property as may be reasonably required in order to permit the Director to perform his obligations hereunder. The Director shall cooperate with the Company’s personnel and shall observe all rules, regulations and security requirements of the Company concerning the safety of persons and property.

 

6.             Proprietary Information and Inventions.

 

6.1     Proprietary Information.

 

(a)                The Director acknowledges that his relationship with the Company is one of high trust and confidence and that in the course of his service to the Company he will have access to and contact with Proprietary Information. The Director will not disclose any Proprietary Information to any person or entity other than employees of the Company or use the same for any purposes (other than in the performance of his duties as director of the Company Entities) without written approval by an officer of the Company, either during or after the Service Period, unless and until such Proprietary Information has become public knowledge without fault by the Director.

 

(b)               For purposes of this Agreement, “Proprietary Information” shall mean, by way of illustration and not limitation, all information, whether or not in writing, whether or not patentable and whether or not copyrightable, of a private, secret or confidential nature, owned, possessed or used by the Company Entities, concerning the Company Entities’ business, business relationships or financial affairs, including, without limitation, any Invention (as defined below), formula, vendor information, customer information, apparatus, equipment, trade secret, process, research, report, technical or research data, clinical data, know-how, computer program, software, software documentation, hardware design, technology, product, processes, methods, techniques, formulas, compounds, projects, developments, marketing or business plan, forecast, unpublished financial statement, budget, license, price, cost, customer, supplier or personnel information or employee list that is communicated to, learned of, developed or otherwise acquired by the Director in the course of performing his service to the Company.

 

(c)            The Director’s obligations under this Section 6.1 shall not apply to any information that (i) is or becomes known to the general public under circumstances involving no breach by the Director of the terms of this Section 6.1, (ii) is generally disclosed to third parties by the Company without restriction on such third parties, or (iii) is approved for release by written authorization of an officer of the Company.

 

(d)            The Director agrees that all files, documents, letters, memoranda, reports, records, data sketches, drawings, models, laboratory notebooks, program listings, computer equipment or devices, computer programs or other written, photographic, or other tangible material containing Proprietary Information, whether created by the Director or others, which shall come into his custody or possession, shall be and are the exclusive property of the Company to be used by the Director only in the performance of his service to the Company and shall not be copied or removed from the Company premises except in the pursuit of the business of the Company. All such materials or copies thereof and all tangible property of the Company in the custody or possession of the Director shall promptly be delivered to the Company, upon the earlier of (i) a request by the Company or (ii) the termination of this Agreement. After such delivery, the Director shall not retain any such materials or copies thereof or any such tangible property.

 

(e)            The Director agrees that his obligation not to disclose or to use information and materials of the types set forth in paragraphs (b) and (d) above, and his obligation to return materials and tangible property set forth in paragraph (d) above extends to such types of information, materials and tangible property of customers of the Company or suppliers to the Company or other third parties who may have disclosed or entrusted the same to the Company or to the Director.

 

(f)            The Director acknowledges that any of the Company Entities from time to time may have agreements with other persons or with the United States Government, or agencies thereof, that impose obligations or restrictions on such party regarding inventions made during the course of work under such agreements or regarding the confidential nature of such work. The Director agrees to be bound by all such obligations and restrictions that are known to him and to take all action necessary to discharge the obligations of the Company Entities under such agreements.

 

6.2     Inventions.

 

(a)            All inventions, creations, discoveries, computer programs, data, developments, technology, designs, innovations and improvements (whether or not patentable and whether or not copyrightable) which are made, conceived, reduced to practice, created, written, designed or developed by the Director, solely or jointly with others or under his direction and whether during normal business hours or otherwise, (i) during the Service Period if made, conceived, reduced to practice, created, written, designed or developed in the course of Director’s performance of duties pursuant to this Agreement or (ii) during or after the Service Period if resulting or directly derived from Proprietary Information (collectively under clauses (i) and (ii), “Inventions”), shall be the sole property of the Company. The Director hereby assigns and transfers and, to the extent any such assignment cannot be made at present, will assign and transfer, to the Company all Inventions and any and all related patents, copyrights, trademarks, trade names, and other industrial and intellectual property rights and applications therefor, in the United States and elsewhere and appoints any officer of the Company as his duly authorized attorney to execute, file, prosecute and protect the same before any government agency, court or authority.

 

(b)            Upon the request of the Company and at the Company’s expense, the Director shall execute such further assignments, documents and other instruments as may be necessary or desirable to fully and completely assign all Inventions to the Company and to assist the Company in applying for, obtaining and enforcing patents or copyrights or other rights in the United States and in any foreign country with respect to any Invention. The Director also hereby waives all claims to moral rights in any Inventions.

 

(c)            The Director shall promptly disclose to the Company all Inventions and will maintain adequate and current written records (in the form of notes, sketches, drawings and as may be specified by the Company) to document the conception and/or first actual reduction to practice of any Invention. Such written records shall be available to and remain the sole property of the Company at all times.

 

6.3           Remedies. The Director acknowledges that any breach of the provisions of this Section 6 shall result in serious and irreparable injury to the Company Entities for which such parties cannot be adequately compensated by monetary damages alone. The Director agrees, therefore, that, in addition to any other remedy it may have, each Company Entity shall be entitled to enforce the specific performance of this Section 6 by the Director and to seek both temporary and permanent injunctive relief (to the extent permitted by law) without the necessity of proving actual damages.

 

7.             Independent Contractor Status. The Director shall perform all services under this Agreement as an “independent contractor” and not as an employee or agent of the Company.

 

8.             Notices. All notices required or permitted under this Agreement shall be in writing and shall be deemed effective upon personal delivery or three days after deposit in the United States Post Office, by registered or certified mail (return receipt requested), postage prepaid, addressed to the other party at the address shown above, or at such other address or addresses as either party shall designate to the other in accordance with this Section 8.

 

9.             Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa.

 

10.          Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement.

 

11.          Third-Party Beneficiary. Each of the LLC Parent and, following the effectiveness of the Restructuring, the Ultimate Corporate Parent shall be an express third-party beneficiary of this Agreement.

 

12.          Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Director.

 

13.          Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the Commonwealth of Massachusetts.

 

14.          Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, both parties and their respective successors and assigns, including any corporation with which, or into which, the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Director are personal and shall not be assigned by him.

 

15.          Survival. Section 3.5 and Sections 4 through 16 shall survive the expiration or termination of this Agreement.

 

16.          Miscellaneous.

 

16.1          No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

 

16.2          The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

 

16.3          In the event that any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.

 

 

[Remainder of Page Intentionally Left Blank]

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above.

 

	XILIO THERAPEUTICS INC.
	By:	/s/ René Russo
	Name: René Russo
	Title: CEO
	DIRECTOR
	/s/ Daniel S. Lynch
	Daniel S. Lynch

 

[SIGNATURE PAGE TO SERVICE AGREEMENT]

 

Exhibit 10.20

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (“Agreement”) is made as of [●], 20[●] by and between Xilio Therapeutics, Inc., a Delaware corporation (the “Company”), and [●] (“Indemnitee”). This Agreement supersedes and replaces any and all previous Agreements between the Company and Indemnitee covering the subject matter of this Agreement. [[Solely with respect to officers and directors that execute this form of indemnification agreement on or prior to the Company’s initial public offering:] and shall be effective as of the effectiveness of a Registration Statement on Form S-1 relating to the initial registration under the Securities Act of 1933, as amended, of shares of the Company’s common stock].

 

RECITALS

 

WHEREAS, the Board of Directors of the Company (the “Board”) believes that highly competent persons have become more reluctant to serve publicly-held corporations as directors or officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

 

WHEREAS, the Board has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The certificate of incorporation of the Company (as the same may be amended or restated from time to time, the “Certificate of Incorporation”) requires indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (the “DGCL”). The Certificate of Incorporation and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification;

 

WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

 

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and its stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

 

 

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

 

WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of Incorporation and any resolutions adopted pursuant thereto, as well as any rights of Indemnitee under any directors’ and officers’ liability insurance policy, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; [and]

 

[WHEREAS, Indemnitee is a representative of [●] [and its affiliated investment funds] (the “Fund”), and has certain rights to indemnification and/or insurance provided by the Fund which Indemnitee and the Fund intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein, with the Company’s acknowledgement and agreement to the foregoing being a material consideration to Indemnitee’s willingness to serve on the Board; and]

 

WHEREAS, Indemnitee does not regard the protection available under the Certificate of Incorporation and insurance as adequate in the present circumstances and may not be willing to serve or continue to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve or continue to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified.

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the sufficiency of which is hereby acknowledged, the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1.         Services to the Company. Indemnitee agrees to serve as [a director] [an officer] of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position. This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise (as defined below)) and Indemnitee. Indemnitee specifically acknowledges that Indemnitee’s employment with the Company (or any of its subsidiaries or any Enterprise), if any, is at will, and Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided in any written employment contract between Indemnitee and the Company (or any of its subsidiaries or any Enterprise), other applicable formal severance policies duly adopted by the Board, or, with respect to service as a director or officer of the Company, by the Certificate of Incorporation, the bylaws of the Company (as the same may be amended or restated from time to time, the “Bylaws”), and the DGCL. The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as [an officer] [a director] of the Company, as provided in Section 16 hereof.

 

 

Section 2.         Definitions. As used in this Agreement:

 

    (a)          References to “agent” shall mean any person who is or was a director, officer, or employee of the Company or a subsidiary of the Company or other person authorized by the Company to act for the Company, to include such person serving in such capacity as a director, officer, employee, fiduciary or other official of another corporation, partnership, limited liability company, joint venture, trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company.

 

    (b)          A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

 

   i.             Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities unless the change in relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;

 

   ii.            Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b)(i), 2(b)(iii) or 2(b)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;

 

   iii.           Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its ultimate parent, as applicable) more than fifty percent (50%) of the combined voting power of the voting securities of the surviving entity or its ultimate parent, as applicable, outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity or its ultimate parent, as applicable;

 

  iv.            Liquidation or Sale of Assets. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or

 

  v.             Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

 

 

For purposes of this Section 2(b), the following terms shall have the following meanings:

 

  (A)        “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

  (B)         “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

  (C)         “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

 

(c)      “Corporate Status” describes the status of a person who is or was a director, officer, employee or agent of the Company or of any other corporation, limited liability company, partnership or joint venture, trust or other enterprise which such person is or was serving at the request of the Company.

 

(d)      “Disinterested Director” shall mean a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

 

(e)      “Enterprise” shall mean the Company and any other corporation, limited liability company, partnership, joint venture, trust or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, employee, agent or fiduciary.

 

(f)       “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a deponent or witness in, or otherwise participating in, a Proceeding. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) expenses incurred in connection with recovery under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee is ultimately determined to be entitled to such indemnification, advancement or Expenses or insurance recovery, as the case may be, and (iii) for purposes of Section 14(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, the Certificate of Incorporation or under any directors’ and officers’ liability insurance policies maintained by the Company, by litigation or otherwise. The parties agree that for the purposes of any advancement of Expenses for which Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit of Indemnitee’s counsel as being reasonable in the good faith judgment of such counsel shall be presumed conclusively to be reasonable. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

 

(g)      “Independent Counsel” shall mean a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

(h)      The term “Proceeding” shall include any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, legislative, regulatory or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action taken by Indemnitee (or a failure to take action by Indemnitee) or of any action (or failure to act) on Indemnitee’s part while acting pursuant to Indemnitee’s Corporate Status, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement. If Indemnitee believes in good faith that a given situation may lead to or culminate in the institution of a Proceeding, this shall be considered a Proceeding under this paragraph.

 

(i)       Reference to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

 

 

Section 3.         Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding had no reasonable cause to believe that Indemnitee’s conduct was unlawful. The parties hereto intend that this Agreement shall provide to the fullest extent permitted by law for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Certificate of Incorporation, the Bylaws, vote of the Company’s stockholders or disinterested directors or applicable law.

 

Section 4.         Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Court of Chancery of the State of Delaware (the “Delaware Court”) or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to such indemnification.

 

Section 5.         Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

 

Section 6.         Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness, is or was made (or asked) to respond to discovery requests in any Proceeding, or otherwise asked to participate in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection therewith.

 

Section 7.         Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

 

Section 8.         Additional Indemnification.

 

    (a)          Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding.

 

    (b)          For purposes of Section 8(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to:

 

   i.             to the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and

 

   ii.            to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.

 

Section 9.         Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnification payment in connection with any claim involving Indemnitee:

 

    (a)          for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

 

    (b)         for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as defined in Section 2(b) hereof) or similar provisions of state statutory law or common law, or (ii) any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act); or (iii) any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, including but not limited to any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act; or

 

 

     (c)         except as provided in Section 14(d) of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

 

Section 10.        Advances of Expenses. Notwithstanding any provision of this Agreement to the contrary (other than Section 14(d)), the Company shall advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding (or any part of any Proceeding) (x) not initiated by Indemnitee or (y) initiated by Indemnitee with the prior approval of the Board as provided in Section 9(c), and such advancement shall be made within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. In accordance with Section 14(d), advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which shall constitute an undertaking providing that Indemnitee undertakes to repay the amounts advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company. No other form of undertaking shall be required other than the execution of this Agreement. This Section 10 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 9.

 

Section 11.       Procedure for Notification and Defense of Claim.

 

      (a)        Indemnitee shall notify the Company in writing of any matter with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof. The written notification to the Company shall include a description of the nature of the Proceeding and the facts underlying the Proceeding. To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. The omission by Indemnitee to notify the Company hereunder will not relieve the Company from any liability which it may have to Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights under this Agreement. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

 

 

     (b)         The Company will be entitled to participate in the Proceeding at its own expense.

 

Section 12.       Procedure Upon Application for Indemnification.

 

      (a)        Upon written request by Indemnitee for indemnification pursuant to Section 11(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Board, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or Expenses (including attorneys’ fees and disbursements) incurred by or on behalf of Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Company promptly will advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied.

 

 

     (b)        In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be selected as provided in this Section 12(b). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Court has determined that such objection is without merit. If, within twenty (20) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof and the final disposition of the Proceeding, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by such court or by such other person as such court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 12(a) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

Section 13.       Presumptions and Effect of Certain Proceedings.

 

      (a)        In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall, to the fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

     (b)         Subject to Section 14(e), if the person, persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 13(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 12(a) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) of this Agreement.

 

 

      (c)        The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

     (d)         For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the directors or officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by or on behalf of the Enterprise. The provisions of this Section 13(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

 

     (e)         The knowledge and/or actions, or failure to act, of any director, officer, trustee, partner, managing member, fiduciary, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

Section 14.       Remedies of Indemnitee.

 

      (a)        Subject to Section 14(e), in the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12(a) of this Agreement within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6 or 7 or the second to last sentence of Section 12(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) payment of indemnification pursuant to Section 3, 4 or 8 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of Indemnitee’s entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 14(a); provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 5 of this Agreement. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

 

 

     (b)         In the event that a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 14 the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

 

     (c)         If a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

     (d)         The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. It is the intent of the Company that, to the fullest extent permitted by law, Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to Indemnitee hereunder. The Company shall, to the fullest extent permitted by law, indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by law, such Expenses to Indemnitee, which are incurred by or on behalf of Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company if, in the case of indemnification, Indemnitee is wholly successful on the underlying claims; if Indemnitee is not wholly successful on the underlying claims, then such indemnification shall be only to the extent Indemnitee is successful on such underlying claims or otherwise as permitted by law, whichever is greater.

 

 

      (e)        Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement of Indemnitee to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

 

Section 15.        Non-Exclusivity; Survival of Rights; Insurance; Subrogation.

 

      (a)        The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Certificate of Incorporation and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

     (b)         To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Enterprise, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such claim or of the commencement of a Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

 

      (c)        In the event of any payment made by the Company under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

     (d)         The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

 

 

     (e)         [The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by the Fund and certain of its affiliates (collectively, the “Fund Indemnitors”). The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to advance the full amount of Expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the Certificate of Incorporation or Bylaws (or any agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and (iii) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms of this Section 15(e).]

 

      (f)        [Except as provided in paragraph (e) above,] [T]he Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other corporation, limited liability company, partnership, joint venture, trust or other enterprise.

 

Section 16.       Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve as [a director] [an officer] or (b) one (1) year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement relating thereto. The indemnification and advancement of expenses rights provided by or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise, and shall inure to the benefit of Indemnitee and his or her spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

 

Section 17.       Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

 

Section 18.       Enforcement.

 

      (a)        The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as a director or officer of the Company.

 

     (b)         This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes and replaces all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof, including any agreement covering the subject matter of this Agreement previously entered into between the Company and Indemnitee; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws, any directors’ and officers’ insurance maintained by the Company and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

Section 19.       Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

 

Section 20.       Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise.

 

Section 21.       Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed or (d) sent by facsimile transmission, with receipt of oral confirmation that such transmission has been received:

 

     (a)         If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the Company.

 

 

     (b)            If to the Company to

 

     Xilio Therapeutics, Inc.

     828 Winter Street

     Waltham, MA 02451

     Attention: Chief Executive Officer

     CC: General Counsel

 

or to any other address as may have been furnished to Indemnitee by the Company.

 

Section 22.       Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company, on the one hand, and Indemnitee, on the other hand, as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its other directors, officers, employees and agents) on the one hand, and Indemnitee, on the other hand, in connection with such event(s) and/or transaction(s).

 

Section 23.       Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court, and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

 

Section 24.       Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

Section 25.       Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

 

XILIO THERAPEUTICS, INC.

 

	By:
	Name:
	Title:

 

	INDEMNITEE:
	[Name of Indemnitee]

 

[Signature Page to Xilio Therapeutics, Inc.

Indemnification Agreement]

 

 

Exhibit 21.1

 

Subsidiaries of the Registrant

 

Entity		Jurisdiction of Incorporation
Xilio Securities Corporation Xilio Therapeutics LLC Xilio Concerto LLC Xilio Development, Inc.		Massachusetts Delaware Delaware Delaware

 

 

Exhibit 23.1

 

Consent of Independent Registered Public Accounting Firm

 

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated May 24, 2021, in the Registration Statement (Form S-1) and related Prospectus of Xilio Therapeutics, Inc. dated October 1, 2021 for the registration of shares of its common stock.

 

/s/ Ernst & Young LLP

 

Boston, Massachusetts

October 1, 2021